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, 2013
Date of reporting period: February 28, 2013
Table of Contents
Item 1. Reports to Stockholders.
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
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iShares, Inc.
| Ø | iShares MSCI Japan Index Fund | EWJ | NYSE Arca |
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Table of Contents
iSHARES® MSCI JAPAN INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 4.50% | 4.40% | 4.87% | (2.81)% | (2.46)% | (2.27)% | 5.37% | 5.22% | 5.96% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 4.50% | 4.40% | 4.87% | (13.29)% | (11.70)% | (10.86)% | 68.68% | 66.27% | 78.47% | ||||||||
“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 28, 2013, the total return for the Fund was 14.85%, net of fees, while the total return for the Index was 15.21%.
| 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, 2012 to February 28, 2013.
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 (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
|||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,148.50 | 0.51 | % | $ | 2.72 | ||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||||
| 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 (181 days) and divided by the number of days in the year (365 days). |
| 6 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
February 28, 2013
| SCHEDULE OF INVESTMENTS |
7 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 28, 2013
| 8 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 28, 2013
| SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 28, 2013
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 28, 2013
| SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 28, 2013
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statement of Assets and Liabilities (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
February 28, 2013
| ASSETS |
| |||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 7,228,885,039 | ||
| Affiliated (Note 2) |
67,130,138 | |||
|
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|
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| Total cost of investments |
$ | 7,296,015,177 | ||
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|
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| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 6,099,196,495 | ||
| Affiliated (Note 2) |
67,130,138 | |||
|
|
|
|||
| Total fair value of investments |
6,166,326,633 | |||
| Foreign currency, at valueb |
10,370,684 | |||
| Receivables: |
||||
| Investment securities sold |
5,474,125 | |||
| Dividends and interest |
6,590,909 | |||
| Futures variation margin |
2,484,966 | |||
|
|
|
|||
| Total Assets |
6,191,247,317 | |||
|
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|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
3,810,305 | |||
| Foreign currency overdraft at broker |
1,648,588 | |||
| Collateral for securities on loan (Note 5) |
58,825,823 | |||
| Capital shares redeemed |
577,499 | |||
| Investment advisory fees (Note 2) |
2,240,978 | |||
|
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|
|||
| Total Liabilities |
67,103,193 | |||
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|
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| NET ASSETS |
$ | 6,124,144,124 | ||
|
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|
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| Net assets consist of: |
||||
| Paid-in capital |
$ | 8,242,118,874 | ||
| Distributions in excess of net investment income |
(7,802,443 | ) | ||
| Accumulated net realized loss |
(982,275,897 | ) | ||
| Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies |
(1,127,896,410 | ) | ||
|
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|
|||
| NET ASSETS |
$ | 6,124,144,124 | ||
|
|
|
|||
| Shares outstandingc |
597,600,000 | |||
|
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|
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| Net asset value per share |
$ | 10.25 | ||
|
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|
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| a | Securities on loan with a value of $55,853,101. See Note 5. |
| b | Cost of foreign currency: $9,060,202. |
| 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 28, 2013
| NET INVESTMENT INCOME |
| |||
| Dividends — unaffiliateda |
$ | 48,426,582 | ||
| Interest — affiliated (Note 2) |
1,894 | |||
| Securities lending income — affiliated (Note 2) |
893,267 | |||
|
|
|
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| Total investment income |
49,321,743 | |||
|
|
|
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| EXPENSES |
||||
| Investment advisory fees (Note 2) |
12,146,525 | |||
|
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|
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| Total expenses |
12,146,525 | |||
|
|
|
|||
| Net investment income |
37,175,218 | |||
|
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|
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| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(83,127,508 | ) | ||
| In-kind redemptions — unaffiliated |
(25,473,418 | ) | ||
| Futures contracts |
3,218,936 | |||
| Foreign currency transactions |
(3,151,736 | ) | ||
|
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|
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| Net realized loss |
(108,533,726 | ) | ||
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| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
769,448,208 | |||
| Futures contracts |
2,653,039 | |||
| Translation of assets and liabilities in foreign currencies |
(830,186 | ) | ||
|
|
|
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| Net change in unrealized appreciation/depreciation |
771,271,061 | |||
|
|
|
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| Net realized and unrealized gain |
662,737,335 | |||
|
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|
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| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 699,912,553 | ||
|
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|
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| a | Net of foreign withholding tax of $3,630,380. |
See notes to financial statements.
| 14 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES® MSCI JAPAN INDEX FUND
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
|
|||||||
| OPERATIONS: |
|
|||||||
| Net investment income |
$ | 37,175,218 | $ | 106,977,074 | ||||
| Net realized loss |
(108,533,726 | ) | (263,209,688 | ) | ||||
| Net change in unrealized appreciation/depreciation |
771,271,061 | (266,966,709 | ) | |||||
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|||||
| Net increase (decrease) in net assets resulting from operations |
699,912,553 | (423,199,323 | ) | |||||
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| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(48,420,838 | ) | (109,422,889 | ) | ||||
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|
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| Total distributions to shareholders |
(48,420,838 | ) | (109,422,889 | ) | ||||
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|
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| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
1,998,557,619 | 758,956,904 | ||||||
| Cost of shares redeemed |
(1,154,939,578 | ) | (2,791,809,212 | ) | ||||
|
|
|
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|
|||||
| Net increase (decrease) in net assets from capital share transactions |
843,618,041 | (2,032,852,308 | ) | |||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN NET ASSETS |
1,495,109,756 | (2,565,474,520 | ) | |||||
| NET ASSETS |
||||||||
| Beginning of period |
4,629,034,368 | 7,194,508,888 | ||||||
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|
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|
|
|||||
| End of period |
$ | 6,124,144,124 | $ | 4,629,034,368 | ||||
|
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|
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| Undistributed (distributions in excess of) net investment income |
$ | (7,802,443 | ) | $ | 3,443,177 | |||
|
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|
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| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
207,000,000 | 76,800,000 | ||||||
| Shares redeemed |
(122,400,000 | ) | (298,200,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in shares outstanding |
84,600,000 | (221,400,000 | ) | |||||
|
|
|
|
|
|||||
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 Feb. 28, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 9.02 | $ | 9.80 | $ | 9.43 | $ | 10.24 | $ | 11.62 | $ | 14.07 | ||||||||||||
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| Income from investment operations: |
| |||||||||||||||||||||||
| Net investment incomea |
0.07 | 0.18 | 0.16 | 0.12 | 0.13 | 0.14 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.26 | (0.77 | ) | 0.37 | (0.77 | ) | (1.39 | ) | (2.39 | ) | ||||||||||||||
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| Total from investment operations |
1.33 | (0.59 | ) | 0.53 | (0.65 | ) | (1.26 | ) | (2.25 | ) | ||||||||||||||
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| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.10 | ) | (0.19 | ) | (0.16 | ) | (0.16 | ) | (0.12 | ) | (0.20 | ) | ||||||||||||
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| Total distributions |
(0.10 | ) | (0.19 | ) | (0.16 | ) | (0.16 | ) | (0.12 | ) | (0.20 | ) | ||||||||||||
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| Net asset value, end of period |
$ | 10.25 | $ | 9.02 | $ | 9.80 | $ | 9.43 | $ | 10.24 | $ | 11.62 | ||||||||||||
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| Total return |
14.85 | %c | (5.96 | )% | 5.54 | % | (6.41 | )% | (10.68 | )% | (16.13 | )% | ||||||||||||
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| Ratios/Supplemental data: |
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| Net assets, end of period (000s) |
$ | 6,124,144 | $ | 4,629,034 | $ | 7,194,509 | $ | 3,942,769 | $ | 6,164,170 | $ | 7,499,536 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.51 | % | 0.54 | % | 0.56 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average |
1.57 | % | 1.95 | % | 1.53 | % | 1.20 | % | 1.46 | % | 1.11 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 3 | % | 4 | % | 5 | % | 4 | % | 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.
| 16 | 2013 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 |
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.
SECURITY VALUATION
The Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of
| NOTES TO FINANCIAL STATEMENTS |
17 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
investments for the Fund. The investments of the Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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). |
| • | Financial futures contracts are valued at that day’s last reported settlement price on the exchange where the contract is traded. |
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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Fund’s perceived risk of that instrument. 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 (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Fund’s assumptions used in determining the fair value of investments. |
| 18 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
As of February 28, 2013, 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 28, 2013 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, stock dividends, capital gains on investments, or certain foreign currency transactions. 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 stock dividends are presented as “other foreign taxes,” and foreign taxes on capital gains from sales of investments and foreign taxes on foreing currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, 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.
| NOTES TO FINANCIAL STATEMENTS |
19 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX 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 December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, 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. The Fund benefits from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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.
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
For the six months ended February 28, 2013, BTC earned securities lending agent fees from the Fund in the amount of $480,990.
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for the Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Fund for 1940 Act purposes.
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 28, 2013, were $85,739,364 and $94,847,156, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 28, 2013, were $1,963,654,342 and $1,135,971,436, 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 may also 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 market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund on the next business day. The risks of securities lending include the risk that the borrower may not provide additional collateral when required or
| NOTES TO FINANCIAL STATEMENTS |
21 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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.
| 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.
As of August 31, 2012, the Fund’s fiscal year-end, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| Non- Expiring a |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total |
||||||||||||||||||||||||||
| $118,947,587 | $ | 8,733,802 | $ | 68,122,871 | $ | 27,817,841 | $ | 44,443,527 | $ | 116,295,478 | $ | 173,577,101 | $ | 139,228,194 | $ | 697,166,401 | ||||||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
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 28, 2013, the cost of investments for federal income tax purposes was $7,355,132,071. Net unrealized depreciation was $1,188,805,438, of which $263,188,756 represented gross unrealized appreciation on securities and $1,451,994,194 represented gross unrealized depreciation on securities.
Management has reviewed the tax positions as of February 28, 2013, 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. | FINANCIAL FUTURES CONTRACTS |
The Fund may purchase or sell financial futures contracts in an effort to help the Fund track its underlying index. A futures contract is a standardized, exchange-traded agreement to buy and sell a financial instrument at a set price on a future date. Upon entering into a futures contract, the Fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S.
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are recorded by the Fund as unrealized appreciation or depreciation. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Losses may arise if the value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts also involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.
The following table shows the value of futures contracts held by the Fund as of February 28, 2013 and the related locations in the statement of assets and liabilities, presented by risk exposure category:
| Assets | ||||
| Equity contracts: |
$ | 2,484,966 | ||
|
|
|
|||
| a | Represents cumulative appreciation of futures contracts as reported in the schedule of investments. |
The following table shows the realized and unrealized gains (losses) on futures contracts held by the Fund during the six months ended February 28, 2013 and the related locations in the statement of operations, presented by risk exposure category:
| Net Realized Gain (Loss) |
Net Change in
Unrealized Appreciation/Depreciation |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | 3,218,936 | $ | 2,653,039 | ||||
|
|
|
|
|
|||||
For the six months ended February 28, 2013, the average quarter-end number of contracts and notional value of open futures contracts for Fund were 229 and $22,220,588, respectively.
| 8. | 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.
| NOTES TO FINANCIAL STATEMENTS |
23 |
Table of Contents
Supplemental Information (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
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 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 |
|||||||||||||||||||||||
| $ | 0.09095 | $ | — | $ | 0.01005 | $ | 0.10100 | 90 | % | — | % | 10 | % | 100 | % | |||||||||||||||
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
25 |
Table of Contents
Notes:
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Fund’s website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund also discloses its complete schedule of portfolio holdings on a daily and monthly basis on the Fund’s website.
©2013 BlackRock. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are their respective owners.
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iS-SAR-81-0213
Table of Contents
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI Austria Capped Investable Market Index Fund | EWO | NYSE Arca |
| Ø | iShares MSCI Belgium Capped Investable Market Index Fund | EWK | NYSE Arca |
| Ø | iShares MSCI Emerging Markets Eastern Europe Index Fund | ESR | NYSE Arca |
| Ø | iShares MSCI EMU Index Fund | EZU | NYSE Arca |
| Ø | iShares MSCI France Index Fund | EWQ | NYSE Arca |
| Ø | iShares MSCI Germany Index Fund | EWG | NYSE Arca |
| Ø | iShares MSCI Italy Capped Index Fund | EWI | NYSE Arca |
| Ø | iShares MSCI Netherlands Investable Market Index Fund | EWN | NYSE Arca |
| Ø | iShares MSCI Spain Capped Index Fund | EWP | NYSE Arca |
| Ø | iShares MSCI Sweden Index Fund | EWD | NYSE Arca |
| Ø | iShares MSCI Switzerland Capped Index Fund | EWL | NYSE Arca |
| Ø | iShares MSCI United Kingdom Index Fund | EWU | NYSE Arca |
Table of Contents
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Table of Contents
iSHARES® MSCI AUSTRIA CAPPED INVESTABLE MARKET INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 11.37% | 10.53% | 11.28% | (8.70)% | (8.42)% | (9.33)% | 9.85% | 9.89% | 9.56% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 11.37% | 10.53% | 11.28% | (36.56)% | (35.59)% | (38.73)% | 155.88% | 156.88% | 149.16% | ||||||||
Index performance through January 31, 2008 reflects the performance of the MSCI Austria IndexSM. Index performance beginning on February 1, 2008 through February 11, 2013 reflects the performance of the MSCI Austria Investable Market IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Austria IMI 25/50 Index.
“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.
Certain sectors and markets performed exceptionally well based on market conditions during the six-month period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.
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.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI AUSTRIA CAPPED INVESTABLE MARKET INDEX FUND
The iShares MSCI Austria Capped Investable Market Index Fund (the “Fund”), formerly the iShares MSCI Austria Investable Market Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Austria IMI 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index and 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 28, 2013, the total return for the Fund was 25.13%, net of fees, while the total return for the Index was 25.51%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Austria Investable Market IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Austria IMI 25/50 Index. |
| 6 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI BELGIUM CAPPED INVESTABLE MARKET INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 23.96% | 23.81% | 27.79% | (5.40)% | (5.21)% | (4.46)% | 9.31% | 9.12% | 9.49% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 23.96% | 23.81% | 27.79% | (24.25)% | (23.46)% | (20.40)% | 143.55% | 139.42% | 147.57% | ||||||||
Index performance through November 30, 2007 reflects the performance of the MSCI Belgium IndexSM. Index performance beginning on December 1, 2007 through November 8, 2012 reflects the performance of the MSCI Belgium Investable Market IndexSM. Index performance beginning on November 9, 2012 reflects the performance of the MSCI Belgium IMI 25/50 Index.
“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.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI BELGIUM CAPPED INVESTABLE MARKET INDEX FUND
The iShares MSCI Belgium Capped Investable Market Index Fund (the “Fund”), formerly the iShares MSCI Belgium Investable Market Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Belgium IMI 25/50 Index (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 28, 2013, the total return for the Fund was 19.56%, net of fees, while the total return for the Index was 16.77%*.
| * | Index performance through November 8, 2012 reflects the performance of the MSCI Belgium Investable Market IndexSM. Index performance beginning on November 9, 2012 reflects the performance of the MSCI Belgium IMI 25/50 Index. |
| 8 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (7.38)% | (7.19)% | (6.50)% | 3.86% | 3.75% | 4.33% | 13.82% | 13.40% | 15.58% | ||||||||
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 28, 2013, the total return for the Fund was 8.05%, net of fees, while the total return for the Index was 8.47%.
| FUND PERFORMANCE OVERVIEWS |
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Fund Performance Overview
iSHARES® MSCI EMU INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 8.52% | 8.58% | 8.47% | (5.76)% | (5.66)% | (5.69)% | 8.10% | 8.06% | 8.29% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 8.52% | 8.58% | 8.47% | (25.68)% | (25.27)% | (25.38)% | 117.94% | 117.14% | 121.68% | ||||||||
“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 28, 2013, the total return for the Fund was 14.65%, net of fees, while the total return for the Index was 14.80%.
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Fund Performance Overview
iSHARES® MSCI FRANCE INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 9.65% | 9.75% | 9.49% | (3.83)% | (3.71)% | (3.77)% | 8.19% | 8.20% | 8.35% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 9.65% | 9.75% | 9.49% | (17.74)% | (17.20)% | (17.48)% | 119.74% | 119.92% | 123.07% | ||||||||
“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. 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 28, 2013, the total return for the Fund was 14.32%, net of fees, while the total return for the Index was 14.46%.
| FUND PERFORMANCE OVERVIEWS |
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Table of Contents
Fund Performance Overview
iSHARES® MSCI GERMANY INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 10.45% | 10.71% | 10.57% | (1.82)% | (1.63)% | (1.79)% | 12.80% | 12.81% | 12.94% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 10.45% | 10.71% | 10.57% | (8.78)% | (7.91)% | (8.65)% | 233.63% | 233.72% | 237.78% | ||||||||
“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 28, 2013, the total return for the Fund was 15.75%, net of fees, while the total return for the Index was 16.04%.
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Fund Performance Overview
iSHARES® MSCI ITALY CAPPED INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (4.12)% | (4.24)% | (4.21)% | (13.08)% | (12.97)% | (13.26)% | 1.40% | 1.39% | 1.31% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (4.12)% | (4.24)% | (4.21)% | (50.38)% | (50.09)% | (50.90)% | 14.93% | 14.79% | 13.89% | ||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Italy IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Italy 25/50 Index.
“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 Capped Index Fund (the “Fund”), formerly the iShares MSCI Italy Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Italy 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index and 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 28, 2013, the total return for the Fund was 6.61%, net of fees, while the total return for the Index was 6.51%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Italy IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Italy 25/50 Index. |
| FUND PERFORMANCE OVERVIEWS |
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Table of Contents
Fund Performance Overview
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 10.74% | 10.97% | 11.45% | (2.98)% | (2.76)% | (2.46)% | 8.95% | 8.96% | 9.15% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 10.74% | 10.97% | 11.45% | (14.02)% | (13.06)% | (11.71)% | 135.72% | 135.80% | 139.91% | ||||||||
Index performance through January 31, 2008 reflects the performance of the MSCI Netherlands IndexSM. Index performance beginning on February 1, 2008 reflects the performance of the MSCI Netherlands Investable Market IndexSM.
“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.
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Fund Performance Overview (Continued)
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
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 28, 2013, the total return for the Fund was 11.61%, net of fees, while the total return for the Index was 11.94%.
| FUND PERFORMANCE OVERVIEWS |
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Table of Contents
Fund Performance Overview
iSHARES® MSCI SPAIN CAPPED INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 1.38% | 1.20% | 1.33% | (6.83)% | (6.65)% | (7.47)% | 9.15% | 9.10% | 8.89% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 1.38% | 1.20% | 1.33% | (29.77)% | (29.10)% | (32.16)% | 139.94% | 138.90% | 134.38% | ||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Spain IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Spain 25/50 Index.
“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.
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Fund Performance Overview (Continued)
iSHARES® MSCI SPAIN CAPPED INDEX FUND
The iShares MSCI Spain Capped Index Fund (the “Fund”), formerly the iShares MSCI Spain Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Spain 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index and 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 28, 2013, the total return for the Fund was 17.29%, net of fees, while the total return for the Index was 17.25%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Spain IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Spain 25/50 Index. |
| FUND PERFORMANCE OVERVIEWS |
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Table of Contents
Fund Performance Overview
iSHARES® MSCI SWEDEN INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 14.04% | 14.03% | 13.95% | 5.56% | 5.70% | 5.51% | 16.15% | 16.09% | 16.22% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 14.04% | 14.03% | 13.95% | 31.06% | 31.96% | 30.73% | 347.04% | 344.39% | 349.51% | ||||||||
“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 28, 2013, the total return for the Fund was 19.11%, net of fees, while the total return for the Index was 19.44%.
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Fund Performance Overview
iSHARES® MSCI SWITZERLAND CAPPED INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 21.73% | 21.50% | 22.24% | 4.58% | 4.65% | 4.39% | 12.59% | 12.44% | 12.15% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 21.73% | 21.50% | 22.24% | 25.11% | 25.53% | 23.94% | 227.43% | 223.03% | 214.66% | ||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Switzerland IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Switzerland 25/50 Index.
“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.
| FUND PERFORMANCE OVERVIEWS |
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Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI SWITZERLAND CAPPED INDEX FUND
The iShares MSCI Switzerland Capped Index Fund (the “Fund”), formerly the iShares MSCI Switzerland Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Switzerland 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index and 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 28, 2013, the total return for the Fund was 21.43%, net of fees, while the total return for the Index was 22.02%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Switzerland IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Switzerland 25/50 Index. |
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI UNITED KINGDOM INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 6.59% | 6.56% | 7.16% | (0.53)% | (0.35)% | 0.03% | 8.44% | 8.47% | 9.16% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 6.59% | 6.56% | 7.16% | (2.61)% | (1.75)% | 0.14% | 124.82% | 125.56% | 140.23% | ||||||||
“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 28, 2013, the total return for the Fund was 7.71%, net of fees, while the total return for the Index was 7.99%.
| FUND PERFORMANCE OVERVIEWS |
21 |
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, 2012 to February 28, 2013.
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 (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| Austria Capped Investable Market |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,251.30 | 0.51 | % | $ | 2.85 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Belgium Capped Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,195.60 | 0.51 | 2.78 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Emerging Markets Eastern Europe |
||||||||||||||||
| Actual |
1,000.00 | 1,080.50 | 0.67 | 3.46 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.67 | 3.36 | ||||||||||||
| EMU |
||||||||||||||||
| Actual |
1,000.00 | 1,146.50 | 0.51 | 2.71 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund | Beginning Account Value (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| France |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,143.20 | 0.51 | % | $ | 2.71 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Germany |
||||||||||||||||
| Actual |
1,000.00 | 1,157.50 | 0.51 | 2.73 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Italy Capped |
||||||||||||||||
| Actual |
1,000.00 | 1,066.10 | 0.51 | 2.61 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Netherlands Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,116.10 | 0.51 | 2.68 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Spain Capped |
||||||||||||||||
| Actual |
1,000.00 | 1,172.90 | 0.51 | 2.75 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Sweden |
||||||||||||||||
| Actual |
1,000.00 | 1,191.10 | 0.51 | 2.77 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Switzerland Capped |
||||||||||||||||
| Actual |
1,000.00 | 1,214.30 | 0.51 | 2.80 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| United Kingdom |
||||||||||||||||
| Actual |
1,000.00 | 1,077.10 | 0.51 | 2.63 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| 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 (181 days) and divided by the number of days in the year (365 days). |
| SHAREHOLDER EXPENSES |
23 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI AUSTRIA CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRIA CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI BELGIUM CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BELGIUM CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND
February 28, 2013
| 28 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2013
| 30 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU INDEX FUND
February 28, 2013
| 32 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI FRANCE INDEX FUND
February 28, 2013
| 34 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRANCE INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRANCE INDEX FUND
February 28, 2013
| 36 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GERMANY INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GERMANY INDEX FUND
February 28, 2013
| 38 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ITALY CAPPED INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ITALY CAPPED INDEX FUND
February 28, 2013
| 40 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
February 28, 2013
| 42 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SPAIN CAPPED INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SPAIN CAPPED INDEX FUND
February 28, 2013
| 44 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SWEDEN INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SWEDEN INDEX FUND
February 28, 2013
| 46 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SWITZERLAND CAPPED INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
47 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SWITZERLAND CAPPED INDEX FUND
February 28, 2013
| 48 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
49 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
February 28, 2013
| 50 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
51 |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Austria Capped Investable Market Index Fund |
iShares MSCI Belgium Capped Investable Market Index Fund |
iShares MSCI Emerging Markets Eastern Europe Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 138,915,015 | $ | 61,357,839 | $ | 30,181,406 | ||||||
| Affiliated (Note 2) |
2,045,243 | 488,451 | 3,799 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 140,960,258 | $ | 61,846,290 | $ | 30,185,205 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 107,984,037 | $ | 59,923,571 | $ | 24,693,120 | ||||||
| Affiliated (Note 2) |
2,045,243 | 488,451 | 3,799 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
110,029,280 | 60,412,022 | 24,696,919 | |||||||||
| Foreign currencies, at valueb |
152,223 | 27,731 | 17,927 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
1,557,085 | 1,072,466 | 177,719 | |||||||||
| Due from custodian (Note 4) |
— | — | 217,936 | |||||||||
| Dividends and interest |
597,390 | 43,772 | 1,501 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
112,335,978 | 61,555,991 | 25,112,002 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
1,556,983 | 1,027,064 | 373,548 | |||||||||
| Collateral for securities on loan (Note 5) |
2,044,849 | 471,666 | — | |||||||||
| Capital shares redeemed |
22,943 | 2,011 | — | |||||||||
| Securities related to in-kind transactions (Note 4) |
— | — | 11,115 | |||||||||
| Investment advisory fees (Note 2) |
46,904 | 23,511 | 12,701 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
3,671,679 | 1,524,252 | 397,364 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 108,664,299 | $ | 60,031,739 | $ | 24,714,638 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 212,196,942 | $ | 112,298,344 | $ | 32,820,279 | ||||||
| Distributions in excess of net investment income |
(350,273 | ) | (38,235 | ) | (30,497 | ) | ||||||
| Accumulated net realized loss |
(72,219,049 | ) | (50,792,656 | ) | (2,586,651 | ) | ||||||
| Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies |
(30,963,321 | ) | (1,435,714 | ) | (5,488,493 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 108,664,299 | $ | 60,031,739 | $ | 24,714,638 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
6,000,000 | 4,200,000 | 950,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 18.11 | $ | 14.29 | $ | 26.02 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $1,945,363, $440,204 and $ —, respectively. See Note 5. |
| b | Cost of foreign currencies: $152,373, $28,583 and $18,285, respectively. |
| c | $0.001 par value, number of shares authorized: 100 million, 136.2 million and 200 million, respectively. |
See notes to financial statements.
| 52 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares MSCI EMU Index Fund |
iShares MSCI France Index Fund |
iShares MSCI Germany Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 2,593,888,644 | $ | 517,768,838 | $ | 3,688,335,039 | ||||||
| Affiliated (Note 2) |
17,321,174 | 814,865 | 8,180,312 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 2,611,209,818 | $ | 518,583,703 | $ | 3,696,515,351 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 2,375,502,410 | $ | 466,088,656 | $ | 3,551,761,748 | ||||||
| Affiliated (Note 2) |
17,321,174 | 814,865 | 8,180,312 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
2,392,823,584 | 466,903,521 | 3,559,942,060 | |||||||||
| Foreign currencies, at valueb |
3,744,631 | 397,815 | 6,277,590 | |||||||||
| Foreign currency pledged to broker, at valueb |
— | — | 1,386,606 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
10,569,208 | 1,866,406 | 5,732,244 | |||||||||
| Dividends and interest |
1,034,835 | 1,584 | 8,781,609 | |||||||||
| Futures variation margin |
— | — | 234,506 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
2,408,172,258 | 469,169,326 | 3,582,354,615 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
10,801,484 | 1,935,779 | 7,751,398 | |||||||||
| Collateral for securities on loan (Note 5) |
17,151,427 | 807,035 | 8,000,000 | |||||||||
| Capital shares redeemed |
198,824 | — | 403,549 | |||||||||
| Investment advisory fees (Note 2) |
959,820 | 182,648 | 1,482,170 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
29,111,555 | 2,925,462 | 17,637,117 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,379,060,703 | $ | 466,243,864 | $ | 3,564,717,498 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 2,789,513,164 | $ | 553,831,918 | $ | 3,786,593,636 | ||||||
| Undistributed (distributions in excess of) net investment income |
1,411,293 | (377,966 | ) | 2,955,227 | ||||||||
| Accumulated net realized loss |
(193,373,977 | ) | (35,520,853 | ) | (87,900,074 | ) | ||||||
| Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies |
(218,489,777 | ) | (51,689,235 | ) | (136,931,291 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,379,060,703 | $ | 466,243,864 | $ | 3,564,717,498 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
71,600,000 | 19,800,000 | 144,300,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 33.23 | $ | 23.55 | $ | 24.70 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $16,262,334, $767,860 and $7,445,912, respectively. See Note 5. |
| b | Cost of foreign currencies including currency at broker, if any: $3,833,055, $406,869 and $7,821,144, 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.
| FINANCIAL STATEMENTS |
53 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Italy Capped Index Fund |
iShares MSCI Netherlands Investable Market Index Fund |
iShares MSCI Spain Capped Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 574,706,251 | $ | 170,546,387 | $ | 308,470,784 | ||||||
| Affiliated (Note 2) |
34,027,150 | 637,567 | 4,740,624 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 608,733,401 | $ | 171,183,954 | $ | 313,211,408 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 551,218,245 | $ | 148,991,686 | $ | 284,126,866 | ||||||
| Affiliated (Note 2) |
34,027,150 | 637,567 | 4,740,624 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
585,245,395 | 149,629,253 | 288,867,490 | |||||||||
| Foreign currencies, at valueb |
396,127 | 131,639 | 304,366 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
21,708,236 | 1,791,972 | 6,412,520 | |||||||||
| Dividends and interest |
26,433 | 238,552 | 29,817 | |||||||||
| Capital shares sold |
3,545 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
607,379,736 | 151,791,416 | 295,614,193 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
21,572,405 | 1,771,335 | 6,542,939 | |||||||||
| Collateral for securities on loan (Note 5) |
33,889,665 | 633,447 | 4,683,207 | |||||||||
| Capital shares redeemed |
— | 16,354 | — | |||||||||
| Investment advisory fees (Note 2) |
222,865 | 64,293 | 108,071 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
55,684,935 | 2,485,429 | 11,334,217 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 551,694,801 | $ | 149,305,987 | $ | 284,279,976 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 679,647,987 | $ | 209,296,027 | $ | 402,984,096 | ||||||
| Undistributed (distributions in excess of) net investment income |
(574,082 | ) | 70,069 | 2,505,315 | ||||||||
| Accumulated net realized loss |
(103,883,259 | ) | (38,493,249 | ) | (96,858,740 | ) | ||||||
| Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies |
(23,495,845 | ) | (21,566,860 | ) | (24,350,695 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 551,694,801 | $ | 149,305,987 | $ | 284,279,976 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
44,100,000 | 7,350,000 | 9,450,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 12.51 | $ | 20.31 | $ | 30.08 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $31,879,020, $600,076 and $4,383,369, respectively. See Note 5. |
| b | Cost of foreign currencies: $404,247, $135,294 and $310,756, 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.
| 54 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Sweden Index Fund |
iShares
MSCI |
iShares MSCI United Kingdom Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 380,773,698 | $ | 632,273,606 | $ | 1,434,502,150 | ||||||
| Affiliated (Note 2) |
12,420 | 3,516 | 71,095 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 380,786,118 | $ | 632,277,122 | $ | 1,434,573,245 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (Note 1): |
||||||||||||
| Unaffiliated |
$ | 392,888,425 | $ | 748,230,387 | $ | 1,432,151,666 | ||||||
| Affiliated (Note 2) |
12,420 | 3,516 | 71,095 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
392,900,845 | 748,233,903 | 1,432,222,761 | |||||||||
| Foreign currencies, at valuea |
133,514 | 5,532 | 1,816,908 | |||||||||
| Foreign currency pledged to broker, at valuea |
— | — | 115,130 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
1,966,656 | 4,454,929 | 1,340,616 | |||||||||
| Dividends and interest |
— | 7,822,436 | 6,520,854 | |||||||||
| Futures variation margin |
— | — | 448,061 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
395,001,015 | 760,516,800 | 1,442,464,330 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
1,893,494 | 3,514,719 | 1,362,114 | |||||||||
| Investment advisory fees (Note 2) |
153,999 | 294,232 | 565,358 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
2,047,493 | 3,808,951 | 1,927,472 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 392,953,522 | $ | 756,707,849 | $ | 1,440,536,858 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 420,786,976 | $ | 678,644,730 | $ | 1,608,102,724 | ||||||
| Undistributed (distributions in excess of) net investment income |
(749,444 | ) | 1,250,115 | 6,059,879 | ||||||||
| Accumulated net realized loss |
(39,203,584 | ) | (39,253,448 | ) | (171,612,075 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
12,119,574 | 116,066,452 | (2,013,670 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 392,953,522 | $ | 756,707,849 | $ | 1,440,536,858 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingb |
12,075,000 | 26,125,000 | 80,200,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 32.54 | $ | 28.96 | $ | 17.96 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Cost of foreign currencies including currency at broker, if any: $128,667, $5,598 and $1,980,455, respectively. |
| b | $0.001 par value, number of shares authorized: 63.6 million, 318.625 million and 934.2 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
55 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Austria Capped Investable Market Index Fund |
iShares MSCI Belgium Capped Investable Market Index Fund |
iShares MSCI Emerging Markets Eastern Europe Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 342,721 | $ | 162,092 | $ | 72,950 | ||||||
| Interest — affiliated (Note 2) |
25 | 10 | 12 | |||||||||
| Securities lending income — affiliated (Note 2) |
5,072 | 2,886 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
347,818 | 164,988 | 72,962 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
230,171 | 113,491 | 67,492 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
230,171 | 113,491 | 67,492 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
117,647 | 51,497 | 5,470 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(11,733,692 | ) | (7,317,228 | ) | (331,493 | ) | ||||||
| In-kind redemptions — unaffiliated |
4,675,664 | 154,799 | (954,687 | ) | ||||||||
| Foreign currency transactions |
6,519 | 4,415 | 6,158 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(7,051,509 | ) | (7,158,014 | ) | (1,280,022 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
24,399,502 | 15,329,032 | 2,392,512 | |||||||||
| Translation of assets and liabilities in foreign currencies |
20,302 | 418 | (462 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
24,419,804 | 15,329,450 | 2,392,050 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
17,368,295 | 8,171,436 | 1,112,028 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 17,485,942 | $ | 8,222,933 | $ | 1,117,498 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $18,083, $28,605 and $12,141, respectively. |
See notes to financial statements.
| 56 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI EMU Index Fund |
iShares MSCI |
iShares MSCI Germany Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 12,756,775 | $ | 2,985,422 | $ | 12,313,864 | ||||||
| Interest — affiliated (Note 2) |
499 | 69 | 417 | |||||||||
| Securities lending income — affiliated (Note 2) |
197,729 | 7,638 | 80,211 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
12,955,003 | 2,993,129 | 12,394,492 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
4,622,868 | 1,122,425 | 9,439,265 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
4,622,868 | 1,122,425 | 9,439,265 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
8,332,135 | 1,870,704 | 2,955,227 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(25,144,650 | ) | (8,318,344 | ) | (15,035,662 | ) | ||||||
| In-kind redemptions — unaffiliated |
21,139,053 | — | 115,501,762 | |||||||||
| Futures contracts |
— | — | 3,336,057 | |||||||||
| Foreign currency transactions |
153,475 | 41,359 | 441,610 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(3,852,122 | ) | (8,276,985 | ) | 104,243,767 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
179,908,333 | 63,916,311 | 407,734,113 | |||||||||
| Futures contracts |
— | — | (1,397,952 | ) | ||||||||
| Translation of assets and liabilities in foreign currencies |
(89,167 | ) | (21,095 | ) | 266,838 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
179,819,166 | 63,895,216 | 406,602,999 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
175,967,044 | 55,618,231 | 510,846,766 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 184,299,179 | $ | 57,488,935 | $ | 513,801,993 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $1,594,006, $522,001 and $2,051,953, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
57 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Italy Capped Index Fund |
iShares MSCI Netherlands Investable Market Index Fund |
iShares MSCI Spain Capped Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 2,096,018 | $ | 490,237 | $ | 5,504,856 | ||||||
| Interest — affiliated (Note 2) |
86 | 24 | 142 | |||||||||
| Securities lending income — affiliated (Note 2) |
35,691 | 3,084 | 214,252 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
2,131,795 | 493,345 | 5,719,250 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
903,928 | 318,696 | 590,581 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
903,928 | 318,696 | 590,581 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
1,227,867 | 174,649 | 5,128,669 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(52,437,263 | ) | (892,079 | ) | (50,881,051 | ) | ||||||
| In-kind redemptions — unaffiliated |
16,410,967 | 2,762,062 | 14,010,640 | |||||||||
| Foreign currency transactions |
19,237 | 25,458 | 93,993 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(36,007,059 | ) | 1,895,441 | (36,776,418 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
28,974,546 | 9,463,525 | 62,983,693 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(9,650 | ) | (15,580 | ) | (9,490 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
28,964,896 | 9,447,945 | 62,974,203 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(7,042,163 | ) | 11,343,386 | 26,197,785 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (5,814,296 | ) | $ | 11,518,035 | $ | 31,326,454 | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $353,180, $85,544 and $309,394, respectively. |
See notes to financial statements.
| 58 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Sweden Index Fund |
iShares MSCI Switzerland Capped Index Fund |
iShares MSCI United Kingdom Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 238,077 | $ | 3,047,782 | $ | 20,379,724 | ||||||
| Interest — unaffiliated |
— | — | 2,736 | |||||||||
| Interest — affiliated (Note 2) |
31 | 84 | 469 | |||||||||
| Securities lending income — affiliated (Note 2) |
728 | — | 69,942 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
238,836 | 3,047,866 | 20,452,871 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
944,457 | 1,707,897 | 3,630,814 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
944,457 | 1,707,897 | 3,630,814 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
(705,621 | ) | 1,339,969 | 16,822,057 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(4,080,863 | ) | (2,242,884 | ) | (16,566,495 | ) | ||||||
| In-kind redemptions — unaffiliated |
6,220,543 | 15,341,109 | — | |||||||||
| Futures contracts |
— | — | 616,847 | |||||||||
| Foreign currency transactions |
8,503 | 17,254 | 230,679 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
2,148,183 | 13,115,479 | (15,718,969 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
63,212,551 | 115,576,762 | 103,083,808 | |||||||||
| Futures contracts |
— | — | 415,039 | |||||||||
| Translation of assets and liabilities in foreign currencies |
632 | 96,144 | (255,423 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
63,213,183 | 115,672,906 | 103,243,424 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
65,361,366 | 128,788,385 | 87,524,455 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 64,655,745 | $ | 130,128,354 | $ | 104,346,512 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $42,014, $687,663 and $307,254, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
59 |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Austria Capped Investable Market Index Fund |
iShares MSCI Belgium Capped Investable Market Index Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 117,647 | $ | 1,549,161 | $ | 51,497 | $ | 841,677 | ||||||||
| Net realized loss |
(7,051,509 | ) | (40,973,628 | ) | (7,158,014 | ) | (3,945,237 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
24,419,804 | 13,231,220 | 15,329,450 | 3,067,475 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
17,485,942 | (26,193,247 | ) | 8,222,933 | (36,085 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(467,647 | ) | (1,874,586 | ) | (85,655 | ) | (1,434,412 | ) | ||||||||
| Return of capital |
— | — | — | (27,668 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(467,647 | ) | (1,874,586 | ) | (85,655 | ) | (1,462,080 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
63,451,695 | 30,854,845 | 27,080,230 | 3,661,417 | ||||||||||||
| Cost of shares redeemed |
(25,562,807 | ) | (86,004,103 | ) | (571,722 | ) | (8,033,134 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
37,888,888 | (55,149,258 | ) | 26,508,508 | (4,371,717 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
54,907,183 | (83,217,091 | ) | 34,645,786 | (5,869,882 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
53,757,116 | 136,974,207 | 25,385,953 | 31,255,835 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 108,664,299 | $ | 53,757,116 | $ | 60,031,739 | $ | 25,385,953 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Distributions in excess of net investment income included in net assets at end of period |
$ | (350,273 | ) | $ | (273 | ) | $ | (38,235 | ) | $ | (4,077 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
3,700,000 | 1,900,000 | 2,120,000 | 320,000 | ||||||||||||
| Shares redeemed |
(1,400,000 | ) | (5,500,000 | ) | (40,000 | ) | (680,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
2,300,000 | (3,600,000 | ) | 2,080,000 | (360,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 60 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 5,470 | $ | 988,863 | $ | 8,332,135 | $ | 24,981,379 | ||||||||
| Net realized loss |
(1,280,022 | ) | (3,942,137 | ) | (3,852,122 | ) | (64,241,482 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
2,392,050 | (1,763,369 | ) | 179,819,166 | 3,598,710 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
1,117,498 | (4,716,643 | ) | 184,299,179 | (35,661,393 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(111,949 | ) | (999,697 | ) | (7,862,714 | ) | (26,115,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(111,949 | ) | (999,697 | ) | (7,862,714 | ) | (26,115,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
8,135,704 | 3,811,852 | 1,562,283,756 | 423,843,438 | ||||||||||||
| Cost of shares redeemed |
(5,028,621 | ) | (9,705,031 | ) | (153,885,525 | ) | (306,073,712 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
3,107,083 | (5,893,179 | ) | 1,408,398,231 | 117,769,726 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
4,112,632 | (11,609,519 | ) | 1,584,834,696 | 55,993,333 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
20,602,006 | 32,211,525 | 794,226,007 | 738,232,674 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 24,714,638 | $ | 20,602,006 | $ | 2,379,060,703 | $ | 794,226,007 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (30,497 | ) | $ | 75,982 | $ | 1,411,293 | $ | 941,872 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
300,000 | 150,000 | 49,200,000 | 14,700,000 | ||||||||||||
| Shares redeemed |
(200,000 | ) | (400,000 | ) | (4,900,000 | ) | (10,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
100,000 | (250,000 | ) | 44,300,000 | 3,900,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
61 |
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 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,870,704 | $ | 8,469,659 | $ | 2,955,227 | $ | 72,991,703 | ||||||||
| Net realized gain (loss) |
(8,276,985 | ) | (46,840,141 | ) | 104,243,767 | (23,203,349 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
63,895,216 | 21,070,720 | 406,602,999 | 56,076,160 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
57,488,935 | (17,299,762 | ) | 513,801,993 | 105,864,514 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(2,200,542 | ) | (8,849,764 | ) | — | (74,836,476 | ) | |||||||||
| Return of capital |
— | (2,754 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(2,200,542 | ) | (8,852,518 | ) | — | (74,836,476 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
9,329,969 | 407,882,087 | 931,262,856 | 1,528,900,109 | ||||||||||||
| Cost of shares redeemed |
— | (337,241,789 | ) | (677,376,419 | ) | (1,531,070,466 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
9,329,969 | 70,640,298 | 253,886,437 | (2,170,357 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
64,618,362 | 44,488,018 | 767,688,430 | 28,857,681 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
401,625,502 | 357,137,484 | 2,797,029,068 | 2,768,171,387 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 466,243,864 | $ | 401,625,502 | $ | 3,564,717,498 | $ | 2,797,029,068 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (377,966 | ) | $ | (48,128 | ) | $ | 2,955,227 | $ | — | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
400,000 | 21,000,000 | 40,800,000 | 72,900,000 | ||||||||||||
| Shares redeemed |
— | (17,400,000 | ) | (27,600,000 | ) | (73,500,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
400,000 | 3,600,000 | 13,200,000 | (600,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 62 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Italy Capped Index Fund |
iShares MSCI Netherlands Investable Market Index Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,227,867 | $ | 4,465,523 | $ | 174,649 | $ | 1,568,827 | ||||||||
| Net realized gain (loss) |
(36,007,059 | ) | (29,842,080 | ) | 1,895,441 | (20,489,624 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
28,964,896 | 14,197,991 | 9,447,945 | 16,001,368 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(5,814,296 | ) | (11,178,566 | ) | 11,518,035 | (2,919,429 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(1,740,109 | ) | (4,578,996 | ) | (263,792 | ) | (1,910,545 | ) | ||||||||
| Return of capital |
— | (1,125 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(1,740,109 | ) | (4,580,121 | ) | (263,792 | ) | (1,910,545 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
457,253,170 | 186,146,005 | 74,025,936 | 38,973,623 | ||||||||||||
| Cost of shares redeemed |
(94,215,716 | ) | (118,787,548 | ) | (14,370,733 | ) | (77,487,514 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
363,037,454 | 67,358,457 | 59,655,203 | (38,513,891 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
355,483,049 | 51,599,770 | 70,909,446 | (43,343,865 | ) | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
196,211,752 | 144,611,982 | 78,396,541 | 121,740,406 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 551,694,801 | $ | 196,211,752 | $ | 149,305,987 | $ | 78,396,541 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (574,082 | ) | $ | (61,840 | ) | $ | 70,069 | $ | 159,212 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
34,650,000 | 15,750,000 | 3,750,000 | 2,200,000 | ||||||||||||
| Shares redeemed |
(7,200,000 | ) | (9,750,000 | ) | (700,000 | ) | (4,500,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
27,450,000 | 6,000,000 | 3,050,000 | (2,300,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
63 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Spain Capped Index Fund |
iShares MSCI Sweden Index Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | 5,128,669 | $ | 10,200,322 | $ | (705,621 | ) | $ | 9,806,343 | |||||||
| Net realized gain (loss) |
(36,776,418 | ) | (55,320,695 | ) | 2,148,183 | (18,580,006 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
62,974,203 | 23,658,799 | 63,213,183 | 18,534,408 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
31,326,454 | (21,461,574 | ) | 64,655,745 | 9,760,745 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(5,405,831 | ) | (11,503,970 | ) | — | (9,531,005 | ) | |||||||||
| Return of capital |
— | — | — | (613,518 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(5,405,831 | ) | (11,503,970 | ) | — | (10,144,523 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
138,832,577 | 226,627,780 | 13,906,336 | 141,186,783 | ||||||||||||
| Cost of shares redeemed |
(75,566,243 | ) | (178,928,842 | ) | (56,440,942 | ) | (99,857,806 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
63,266,334 | 47,698,938 | (42,534,606 | ) | 41,328,977 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
89,186,957 | 14,733,394 | 22,121,139 | 40,945,199 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
195,093,019 | 180,359,625 | 370,832,383 | 329,887,184 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 284,279,976 | $ | 195,093,019 | $ | 392,953,522 | $ | 370,832,383 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 2,505,315 | $ | 2,782,477 | $ | (749,444 | ) | $ | (43,823 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
4,650,000 | 8,550,000 | 450,000 | 5,250,000 | ||||||||||||
| Shares redeemed |
(2,625,000 | ) | (6,150,000 | ) | (1,950,000 | ) | (3,975,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
2,025,000 | 2,400,000 | (1,500,000 | ) | 1,275,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 64 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Switzerland Capped Index Fund |
iShares MSCI United Kingdom Index Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,339,969 | $ | 14,072,490 | $ | 16,822,057 | $ | 51,696,487 | ||||||||
| Net realized gain (loss) |
13,115,479 | (923,487 | ) | (15,718,969 | ) | (13,950,054 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
115,672,906 | (15,616,566 | ) | 103,243,424 | 52,432,507 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
130,128,354 | (2,467,563 | ) | 104,346,512 | 90,178,940 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
— | (14,947,529 | ) | (20,303,753 | ) | (49,722,633 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
— | (14,947,529 | ) | (20,303,753 | ) | (49,722,633 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
126,589,389 | 90,416,035 | — | 243,232,911 | ||||||||||||
| Cost of shares redeemed |
(54,579,608 | ) | (42,590,064 | ) | — | (126,527,912 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
72,009,781 | 47,825,971 | — | 116,704,999 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
202,138,135 | 30,410,879 | 84,042,759 | 157,161,306 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
554,569,714 | 524,158,835 | 1,356,494,099 | 1,199,332,793 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 756,707,849 | $ | 554,569,714 | $ | 1,440,536,858 | $ | 1,356,494,099 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 1,250,115 | $ | (89,854 | ) | $ | 6,059,879 | $ | 9,541,575 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
4,875,000 | 3,875,000 | — | 14,800,000 | ||||||||||||
| Shares redeemed |
(2,000,000 | ) | (1,875,000 | ) | — | (7,600,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
2,875,000 | 2,000,000 | — | 7,200,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
65 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Austria Capped Investable Market Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 14.53 | $ | 18.76 | $ | 17.27 | $ | 20.21 | $ | 29.78 | $ | 37.28 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.02 | 0.35 | 0.42 | 0.43 | 0.51 | 0.56 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.63 | (4.09 | ) | 1.53 | (2.62 | ) | (9.36 | ) | (6.98 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.65 | (3.74 | ) | 1.95 | (2.19 | ) | (8.85 | ) | (6.42 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.07 | ) | (0.49 | ) | (0.46 | ) | (0.75 | ) | (0.72 | ) | (1.08 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.07 | ) | (0.49 | ) | (0.46 | ) | (0.75 | ) | (0.72 | ) | (1.08 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 18.11 | $ | 14.53 | $ | 18.76 | $ | 17.27 | $ | 20.21 | $ | 29.78 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
25.13 | %c | (19.81 | )% | 10.92 | % | (11.07 | )% | (28.52 | )% | (17.64 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 108,664 | $ | 53,757 | $ | 136,974 | $ | 110,520 | $ | 159,666 | $ | 193,602 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.52 | % | 0.52 | % | 0.54 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.26 | % | 2.32 | % | 1.95 | % | 2.20 | % | 3.25 | % | 1.57 | % | ||||||||||||
| Portfolio turnover ratee |
14 | % | 13 | % | 12 | % | 11 | % | 26 | % | 26 | % | ||||||||||||
| 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 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Belgium Capped Investable Market Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 11.97 | $ | 12.60 | $ | 11.78 | $ | 12.06 | $ | 17.64 | $ | 25.89 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.02 | 0.38 | 0.35 | 0.19 | 0.22 | 0.78 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
2.32 | (0.33 | ) | 0.80 | (0.27 | ) | (5.46 | ) | (7.27 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.34 | 0.05 | 1.15 | (0.08 | ) | (5.24 | ) | (6.49 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.02 | ) | (0.67 | ) | (0.33 | ) | (0.20 | ) | (0.34 | ) | (1.76 | ) | ||||||||||||
| Return of capital |
— | (0.01 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.02 | ) | (0.68 | ) | (0.33 | ) | (0.20 | ) | (0.34 | ) | (1.76 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 14.29 | $ | 11.97 | $ | 12.60 | $ | 11.78 | $ | 12.06 | $ | 17.64 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
19.56 | %c | 1.11 | % | 9.59 | % | (0.60 | )% | (29.15 | )% | (26.21 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 60,032 | $ | 25,386 | $ | 31,256 | $ | 58,896 | $ | 53,042 | $ | 119,955 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.54 | % | 0.56 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.23 | % | 3.35 | % | 2.56 | % | 1.55 | % | 2.23 | % | 3.32 | % | ||||||||||||
| Portfolio turnover ratee |
21 | % | 19 | % | 12 | % | 17 | % | 33 | % | 31 | % | ||||||||||||
| 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 |
67 |
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. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Period from to Aug. 31, 2010 |
|||||||||||||
| Net asset value, beginning of period |
$ | 24.24 | $ | 29.28 | $ | 25.66 | $ | 24.65 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.01 | 1.01 | 0.67 | 0.26 | ||||||||||||
| Net realized and unrealized gain (loss)c |
1.94 | (4.92 | ) | 3.45 | 0.89 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
1.95 | (3.91 | ) | 4.12 | 1.15 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.17 | ) | (1.13 | ) | (0.50 | ) | (0.13 | ) | ||||||||
| Net realized gain |
— | — | — | (0.01 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.17 | ) | (1.13 | ) | (0.50 | ) | (0.14 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 26.02 | $ | 24.24 | $ | 29.28 | $ | 25.66 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
8.05 | %d | (13.14 | )% | 15.86 | % | 4.68 | %d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 24,715 | $ | 20,602 | $ | 32,212 | $ | 12,832 | ||||||||
| Ratio of expenses to average net assetse |
0.67 | % | 0.69 | % | 0.68 | % | 0.69 | % | ||||||||
| Ratio of expenses to average net assets prior to waived fees |
n/a | n/a | 0.68 | % | n/a | |||||||||||
| Ratio of net investment income to average net assetse |
0.05 | % | 3.97 | % | 2.06 | % | 1.05 | % | ||||||||
| Portfolio turnover ratef |
4 | % | 8 | % | 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.
| 68 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI EMU Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008a |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 29.09 | $ | 31.55 | $ | 30.75 | $ | 35.64 | $ | 45.97 | $ | 57.15 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.15 | 1.02 | 1.23 | 0.80 | 0.93 | 1.71 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
4.11 | (2.38 | ) | 0.71 | (4.76 | ) | (9.97 | ) | (9.59 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.26 | (1.36 | ) | 1.94 | (3.96 | ) | (9.04 | ) | (7.88 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.12 | ) | (1.10 | ) | (1.14 | ) | (0.93 | ) | (1.29 | ) | (3.30 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.12 | ) | (1.10 | ) | (1.14 | ) | (0.93 | ) | (1.29 | ) | (3.30 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 33.23 | $ | 29.09 | $ | 31.55 | $ | 30.75 | $ | 35.64 | $ | 45.97 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
14.65 | %d | (3.99 | )% | 5.78 | % | (11.19 | )% | (19.05 | )% | (14.52 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,379,061 | $ | 794,226 | $ | 738,233 | $ | 823,972 | $ | 741,270 | $ | 1,291,808 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.51 | % | 0.53 | % | 0.52 | % | 0.54 | % | 0.56 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsf |
0.92 | % | 3.55 | % | 3.38 | % | 2.29 | % | 3.07 | % | 3.06 | % | ||||||||||||
| Portfolio turnover rateg |
2 | % | 7 | % | 8 | % | 5 | % | 8 | % | 27 | % | ||||||||||||
| 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 years 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 |
69 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI France Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 20.70 | $ | 22.60 | $ | 21.03 | $ | 24.28 | $ | 30.70 | $ | 36.53 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.10 | 0.59 | 0.86 | 0.65 | 0.66 | 0.93 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
2.86 | (1.80 | ) | 1.38 | (3.30 | ) | (6.13 | ) | (5.17 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.96 | (1.21 | ) | 2.24 | (2.65 | ) | (5.47 | ) | (4.24 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.11 | ) | (0.69 | ) | (0.67 | ) | (0.60 | ) | (0.95 | ) | (1.59 | ) | ||||||||||||
| Return of capital |
— | (0.00 | )c | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.11 | ) | (0.69 | ) | (0.67 | ) | (0.60 | ) | (0.95 | ) | (1.59 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 23.55 | $ | 20.70 | $ | 22.60 | $ | 21.03 | $ | 24.28 | $ | 30.70 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
14.32 | %d | (5.05 | )% | 10.24 | % | (10.98 | )% | (17.11 | )% | (11.96 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 466,244 | $ | 401,626 | $ | 357,137 | $ | 239,706 | $ | 184,511 | $ | 227,203 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsf |
0.86 | % | 2.91 | % | 3.38 | % | 2.71 | % | 3.18 | % | 2.60 | % | ||||||||||||
| Portfolio turnover rateg |
1 | % | 6 | % | 6 | % | 6 | % | 6 | % | 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 | Rounds to less than $0.01. |
| d | Not annualized. |
| e | Ratios for the years 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.
| 70 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Germany Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 21.34 | $ | 21.02 | $ | 19.45 | $ | 20.86 | $ | 27.55 | $ | 32.18 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.02 | 0.56 | 0.86 | 0.38 | 0.58 | 0.88 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.34 | 0.34 | 1.38 | (1.49 | ) | (6.65 | ) | (3.84 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.36 | 0.90 | 2.24 | (1.11 | ) | (6.07 | ) | (2.96 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.58 | ) | (0.67 | ) | (0.30 | ) | (0.62 | ) | (1.67 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.58 | ) | (0.67 | ) | (0.30 | ) | (0.62 | ) | (1.67 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 24.70 | $ | 21.34 | $ | 21.02 | $ | 19.45 | $ | 20.86 | $ | 27.55 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
15.75 | %c | 4.55 | % | 10.84 | % | (5.35 | )% | (21.62 | )% | (9.81 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,564,717 | $ | 2,797,029 | $ | 2,768,171 | $ | 1,487,881 | $ | 619,638 | $ | 669,452 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.51 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.16 | % | 2.72 | % | 3.45 | % | 1.80 | % | 3.18 | % | 2.72 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 4 | % | 13 | % | 5 | % | 15 | % | 11 | % | ||||||||||||
| 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 |
71 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Italy Capped Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 11.78 | $ | 13.58 | $ | 15.00 | $ | 19.05 | $ | 25.04 | $ | 33.82 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.05 | 0.41 | 0.54 | 0.39 | 0.47 | 1.53 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.74 | (1.79 | ) | (1.47 | ) | (3.99 | ) | (5.82 | ) | (7.71 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.79 | (1.38 | ) | (0.93 | ) | (3.60 | ) | (5.35 | ) | (6.18 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.06 | ) | (0.42 | ) | (0.49 | ) | (0.44 | ) | (0.64 | ) | (2.60 | ) | ||||||||||||
| Return of capital |
— | (0.00 | )c | — | (0.01 | ) | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.06 | ) | (0.42 | ) | (0.49 | ) | (0.45 | ) | (0.64 | ) | (2.60 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 12.51 | $ | 11.78 | $ | 13.58 | $ | 15.00 | $ | 19.05 | $ | 25.04 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
6.61 | %d | (9.98 | )% | (6.80 | )% | (19.11 | )% | (20.78 | )% | (19.43 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 551,695 | $ | 196,212 | $ | 144,612 | $ | 76,500 | $ | 125,716 | $ | 244,154 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.51 | % | 0.53 | % | 0.51 | % | 0.54 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsf |
0.70 | % | 3.41 | % | 3.15 | % | 2.17 | % | 2.85 | % | 5.06 | % | ||||||||||||
| Portfolio turnover rateg |
36 | % | 14 | % | 16 | % | 12 | % | 18 | % | 29 | % | ||||||||||||
| 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 years 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.
| 72 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 18.23 | $ | 18.45 | $ | 17.89 | $ | 18.52 | $ | 24.38 | $ | 29.75 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.03 | 0.39 | 0.48 | 0.45 | 0.35 | 1.10 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
2.09 | (0.08 | ) | 0.55 | (0.70 | ) | (5.55 | ) | (4.68 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.12 | 0.31 | 1.03 | (0.25 | ) | (5.20 | ) | (3.58 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.04 | ) | (0.53 | ) | (0.47 | ) | (0.38 | ) | (0.66 | ) | (1.79 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.04 | ) | (0.53 | ) | (0.47 | ) | (0.38 | ) | (0.66 | ) | (1.79 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 20.31 | $ | 18.23 | $ | 18.45 | $ | 17.89 | $ | 18.52 | $ | 24.38 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
11.61 | %c | 1.96 | % | 5.44 | % | (1.44 | )% | (20.59 | )% | (12.67 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 149,306 | $ | 78,397 | $ | 121,740 | $ | 147,611 | $ | 83,351 | $ | 209,653 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.28 | % | 2.21 | % | 2.26 | % | 2.31 | % | 2.24 | % | 3.86 | % | ||||||||||||
| Portfolio turnover ratee |
5 | % | 10 | % | 6 | % | 9 | % | 15 | % | 26 | % | ||||||||||||
| 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 |
73 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Spain Capped Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 26.28 | $ | 35.89 | $ | 37.02 | $ | 47.65 | $ | 50.41 | $ | 58.06 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.65 | 2.12 | 2.14 | 1.64 | 1.75 | 1.98 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.88 | (8.93 | ) | (1.36 | ) | (10.01 | ) | (2.14 | ) | (7.33 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.53 | (6.81 | ) | 0.78 | (8.37 | ) | (0.39 | ) | (5.35 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.73 | ) | (2.80 | ) | (1.91 | ) | (2.26 | ) | (2.37 | ) | (2.30 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.73 | ) | (2.80 | ) | (1.91 | ) | (2.26 | ) | (2.37 | ) | (2.30 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 30.08 | $ | 26.28 | $ | 35.89 | $ | 37.02 | $ | 47.65 | $ | 50.41 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
17.29 | %c | (19.36 | )% | 1.78 | % | (17.91 | )% | 0.64 | % | (9.76 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 284,280 | $ | 195,093 | $ | 180,360 | $ | 194,362 | $ | 278,734 | $ | 321,349 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.54 | % | 0.56 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
4.46 | % | 7.60 | % | 5.31 | % | 3.72 | % | 4.70 | % | 3.28 | % | ||||||||||||
| Portfolio turnover ratee |
24 | % | 17 | % | 14 | % | 9 | % | 19 | % | 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 | 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.
| 74 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Sweden Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 27.32 | $ | 26.82 | $ | 24.46 | $ | 22.86 | $ | 24.48 | $ | 34.57 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.06 | ) | 0.83 | 1.18 | 0.48 | 0.40 | 0.91 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
5.28 | 0.58 | 2.22 | 1.73 | (1.56 | ) | (8.63 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
5.22 | 1.41 | 3.40 | 2.21 | (1.16 | ) | (7.72 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.86 | ) | (1.04 | ) | (0.61 | ) | (0.46 | ) | (2.37 | ) | |||||||||||||
| Return of capital |
— | (0.05 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.91 | ) | (1.04 | ) | (0.61 | ) | (0.46 | ) | (2.37 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 32.54 | $ | 27.32 | $ | 26.82 | $ | 24.46 | $ | 22.86 | $ | 24.48 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
19.11 | %c | 5.57 | % | 13.40 | % | 9.70 | % | (4.04 | )% | (23.16 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 392,954 | $ | 370,832 | $ | 329,887 | $ | 249,491 | $ | 190,333 | $ | 227,654 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.51 | % | 0.53 | % | 0.55 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.38 | )% | 3.17 | % | 3.80 | % | 1.97 | % | 2.34 | % | 2.91 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 7 | % | 9 | % | 10 | % | 9 | % | 17 | % | ||||||||||||
| 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 |
75 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Switzerland Capped Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 23.85 | $ | 24.67 | $ | 21.64 | $ | 20.71 | $ | 23.09 | $ | 25.78 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.05 | 0.63 | 0.59 | 0.39 | 0.25 | 0.49 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
5.06 | (0.80 | ) | 2.97 | 0.90 | (2.30 | ) | (2.51 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
5.11 | (0.17 | ) | 3.56 | 1.29 | (2.05 | ) | (2.02 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.65 | ) | (0.53 | ) | (0.36 | ) | (0.33 | ) | (0.67 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.65 | ) | (0.53 | ) | (0.36 | ) | (0.33 | ) | (0.67 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 28.96 | $ | 23.85 | $ | 24.67 | $ | 21.64 | $ | 20.71 | $ | 23.09 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
21.43 | %c | (0.53 | )% | 16.30 | % | 6.35 | % | (8.63 | )% | (7.97 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 756,708 | $ | 554,570 | $ | 524,159 | $ | 405,755 | $ | 271,855 | $ | 366,525 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.56 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.40 | % | 2.73 | % | 2.35 | % | 1.80 | % | 1.42 | % | 1.93 | % | ||||||||||||
| Portfolio turnover ratee |
8 | % | 8 | % | 7 | % | 7 | % | 16 | % | 11 | % | ||||||||||||
| 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.
| 76 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 16.91 | $ | 16.43 | $ | 15.01 | $ | 15.02 | $ | 19.35 | $ | 24.73 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.21 | 0.64 | 0.54 | 0.46 | 0.50 | 0.83 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.09 | 0.46 | 1.35 | (0.03 | ) | (4.26 | ) | (4.89 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.30 | 1.10 | 1.89 | 0.43 | (3.76 | ) | (4.06 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.25 | ) | (0.62 | ) | (0.47 | ) | (0.44 | ) | (0.57 | ) | (1.32 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.25 | ) | (0.62 | ) | (0.47 | ) | (0.44 | ) | (0.57 | ) | (1.32 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 17.96 | $ | 16.91 | $ | 16.43 | $ | 15.01 | $ | 15.02 | $ | 19.35 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
7.71 | %c | 6.94 | % | 12.50 | % | 2.87 | % | (18.68 | )% | (17.16 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,440,537 | $ | 1,356,494 | $ | 1,199,333 | $ | 930,412 | $ | 739,124 | $ | 882,502 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.39 | % | 3.88 | % | 3.07 | % | 2.98 | % | 3.90 | % | 3.64 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 7 | % | 4 | % | 7 | % | 11 | % | 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 |
77 |
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”):
| a | Formerly the iShares MSCI Austria Investable Market Index Fund. |
| b | Formerly the iShares MSCI Belgium Investable Market Index Fund. |
| c | Formerly the iShares MSCI Italy Index Fund. |
| d | Formerly the iShares MSCI Spain Index Fund. |
| e | Formerly the iShares MSCI Switzerland Index Fund. |
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
| 78 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of investments for the Funds. The investments of each Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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). |
| • | Financial futures contracts are valued at that day’s last reported settlement price on the exchange where the contract is traded. |
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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument. The three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| NOTES TO FINANCIAL STATEMENTS |
79 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| • | 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 (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; 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. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2013. 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 | |||||||||||||
| Austria Capped Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 107,984,012 | $ | — | $ | 25 | $ | 107,984,037 | ||||||||
| Money Market Funds |
2,045,243 | — | — | 2,045,243 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 110,029,255 | $ | — | $ | 25 | $ | 110,029,280 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Belgium Capped Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 59,923,571 | $ | — | $ | — | $ | 59,923,571 | ||||||||
| Money Market Funds |
488,451 | — | — | 488,451 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 60,412,022 | $ | — | $ | — | $ | 60,412,022 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Eastern Europe |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 23,816,921 | $ | — | $ | — | $ | 23,816,921 | ||||||||
| Preferred Stocks |
876,199 | — | — | 876,199 | ||||||||||||
| Money Market Funds |
3,799 | — | — | 3,799 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 24,696,919 | $ | — | $ | — | $ | 24,696,919 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EMU |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,325,040,398 | $ | — | $ | 8 | $ | 2,325,040,406 | ||||||||
| Preferred Stocks |
50,462,004 | — | — | 50,462,004 | ||||||||||||
| Money Market Funds |
17,321,174 | — | — | 17,321,174 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,392,823,576 | $ | — | $ | 8 | $ | 2,392,823,584 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 80 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| France |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 466,088,656 | $ | — | $ | — | $ | 466,088,656 | ||||||||
| Money Market Funds |
814,865 | — | — | 814,865 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 466,903,521 | $ | — | $ | — | $ | 466,903,521 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Germany |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,302,979,517 | $ | — | $ | — | $ | 3,302,979,517 | ||||||||
| Preferred Stocks |
248,782,231 | — | — | 248,782,231 | ||||||||||||
| Money Market Funds |
8,180,312 | — | — | 8,180,312 | ||||||||||||
| Futures Contractsa |
234,506 | — | — | 234,506 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,560,176,566 | $ | — | $ | — | $ | 3,560,176,566 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Italy Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 551,218,245 | $ | — | $ | — | $ | 551,218,245 | ||||||||
| Money Market Funds |
34,027,150 | — | — | 34,027,150 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 585,245,395 | $ | — | $ | — | $ | 585,245,395 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Netherlands Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 148,991,685 | $ | — | $ | 1 | $ | 148,991,686 | ||||||||
| Warrants |
— | — | 0 | b | 0 | b | ||||||||||
| Money Market Funds |
637,567 | — | — | 637,567 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 149,629,252 | $ | — | $ | 1 | $ | 149,629,253 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Spain Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 284,126,866 | $ | — | $ | — | $ | 284,126,866 | ||||||||
| Money Market Funds |
4,740,624 | — | — | 4,740,624 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 288,867,490 | $ | — | $ | — | $ | 288,867,490 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Sweden |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 392,888,425 | $ | — | $ | — | $ | 392,888,425 | ||||||||
| Money Market Funds |
12,420 | — | — | 12,420 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 392,900,845 | $ | — | $ | — | $ | 392,900,845 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
81 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Switzerland Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 748,230,387 | $ | — | $ | — | $ | 748,230,387 | ||||||||
| Money Market Funds |
3,516 | — | — | 3,516 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 748,233,903 | $ | — | $ | — | $ | 748,233,903 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| United Kingdom |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,432,151,666 | $ | — | $ | — | $ | 1,432,151,666 | ||||||||
| Money Market Funds |
71,095 | — | — | 71,095 | ||||||||||||
| Futures Contracts a |
448,061 | — | — | 448,061 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,432,670,822 | $ | — | $ | — | $ | 1,432,670,822 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Futures contracts are shown at the net unrealized appreciation (depreciation) on the contracts. |
| b | 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 28, 2013 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, stock dividends, capital gains on investments, or certain foreign currency transactions. 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
| 82 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 stock dividends are presented as “other foreign taxes,” and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, 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 December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, 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 |
83 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 borrowers of securities. Each Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. The Funds benefit from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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 28, 2013, BTC earned securities lending agent fees from the Funds as follows:
| 84 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Funds for 1940 Act purposes.
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 28, 2013 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| Austria Capped Investable Market |
$ | 11,888,050 | $ | 11,948,193 | ||||
| Belgium Capped Investable Market |
9,336,697 | 8,978,527 | ||||||
| Emerging Markets Eastern Europe |
1,050,829 | 775,966 | ||||||
| EMU |
41,241,790 | 33,853,856 | ||||||
| France |
6,061,954 | 6,045,386 | ||||||
| Germany |
39,241,043 | 28,046,758 | ||||||
| Italy Capped |
132,862,180 | 132,650,089 | ||||||
| Netherlands Investable Market |
6,531,647 | 6,437,630 | ||||||
| Spain Capped |
43,367,823 | 40,963,342 | ||||||
| Sweden |
6,369,681 | 7,145,785 | ||||||
| Switzerland Capped |
52,661,149 | 54,089,142 | ||||||
| United Kingdom |
24,583,200 | 23,323,697 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2013 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales | ||||||
| Austria Capped Investable Market |
$ | 62,963,305 | $ | 25,414,259 | ||||
| Belgium Capped Investable Market |
26,737,276 | 569,711 | ||||||
| Emerging Markets Eastern Europe |
8,109,925 | 5,007,320 | ||||||
| EMU |
1,553,231,748 | 153,234,243 | ||||||
| France |
9,147,376 | — | ||||||
| Germany |
926,029,280 | 674,060,233 | ||||||
| Italy Capped |
455,795,774 | 94,023,769 | ||||||
| Netherlands Investable Market |
73,763,051 | 14,336,889 | ||||||
| Spain Capped |
135,716,793 | 74,959,929 | ||||||
| Sweden |
13,899,076 | 56,342,267 | ||||||
| Switzerland Capped |
125,582,442 | 54,150,141 | ||||||
| NOTES TO FINANCIAL STATEMENTS |
85 |
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 may also 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 market value of the loaned securities is determined at the close of each business day of the Funds and any additional required collateral is delivered to the Funds on the next business day. 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. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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.
| 86 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The tax character of current year distributions will be determined at the end of the current fiscal year.
As of August 31, 2012, the Funds’ fiscal year-end, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| iShares MSCI Index Fund |
Non- Expiring a |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||||||||
| Austria Capped Investable Market |
$ | 3,424,334 | $ | — | $ | — | $ | 9,795,917 | $ | 2,587,916 | $ | 7,102,366 | $ | 16,657,011 | $ | 13,826,937 | $ | 53,394,481 | ||||||||||||||||||
| Belgium Capped Investable Market |
3,414,294 | 33,969 | — | — | 1,698,444 | 5,953,120 | 10,826,174 | 19,023,517 | 40,949,518 | |||||||||||||||||||||||||||
| Emerging Markets Eastern Europe |
243,179 | — | — | — | — | — | — | 204,914 | 448,093 | |||||||||||||||||||||||||||
| EMU |
16,675,236 | 1,873,963 | — | — | — | 26,644,200 | 68,035,542 | 30,230,739 | 143,459,680 | |||||||||||||||||||||||||||
| France |
436,330 | — | — | 158,472 | 335,795 | 3,408,374 | 7,008,530 | 2,858,814 | 14,206,315 | |||||||||||||||||||||||||||
| Germany |
9,227,956 | 2,241,687 | — | 4,227,713 | 3,394,735 | 27,790,050 | 28,490,949 | 32,215,954 | 107,589,044 | |||||||||||||||||||||||||||
| Italy Capped |
3,331,166 | 527,327 | — | — | 472,268 | 2,743,650 | 18,169,627 | 9,459,662 | 34,703,700 | |||||||||||||||||||||||||||
| Netherlands Investable Market |
3,096,503 | 129,137 | 403,525 | 260,715 | 1,195,162 | 5,819,153 | 22,256,170 | 2,329,005 | 35,489,370 | |||||||||||||||||||||||||||
| Spain Capped |
5,225,806 | — | — | — | — | 5,946,927 | 15,120,672 | 8,619,903 | 34,913,308 | |||||||||||||||||||||||||||
| Sweden |
5,222,903 | — | 107,613 | — | 100,015 | 13,686,746 | 8,483,510 | 5,244,977 | 32,845,764 | |||||||||||||||||||||||||||
| Switzerland Capped |
3,464,888 | 354,252 | — | — | — | 2,837,786 | 22,569,380 | 6,955,758 | 36,182,064 | |||||||||||||||||||||||||||
| United Kingdom |
7,758,079 | 1,517,783 | 7,063,063 | — | 261,754 | 16,140,312 | 23,559,917 | 22,514,433 | 78,815,341 | |||||||||||||||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
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 FINANCIAL STATEMENTS |
87 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2013, 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 Capped Investable Market |
$ | 142,945,975 | $ | 2,576,525 | $ | (35,493,220 | ) | $ | (32,916,695 | ) | ||||||
| Belgium Capped Investable Market |
62,030,241 | 6,139,124 | (7,757,343 | ) | (1,618,219 | ) | ||||||||||
| Emerging Markets Eastern Europe |
30,336,679 | 425,306 | (6,065,066 | ) | (5,639,760 | ) | ||||||||||
| EMU |
2,633,354,912 | 119,609,926 | (360,141,254 | ) | (240,531,328 | ) | ||||||||||
| France |
524,722,074 | 33,092,711 | (90,911,264 | ) | (57,818,553 | ) | ||||||||||
| Germany |
3,773,447,482 | 297,837,866 | (511,343,288 | ) | (213,505,422 | ) | ||||||||||
| Italy Capped |
636,345,268 | 6,921,395 | (58,021,268 | ) | (51,099,873 | ) | ||||||||||
| Netherlands Investable Market |
172,704,089 | 9,225,064 | (32,299,900 | ) | (23,074,836 | ) | ||||||||||
| Spain Capped |
323,256,183 | 12,967,237 | (47,355,930 | ) | (34,388,693 | ) | ||||||||||
| Sweden |
386,612,583 | 36,945,548 | (30,657,286 | ) | 6,288,262 | |||||||||||
| Switzerland Capped |
643,756,728 | 134,179,930 | (29,702,755 | ) | 104,477,175 | |||||||||||
| United Kingdom |
1,486,310,451 | 132,431,768 | (186,519,458 | ) | (54,087,690 | ) | ||||||||||
Management has reviewed the tax positions as of February 28, 2013, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 7. | FINANCIAL FUTURES CONTRACTS |
Each Fund may purchase or sell financial futures contracts in an effort to help such Fund track its underlying index. A futures contract is a standardized, exchange-traded agreement to buy and sell a financial instrument at a set price on a future date. Upon entering into a futures contract, the Fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are recorded by the Fund as unrealized appreciation or depreciation. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Losses may arise if the value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts also involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.
| 88 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table shows the value of futures contracts held by the Funds as of February 28, 2013 and the related locations in the statements of assets and liabilities, presented by risk exposure category:
| Assets | ||||||||
| iShares MSCI Germany Index Fund |
iShares MSCI United Kingdom Index Fund |
|||||||
| Equity contracts: |
||||||||
| Variation margin/Net assets consist of — net unrealized appreciation (depreciation)a |
$ | 234,506 | $ | 448,061 | ||||
|
|
|
|
|
|||||
| a | Represents cumulative appreciation of futures contracts as reported in the schedules of investments. |
The following table shows the realized and unrealized gains (losses) on futures contracts held by the Funds during the six months ended February 28, 2013 and the related locations in the statements of operations, presented by risk exposure category:
| Net Realized Gain (Loss) | ||||||||
| iShares MSCI Index Fund |
iShares MSCI United Kingdom Index Fund |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | 3,336,057 | $ | 616,847 | ||||
|
|
|
|
|
|||||
| Net Change in Unrealized Appreciation/Depreciation |
||||||||
| iShares MSCI Index Fund |
iShares MSCI United Kingdom Index Fund |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | (1,397,952 | ) | $ | 415,039 | |||
|
|
|
|
|
|||||
The following table shows the average quarter-end balances of open futures contracts for the six months ended February 28, 2013:
|
iShares MSCI Index Fund |
iShares MSCI United Kingdom Index Fund |
|||||||
| Average number of contracts purchased |
69 | 108 | ||||||
| Average value of contracts purchased |
$ | 16,225,759 | $ | 10,036,827 | ||||
| 8. | 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 |
89 |
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 |
||||||||||||||||||||||||
| Austria Capped |
$ | 0.02496 | $ | — | $ | 0.04484 | $ | 0.06980 | 36 | % | — | % | 64 | % | 100 | % | ||||||||||||||||
| Belgium Capped |
0.01862 | — | 0.00217 | 0.02079 | 90 | — | 10 | 100 | ||||||||||||||||||||||||
| Emerging Markets |
0.17200 | — | 0.00023 | 0.17223 | 100 | — | 0a | 100 | ||||||||||||||||||||||||
| EMU |
0.07032 | — | 0.05159 | 0.12191 | 58 | — | 42 | 100 | ||||||||||||||||||||||||
| France |
0.07941 | — | 0.03402 | 0.11343 | 70 | — | 30 | 100 | ||||||||||||||||||||||||
| Italy Capped |
0.06107 | — | 0.00064 | 0.06171 | 99 | — | 1 | 100 | ||||||||||||||||||||||||
| Netherlands |
0.03514 | — | 0.00075 | 0.03589 | 98 | — | 2 | 100 | ||||||||||||||||||||||||
| Spain Capped |
0.69134 | — | 0.03672 | 0.72806 | 95 | — | 5 | 100 | ||||||||||||||||||||||||
| United Kingdom |
0.24543 | — | 0.00773 | 0.25316 | 97 | — | 3 | 100 | ||||||||||||||||||||||||
| a | Rounds to less than 1%. |
| 90 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Funds’ website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website.
©2013 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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iS-SAR-82-0213
Table of Contents
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI Australia Index Fund | EWA | NYSE Arca |
| Ø | iShares MSCI Hong Kong Index Fund | EWH | NYSE Arca |
| Ø | iShares MSCI Japan Small Cap Index Fund | SCJ | NYSE Arca |
| Ø | iShares MSCI Malaysia Index Fund | EWM | NYSE Arca |
| Ø | iShares MSCI Pacific ex-Japan Index Fund | EPP | NYSE Arca |
| Ø | iShares MSCI Singapore Index Fund | EWS | NYSE Arca |
| Ø | iShares MSCI South Korea Capped Index Fund | EWY | NYSE Arca |
| Ø | iShares MSCI Taiwan Index Fund | EWT | NYSE Arca |
| Ø | iShares MSCI Thailand Capped Investable Market Index Fund | THD | NYSE Arca |
Table of Contents
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| 85 |
Table of Contents
iSHARES® MSCI AUSTRALIA INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 18.91% | 20.03% | 19.37% | 4.71% | 5.06% | 4.91% | 16.37% | 16.21% | 16.21% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 18.91% | 20.03% | 19.37% | 25.86% | 28.01% | 27.05% | 355.53% | 349.09% | 349.18% | ||||||||
“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 28, 2013, the total return for the Fund was 19.96%, net of fees, while the total return for the Index was 20.20%.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI HONG KONG INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 13.08% | 13.84% | 13.51% | 4.25% | 5.01% | 4.78% | 13.55% | 13.47% | 14.23% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 13.08% | 13.84% | 13.51% | 23.14% | 27.71% | 26.31% | 256.42% | 253.92% | 278.19% | ||||||||
“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 28, 2013, the total return for the Fund was 19.59%, net of fees, while the total return for the Index was 19.92%.
| 6 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 5.77% | 5.76% | 6.01% | 1.80% | 1.83% | 2.08% | 1.38% | 1.29% | 1.68% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 5.77% | 5.76% | 6.01% | 9.31% | 9.49% | 10.83% | 7.36% | 6.87% | 9.02% | ||||||||
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.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
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 28, 2013, the total return for the Fund was 11.68%, net of fees, while the total return for the Index was 11.97%.
| 8 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI MALAYSIA INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 0.97% | 1.32% | 1.49% | 6.02% | 6.52% | 6.53% | 14.19% | 14.46% | 14.90% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 0.97% | 1.32% | 1.49% | 33.93% | 37.13% | 37.18% | 276.83% | 286.08% | 300.91% | ||||||||
“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.
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI MALAYSIA INDEX FUND
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 28, 2013, the total return for the Fund was 1.61%, net of fees, while the total return for the Index was 1.87%.
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 16.46% | 17.33% | 17.00% | 4.82% | 5.30% | 5.02% | 15.69% | 15.47% | 15.75% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 16.46% | 17.33% | 17.00% | 26.55% | 29.49% | 27.76% | 329.47% | 321.24% | 331.64% | ||||||||
“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. 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.
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
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 28, 2013, the total return for the Fund was 18.10%, net of fees, while the total return for the Index was 18.46%.
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SINGAPORE INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 10.43% | 10.31% | 10.87% | 5.93% | 6.39% | 6.07% | 16.75% | 16.75% | 16.67% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 10.43% | 10.31% | 10.87% | 33.38% | 36.31% | 34.29% | 370.68% | 370.31% | 367.46% | ||||||||
“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 28, 2013, the total return for the Fund was 7.65%, net of fees, while the total return for the Index was 7.94%.
| FUND PERFORMANCE OVERVIEWS |
13 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SOUTH KOREA CAPPED INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 4.31% | 3.66% | 5.65% | 2.25% | 2.68% | 2.86% | 14.88% | 14.56% | 16.02% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 4.31% | 3.66% | 5.65% | 11.78% | 14.12% | 15.16% | 300.29% | 289.28% | 341.77% | ||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Korea IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Korea 25/50 Index.
“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.
| 14 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI SOUTH KOREA CAPPED INDEX FUND
The iShares MSCI South Korea Capped Index Fund (the “Fund”), formerly the iShares MSCI South Korea Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Korea 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index and 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 28, 2013, the total return for the Fund was 11.98%, net of fees, while the total return for the Index was 13.20%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Korea IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Korea 25/50 Index. |
| FUND PERFORMANCE OVERVIEWS |
15 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI TAIWAN INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 0.03% | 1.26% | 0.28% | 0.66% | 1.00% | 1.11% | 8.18% | 8.38% | 8.95% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 0.03% | 1.26% | 0.28% | 3.32% | 5.10% | 5.69% | 119.61% | 123.68% | 135.57% | ||||||||
“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 28, 2013, the total return for the Fund was 9.33%, net of fees, while the total return for the Index was 9.53%.
| 16 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI THAILAND CAPPED INVESTABLE MARKET INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 27.45% | 27.83% | 27.77% | 15.79% | 15.69% | 16.30% | 105.98% | 105.13% | 110.52% | ||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Thailand Investable Market IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Thailand IMI 25/50 Index.
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.
Certain sectors and markets performed exceptionally well based on market conditions during the six-month period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.
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.
| FUND PERFORMANCE OVERVIEWS |
17 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI THAILAND CAPPED INVESTABLE MARKET INDEX FUND
The iShares MSCI Thailand Capped Investable Market Index Fund (the “Fund”), formerly the iShares MSCI Thailand Investable Market Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Thailand IMI 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index and consists of stocks traded primarily on the Stock Exchange of Thailand (SET). 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 28, 2013, the total return for the Fund was 28.63%, net of fees, while the total return for the Index was 28.82%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Thailand Investable Market IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Thailand IMI 25/50 Index. |
| 18 | 2013 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, 2012 to February 28, 2013.
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 Index Fund | Beginning Account Value (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| Australia |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,199.60 | 0.51 | % | $ | 2.78 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Hong Kong |
||||||||||||||||
| Actual |
1,000.00 | 1,195.90 | 0.51 | 2.78 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Japan Small Cap |
||||||||||||||||
| Actual |
1,000.00 | 1,116.80 | 0.51 | 2.68 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Malaysia |
||||||||||||||||
| Actual |
1,000.00 | 1,016.10 | 0.52 | 2.60 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.20 | 0.52 | 2.61 | ||||||||||||
| SHAREHOLDER EXPENSES |
19 |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares Index Fund | Beginning Account Value (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| Pacific ex-Japan |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,181.00 | 0.50 | % | $ | 2.70 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.50 | 2.51 | ||||||||||||
| Singapore |
||||||||||||||||
| Actual |
1,000.00 | 1,076.50 | 0.51 | 2.63 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| South Korea Capped |
||||||||||||||||
| Actual |
1,000.00 | 1,119.80 | 0.60 | 3.15 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.60 | 3.01 | ||||||||||||
| Taiwan |
||||||||||||||||
| Actual |
1,000.00 | 1,093.30 | 0.60 | 3.11 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.60 | 3.01 | ||||||||||||
| Thailand Capped Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,286.30 | 0.60 | 3.40 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.60 | 3.01 | ||||||||||||
| 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 (181 days) and divided by the number of days in the year (365 days). |
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI AUSTRALIA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRALIA INDEX FUND
February 28, 2013
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRALIA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI HONG KONG INDEX FUND
February 28, 2013
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI HONG KONG INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| 28 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| 30 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| 32 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| 34 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 28, 2013
| 36 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI MALAYSIA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MALAYSIA INDEX FUND
February 28, 2013
| 38 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
February 28, 2013
| 40 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SINGAPORE INDEX FUND
February 28, 2013
| 42 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SINGAPORE INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SOUTH KOREA CAPPED INDEX FUND
February 28, 2013
| 44 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA CAPPED INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA CAPPED INDEX FUND
February 28, 2013
| 46 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI TAIWAN INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
47 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TAIWAN INDEX FUND
February 28, 2013
| 48 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TAIWAN INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
49 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI THAILAND CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| 50 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
51 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| 52 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Australia Index Fund |
iShares MSCI Hong Kong Index Fund |
iShares MSCI Japan Small Cap Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 2,344,522,414 | $ | 3,152,798,725 | $ | 57,272,763 | ||||||
| Affiliated (Note 2) |
4,571,563 | 77,899,246 | 1,197,898 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 2,349,093,977 | $ | 3,230,697,971 | $ | 58,470,661 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 2,650,856,966 | $ | 3,519,885,447 | $ | 56,234,361 | ||||||
| Affiliated (Note 2) |
4,571,563 | 77,899,246 | 1,197,898 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
2,655,428,529 | 3,597,784,693 | 57,432,259 | |||||||||
| Foreign currencies, at valueb |
6,916,484 | 6,350,303 | 41,726 | |||||||||
| Foreign currencies pledged to broker, at valueb |
667,242 | 1,025,862 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
6,937,151 | 36,793,869 | 144,655 | |||||||||
| Dividends and interest |
16,891,595 | 19,468 | 109,053 | |||||||||
| Futures variation margin |
865,094 | 63,709 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
2,687,706,095 | 3,642,037,904 | 57,727,693 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
6,977,831 | 41,544,021 | 179,546 | |||||||||
| Collateral for securities on loan (Note 5) |
4,301,326 | 72,579,150 | 1,140,157 | |||||||||
| Investment advisory fees (Note 2) |
1,011,942 | 1,337,193 | 20,126 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
12,291,099 | 115,460,364 | 1,339,829 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,675,414,996 | $ | 3,526,577,540 | $ | 56,387,864 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 2,585,628,224 | $ | 3,559,168,891 | $ | 59,206,239 | ||||||
| Distributions in excess of net investment income |
(21,382,413 | ) | (2,203,448 | ) | (305,484 | ) | ||||||
| Accumulated net realized loss |
(195,857,639 | ) | (397,538,506 | ) | (1,470,697 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
307,026,824 | 367,150,603 | (1,042,194 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,675,414,996 | $ | 3,526,577,540 | $ | 56,387,864 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
98,800,000 | 175,275,000 | 1,200,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 27.08 | $ | 20.12 | $ | 46.99 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $4,084,175, $68,899,927 and $1,081,636, respectively. See Note 5. |
| b | Cost of foreign currencies including currencies at broker, if any: $7,657,974, $7,375,769 and $41,656, 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 |
53 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Malaysia Index Fund |
iShares MSCI Pacific ex-Japan Index Fund |
iShares MSCI Singapore Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 467,358,554 | $ | 3,445,861,643 | $ | 1,405,035,539 | ||||||
| Affiliated (Note 2) |
25,782 | 45,822,048 | 64,360,115 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 467,384,336 | $ | 3,491,683,691 | $ | 1,469,395,654 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 904,653,804 | $ | 4,413,050,318 | $ | 1,600,611,522 | ||||||
| Affiliated (Note 2) |
25,782 | 45,822,048 | 64,360,115 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
904,679,586 | 4,458,872,366 | 1,664,971,637 | |||||||||
| Foreign currencies, at valueb |
1,092,710 | 9,104,268 | 2,600,431 | |||||||||
| Foreign currency pledged to broker, at valueb |
— | — | 284,405 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
2,007,993 | 16,053,006 | 2,312,944 | |||||||||
| Due from custodian (Note 4) |
— | 10,682,045 | — | |||||||||
| Dividends and interest |
1,418,416 | 18,766,677 | 1,894,150 | |||||||||
| Capital shares sold |
6,574,363 | 1,478,641 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
915,773,068 | 4,514,957,003 | 1,672,063,567 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
8,175,334 | 28,057,237 | 4,257,579 | |||||||||
| Collateral for securities on loan (Note 5) |
— | 43,836,785 | 62,003,178 | |||||||||
| Capital shares redeemed |
— | — | 623,903 | |||||||||
| Futures variation margin |
— | — | 30,539 | |||||||||
| Investment advisory fees (Note 2) |
344,091 | 1,635,712 | 626,773 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
8,519,425 | 73,529,734 | 67,541,972 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 907,253,643 | $ | 4,441,427,269 | $ | 1,604,521,595 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 544,754,090 | $ | 3,982,104,817 | $ | 1,649,015,406 | ||||||
| Undistributed (distributions in excess of) net investment income |
1,449,702 | (22,499,012 | ) | (25,524,266 | ) | |||||||
| Accumulated net realized loss |
(76,244,180 | ) | (485,230,107 | ) | (214,503,945 | ) | ||||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
437,294,031 | 967,051,571 | 195,534,400 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 907,253,643 | $ | 4,441,427,269 | $ | 1,604,521,595 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
62,100,000 | 89,100,000 | 116,700,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 14.61 | $ | 49.85 | $ | 13.75 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $41,373,414 and $58,460,056, respectively. See Note 5. |
| b | Cost of foreign currencies including currency at broker, if any: $1,102,866, $9,130,647 and $2,895,039, respectively. |
| c | $0.001 par value, number of shares authorized: 300 million, 1 billion and 300 million, respectively. |
See notes to financial statements.
| 54 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares MSCI South Korea Capped Index Fund |
iShares MSCI Taiwan Index Fund |
iShares MSCI Thailand Capped Investable Market Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 1,634,860,486 | $ | 1,752,162,554 | $ | 836,359,099 | ||||||
| Affiliated (Note 2) |
99,618,739 | 246,013,646 | 407,408 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 1,734,479,225 | $ | 1,998,176,200 | $ | 836,766,507 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 3,369,358,403 | $ | 2,708,407,421 | $ | 1,040,486,556 | ||||||
| Affiliated (Note 2) |
99,618,739 | 246,013,646 | 407,408 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
3,468,977,142 | 2,954,421,067 | 1,040,893,964 | |||||||||
| Cash pledged to broker |
— | 453,000 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
26,658,381 | 2,510,334 | 38,408,332 | |||||||||
| Dividends and interest |
24,252,356 | 609,622 | 1,932,929 | |||||||||
| Capital shares sold |
— | — | 15,663 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
3,519,887,879 | 2,957,994,023 | 1,081,250,888 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
26,152,665 | 1,256,645 | 38,354,667 | |||||||||
| Collateral for securities on loan (Note 5) |
96,088,937 | 241,187,660 | — | |||||||||
| Foreign taxes (Note 1) |
— | 70,203 | — | |||||||||
| Investment advisory fees (Note 2) |
1,502,686 | 1,247,128 | 462,819 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
123,744,288 | 243,761,636 | 38,817,486 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 3,396,143,591 | $ | 2,714,232,387 | $ | 1,042,433,402 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 2,521,144,942 | $ | 2,836,323,923 | $ | 849,708,654 | ||||||
| Undistributed (distributions in excess of) net investment income |
(10,596,466 | ) | (8,484,369 | ) | 1,216,347 | |||||||
| Accumulated net realized loss |
(848,660,171 | ) | (1,069,827,262 | ) | (12,626,104 | ) | ||||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
1,734,255,286 | 956,220,095 | 204,134,505 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 3,396,143,591 | $ | 2,714,232,387 | $ | 1,042,433,402 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingb |
54,500,000 | 201,400,000 | 11,550,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 62.31 | $ | 13.48 | $ | 90.25 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $91,076,846, $226,972,989 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 |
55 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Australia Index Fund |
iShares MSCI Hong Kong Index Fund |
iShares MSCI Japan Small Cap Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 54,585,789 | $ | 20,059,073 | $ | 447,073 | ||||||
| Interest — unaffiliated |
30,726 | — | — | |||||||||
| Interest — affiliated (Note 2) |
1,689 | 1,495 | 16 | |||||||||
| Securities lending income — affiliated (Note 2) |
86,367 | 380,892 | 6,274 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
54,704,571 | 20,441,460 | 453,363 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
6,210,389 | 7,102,648 | 111,927 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
6,210,389 | 7,102,648 | 111,927 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
48,494,182 | 13,338,812 | 341,436 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(29,004,506 | ) | (26,878,823 | ) | (170,451 | ) | ||||||
| In-kind redemptions — unaffiliated |
48,186,036 | 14,896,640 | 603,169 | |||||||||
| Futures contracts |
1,817,979 | 1,524,347 | — | |||||||||
| Foreign currency transactions |
(364,057 | ) | (1,716 | ) | (29,027 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
20,635,452 | (10,459,552 | ) | 403,691 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
374,747,310 | 445,476,964 | 4,492,550 | |||||||||
| Futures contracts |
915,113 | 87,084 | — | |||||||||
| Translation of assets and liabilities in foreign currencies |
50,004 | (99 | ) | (4,862 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
375,712,427 | 445,563,949 | 4,487,688 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
396,347,879 | 435,104,397 | 4,891,379 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 444,842,061 | $ | 448,443,209 | $ | 5,232,815 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $690,422, $ — and $33,612, respectively. |
See notes to financial statements.
| 56 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Malaysia Index Fund |
iShares MSCI Pacific ex-Japan Index Fund |
iShares MSCI Singapore Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 13,482,573 | $ | 63,199,560 | $ | 11,358,592 | ||||||
| Interest — affiliated (Note 2) |
223 | 1,976 | 1,058 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 456,823 | 765,044 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
13,482,796 | 63,658,359 | 12,124,694 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
2,433,403 | 9,009,401 | 3,957,693 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
2,433,403 | 9,009,401 | 3,957,693 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
11,049,393 | 54,648,958 | 8,167,001 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
5,277,233 | (29,924,709 | ) | (11,167,073 | ) | |||||||
| In-kind redemptions — unaffiliated |
— | 21,568,216 | 32,707,260 | |||||||||
| Futures contracts |
— | — | 306,952 | |||||||||
| Foreign currency transactions |
89,832 | (258,003 | ) | 160,539 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
5,367,065 | (8,614,496 | ) | 22,007,678 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
488,290 | 570,975,684 | 83,754,190 | |||||||||
| Futures contracts |
— | — | 13,360 | |||||||||
| Translation of assets and liabilities in foreign currencies |
11,776 | 30,179 | (37,921 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
500,066 | 571,005,863 | 83,729,629 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
5,867,131 | 562,391,367 | 105,737,307 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 16,916,524 | $ | 617,040,325 | $ | 113,904,308 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $923,066, $924,738 and $162,480, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
57 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI South Korea Capped Index Fund |
iShares MSCI Taiwan Index Fund |
iShares MSCI Thailand Capped Investable Market Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 24,294,006 | $ | 279,138 | $ | 4,759,085 | ||||||
| Interest — unaffiliated |
1,578 | 461 | — | |||||||||
| Interest — affiliated (Note 2) |
2,103 | 2,710 | 658 | |||||||||
| Securities lending income — affiliated (Note 2) |
1,890,953 | 3,613,260 | b | — | ||||||||
|
|
|
|
|
|
|
|||||||
| 26,188,640 | 3,895,569 | 4,759,743 | ||||||||||
| Less: Other foreign taxes (Note 1) |
— | (586,823 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
26,188,640 | 3,308,746 | 4,759,743 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
9,213,115 | 7,632,377 | 2,261,197 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
9,213,115 | 7,632,377 | 2,261,197 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
16,975,525 | (4,323,631 | ) | 2,498,546 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
22,031,478 | (20,187,060 | ) | (9,190,213 | ) | |||||||
| In-kind redemptions — unaffiliated |
— | — | 13,755,777 | |||||||||
| Futures contracts |
— | 607,511 | — | |||||||||
| Foreign currency transactions |
(210,469 | ) | (177,393 | ) | 11,495 | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
21,821,009 | (19,756,942 | ) | 4,577,059 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
296,555,552 | 237,436,597 | 186,533,635 | |||||||||
| Futures contracts |
— | 141,032 | — | |||||||||
| Translation of assets and liabilities in foreign currencies |
(228,263 | ) | (6,928 | ) | 4,544 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
296,327,289 | 237,570,701 | 186,538,179 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
318,148,298 | 217,813,759 | 191,115,238 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 335,123,823 | $ | 213,490,128 | $ | 193,613,784 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $6,806,984, $5,786 and $528,787, respectively. |
| b | Net of foreign tax paid of $830,634. |
See notes to financial statements.
| 58 | 2013 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 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 48,494,182 | $ | 121,314,624 | $ | 13,338,812 | $ | 57,045,268 | ||||||||
| Net realized gain (loss) |
20,635,452 | (146,353 | ) | (10,459,552 | ) | (96,172,080 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
375,712,427 | (124,678,562 | ) | 445,563,949 | 77,291,953 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
444,842,061 | (3,510,291 | ) | 448,443,209 | 38,165,141 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(85,067,275 | ) | (127,985,295 | ) | (20,527,799 | ) | (55,827,349 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(85,067,275 | ) | (127,985,295 | ) | (20,527,799 | ) | (55,827,349 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
220,481,766 | 379,920,871 | 1,299,939,783 | 1,187,272,846 | ||||||||||||
| Cost of shares redeemed |
(398,540,312 | ) | (845,151,157 | ) | (67,251,810 | ) | (911,618,933 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from |
(178,058,546 | ) | (465,230,286 | ) | 1,232,687,973 | 275,653,913 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
181,716,240 | (596,725,872 | ) | 1,660,603,383 | 257,991,705 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
2,493,698,756 | 3,090,424,628 | 1,865,974,157 | 1,607,982,452 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 2,675,414,996 | $ | 2,493,698,756 | $ | 3,526,577,540 | $ | 1,865,974,157 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (21,382,413 | ) | $ | 15,190,680 | $ | (2,203,448 | ) | $ | 4,985,539 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
8,600,000 | 16,400,000 | 68,625,000 | 73,350,000 | ||||||||||||
| Shares redeemed |
(16,400,000 | ) | (37,600,000 | ) | (3,525,000 | ) | (54,600,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(7,800,000 | ) | (21,200,000 | ) | 65,100,000 | 18,750,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
59 |
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 ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 341,436 | $ | 1,024,054 | $ | 11,049,393 | $ | 24,520,962 | ||||||||
| Net realized gain (loss) |
403,691 | 2,654,100 | 5,367,065 | (3,123,398 | ) | |||||||||||
| Net change in unrealized appreciation/depreciation |
4,487,688 | (8,078,528 | ) | 500,066 | 42,688,241 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
5,232,815 | (4,400,374 | ) | 16,916,524 | 64,085,805 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(687,935 | ) | (1,368,220 | ) | (9,599,691 | ) | (32,637,576 | ) | ||||||||
| Return of capital |
— | — | — | (1,278,099 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(687,935 | ) | (1,368,220 | ) | (9,599,691 | ) | (33,915,675 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
17,720,583 | 4,249,057 | 30,935,603 | 102,342,503 | ||||||||||||
| Cost of shares redeemed |
(8,694,664 | ) | (3,050,195 | ) | (67,691,050 | ) | (174,222,658 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from |
9,025,919 | (25,801,138 | ) | (36,755,447 | ) | (71,880,155 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
13,570,799 | (31,569,732 | ) | (29,438,614 | ) | (41,710,025 | ) | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
42,817,065 | 74,386,797 | 936,692,257 | 978,402,282 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 56,387,864 | $ | 42,817,065 | $ | 907,253,643 | $ | 936,692,257 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (305,484 | ) | $ | 41,015 | $ | 1,449,702 | $ | — | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
400,000 | 100,000 | 2,100,000 | 7,275,000 | ||||||||||||
| Shares redeemed |
(200,000 | ) | (700,000 | ) | (4,500,000 | ) | (13,050,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
200,000 | (600,000 | ) | (2,400,000 | ) | (5,775,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 60 | 2013 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 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 54,648,958 | $ | 134,564,204 | $ | 8,167,001 | $ | 48,620,016 | ||||||||
| Net realized gain (loss) |
(8,614,496 | ) | 19,498,306 | 22,007,678 | 5,615,906 | |||||||||||
| Net change in unrealized appreciation/depreciation |
571,005,863 | (127,950,024 | ) | 83,729,629 | (25,799,426 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
617,040,325 | 26,112,486 | 113,904,308 | 28,436,496 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(85,932,393 | ) | (141,521,654 | ) | (38,608,771 | ) | (55,248,494 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(85,932,393 | ) | (141,521,654 | ) | (38,608,771 | ) | (55,248,494 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
777,647,140 | 77,411,532 | 166,909,810 | 109,538,489 | ||||||||||||
| Cost of shares redeemed |
(55,909,672 | ) | (322,287,900 | ) | (150,370,259 | ) | (283,239,248 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from |
721,737,468 | (244,876,368 | ) | 16,539,551 | (173,700,759 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
1,252,845,400 | (360,285,536 | ) | 91,835,088 | (200,512,757 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
3,188,581,869 | 3,548,867,405 | 1,512,686,507 | 1,713,199,264 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 4,441,427,269 | $ | 3,188,581,869 | $ | 1,604,521,595 | $ | 1,512,686,507 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of )net investment income included in net assets at end of period |
$ | (22,499,012 | ) | $ | 8,784,423 | $ | (25,524,266 | ) | $ | 4,917,504 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
16,500,000 | 1,800,000 | 12,300,000 | 8,600,000 | ||||||||||||
| Shares redeemed |
(1,200,000 | ) | (7,800,000 | ) | (11,100,000 | ) | (24,400,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
15,300,000 | (6,000,000 | ) | 1,200,000 | (15,800,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
61 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI South Korea Capped Index Fund |
iShares MSCI Taiwan Index Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | 16,975,525 | $ | 13,344,165 | $ | (4,323,631 | ) | $ | 52,569,798 | |||||||
| Net realized gain (loss) |
21,821,009 | 293,479,714 | (19,756,942 | ) | 9,808,034 | |||||||||||
| Net change in unrealized appreciation/depreciation |
296,327,289 | (395,833,750 | ) | 237,570,701 | (245,000,348 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
335,123,823 | (89,009,871 | ) | 213,490,128 | (182,622,516 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(18,847,855 | ) | (21,597,221 | ) | (53,961,288 | ) | (88,700,282 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(18,847,855 | ) | (21,597,221 | ) | (53,961,288 | ) | (88,700,282 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
410,316,408 | 128,924,534 | 342,174,515 | 381,912,612 | ||||||||||||
| Cost of shares redeemed |
— | (1,419,990,818 | ) | (34,598,958 | ) | (720,973,706 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from |
410,316,408 | (1,291,066,284 | ) | 307,575,557 | (339,061,094 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
726,592,376 | (1,401,673,376 | ) | 467,104,397 | (610,383,892 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
2,669,551,215 | 4,071,224,591 | 2,247,127,990 | 2,857,511,882 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 3,396,143,591 | $ | 2,669,551,215 | $ | 2,714,232,387 | $ | 2,247,127,990 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (10,596,466 | ) | $ | (8,724,136 | ) | $ | (8,484,369 | ) | $ | 49,800,550 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
6,800,000 | 2,350,000 | 25,400,000 | 30,600,000 | ||||||||||||
| Shares redeemed |
— | (26,400,000 | ) | (2,600,000 | ) | (59,400,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
6,800,000 | (24,050,000 | ) | 22,800,000 | (28,800,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 62 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Thailand Capped Investable Market Index Fund |
||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 2,498,546 | $ | 15,574,422 | ||||
| Net realized gain |
4,577,059 | 58,835,767 | ||||||
| Net change in unrealized appreciation/depreciation |
186,538,179 | (54,329,252 | ) | |||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
193,613,784 | 20,080,937 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(3,828,525 | ) | (15,932,327 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(3,828,525 | ) | (15,932,327 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
309,691,537 | 364,124,479 | ||||||
| Cost of shares redeemed |
(53,010,894 | ) | (405,145,323 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets from capital share transactions |
256,680,643 | (41,020,844 | ) | |||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN NET ASSETS |
446,465,902 | (36,872,234 | ) | |||||
| NET ASSETS |
||||||||
| Beginning of period |
595,967,500 | 632,839,734 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 1,042,433,402 | $ | 595,967,500 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 1,216,347 | $ | 2,546,326 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
3,800,000 | 5,250,000 | ||||||
| Shares redeemed |
(700,000 | ) | (6,350,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in shares outstanding |
3,100,000 | (1,100,000 | ) | |||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
63 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Australia Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 23.39 | $ | 24.18 | $ | 20.92 | $ | 20.33 | $ | 23.96 | $ | 27.62 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.50 | 1.04 | 0.99 | 0.72 | 0.78 | 0.96 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
4.09 | (0.72 | ) | 3.33 | 0.69 | (3.47 | ) | (3.34 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.59 | 0.32 | 4.32 | 1.41 | (2.69 | ) | (2.38 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.90 | ) | (1.11 | ) | (1.06 | ) | (0.82 | ) | (0.94 | ) | (1.28 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.90 | ) | (1.11 | ) | (1.06 | ) | (0.82 | ) | (0.94 | ) | (1.28 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 27.08 | $ | 23.39 | $ | 24.18 | $ | 20.92 | $ | 20.33 | $ | 23.96 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
19.96 | %c | 1.84 | % | 20.54 | % | 6.86 | % | (8.91 | )% | (9.25 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,675,415 | $ | 2,493,699 | $ | 3,090,425 | $ | 2,196,817 | $ | 1,593,676 | $ | 1,059,092 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average |
4.02 | % | 4.61 | % | 3.95 | % | 3.24 | % | 4.92 | % | 3.38 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 9 | % | 9 | % | 8 | % | 14 | % | 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.
| 64 | 2013 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 ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 16.94 | $ | 17.59 | $ | 16.02 | $ | 14.39 | $ | 15.87 | $ | 18.30 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.09 | 0.54 | 0.42 | 0.42 | 0.52 | 0.45 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.22 | (0.65 | ) | 1.56 | 1.69 | (1.46 | ) | (2.25 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.31 | (0.11 | ) | 1.98 | 2.11 | (0.94 | ) | (1.80 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.13 | ) | (0.54 | ) | (0.41 | ) | (0.48 | ) | (0.54 | ) | (0.63 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.13 | ) | (0.54 | ) | (0.41 | ) | (0.48 | ) | (0.54 | ) | (0.63 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 20.12 | $ | 16.94 | $ | 17.59 | $ | 16.02 | $ | 14.39 | $ | 15.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
19.59 | %c | (0.33 | )% | 12.27 | % | 14.85 | % | (4.77 | )% | (10.54 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,526,578 | $ | 1,865,974 | $ | 1,607,982 | $ | 1,976,317 | $ | 1,951,777 | $ | 1,675,184 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average |
0.96 | % | 3.26 | % | 2.25 | % | 2.67 | % | 4.29 | % | 2.34 | % | ||||||||||||
| Portfolio turnover ratee |
5 | % | 11 | % | 15 | % | 5 | % | 9 | % | 17 | % | ||||||||||||
| 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 |
65 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Japan Small Cap Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 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 |
$ | 42.82 | $ | 46.49 | $ | 40.74 | $ | 44.45 | $ | 43.24 | $ | 48.85 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.34 | 0.82 | 0.78 | 0.61 | 0.60 | 0.29 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
4.59 | (3.25 | ) | 5.87 | (3.39 | ) | 1.29 | (5.74 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.93 | (2.43 | ) | 6.65 | (2.78 | ) | 1.89 | (5.45 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.76 | ) | (1.24 | ) | (0.90 | ) | (0.93 | ) | (0.68 | ) | (0.16 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.76 | ) | (1.24 | ) | (0.90 | ) | (0.93 | ) | (0.68 | ) | (0.16 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 46.99 | $ | 42.82 | $ | 46.49 | $ | 40.74 | $ | 44.45 | $ | 43.24 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
11.68 | %d | (5.18 | )% | 16.38 | % | (6.25 | )% | 4.62 | % | (11.19 | )%d | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 56,388 | $ | 42,817 | $ | 74,387 | $ | 36,664 | $ | 35,556 | $ | 34,594 | ||||||||||||
| Ratio of expenses to average net assetse |
0.51 | % | 0.53 | % | 0.51 | % | 0.53 | % | 0.56 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average |
1.57 | % | 1.84 | % | 1.72 | % | 1.46 | % | 1.59 | % | 0.93 | % | ||||||||||||
| Portfolio turnover ratef |
6 | % | 7 | % | 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.
| 66 | 2013 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 ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 14.52 | $ | 13.92 | $ | 12.98 | $ | 9.79 | $ | 9.39 | $ | 10.97 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.17 | 0.38 | 0.41 | 0.24 | 0.28 | 0.34 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.07 | 0.76 | 0.92 | 3.20 | 0.40 | (1.31 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.24 | 1.14 | 1.33 | 3.44 | 0.68 | (0.97 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.15 | ) | (0.52 | ) | (0.39 | ) | (0.25 | ) | (0.28 | ) | (0.61 | ) | ||||||||||||
| Return of capital |
— | (0.02 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.15 | ) | (0.54 | ) | (0.39 | ) | (0.25 | ) | (0.28 | ) | (0.61 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 14.61 | $ | 14.52 | $ | 13.92 | $ | 12.98 | $ | 9.79 | $ | 9.39 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
1.61 | %c | 8.61 | % | 10.19 | % | 35.76 | % | 8.00 | % | (9.86 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 907,254 | $ | 936,692 | $ | 978,402 | $ | 794,142 | $ | 513,000 | $ | 473,091 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.56 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average |
2.34 | % | 2.73 | % | 2.84 | % | 2.17 | % | 3.45 | % | 2.84 | % | ||||||||||||
| Portfolio turnover ratee |
7 | % | 24 | % | 49 | % | 29 | % | 52 | % | 92 | % | ||||||||||||
| 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 rates for the six months ended February 28, 2013 and the years ended August 31, 2012, August 31, 2011, August 31, 2010, August 31, 2009, and August 31, 2008 were 3%, 14%, 14%, 10%, 12%, and 16%, respectively. See Note 4. |
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 Pacific ex-Japan Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28,
2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008a |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 43.21 | $ | 44.47 | $ | 39.25 | $ | 36.85 | $ | 41.37 | $ | 48.31 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.69 | 1.73 | 1.64 | 1.25 | 1.38 | 1.64 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
7.06 | (1.14 | ) | 5.31 | 2.52 | (4.79 | ) | (6.01 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
7.75 | 0.59 | 6.95 | 3.77 | (3.41 | ) | (4.37 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(1.11 | ) | (1.85 | ) | (1.73 | ) | (1.37 | ) | (1.11 | ) | (2.51 | ) | ||||||||||||
| Net realized gain |
— | — | — | — | — | (0.06 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(1.11 | ) | (1.85 | ) | (1.73 | ) | (1.37 | ) | (1.11 | ) | (2.57 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 49.85 | $ | 43.21 | $ | 44.47 | $ | 39.25 | $ | 36.85 | $ | 41.37 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
18.10 | %d | 1.82 | % | 17.61 | % | 10.27 | % | (7.23 | )% | (9.87 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 4,441,427 | $ | 3,188,582 | $ | 3,548,867 | $ | 3,438,149 | $ | 3,382,554 | $ | 3,263,971 | ||||||||||||
| 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 |
3.01 | % | 4.16 | % | 3.53 | % | 3.09 | % | 4.83 | % | 3.35 | % | ||||||||||||
| Portfolio turnover ratef |
4 | % | 7 | % | 10 | % | 7 | % | 10 | % | 14 | % | ||||||||||||
| 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.
| 68 | 2013 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 Feb. 28, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 13.10 | $ | 13.05 | $ | 12.17 | $ | 10.25 | $ | 11.44 | $ | 13.28 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.07 | 0.41 | 0.45 | 0.32 | 0.32 | 0.47 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.93 | 0.11 | 0.92 | 1.97 | (1.16 | ) | (1.67 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.00 | 0.52 | 1.37 | 2.29 | (0.84 | ) | (1.20 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.35 | ) | (0.47 | ) | (0.49 | ) | (0.37 | ) | (0.35 | ) | (0.64 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.35 | ) | (0.47 | ) | (0.49 | ) | (0.37 | ) | (0.35 | ) | (0.64 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 13.75 | $ | 13.10 | $ | 13.05 | $ | 12.17 | $ | 10.25 | $ | 11.44 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
7.65 | %c | 4.67 | % | 11.27 | % | 22.68 | % | (5.87 | )% | (9.55 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,604,522 | $ | 1,512,687 | $ | 1,713,199 | $ | 1,730,001 | $ | 1,294,039 | $ | 1,476,968 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average |
1.06 | % | 3.32 | % | 3.34 | % | 2.80 | % | 3.97 | % | 3.56 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 3 | % | 10 | % | 9 | % | 15 | % | 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 | 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 South Korea Capped Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 55.97 | $ | 56.74 | $ | 47.76 | $ | 42.01 | $ | 43.55 | $ | 63.60 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.33 | 0.23 | 0.29 | 0.32 | 0.30 | 0.80 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
6.37 | (0.63 | ) | 9.19 | 5.82 | (1.45 | ) | (19.87 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
6.70 | (0.40 | ) | 9.48 | 6.14 | (1.15 | ) | (19.07 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.36 | ) | (0.37 | ) | (0.43 | ) | (0.39 | ) | (0.39 | ) | (0.98 | ) | ||||||||||||
| Return of capital |
— | — | (0.07 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.36 | ) | (0.37 | ) | (0.50 | ) | (0.39 | ) | (0.39 | ) | (0.98 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 62.31 | $ | 55.97 | $ | 56.74 | $ | 47.76 | $ | 42.01 | $ | 43.55 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
11.98 | %c | (0.62 | )% | 19.76 | % | 14.65 | % | (2.31 | )% | (30.35 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,396,144 | $ | 2,669,551 | $ | 4,071,225 | $ | 3,255,168 | $ | 2,398,550 | $ | 1,985,763 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.60 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||||
| Ratio of net investment income to average |
1.11 | % | 0.42 | % | 0.49 | % | 0.67 | % | 0.91 | % | 1.35 | % | ||||||||||||
| Portfolio turnover ratee |
6 | % | 12 | % | 18 | % | 14 | % | 62 | % | 42 | % | ||||||||||||
| 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 rates for the six months ended February 28, 2013 and the years ended August 31, 2012, August 31, 2011, August 31, 2010, August 31, 2009 and August 31, 2008 were 6%, 8%, 6%, 6%, 8% and 15%, respectively. See Note 4. |
See notes to financial statements.
| 70 | 2013 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 Feb. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 12.58 | $ | 13.78 | $ | 12.19 | $ | 10.94 | $ | 13.13 | $ | 15.99 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.02 | ) | 0.28 | 0.39 | 0.23 | 0.30 | 0.54 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.19 | (1.01 | ) | 1.49 | 1.23 | (1.89 | ) | (3.01 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.17 | (0.73 | ) | 1.88 | 1.46 | (1.59 | ) | (2.47 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.27 | ) | (0.47 | ) | (0.29 | ) | (0.21 | ) | (0.60 | ) | (0.39 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.27 | ) | (0.47 | ) | (0.29 | ) | (0.21 | ) | (0.60 | ) | (0.39 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 13.48 | $ | 12.58 | $ | 13.78 | $ | 12.19 | $ | 10.94 | $ | 13.13 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
9.33 | %c | (4.80 | )% | 15.24 | % | 13.30 | % | (9.67 | )% | (15.69 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,714,232 | $ | 2,247,128 | $ | 2,857,512 | $ | 2,721,439 | $ | 3,035,331 | $ | 2,918,008 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.60 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.34 | )% | 2.25 | % | 2.64 | % | 1.90 | % | 3.18 | % | 3.54 | % | ||||||||||||
| Portfolio turnover ratef |
5 | % | 22 | % | 23 | % | 9 | % | 52 | % | 33 | % | ||||||||||||
| 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 years 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 rates for the six months ended February 28, 2013 and the years ended August 31, 2012, August 31, 2011, August 31, 2010, August 31, 2009, and August 31, 2008 were 2%, 7%, 8%, 4%, 14%, and 11%, respectively. See Note 4. |
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 Thailand Capped Investable Market Index Fund | ||||||||||||||||||||||||
| Six months Feb. 28, 2013 |
Year ended Aug. 31, 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 |
$ | 70.53 | $ | 66.27 | $ | 55.06 | $ | 36.87 | $ | 38.83 | $ | 50.03 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.26 | 1.76 | 1.65 | 1.44 | 1.17 | 0.32 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
19.88 | 4.37 | 11.10 | 17.95 | (1.88 | ) | (11.52 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
20.14 | 6.13 | 12.75 | 19.39 | (0.71 | ) | (11.20 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.42 | ) | (1.87 | ) | (1.54 | ) | (1.20 | ) | (1.25 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.42 | ) | (1.87 | ) | (1.54 | ) | (1.20 | ) | (1.25 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 90.25 | $ | 70.53 | $ | 66.27 | $ | 55.06 | $ | 36.87 | $ | 38.83 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
28.63 | %d | 9.57 | % | 23.33 | % | 53.19 | % | (0.33 | )% | (22.39 | )%d | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,042,433 | $ | 595,968 | $ | 632,840 | $ | 520,304 | $ | 94,021 | $ | 58,248 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.60 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||||
| Ratio of net investment income to average |
0.67 | % | 2.66 | % | 2.56 | % | 3.22 | % | 4.00 | % | 1.68 | % | ||||||||||||
| Portfolio turnover rateg |
14 | % | 12 | % | 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.
| 72 | 2013 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”):
| a | Formerly the iShares MSCI South Korea Index Fund |
| b | Formerly the iShares MSCI Thailand Investable Market Index Fund |
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
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of investments for the Funds. The investments of each Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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). |
| • | Financial futures contracts are valued at that day’s last reported settlement price on the exchange where the contract is traded. |
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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument. 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 |
| 74 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; 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. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2013. 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 |
$ | 2,650,856,719 | $ | — | $ | — | $ | 2,650,856,719 | ||||||||
| Investment Companies |
— | — | 247 | 247 | ||||||||||||
| Money Market Funds |
4,571,563 | — | — | 4,571,563 | ||||||||||||
| Futures Contractsa |
865,094 | — | — | 865,094 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,656,293,376 | $ | — | $ | 247 | $ | 2,656,293,623 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Hong Kong |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,519,885,447 | $ | — | $ | — | $ | 3,519,885,447 | ||||||||
| Money Market Funds |
77,899,246 | — | — | 77,899,246 | ||||||||||||
| Futures Contractsa |
63,709 | — | — | 63,709 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,597,848,402 | $ | — | $ | — | $ | 3,597,848,402 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Japan Small Cap |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 56,234,361 | $ | — | $ | — | $ | 56,234,361 | ||||||||
| Money Market Funds |
1,197,898 | — | — | 1,197,898 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 57,432,259 | $ | — | $ | — | $ | 57,432,259 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Malaysia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 904,653,804 | $ | — | $ | — | $ | 904,653,804 | ||||||||
| Money Market Funds |
25,782 | — | — | 25,782 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 904,679,586 | $ | — | $ | — | $ | 904,679,586 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 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 | |||||||||||||
| Pacific ex-Japan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 4,395,190,676 | $ | 17,859,289 | $ | — | $ | 4,413,049,965 | ||||||||
| Investment Companies |
— | — | 353 | 353 | ||||||||||||
| Money Market Funds |
45,822,048 | — | — | 45,822,048 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 4,441,012,724 | $ | 17,859,289 | $ | 353 | $ | 4,458,872,366 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Singapore |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,546,945,660 | $ | 53,665,862 | $ | — | $ | 1,600,611,522 | ||||||||
| Money Market Funds |
64,360,115 | — | — | 64,360,115 | ||||||||||||
| Liabilities: |
||||||||||||||||
| Futures Contractsa |
(30,539 | ) | — | — | (30,539 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,611,275,236 | $ | 53,665,862 | $ | — | $ | 1,664,941,098 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| South Korea Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,306,857,660 | $ | — | $ | 0 | b | $ | 3,306,857,660 | |||||||
| Preferred Stocks |
62,500,743 | — | — | 62,500,743 | ||||||||||||
| Money Market Funds |
99,618,739 | — | — | 99,618,739 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,468,977,142 | $ | — | $ | 0 | b | $ | 3,468,977,142 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Taiwan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,708,407,419 | $ | — | $ | 2 | $ | 2,708,407,421 | ||||||||
| Money Market Funds |
246,013,646 | — | — | 246,013,646 | ||||||||||||
| Liabilities: |
||||||||||||||||
| Futures Contractsa |
(24,962 | ) | — | — | (24,962 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,954,396,103 | $ | — | $ | 2 | $ | 2,954,396,105 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Thailand Capped Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,040,486,550 | $ | — | $ | — | $ | 1,040,486,550 | ||||||||
| Warrants |
— | 6 | — | 6 | ||||||||||||
| Money Market Funds |
407,408 | — | — | 407,408 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,040,893,958 | $ | 6 | $ | — | $ | 1,040,893,964 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Futures contracts are shown at the net unrealized appreciation (depreciation) on the contracts. |
| b | Rounds to less than $1. |
The iShares MSCI Singapore Index Fund had transfers from Level 1 to Level 2 during the period ended February 28, 2013 in the amount of $53,665,862, resulting from a suspension of trading due to a pending corporate action.
| 76 | 2013 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 28, 2013 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, stock dividends, capital gains on investments, or certain foreign currency transactions. 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 stock dividends are presented as “other foreign taxes,” and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, 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 |
77 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
RECENT ACCOUNTING STANDARD
In December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, 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 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 Capped, iShares MSCI Taiwan and iShares MSCI Thailand Capped 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 Fund’s allocable portion of the aggregate of the average daily net assets (of the Fund and certain other iShares funds) up to $46 billion, and 0.475% on its allocable portion of the aggregate average daily net assets in excess of $46 billion.
| 78 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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. The Funds benefit from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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 28, 2013, BTC earned securities lending agent fees from the Funds as follows:
For the six months ended February 28, 2013, BTC, the Funds’ securities lending agent, has agreed to voluntarily reimburse the iShares MSCI Taiwan Index Fund in the amount of $290,722, 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.
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Funds for 1940 Act purposes.
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| NOTES TO FINANCIAL STATEMENTS |
79 |
Table of Contents
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 28, 2013 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| Australia |
$ | 78,118,953 | $ | 111,488,871 | ||||
| Hong Kong |
267,702,389 | 141,019,985 | ||||||
| Japan Small Cap |
2,502,103 | 2,763,033 | ||||||
| Malaysia |
63,025,990 | 98,748,368 | ||||||
| Pacific ex-Japan |
135,934,601 | 158,002,604 | ||||||
| Singapore |
35,246,538 | 60,324,392 | ||||||
| South Korea Capped |
577,550,357 | 192,805,629 | ||||||
| Taiwan |
389,539,852 | 120,953,403 | ||||||
| Thailand Capped Investable Market |
139,040,193 | 108,566,605 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2013 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| Australia |
$ | 219,516,836 | $ | 394,324,060 | ||||
| Hong Kong |
1,165,737,125 | 64,929,520 | ||||||
| Japan Small Cap |
17,476,435 | 8,540,636 | ||||||
| Pacific ex-Japan |
766,596,074 | 55,272,624 | ||||||
| Singapore |
160,624,488 | 143,317,046 | ||||||
| Thailand Capped Investable Market |
279,374,342 | 51,448,177 | ||||||
| 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 may also 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.
| 80 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to 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 market value of the loaned securities is determined at the close of each business day of the Funds and any additional required collateral is delivered to the Funds on the next business day. 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. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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.
As of August 31, 2012, the Funds’ fiscal year-end, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| iShares MSCI Index Fund |
Non- Expiringa |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||||||||
| Australia |
$ | 23,345,303 | $ | 384,424 | $ | — | $ | 7,066 | $ | 529,868 | $ | 24,006,125 | $ | 23,348,244 | $ | 12,127,364 | $ | 83,748,394 | ||||||||||||||||||
| Hong Kong |
36,014,089 | 468,716 | 425,440 | 2,899,247 | 3,185,408 | 29,235,556 | 114,836,904 | 34,565,959 | 221,631,319 | |||||||||||||||||||||||||||
| Japan Small Cap |
486,584 | — | — | — | — | 131,718 | 541,322 | 203,697 | 1,363,321 | |||||||||||||||||||||||||||
| Malaysia |
— | — | — | — | — | 39,171,645 | — | — | 39,171,645 | |||||||||||||||||||||||||||
| Pacific ex-Japan |
59,368,214 | — | — | — | — | 66,207,828 | 104,799,503 | 36,600,987 | 266,976,532 | |||||||||||||||||||||||||||
| Singapore |
12,674,147 | 2,558,348 | — | — | 807,115 | 15,680,510 | 132,420,824 | 11,588,528 | 175,729,472 | |||||||||||||||||||||||||||
| South Korea Capped |
— | — | — | — | — | 60,990,953 | 226,591,665 | 78,503,704 | 366,086,322 | |||||||||||||||||||||||||||
| Taiwan |
4,857,121 | 12,022,719 | 14,435,986 | 64,999,586 | 16,734,578 | 343,375,145 | 363,052,013 | 19,669,958 | 839,147,106 | |||||||||||||||||||||||||||
| Thailand Capped Investable Market |
2,373,181 | — | — | — | — | 555,444 | 2,321,428 | 1,304,910 | 6,554,963 | |||||||||||||||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
| NOTES TO FINANCIAL STATEMENTS |
81 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 28, 2013, 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) |
||||||||||||
| Australia |
$ | 2,460,511,377 | $ | 401,100,754 | $ | (206,183,602 | ) | $ | 194,917,152 | |||||||
| Hong Kong |
3,298,907,158 | 408,705,548 | (109,828,013 | ) | 298,877,535 | |||||||||||
| Japan Small Cap |
58,833,334 | 4,743,492 | (6,144,567 | ) | (1,401,075 | ) | ||||||||||
| Malaysia |
506,159,239 | 445,688,240 | (47,167,893 | ) | 398,520,347 | |||||||||||
| Pacific ex-Japan |
3,653,776,503 | 1,056,924,803 | (251,828,940 | ) | 805,095,863 | |||||||||||
| Singapore |
1,526,020,614 | 252,912,896 | (113,961,873 | ) | 138,951,023 | |||||||||||
| South Korea Capped |
2,220,651,391 | 1,760,275,075 | (511,949,324 | ) | 1,248,325,751 | |||||||||||
| Taiwan |
2,187,771,759 | 1,004,656,227 | (238,006,919 | ) | 766,649,308 | |||||||||||
| Thailand Capped Investable Market |
843,962,470 | 222,006,012 | (25,074,518 | ) | 196,931,494 | |||||||||||
Management has reviewed the tax positions as of February 28, 2013, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 7. | FINANCIAL FUTURES CONTRACTS |
Each Fund may purchase or sell financial futures contracts in an effort to help such Fund track its underlying index. A futures contract is a standardized, exchange-traded agreement to buy and sell a financial instrument at a set price on a future date. Upon entering into a futures contract, the Fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are recorded by the Fund as unrealized appreciation or depreciation. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Losses may arise if the value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts also involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.
| 82 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table shows the value of futures contracts held by the Funds as of February 28, 2013 and the related locations in the statements of assets and liabilities, presented by risk exposure category:
| Assets | ||||||||
| iShares MSCI Australia Index Fund |
iShares MSCI Hong Kong Index Fund |
|||||||
| Equity contracts: |
||||||||
| Variation margin/Net assets consist of — net unrealized appreciation (depreciation)a |
$ | 865,094 | $ | 63,709 | ||||
|
|
|
|
|
|||||
| a | Represents cumulative appreciation of futures contracts as reported in the schedules of investments. |
| Liabilities | ||||||||
| iShares MSCI Singapore Index Fund |
iShares MSCI Taiwan Index Fund |
|||||||
| Equity contracts: |
||||||||
| Variation margin/Net assets consist of — net unrealized appreciation (depreciation)a |
$ | (30,539 | ) | $ | (24,962 | )b | ||
|
|
|
|
|
|||||
| a | Represents cumulative depreciation of futures contracts as reported in the schedules of investments. |
| b | Only current day’s variation margin is reported in the statements of assets and liabilities. |
The following table shows the realized and unrealized gains (losses) on futures contracts held by the Funds during the six months ended February 28, 2013 and the related locations in the statements of operations, presented by risk exposure category:
| Net Realized Gain (Loss) | ||||||||||||||||
| iShares MSCI Australia Index Fund |
iShares MSCI Hong Kong Index Fund |
iShares MSCI Singapore Index Fund |
iShares MSCI Taiwan Index Fund |
|||||||||||||
| Equity contracts: |
||||||||||||||||
| Futures contracts |
$ | 1,817,979 | $ | 1,524,347 | $ | 306,952 | $ | 607,511 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net Change in Unrealized Appreciation/Depreciation | ||||||||||||||||
| iShares MSCI Australia Index Fund |
iShares MSCI Hong Kong Index Fund |
iShares MSCI Singapore Index Fund |
iShares MSCI Taiwan Index Fund |
|||||||||||||
| Equity contracts: |
||||||||||||||||
| Futures contracts |
$ | 915,113 | $ | 87,084 | $ | 13,360 | $ | 141,032 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
83 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table shows the average quarter-end balances of open futures contracts for the six months ended February 28, 2013:
| iShares MSCI Australia Index Fund |
iShares MSCI Hong Kong Index Fund |
iShares MSCI Singapore Index Fund |
iShares MSCI Taiwan Index Fund |
|||||||||||||
| Average number of contracts purchased |
148 | 56 | 100 | 308 | ||||||||||||
| Average value of contracts purchased |
$ | 17,981,516 | $ | 7,793,647 | $ | 5,700,993 | $ | 8,118,367 | ||||||||
| 8. | 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.
| 84 | 2013 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 |
$ | 0.68272 | $ | — | $ | 0.21272 | $ | 0.89544 | 76 | % | — | % | 24 | % | 100 | % | ||||||||||||||||
| Hong Kong |
0.12186 | — | 0.00998 | 0.13184 | 92 | — | 8 | 100 | ||||||||||||||||||||||||
| Japan Small Cap |
0.65709 | — | 0.10728 | 0.76437 | 86 | — | 14 | 100 | ||||||||||||||||||||||||
| Malaysia |
0.13209 | — | 0.01419 | 0.14628 | 90 | — | 10 | 100 | ||||||||||||||||||||||||
| Pacific ex-Japan |
0.91722 | — | 0.18873 | 1.10595 | 83 | — | 17 | 100 | ||||||||||||||||||||||||
| Singapore |
0.19897 | — | 0.14730 | 0.34627 | 57 | — | 43 | 100 | ||||||||||||||||||||||||
| South Korea Capped |
— | — | 0.36456 | 0.36456 | — | — | 100 | 100 | ||||||||||||||||||||||||
| Taiwan |
0.24945 | — | 0.02144 | 0.27089 | 92 | — | 8 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
85 |
Table of Contents
Notes:
| 86 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Funds’ website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website.
©2013 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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iS-SAR-83-0213
Table of Contents
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI Brazil Capped Index Fund | EWZ | NYSE Arca |
| Ø | iShares MSCI Canada Index Fund | EWC | NYSE Arca |
| Ø | iShares MSCI Chile Capped Investable Market Index Fund | ECH | NYSE Arca |
| Ø | iShares MSCI Israel Capped Investable Market Index Fund | EIS | NYSE Arca |
| Ø | iShares MSCI Mexico Capped Investable Market Index Fund | EWW | NYSE Arca |
| Ø | iShares MSCI South Africa Index Fund | EZA | NYSE Arca |
| Ø | iShares MSCI Turkey Investable Market Index Fund | TUR | NYSE Arca |
| Ø | iShares MSCI USA Index Fund | EUSA | NYSE Arca |
Table of Contents
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| 26 | ||||
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| 74 |
Table of Contents
iSHARES® MSCI BRAZIL CAPPED INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (17.40)% | (17.94)% | (17.24)% | (4.45)% | (4.65)% | (4.05)% | 25.62% | 25.47% | 26.73% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (17.40)% | (17.94)% | (17.24)% | (20.36)% | (21.17)% | (18.67)% | 878.33% | 866.83% | 968.30% | ||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Brazil IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Brazil 25/50 Index.
“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.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI BRAZIL CAPPED INDEX FUND
The iShares MSCI Brazil Capped Index Fund (the “Fund”), formerly the iShares MSCI Brazil Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Brazil 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index and 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 28, 2013, the total return for the Fund was 6.29%, net of fees, while the total return for the Index was 6.86%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Brazil IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Brazil 25/50 Index. |
| 6 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI CANADA INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.40)% | (0.44)% | (0.19)% | (0.52)% | (0.56)% | (0.29)% | 12.74% | 12.66% | 13.04% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.40)% | (0.44)% | (0.19)% | (2.57)% | (2.76)% | (1.44)% | 231.72% | 229.46% | 240.70% | ||||||||
“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 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 28, 2013, the total return for the Fund was 4.60%, net of fees, while the total return for the Index was 4.73%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI CHILE CAPPED INVESTABLE MARKET INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.19)% | (1.16)% | 0.13% | 7.79% | 7.53% | 8.69% | 7.36% | 7.23% | 8.17% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.19)% | (1.16)% | 0.13% | 45.53% | 43.76% | 51.67% | 45.68% | 44.72% | 51.62% | ||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Chile Investable Market IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Chile IMI 25/50 Index.
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.
| 8 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI CHILE CAPPED INVESTABLE MARKET INDEX FUND
The iShares MSCI Chile Capped Investable Market Index Fund (the “Fund”), formerly the iShares MSCI Chile Investable Market Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Chile IMI 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index 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 28, 2013, the total return for the Fund was 10.37%, net of fees, while the total return for the Index was 10.59%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Chile Investable Market IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Chile IMI 25/50 Index. |
| FUND PERFORMANCE OVERVIEWS |
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Table of Contents
Fund Performance Overview
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 9.93% | 10.35% | 9.38% | (0.29)% | (0.22)% | 0.19% | (1.42)% | (1.07)% | 0.95% | ||||||||
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-weighted 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 28, 2013, the total return for the Fund was 18.35%, net of fees, while the total return for the Index was 17.89%.
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI MEXICO CAPPED INVESTABLE MARKET INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 20.99% | 21.61% | 19.94% | 6.62% | 6.65% | 5.78% | 21.56% | 21.59% | 20.80% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 20.99% | 21.61% | 19.94% | 37.76% | 38.00% | 32.42% | 604.68% | 606.18% | 561.66% | ||||||||
Index performance through November 30, 2007 reflects the performance of the MSCI Mexico IndexSM. Index performance beginning on December 1, 2007 through February 11, 2013 reflects the performance of the MSCI Mexico Investable Market IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Mexico IMI 25/50 Index.
“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.
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI MEXICO CAPPED INVESTABLE MARKET INDEX FUND
The iShares MSCI Mexico Capped Investable Market Index Fund (the “Fund”), formerly the iShares MSCI Mexico Investable Market Index Fund, seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Mexico IMI 25/50 Index (the “Index”). The Index is a free-float adjusted market capitalization-weighted index and 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 28, 2013, the total return for the Fund was 17.36%, net of fees, while the total return for the Index was 16.36%*.
| * | Index performance through February 11, 2013 reflects the performance of the MSCI Mexico Investable Market IndexSM. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Mexico IMI 25/50 Index. |
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SOUTH AFRICA INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (5.54)% | (4.52)% | (4.92)% | 5.11% | 5.38% | 6.12% | 16.12% | 16.07% | 17.24% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Ten Years Ended 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (5.54)% | (4.52)% | (4.92)% | 28.28% | 29.94% | 34.57% | 345.81% | 344.00% | 390.50% | ||||||||
“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 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 28, 2013, the total return for the Fund was 1.99%, net of fees, while the total return for the Index was 2.34%.
| FUND PERFORMANCE OVERVIEWS |
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Table of Contents
Fund Performance Overview
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 29.27% | 30.03% | 29.58% | 7.91% | 7.78% | 8.27% | 45.56% | 44.69% | 47.98% | ||||||||
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-weighted 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 28, 2013, the total return for the Fund was 18.17%, net of fees, while the total return for the Index was 18.44%.
| 14 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI USA INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 13.10% | 12.95% | 13.29% | 12.09% | 12.06% | 12.29% | 37.97% | 37.85% | 38.66% | ||||||||
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 28, 2013, the total return for the Fund was 9.03%, net of fees, while the total return for the Index was 9.12%.
| FUND PERFORMANCE OVERVIEWS |
15 |
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, 2012 to February 28, 2013.
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 (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| Brazil Capped |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,062.90 | 0.60 | % | $ | 3.07 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.60 | 3.01 | ||||||||||||
| Canada |
||||||||||||||||
| Actual |
1,000.00 | 1,046.00 | 0.51 | 2.59 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| Chile Capped Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,103.70 | 0.60 | 3.13 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.60 | 3.01 | ||||||||||||
| Israel Capped Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,183.50 | 0.60 | 3.25 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.60 | 3.01 | ||||||||||||
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Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund | Beginning Account Value (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| Mexico Capped Investable Market |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,173.60 | 0.51 | % | $ | 2.75 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.51 | 2.56 | ||||||||||||
| South Africa |
||||||||||||||||
| Actual |
1,000.00 | 1,019.90 | 0.60 | 3.00 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.60 | 3.01 | ||||||||||||
| Turkey Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,181.70 | 0.60 | 3.25 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.60 | 3.01 | ||||||||||||
| USA |
||||||||||||||||
| Actual |
1,000.00 | 1,090.30 | 0.15 | 0.78 | ||||||||||||
| 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 (181 days) and divided by the number of days in the year (365 days). |
| SHAREHOLDER EXPENSES |
17 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI BRAZIL CAPPED INDEX FUND
February 28, 2013
| 18 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRAZIL CAPPED INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRAZIL CAPPED INDEX FUND
February 28, 2013
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI CANADA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CANADA INDEX FUND
February 28, 2013
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CANADA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI CHILE CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CHILE CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI MEXICO CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| 28 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MEXICO CAPPED INVESTABLE MARKET INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SOUTH AFRICA INDEX FUND
February 28, 2013
| 30 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH AFRICA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
February 28, 2013
| 32 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
February 28, 2013
| 34 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2013
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| 36 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| 38 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| 40 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| 42 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 28, 2013
| 44 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2013
| iShares Index Fund |
iShares MSCI Canada Index Fund |
iShares MSCI Chile Capped Investable Market Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 5,905,464,573 | $ | 5,122,669,768 | $ | 419,214,651 | ||||||
| Affiliated (Note 2) |
811,745 | 52,643,979 | 19,603,844 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 5,906,276,318 | $ | 5,175,313,747 | $ | 438,818,495 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 8,318,249,385 | $ | 4,757,053,356 | $ | 614,277,024 | ||||||
| Affiliated (Note 2) |
811,745 | 52,643,979 | 19,603,844 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
8,319,061,130 | 4,809,697,335 | 633,880,868 | |||||||||
| Foreign currencies, at valueb |
9,338,605 | 20,947,503 | — | |||||||||
| Foreign currencies pledged to broker, at valueb |
— | 472,586 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
225,164,666 | 788,016 | 8,347,385 | |||||||||
| Dividends and interest |
53,936,439 | 6,580,383 | 1,780 | |||||||||
| Futures variation margin |
— | 758,309 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
8,607,500,840 | 4,839,244,132 | 642,230,033 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
209,640,022 | 60,482,616 | 7,165,159 | |||||||||
| Collateral for securities on loan (Note 5) |
— | 52,031,217 | — | |||||||||
| Capital shares redeemed |
17,729,710 | 2,484,143 | — | |||||||||
| Investment advisory fees (Note 2) |
4,112,983 | 1,902,938 | 290,103 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
231,482,715 | 116,900,914 | 7,455,262 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 8,376,018,125 | $ | 4,722,343,218 | $ | 634,774,771 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 7,448,877,628 | $ | 5,332,790,678 | $ | 535,689,516 | ||||||
| Distributions in excess of net investment income |
(29,992,426 | ) | (4,775,568 | ) | (215,174 | ) | ||||||
| Accumulated net realized loss |
(1,456,617,579 | ) | (240,321,548 | ) | (95,763,420 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
2,413,750,502 | (365,350,344 | ) | 195,063,849 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 8,376,018,125 | $ | 4,722,343,218 | $ | 634,774,771 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
151,200,000 | 166,200,000 | 9,550,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 55.40 | $ | 28.41 | $ | 66.47 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $49,488,389 and $ —, respectively. See Note 5. |
| b | Cost of foreign currencies including currencies at broker, if any: $9,338,605, $21,865,959 and $ —, 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 |
45 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Israel Capped Investable Market Index Fund |
iShares MSCI Mexico Capped Investable Market Index Fund |
iShares MSCI South Africa Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 100,418,890 | $ | 2,231,266,618 | $ | 538,714,918 | ||||||
| Affiliated (Note 2) |
777,345 | 41,018,664 | 5,215,141 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 101,196,235 | $ | 2,272,285,282 | $ | 543,930,059 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 80,362,653 | $ | 2,364,179,774 | $ | 505,634,924 | ||||||
| Affiliated (Note 2) |
777,345 | 41,018,664 | 5,215,141 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
81,139,998 | 2,405,198,438 | 510,850,065 | |||||||||
| Foreign currencies, at valueb |
55,438 | 3,807,717 | 176,594 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
200,375 | 69,927,850 | 616,215 | |||||||||
| Dividends and interest |
127,057 | 620,270 | 3,536 | |||||||||
| Capital shares sold |
— | 174,220 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
81,522,868 | 2,479,728,495 | 511,646,410 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
193,936 | 68,718,304 | 413,640 | |||||||||
| Collateral for securities on loan (Note 5) |
738,106 | 40,695,274 | 4,990,000 | |||||||||
| Investment advisory fees (Note 2) |
36,907 | 889,187 | 232,228 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
968,949 | 110,302,765 | 5,635,868 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 80,553,919 | $ | 2,369,425,730 | $ | 506,010,542 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 133,001,818 | $ | 2,354,061,238 | $ | 597,349,901 | ||||||
| Undistributed (distributions in excess of) net investment income |
(301,194 | ) | 1,194,871 | (4,431,954 | ) | |||||||
| Accumulated net realized loss |
(32,089,223 | ) | (118,751,069 | ) | (53,827,411 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
(20,057,482 | ) | 132,920,690 | (33,079,994 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 80,553,919 | $ | 2,369,425,730 | $ | 506,010,542 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
1,850,000 | 33,200,000 | 7,800,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 43.54 | $ | 71.37 | $ | 64.87 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $699,777, $37,932,851 and $4,744,590, respectively. See Note 5. |
| b | Cost of foreign currencies: $55,954, $3,807,717 and $176,594, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 255 million and 400 million, respectively. |
See notes to financial statements.
| 46 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares Index Fund |
iShares MSCI USA Index Fund |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 761,404,079 | $ | 130,400,845 | ||||
| Affiliated (Note 2) |
23,506,698 | 3,421,243 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 784,910,777 | $ | 133,822,088 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 805,739,007 | $ | 152,311,067 | ||||
| Affiliated (Note 2) |
23,506,698 | 3,541,261 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
829,245,705 | 155,852,328 | ||||||
| Foreign currencies, at valueb |
415,821 | — | ||||||
| Receivables: |
||||||||
| Investment securities sold |
— | 822,544 | ||||||
| Dividends and interest |
66,234 | 366,142 | ||||||
|
|
|
|
|
|||||
| Total Assets |
829,727,760 | 157,041,014 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
— | 857,664 | ||||||
| Collateral for securities on loan (Note 5) |
23,411,603 | 2,684,603 | ||||||
| Investment advisory fees (Note 2) |
378,701 | 17,711 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
23,790,304 | 3,559,978 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 805,937,456 | $ | 153,481,036 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 793,287,774 | $ | 127,557,122 | ||||
| Undistributed (distributions in excess of) net investment income |
(1,981,249 | ) | 554,012 | |||||
| Undistributed net realized gain (accumulated net realized loss) |
(29,696,749 | ) | 3,339,662 | |||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
44,327,680 | 22,030,240 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 805,937,456 | $ | 153,481,036 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
12,150,000 | 4,700,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 66.33 | $ | 32.66 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $21,943,100 and $2,613,271, respectively. See Note 5. |
| b | Cost of foreign currencies: $423,069 and $ —, respectively. |
| c | $0.001 par value, number of shares authorized: 200 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
47 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Brazil Capped Index Fund |
iShares MSCI Canada Index Fund |
iShares MSCI Chile Capped Investable Market Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 136,032,472 | $ | 56,120,308 | $ | 2,260,103 | ||||||
| Interest — unaffiliated |
— | 4,812 | — | |||||||||
| Interest — affiliated (Note 2) |
2,943 | 1,886 | 575 | |||||||||
| Securities lending income — affiliated (Note 2) |
42 | 383,824 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
136,035,457 | 56,510,830 | 2,260,678 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
26,696,139 | 11,730,383 | 1,702,825 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
26,696,139 | 11,730,383 | 1,702,825 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
109,339,318 | 44,780,447 | 557,853 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(268,881,056 | ) | (13,506,043 | ) | (3,093,644 | ) | ||||||
| In-kind redemptions — unaffiliated |
47,225,661 | 43,468,206 | — | |||||||||
| Futures contracts |
— | 234,177 | — | |||||||||
| Foreign currency transactions |
(237,319 | ) | (452,599 | ) | (90,933 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(221,892,714 | ) | 29,743,741 | (3,184,577 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
584,531,085 | 124,749,830 | 58,497,961 | |||||||||
| Futures contracts |
— | 803,280 | — | |||||||||
| Translation of assets and liabilities in foreign currencies |
2,043,644 | (541,498 | ) | 5,703 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
586,574,729 | 125,011,612 | 58,503,664 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
364,682,015 | 154,755,353 | 55,319,087 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 474,021,333 | $ | 199,535,800 | $ | 55,876,940 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $10,456,848, $9,816,757 and $708,316, respectively. |
See notes to financial statements.
| 48 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Israel Capped Investable Market Index Fund |
iShares MSCI Mexico Capped Investable Market Index Fund |
iShares MSCI South Africa Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 876,271 | $ | 8,504,460 | $ | 6,547,374 | ||||||
| Interest — affiliated (Note 2) |
34 | 318 | 185 | |||||||||
| Securities lending income — affiliated (Note 2) |
79,186 | 112,608 | 46,095 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
955,491 | 8,617,386 | 6,593,654 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
237,279 | 4,390,129 | 1,528,256 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
237,279 | 4,390,129 | 1,528,256 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
718,212 | 4,227,257 | 5,065,398 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(3,120,393 | ) | (51,996,638 | ) | (1,826,433 | ) | ||||||
| In-kind redemptions — unaffiliated |
871,361 | 20,705,624 | 11,186,106 | |||||||||
| Foreign currency transactions |
23,160 | 80,202 | (43,341 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(2,225,872 | ) | (31,210,812 | ) | 9,316,332 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
14,398,206 | 248,567,058 | (3,945,724 | ) | ||||||||
| Translation of assets and liabilities in foreign currencies |
(1,696 | ) | 14,568 | 15,261 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
14,396,510 | 248,581,626 | (3,930,463 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
12,170,638 | 217,370,814 | 5,385,869 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 12,888,850 | $ | 221,598,071 | $ | 10,451,267 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $215,093, $ — and $863,781, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares Index Fund |
iShares MSCI USA Index Fund |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 264,758 | $ | 1,838,891 | ||||
| Dividends — affiliated (Note 2) |
— | 6,867 | ||||||
| Interest — affiliated (Note 2) |
76 | 72 | ||||||
| Securities lending income — affiliated (Note 2) |
369,637 | 5,315 | ||||||
|
|
|
|
|
|||||
| Total investment income |
634,471 | 1,851,145 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
2,085,969 | 111,661 | ||||||
|
|
|
|
|
|||||
| Total expenses |
2,085,969 | 111,661 | ||||||
|
|
|
|
|
|||||
| Net investment income (loss) |
(1,451,498 | ) | 1,739,484 | |||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(7,347,042 | ) | (157,154 | ) | ||||
| Investments — affiliated (Note 2) |
— | (658 | ) | |||||
| In-kind redemptions — unaffiliated |
18,415,797 | 3,989,384 | ||||||
| In-kind redemptions — affiliated (Note 2) |
— | 15,938 | ||||||
| Foreign currency transactions |
12,014 | — | ||||||
|
|
|
|
|
|||||
| Net realized gain |
11,080,769 | 3,847,510 | ||||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
95,489,406 | 7,463,089 | ||||||
| Translation of assets and liabilities in foreign currencies |
(6,743 | ) | — | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
95,482,663 | 7,463,089 | ||||||
|
|
|
|
|
|||||
| Net realized and unrealized gain |
106,563,432 | 11,310,599 | ||||||
|
|
|
|
|
|||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 105,111,934 | $ | 13,050,083 | ||||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $16,524 and $1,920, respectively. |
See notes to financial statements.
| 50 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Brazil Capped Index Fund |
iShares MSCI Canada Index Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 109,339,318 | $ | 265,582,641 | $ | 44,780,447 | $ | 87,661,937 | ||||||||
| Net realized gain (loss) |
(221,892,714 | ) | (543,223,728 | ) | 29,743,741 | 21,344,695 | ||||||||||
| Net change in unrealized appreciation/depreciation |
586,574,729 | (1,354,671,920 | ) | 125,011,612 | (434,518,038 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
474,021,333 | (1,632,313,007 | ) | 199,535,800 | (325,511,406 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(85,946,218 | ) | (82,370,233 | ) | (62,085,928 | ) | (94,130,044 | ) | ||||||||
| Return of capital |
— | (133,826,010 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(85,946,218 | ) | (216,196,243 | ) | (62,085,928 | ) | (94,130,044 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
1,642,559,353 | 139,197,302 | 613,910,740 | 652,923,013 | ||||||||||||
| Cost of shares redeemed |
(1,025,233,433 | ) | (2,252,192,423 | ) | (283,561,696 | ) | (1,071,283,795 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
617,325,920 | (2,112,995,121 | ) | 330,349,044 | (418,360,782 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
1,005,401,035 | (3,961,504,371 | ) | 467,798,916 | (838,002,232 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
7,370,617,090 | 11,332,121,461 | 4,254,544,302 | 5,092,546,534 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 8,376,018,125 | $ | 7,370,617,090 | $ | 4,722,343,218 | $ | 4,254,544,302 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (29,992,426 | ) | $ | (53,385,526 | ) | $ | (4,775,568 | ) | $ | 12,529,913 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
29,600,000 | 2,600,000 | 21,600,000 | 23,900,000 | ||||||||||||
| Shares redeemed |
(18,500,000 | ) | (36,850,000 | ) | (10,000,000 | ) | (39,700,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
11,100,000 | (34,250,000 | ) | 11,600,000 | (15,800,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
51 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Chile Capped Investable Market Index Fund |
iShares MSCI Israel Capped Investable Market Index Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 557,853 | $ | 9,312,365 | $ | 718,212 | $ | 2,116,888 | ||||||||
| Net realized loss |
(3,184,577 | ) | (53,947,353 | ) | (2,225,872 | ) | (8,782,793 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
58,503,664 | (39,629,429 | ) | 14,396,510 | (7,354,630 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
55,876,940 | (84,264,417 | ) | 12,888,850 | (14,020,535 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(773,027 | ) | (8,674,940 | ) | (1,015,503 | ) | (1,986,153 | ) | ||||||||
| Return of capital |
— | (430,786 | ) | — | (63,813 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(773,027 | ) | (9,105,726 | ) | (1,015,503 | ) | (2,049,966 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
58,641,152 | 168,360,287 | 4,057,008 | 54,151,938 | ||||||||||||
| Cost of shares redeemed |
(27,766,939 | ) | (234,211,464 | ) | (4,288,924 | ) | (47,186,462 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
30,874,213 | (65,851,177 | ) | (231,916 | ) | 6,965,476 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
85,978,126 | (159,221,320 | ) | 11,641,431 | (9,105,025 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
548,796,645 | 708,017,965 | 68,912,488 | 78,017,513 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 634,774,771 | $ | 548,796,645 | $ | 80,553,919 | $ | 68,912,488 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (215,174 | ) | $ | — | $ | (301,194 | ) | $ | (3,903 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
900,000 | 2,600,000 | 100,000 | 1,300,000 | ||||||||||||
| Shares redeemed |
(450,000 | ) | (4,050,000 | ) | (100,000 | ) | (1,150,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
450,000 | (1,450,000 | ) | — | 150,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 52 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Mexico Capped Investable Market Index Fund |
iShares MSCI South Africa Index Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 4,227,257 | $ | 14,544,267 | $ | 5,065,398 | $ | 16,812,091 | ||||||||
| Net realized gain (loss) |
(31,210,812 | ) | 51,713,777 | 9,316,332 | 9,214,776 | |||||||||||
| Net change in unrealized appreciation/depreciation |
248,581,626 | (17,415,752 | ) | (3,930,463 | ) | (38,029,481 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
221,598,071 | 48,842,292 | 10,451,267 | (12,002,614 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(4,593,811 | ) | (16,941,924 | ) | (8,548,997 | ) | (16,263,704 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(4,593,811 | ) | (16,941,924 | ) | (8,548,997 | ) | (16,263,704 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
1,073,335,530 | 1,078,823,186 | 86,109,028 | 164,594,240 | ||||||||||||
| Cost of shares redeemed |
(103,613,612 | ) | (1,171,754,823 | ) | (53,922,934 | ) | (168,507,993 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
969,721,918 | (92,931,637 | ) | 32,186,094 | (3,913,753 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
1,186,726,178 | (61,031,269 | ) | 34,088,364 | (32,180,071 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
1,182,699,552 | 1,243,730,821 | 471,922,178 | 504,102,249 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 2,369,425,730 | $ | 1,182,699,552 | $ | 506,010,542 | $ | 471,922,178 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 1,194,871 | $ | 1,561,425 | $ | (4,431,954 | ) | $ | (948,355 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
15,300,000 | 18,600,000 | 1,300,000 | 2,600,000 | ||||||||||||
| Shares redeemed |
(1,500,000 | ) | (20,500,000 | ) | (800,000 | ) | (2,600,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
13,800,000 | (1,900,000 | ) | 500,000 | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
53 |
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 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | (1,451,498 | ) | $ | 7,409,333 | $ | 1,739,484 | $ | 2,008,350 | |||||||
| Net realized gain (loss) |
11,080,769 | (43,049,648 | ) | 3,847,510 | 1,787,070 | |||||||||||
| Net change in unrealized appreciation/depreciation |
95,482,663 | 111,616,412 | 7,463,089 | 14,419,985 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
105,111,934 | 75,976,097 | 13,050,083 | 18,215,405 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
— | (8,952,333 | ) | (1,775,339 | ) | (1,429,449 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
— | (8,952,333 | ) | (1,775,339 | ) | (1,429,449 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
215,267,068 | 169,170,485 | 18,838,623 | 150,498,448 | ||||||||||||
| Cost of shares redeemed |
(75,725,831 | ) | (123,586,926 | ) | (22,102,164 | ) | (27,048,052 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
139,541,237 | 45,583,559 | (3,263,541 | ) | 123,450,396 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
244,653,171 | 112,607,323 | 8,011,203 | 140,236,352 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
561,284,285 | 448,676,962 | 145,469,833 | 5,233,481 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 805,937,456 | $ | 561,284,285 | $ | 153,481,036 | $ | 145,469,833 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (1,981,249 | ) | $ | (529,751 | ) | $ | 554,012 | $ | 589,867 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
3,350,000 | 3,250,000 | 600,000 | 5,550,000 | ||||||||||||
| Shares redeemed |
(1,200,000 | ) | (2,650,000 | ) | (700,000 | ) | (950,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
2,150,000 | 600,000 | (100,000 | ) | 4,600,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 54 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Brazil Capped Index Fund | ||||||||||||||||||||||||
| Six months Feb. 28, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 52.61 | $ | 65.00 | $ | 68.07 | $ | 58.26 | $ | 73.27 | $ | 61.59 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.67 | 1.73 | 2.24 | 1.56 | 1.56 | 1.93 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
2.63 | (12.64 | ) | (1.69 | ) | 10.83 | (14.63 | ) | 11.59 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.30 | (10.91 | ) | 0.55 | 12.39 | (13.07 | ) | 13.52 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.51 | ) | (0.56 | ) | (3.62 | ) | (2.58 | ) | (1.94 | ) | (1.41 | ) | ||||||||||||
| Net realized gain |
— | — | — | — | — | (0.43 | ) | |||||||||||||||||
| Return of capital |
— | (0.92 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.51 | ) | (1.48 | ) | (3.62 | ) | (2.58 | ) | (1.94 | ) | (1.84 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 55.40 | $ | 52.61 | $ | 65.00 | $ | 68.07 | $ | 58.26 | $ | 73.27 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
6.29 | %c | (16.79 | )% | 0.36 | % | 21.12 | % | (16.05 | )% | 21.58 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 8,376,018 | $ | 7,370,617 | $ | 11,332,121 | $ | 9,240,453 | $ | 8,777,366 | $ | 7,242,260 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.60 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.48 | % | 2.92 | % | 3.08 | % | 2.24 | % | 3.38 | % | 2.37 | % | ||||||||||||
| Portfolio turnover ratef |
21 | % | 7 | % | 11 | % | 13 | % | 30 | % | 30 | % | ||||||||||||
| 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 years ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| f | 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 solely or partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rates for the six months ended February 28, 2013 and the years ended August 31, 2012, August 31, 2011, August 31, 2010, August 31, 2009 and August 31, 2008 were 10%, 6%, 11%, 13%, 14%, and 19%, respectively. See Note 4. |
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 Canada Index Fund | ||||||||||||||||||||||||
| Six months Feb. 28, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 27.52 | $ | 29.89 | $ | 26.10 | $ | 23.70 | $ | 30.55 | $ | 29.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.28 | 0.53 | 0.53 | 0.43 | 0.41 | 0.47 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.99 | (2.33 | ) | 3.78 | 2.39 | (6.84 | ) | 0.72 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.27 | (1.80 | ) | 4.31 | 2.82 | (6.43 | ) | 1.19 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.38 | ) | (0.57 | ) | (0.52 | ) | (0.42 | ) | (0.42 | ) | (0.51 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.38 | ) | (0.57 | ) | (0.52 | ) | (0.42 | ) | (0.42 | ) | (0.51 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 28.41 | $ | 27.52 | $ | 29.89 | $ | 26.10 | $ | 23.70 | $ | 30.55 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
4.60 | %c | (5.87 | )% | 16.50 | % | 11.91 | % | (20.51 | )% | 3.88 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 4,722,343 | $ | 4,254,544 | $ | 5,092,547 | $ | 3,447,242 | $ | 2,393,638 | $ | 2,071,061 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.96 | % | 1.94 | % | 1.70 | % | 1.63 | % | 2.00 | % | 1.46 | % | ||||||||||||
| Portfolio turnover ratef |
3 | % | 5 | % | 8 | % | 6 | % | 6 | % | 11 | % | ||||||||||||
| 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 years ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| 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 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Chile Capped Investable Market Index Fund | ||||||||||||||||||||||||
| Six months Feb. 28, 2013 |
Year ended Aug. 31, 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 |
$ | 60.31 | $ | 67.11 | $ | 67.37 | $ | 44.61 | $ | 44.80 | $ | 48.84 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.06 | 0.97 | 0.95 | 0.59 | 0.76 | 0.92 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
6.19 | (6.80 | ) | (0.23 | ) | 22.86 | (0.42 | ) | (4.38 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
6.25 | (5.83 | ) | 0.72 | 23.45 | 0.34 | (3.46 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.09 | ) | (0.92 | ) | (0.98 | ) | (0.66 | ) | (0.53 | ) | (0.58 | ) | ||||||||||||
| Return of capital |
— | (0.05 | ) | (0.00 | )d | (0.03 | ) | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.09 | ) | (0.97 | ) | (0.98 | ) | (0.69 | ) | (0.53 | ) | (0.58 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 66.47 | $ | 60.31 | $ | 67.11 | $ | 67.37 | $ | 44.61 | $ | 44.80 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
10.37 | %e | (8.68 | )% | 0.93 | % | 52.88 | % | 0.89 | % | (7.15 | )%e | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 634,775 | $ | 548,797 | $ | 708,018 | $ | 670,350 | $ | 263,205 | $ | 76,158 | ||||||||||||
| Ratio of expenses to average net assetsf |
0.60 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||||
| Ratio of net investment income to average net assetsf |
0.20 | % | 1.55 | % | 1.30 | % | 1.05 | % | 1.98 | % | 2.38 | % | ||||||||||||
| Portfolio turnover rateg |
15 | % | 48 | % | 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 rates for the six months ended February 28, 2013, the years ended August 31, 2012, August 31, 2011, August 31, 2010, August 31, 2009 and the period ended August 31, 2008 were 6%, 20%, 12%, 9%, 14% and 16%, respectively. See Note 4. |
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 Israel Capped Investable Market Index Fund | ||||||||||||||||||||||||
| Six months Feb. 28, 2013 |
Year ended Aug. 31, 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 |
$ | 37.25 | $ | 45.89 | $ | 49.41 | $ | 46.87 | $ | 48.62 | $ | 50.33 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.38 | 1.12 | 1.39 | 1.40 | 0.98 | 0.21 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
6.44 | (8.66 | ) | (3.18 | ) | 2.63 | (1.75 | ) | (1.92 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
6.82 | (7.54 | ) | (1.79 | ) | 4.03 | (0.77 | ) | (1.71 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.53 | ) | (1.07 | ) | (1.73 | ) | (1.49 | ) | (0.98 | ) | — | |||||||||||||
| Return of capital |
— | (0.03 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.53 | ) | (1.10 | ) | (1.73 | ) | (1.49 | ) | (0.98 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 43.54 | $ | 37.25 | $ | 45.89 | $ | 49.41 | $ | 46.87 | $ | 48.62 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
18.35 | %d | (16.52 | )% | (4.26 | )% | 8.57 | % | (0.63 | )% | (3.40 | )%d | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 80,554 | $ | 68,912 | $ | 78,018 | $ | 128,473 | $ | 107,792 | $ | 204,201 | ||||||||||||
| Ratio of expenses to average net assetse |
0.60 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.66 | % | 0.63 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
1.83 | % | 2.75 | % | 2.49 | % | 2.64 | % | 2.66 | % | 0.93 | % | ||||||||||||
| Portfolio turnover ratef |
8 | % | 20 | % | 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.
| 58 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Mexico Capped Investable Market Index Fund | ||||||||||||||||||||||||
| Six months Feb. 28, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 60.96 | $ | 58.39 | $ | 48.17 | $ | 42.59 | $ | 51.94 | $ | 58.35 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.17 | 0.73 | 0.80 | 0.72 | 0.43 | 1.40 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
10.41 | 2.76 | 10.15 | 5.61 | (9.17 | ) | (6.21 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
10.58 | 3.49 | 10.95 | 6.33 | (8.74 | ) | (4.81 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.17 | ) | (0.92 | ) | (0.73 | ) | (0.75 | ) | (0.61 | ) | (1.60 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.17 | ) | (0.92 | ) | (0.73 | ) | (0.75 | ) | (0.61 | ) | (1.60 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 71.37 | $ | 60.96 | $ | 58.39 | $ | 48.17 | $ | 42.59 | $ | 51.94 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
17.36 | %c | 6.13 | % | 22.67 | % | 14.83 | % | (16.50 | )% | (8.44 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,369,426 | $ | 1,182,700 | $ | 1,243,731 | $ | 1,450,039 | $ | 694,278 | $ | 955,684 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.49 | % | 1.26 | % | 1.35 | % | 1.46 | % | 1.25 | % | 2.42 | % | ||||||||||||
| Portfolio turnover ratee |
11 | % | 10 | % | 5 | % | 11 | % | 13 | % | 13 | % | ||||||||||||
| 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 South Africa Index Fund | ||||||||||||||||||||||||
| Six months Feb. 28, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year
ended Aug. 31, 2008a |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 64.65 | $ | 69.06 | $ | 58.74 | $ | 51.99 | $ | 55.80 | $ | 62.26 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.66 | 2.10 | 1.65 | 1.18 | 1.94 | 2.28 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
0.68 | (4.41 | ) | 11.08 | 6.92 | (3.84 | ) | (6.02 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.34 | (2.31 | ) | 12.73 | 8.10 | (1.90 | ) | (3.74 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(1.12 | ) | (2.10 | ) | (2.41 | ) | (1.35 | ) | (1.91 | ) | (2.72 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(1.12 | ) | (2.10 | ) | (2.41 | ) | (1.35 | ) | (1.91 | ) | (2.72 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 64.87 | $ | 64.65 | $ | 69.06 | $ | 58.74 | $ | 51.99 | $ | 55.80 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
1.99 | %d | (3.17 | )% | 21.58 | % | 15.80 | % | (2.23 | )% | (6.18 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 506,011 | $ | 471,922 | $ | 504,102 | $ | 505,191 | $ | 488,728 | $ | 429,655 | ||||||||||||
| Ratio of expenses to average net assetse |
0.60 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.66 | % | 0.63 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
2.01 | % | 3.26 | % | 2.38 | % | 2.09 | % | 4.81 | % | 3.61 | % | ||||||||||||
| Portfolio turnover ratef |
1 | % | 4 | % | 4 | % | 5 | % | 16 | % | 21 | % | ||||||||||||
| 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.
| 60 | 2013 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 Feb. 28, 2013 |
Year ended Aug. 31, 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 |
$ | 56.13 | $ | 47.73 | $ | 60.81 | $ | 48.01 | $ | 52.42 | $ | 50.30 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)b |
(0.13 | ) | 0.86 | 0.84 | 1.00 | 0.78 | 0.83 | |||||||||||||||||
| Net realized and unrealized gain (loss)c |
10.33 | 8.70 | (12.59 | ) | 13.02 | (4.22 | ) | 1.29 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
10.20 | 9.56 | (11.75 | ) | 14.02 | (3.44 | ) | 2.12 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (1.16 | ) | (1.33 | ) | (1.22 | ) | (0.97 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (1.16 | ) | (1.33 | ) | (1.22 | ) | (0.97 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 66.33 | $ | 56.13 | $ | 47.73 | $ | 60.81 | $ | 48.01 | $ | 52.42 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
18.17 | %d | 20.37 | % | (19.74 | )% | 29.55 | % | (5.56 | )% | 4.22 | %d | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 805,937 | $ | 561,284 | $ | 448,677 | $ | 601,988 | $ | 242,435 | $ | 152,021 | ||||||||||||
| Ratio of expenses to average net assetse |
0.60 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetse |
(0.42 | )% | 1.75 | % | 1.30 | % | 1.81 | % | 2.39 | % | 3.78 | % | ||||||||||||
| Portfolio turnover ratef |
4 | % | 9 | % | 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 |
61 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI USA Index Fund | ||||||||||||||||
| Six months Feb. 28, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Period from to Aug. 31, 2010 |
|||||||||||||
| Net asset value, beginning of period |
$ | 30.31 | $ | 26.17 | $ | 22.44 | $ | 24.83 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.36 | 0.59 | 0.51 | 0.17 | ||||||||||||
| Net realized and unrealized gain (loss)c |
2.36 | 3.94 | 3.73 | (2.49 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
2.72 | 4.53 | 4.24 | (2.32 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.37 | ) | (0.39 | ) | (0.51 | ) | (0.07 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.37 | ) | (0.39 | ) | (0.51 | ) | (0.07 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 32.66 | $ | 30.31 | $ | 26.17 | $ | 22.44 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
9.03 | %d | 17.44 | % | 18.89 | % | (9.37 | )%d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 153,481 | $ | 145,470 | $ | 5,233 | $ | 2,244 | ||||||||
| Ratio of expenses to average net assetse |
0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | ||||||||
| Ratio of net investment income to average net assetse |
2.34 | % | 2.04 | % | 1.90 | % | 2.21 | % | ||||||||
| Portfolio turnover ratef |
2 | % | 6 | % | 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.
| 62 | 2013 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”):
| a | Formerly the iShares MSCI Brazil Index Fund |
| b | Formerly the iShares MSCI Chile Investable Market Index Fund |
| c | Formerly the iShares MSCI Mexico Investable Market Index Fund |
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 |
63 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY VALUATION
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of investments for the Funds. The investments of each Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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). |
| • | Financial futures contracts are valued at that day’s last reported settlement price on the exchange where the contract is traded. |
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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument. 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 |
| 64 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; 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. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2013. 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 | |||||||||||||
| Brazil Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 4,252,853,728 | $ | — | $ | — | $ | 4,252,853,728 | ||||||||
| Preferred Stocks |
4,065,395,657 | — | — | 4,065,395,657 | ||||||||||||
| Rights |
— | 0 | a | — | 0 | a | ||||||||||
| Money Market Funds |
811,745 | — | — | 811,745 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 8,319,061,130 | $ | 0 | a | $ | — | $ | 8,319,061,130 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Canada |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 4,757,053,348 | $ | — | $ | 8 | $ | 4,757,053,356 | ||||||||
| Money Market Funds |
52,643,979 | — | — | 52,643,979 | ||||||||||||
| Futures Contractsb |
758,309 | — | — | 758,309 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 4,810,455,636 | $ | — | $ | 8 | $ | 4,810,455,644 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Chile Capped Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 569,721,164 | $ | — | $ | — | $ | 569,721,164 | ||||||||
| Preferred Stocks |
43,382,924 | — | — | 43,382,924 | ||||||||||||
| Rights |
1,172,936 | — | — | 1,172,936 | ||||||||||||
| Money Market Funds |
19,603,844 | — | — | 19,603,844 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 633,880,868 | $ | — | $ | — | $ | 633,880,868 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
65 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Israel Capped Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 80,362,653 | $ | — | $ | — | $ | 80,362,653 | ||||||||
| Money Market Funds |
777,345 | — | — | 777,345 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 81,139,998 | $ | — | $ | — | $ | 81,139,998 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Mexico Capped Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,364,179,774 | $ | — | $ | — | $ | 2,364,179,774 | ||||||||
| Money Market Funds |
41,018,664 | — | — | 41,018,664 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,405,198,438 | $ | — | $ | — | $ | 2,405,198,438 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| South Africa |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 505,634,924 | $ | — | $ | — | $ | 505,634,924 | ||||||||
| Money Market Funds |
5,215,141 | — | — | 5,215,141 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 510,850,065 | $ | — | $ | — | $ | 510,850,065 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Turkey Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 805,739,007 | $ | — | $ | — | $ | 805,739,007 | ||||||||
| Money Market Funds |
23,506,698 | — | — | 23,506,698 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 829,245,705 | $ | — | $ | — | $ | 829,245,705 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| USA |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 153,014,883 | $ | — | $ | — | $ | 153,014,883 | ||||||||
| Money Market Funds |
2,837,445 | — | — | 2,837,445 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 155,852,328 | $ | — | $ | — | $ | 155,852,328 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
| b | Futures contracts are shown at the net unrealized appreciation (depreciation) on the contracts. |
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 28, 2013 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.
| 66 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to 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, stock dividends, capital gains on investments, or certain foreign currency transactions. 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 stock dividends are presented as “other foreign taxes,” and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, 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 December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial
| NOTES TO FINANCIAL STATEMENTS |
67 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
statements for fiscal years beginning after January 1, 2013, 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 Capped 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 | ||||
For its investment advisory services to each of the iShares MSCI Brazil Capped, iShares MSCI Chile Capped 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. The Funds benefit from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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.
| 68 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For the six months ended February 28, 2013, BTC earned securities lending agent fees from the Funds as follows:
| iShares MSCI Index Fund | Securities Lending Agent Fees |
|||
| Brazil Capped |
$ | 23 | ||
| Canada |
206,674 | |||
| Israel Capped Investable Market |
42,639 | |||
| Mexico Capped Investable Market |
60,635 | |||
| South Africa |
24,820 | |||
| Turkey Investable Market |
199,035 | |||
| USA |
2,862 | |||
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Funds for 1940 Act purposes.
Investments in issuers considered to be affiliates of the Funds (excluding short-term investments) during the six months ended February 28, 2013, 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 |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| USA |
||||||||||||||||||||||||||||
| BlackRock Inc. |
1,445 | 251 | (239 | ) | 1,457 | $ | 349,316 | $ | 2,169 | $ | 8,576 | |||||||||||||||||
| PNC Financial Services Group Inc. (The) |
5,825 | 861 | (1,004 | ) | 5,682 | 354,500 | 4,698 | 6,704 | ||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 703,816 | $ | 6,867 | $ | 15,280 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| NOTES TO FINANCIAL STATEMENTS |
69 |
Table of Contents
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 28, 2013 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| Brazil Capped |
$ | 2,446,248,186 | $ | 1,777,473,288 | ||||
| Canada |
178,732,081 | 152,060,330 | ||||||
| Chile Capped Investable Market |
94,983,125 | 84,241,241 | ||||||
| Israel Capped Investable Market |
6,249,963 | 6,462,245 | ||||||
| Mexico Capped Investable Market |
185,306,189 | 187,484,554 | ||||||
| South Africa |
9,558,272 | 5,141,406 | ||||||
| Turkey Investable Market |
26,807,349 | 28,302,289 | ||||||
| USA |
3,719,891 | 3,853,263 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2013 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| Brazil Capped |
$ | — | $ | 59,296,000 | ||||
| Canada |
610,848,593 | 279,938,820 | ||||||
| Israel Capped Investable Market |
4,044,766 | 4,273,589 | ||||||
| Mexico Capped Investable Market |
1,071,142,115 | 103,476,731 | ||||||
| South Africa |
78,993,780 | 53,834,723 | ||||||
| Turkey Investable Market |
215,028,633 | 75,647,281 | ||||||
| USA |
18,788,623 | 22,026,092 | ||||||
| 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 may also 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.
| 70 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to 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 market value of the loaned securities is determined at the close of each business day of the Funds and any additional required collateral is delivered to the Funds on the next business day. 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. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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 |
71 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of August 31, 2012, the Funds’ fiscal year-end, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| iShares MSCI Index Fund |
Non- Expiringa |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||||||||
| Brazil Capped |
$ | 160,031,183 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 198,226,310 | $ | — | $ | 358,257,493 | ||||||||||||||||||
| Canada |
31,451,368 | 2,931,648 | — | 5,363,291 | 5,107,471 | 27,886,883 | 68,928,677 | 14,903,919 | 156,573,257 | |||||||||||||||||||||||||||
| Chile Capped Investable Market |
30,504,831 | — | — | — | — | 1,886,881 | 11,712,090 | 976,991 | 45,080,793 | |||||||||||||||||||||||||||
| Israel Capped Investable Market |
3,141,756 | — | — | — | — | 784,479 | 10,801,191 | 7,130,249 | 21,857,675 | |||||||||||||||||||||||||||
| Mexico Capped Investable Market |
6,596,203 | 12,912 | 632,766 | — | 853,150 | 8,973,988 | 2,789,471 | 22,863,665 | 42,722,155 | |||||||||||||||||||||||||||
| South Africa |
5,013,197 | — | 260,738 | 1,607,845 | 972,024 | 15,339,464 | 14,856,365 | 6,137,142 | 44,186,775 | |||||||||||||||||||||||||||
| Turkey Investable Market |
4,821,444 | — | — | — | — | 720,636 | 5,982,737 | 3,859,184 | 15,384,001 | |||||||||||||||||||||||||||
| USA |
2,724 | — | — | — | — | — | — | — | 2,724 | |||||||||||||||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
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 28, 2013, 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 Capped |
$ | 6,402,129,337 | $ | 2,829,891,154 | $ | (912,959,361 | ) | $ | 1,916,931,793 | |||||||
| Canada |
5,269,052,422 | 423,962,851 | (883,317,938 | ) | (459,355,087 | ) | ||||||||||
| Chile Capped Investable Market |
460,847,952 | 201,208,729 | (28,175,813 | ) | 173,032,916 | |||||||||||
| Israel Capped Investable Market |
103,372,864 | 3,171,604 | (25,404,470 | ) | (22,232,866 | ) | ||||||||||
| Mexico Capped Investable Market |
2,282,996,729 | 273,653,046 | (151,451,337 | ) | 122,201,709 | |||||||||||
| South Africa |
553,995,333 | 54,326,317 | (97,471,585 | ) | (43,145,268 | ) | ||||||||||
| Turkey Investable Market |
793,009,469 | 69,721,418 | (33,485,182 | ) | 36,236,236 | |||||||||||
| USA |
134,035,344 | 23,973,007 | (2,156,023 | ) | 21,816,984 | |||||||||||
Management has reviewed the tax positions as of February 28, 2013, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 72 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 7. | FINANCIAL FUTURES CONTRACTS |
Each Fund may purchase or sell financial futures contracts in an effort to help such Fund track its underlying index. A futures contract is a standardized, exchange-traded agreement to buy and sell a financial instrument at a set price on a future date. Upon entering into a futures contract, the Fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are recorded by the Fund as unrealized appreciation or depreciation. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Losses may arise if the value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts also involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.
The following table shows the value of futures contracts held by the iShares MSCI Canada Index Fund as of February 28, 2013 and the related locations in the statements of assets and liabilities, presented by risk exposure category:
| Assets | ||||
| Equity contracts: |
||||
| Variation margin/Net assets consist of – |
$ | 758,309 | ||
|
|
|
|||
| a | Represents cumulative appreciation of futures contracts as reported in the schedule of investments. |
The following table shows the realized and unrealized gains (losses) on futures contracts held by the iShares MSCI Canada Index Fund during the six months ended February 28, 2013 and the related locations in the statements of operations, presented by risk exposure category:
| Net Realized Gain (Loss) |
Net Change in
Unrealized Appreciation/Depreciation |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | 234,177 | $ | 803,280 | ||||
|
|
|
|
|
|||||
For the six months ended February 28, 2013, the average quarter-end number of contracts and notional value of open futures contracts for the iShares MSCI Canada Index Fund were 86 and $12,204,723, respectively.
| 8. | 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 |
73 |
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 |
||||||||||||||||||||||||
| Brazil Capped |
$ | 0.30346 | $ | — | $ | 0.20767 | $ | 0.51113 | 59 | % | — | % | 41 | % | 100 | % | ||||||||||||||||
| Canada |
0.29591 | — | 0.08083 | 0.37674 | 79 | — | 21 | 100 | ||||||||||||||||||||||||
| Chile Capped Investable Market |
0.07678 | — | 0.01106 | 0.08784 | 87 | — | 13 | 100 | ||||||||||||||||||||||||
| Israel Capped Investable Market |
0.34382 | — | 0.19066 | 0.53448 | 64 | — | 36 | 100 | ||||||||||||||||||||||||
| South Africa |
0.89338 | — | 0.23149 | 1.12487 | 79 | — | 21 | 100 | ||||||||||||||||||||||||
| USA |
0.34533 | — | 0.02021 | 0.36554 | 94 | — | 6 | 100 | ||||||||||||||||||||||||
| 74 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Funds’ website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website.
©2013 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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iS-SAR-84-0213
Table of Contents
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI Emerging Markets Index Fund | EEM | NYSE Arca |
Table of Contents
| 5 | ||||
| 7 | ||||
| 8 | ||||
| 23 | ||||
| 26 | ||||
| 27 | ||||
| 36 |
Table of Contents
iSHARES® MSCI EMERGING MARKETS INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.38)% | (0.71)% | 0.28% | 0.24% | 0.37% | 0.34% | 16.39% | 16.30% | 16.80% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.38)% | (0.71)% | 0.28% | 1.23% | 1.87% | 1.73% | 348.96% | 345.63% | 364.86% | ||||||||
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.
| FUND PERFORMANCE OVERVIEW |
5 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
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 28, 2013, the total return for the Fund was 11.62%, net of fees, while the total return for the Index was 12.06%.
| 6 | 2013 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, 2012 to February 28, 2013.
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 (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
|||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,116.20 | 0.67 | % | $ | 3.52 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.67 | 3.36 | ||||||||||||
| 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 (181 days) and divided by the number of days in the year (365 days). |
| SHAREHOLDER EXPENSES |
7 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| 8 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
13 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| 14 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| 16 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| 18 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
21 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statement of Assets and Liabilities (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 28, 2013
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 48,322,587,258 | ||
| Affiliated (Note 2) |
1,585,363,950 | |||
|
|
|
|||
| Total cost of investments |
$ | 49,907,951,208 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 50,571,415,812 | ||
| Affiliated (Note 2) |
1,585,363,950 | |||
|
|
|
|||
| Total fair value of investments |
52,156,779,762 | |||
| Foreign currencies, at valueb |
30,185,703 | |||
| Cash |
2,052,295 | |||
| Cash held at broker |
9,810,000 | |||
| Receivables: |
||||
| Investment securities sold |
364,673,461 | |||
| Due from custodian (Note 4) |
3,160,352 | |||
| Dividends and interest |
98,470,471 | |||
|
|
|
|||
| Total Assets |
52,665,132,044 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
124,016,055 | |||
| Collateral for securities on loan (Note 5) |
1,503,269,523 | |||
| Capital shares redeemed |
250,445,836 | |||
| Futures variation margin |
451,659 | |||
| Foreign taxes (Note 1) |
270,449 | |||
| Investment advisory fees (Note 2) |
25,777,902 | |||
|
|
|
|||
| Total Liabilities |
1,904,231,424 | |||
|
|
|
|||
| NET ASSETS |
$ | 50,760,900,620 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 53,333,760,443 | ||
| Distributions in excess of net investment income |
(48,393,523 | ) | ||
| Accumulated net realized loss |
(4,773,655,842 | ) | ||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
2,249,189,542 | |||
|
|
|
|||
| NET ASSETS |
$ | 50,760,900,620 | ||
|
|
|
|||
| Shares outstandingc |
1,166,850,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 43.50 | ||
|
|
|
|||
| a | Securities on loan with a value of $1,411,540,454. See Note 5. |
| b | Cost of foreign currencies: $30,393,719. |
| c | $0.001 par value, number of shares authorized: 2 billion. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
23 |
Table of Contents
Consolidated Statement of Operations (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
Six months ended February 28, 2013
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 280,066,418 | ||
| Interest — unaffiliated |
2,401 | |||
| Interest — affiliated (Note 2) |
28,988 | |||
| Securities lending income — affiliated (Note 2)b |
19,112,698 | |||
|
|
|
|||
| Total investment income |
299,210,505 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
143,344,750 | |||
| Mauritius income taxes (Note 1) |
581,224 | |||
| Commitment fees (Note 7) |
44,292 | |||
|
|
|
|||
| Total expenses |
143,970,266 | |||
| Less investment advisory fees waived (Note 2) |
(223,548 | ) | ||
|
|
|
|||
| Net expenses |
143,746,718 | |||
|
|
|
|||
| Net investment income |
155,463,787 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(349,576,455 | ) | ||
| In-kind redemptions — unaffiliated |
105,774,953 | |||
| Futures contracts |
16,465,260 | |||
| Foreign currency transactions |
(1,642,911 | ) | ||
|
|
|
|||
| Net realized loss |
(228,979,153 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
4,296,524,408 | |||
| Futures contracts |
(7,094,555 | ) | ||
| Translation of assets and liabilities in foreign currencies |
517,035 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
4,289,946,888 | |||
|
|
|
|||
| Net realized and unrealized gain |
4,060,967,735 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 4,216,431,522 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $35,457,132. |
| b | Net of foreign tax paid of $1,575,844. |
See notes to consolidated financial statements.
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Changes in Net Assets
iSHARES® MSCI EMERGING MARKETS INDEX FUND
| Six months ended February 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 155,463,787 | $ | 739,830,263 | ||||
| Net realized loss |
(228,979,153 | ) | (1,068,409,206 | ) | ||||
| Net change in unrealized appreciation/depreciation |
4,289,946,888 | (1,942,224,140 | ) | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
4,216,431,522 | (2,270,803,083 | ) | |||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(294,104,911 | ) | (703,374,541 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(294,104,911 | ) | (703,374,541 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
13,338,716,436 | 7,880,602,043 | ||||||
| Cost of shares redeemed |
(756,770,707 | ) | (4,146,345,050 | ) | ||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
12,581,945,729 | 3,734,256,993 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
16,504,272,340 | 760,079,369 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
34,256,628,280 | 33,496,548,911 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 50,760,900,620 | $ | 34,256,628,280 | ||||
|
|
|
|
|
|||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (48,393,523 | ) | $ | 90,247,601 | |||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
310,950,000 | 193,950,000 | ||||||
| Shares redeemed |
(17,550,000 | ) | (104,850,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
293,400,000 | 89,100,000 | ||||||
|
|
|
|
|
|||||
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
25 |
Table of Contents
iSHARES® MSCI EMERGING MARKETS INDEX FUND
(For a share outstanding throughout each period)
|
Six months (Unaudited) |
Year ended Aug. 31, 2012 (Consolidated) |
Year ended Aug. 31, 2011 (Consolidated) |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008a |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 39.22 | $ | 42.71 | $ | 40.19 | $ | 35.48 | $ | 40.07 | $ | 44.78 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.15 | 0.86 | 0.81 | 0.58 | 0.66 | 1.10 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
4.41 | (3.53 | ) | 2.56 | 4.73 | (4.66 | ) | (4.64 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.56 | (2.67 | ) | 3.37 | 5.31 | (4.00 | ) | (3.54 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.28 | ) | (0.82 | ) | (0.85 | ) | (0.60 | ) | (0.59 | ) | (1.17 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.28 | ) | (0.82 | ) | (0.85 | ) | (0.60 | ) | (0.59 | ) | (1.17 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 43.50 | $ | 39.22 | $ | 42.71 | $ | 40.19 | $ | 35.48 | $ | 40.07 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
11.62 | %d | (6.18 | )% | 8.23 | % | 14.97 | % | (9.47 | )% | (8.36 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 50,760,901 | $ | 34,256,628 | $ | 33,496,549 | $ | 39,766,955 | $ | 30,268,121 | $ | 20,302,756 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.67 | % | 0.68 | % | 0.67 | % | 0.68 | % | 0.72 | % | 0.72 | % | ||||||||||||
| Ratio of expenses to average net assets prior to waived feese,f |
0.67 | % | 0.69 | % | 0.67 | % | 0.68 | % | 0.72 | % | 0.72 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
0.72 | % | 2.13 | % | 1.76 | % | 1.45 | % | 2.32 | % | 2.32 | % | ||||||||||||
| Portfolio turnover rateg |
5 | % | 15 | % | 17 | % | 14 | % | 5 | % | 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 | Ratios for the years 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 rates for the six months ended February 28, 2013 and the years ended August 31, 2012 and August 31, 2011 were 4%, 10% and 15%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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 |
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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
27 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
SECURITY VALUATION
The Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of investments for the Fund. The investments of the Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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). |
| • | Financial futures contracts are valued at that day’s last reported settlement price on the exchange where the contract is traded. |
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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Fund’s perceived risk of that instrument. 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 |
| 28 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
| (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; 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. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Fund’s investments according to the fair value hierarchy as of February 28, 2013. 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 |
$ | 46,731,001,518 | $ | — | $ | 0 | a | $ | 46,731,001,518 | |||||||
| Preferred Stocks |
3,838,221,183 | — | — | 3,838,221,183 | ||||||||||||
| Rights |
2,193,111 | 0 | a | — | 2,193,111 | |||||||||||
| Money Market Funds |
1,585,363,950 | — | — | 1,585,363,950 | ||||||||||||
| Futures Contractsb |
638,757 | — | — | 638,757 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 52,157,418,519 | $ | 0 | a | $ | 0 | a | $ | 52,157,418,519 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
| b | Futures contracts are shown at the net unrealized appreciation (depreciation) on the contracts. |
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 28, 2013 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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
29 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
FOREIGN TAXES
The Fund may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. 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 stock dividends are presented as “other foreign taxes,” and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, if any, are disclosed in the Fund’s consolidated statement of assets and liabilities.
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 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 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.
As a result of legislative changes enacted by the 2012 India Finance Act (“the Act”) and its general anti-avoidance rules (“GAAR”), which are effective April 1, 2013 but have been proposed to be deferred until April 1, 2016, the Subsidiary’s ability to leverage the treaty between Mauritius and India may be adversely impacted, and therefore the Fund may be subject to taxes on capital gains and/or dividends realized on Indian securities. The Act also includes provisions that impose Indian tax on the transfer of shares of an Indian company. However, until more definitive guidance on the legislative changes is available, the impact to the Fund, if any, cannot be determined at this time.
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 December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments
| 30 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, 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.
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.
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 of $223,548.
BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through June 30, 2014 in an amount equal to the investment advisory fees payable on the amount of the Fund’s investment in other iShares funds. The Fund did not hold any iShares funds during the six months ended February 28, 2013.
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. The Fund benefits from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
31 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
For the six months ended February 28, 2013, BTC earned securities lending agent fees from the Fund in the amount of $10,842,998.
For the six months ended February 28, 2013, BTC, the Fund’s securities lending agent, has agreed to voluntarily reimburse the Fund in the amount of $551,545, related to the foreign tax on the securities lending income. Such reimbursement is included in the “Securities lending income — affiliated” in the Fund’s consolidated statement of operations.
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for the Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Fund for 1940 Act purposes.
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.
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 28, 2013, were $8,571,735,683 and $2,165,855,981, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 28, 2013, were $6,395,790,624 and $365,564,416, 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 may also 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.
| 32 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
| 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 market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund on the next business day. 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. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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.
As of August 31, 2012, the Funds’ fiscal year-end, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| Non- Expiring a |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | ||||||||||||||||||||||||
| $602,564,447 | $ | 20,296,564 | $ | 11,239,258 | $ | 29,973,301 | $ | 13,844,901 | $ | 228,196,854 | $ | 1,201,366,175 | $ | 873,167,649 | $ | 2,980,649,149 | ||||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
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 28, 2013, the cost of investments for federal income tax purposes was $50,475,706,833. Net unrealized appreciation was $1,681,072,929, of which $7,072,858,325 represented gross unrealized appreciation on securities and $5,391,785,396 represented gross unrealized depreciation on securities.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
33 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
Management has reviewed the tax positions as of February 28, 2013, 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.
| 7. | FINANCIAL FUTURES CONTRACTS |
The Fund may purchase or sell financial futures contracts in an effort to help the Fund track its underlying index. A futures contract is a standardized, exchange-traded agreement to buy and sell a financial instrument at a set price on a future date. Upon entering into a futures contract, the Fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are recorded by the Fund as unrealized appreciation or depreciation. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Losses may arise if the value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts also involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.
The following table shows the value of futures contracts held by the Fund as of February 28, 2013 and the related locations in the consolidated statement of assets and liabilities, presented by risk exposure category:
| Assets | ||||
| Equity contracts: |
||||
| Variation margin/Net assets consist |
$ | 638,757 | ||
|
|
|
|||
| a | Represents cumulative appreciation of futures contracts as reported in the consolidated schedule of investments. Only current day’s variation margin is reported separately within the consolidated statement of assets and liabilities. |
The following table shows the realized and unrealized gains (losses) on futures contracts held by the Fund during the six months ended February 28, 2013 and the related locations in the consolidated statement of operations, presented by risk exposure category:
| Net Realized Gain (Loss) |
Net Change in Unrealized Appreciation/Depreciation |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | 16,465,260 | $ | (7,094,555 | ) | |||
|
|
|
|
|
|||||
For the six months ended February 28, 2013, the average quarter-end number of contracts and notional value of open futures contracts for the Fund were 2,365 and $116,995,180, respectively.
| 8. | 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 30, 2013. 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
| 34 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
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 six months ended February 28, 2013.
| 9. | LEGAL PROCEEDINGS |
On January 18, 2013, a lawsuit was filed in the United States District Court for the Middle District of Tennessee by Laborers’ Local 265 Pension Fund and Plumbers and Pipefitters Local No. 572 Pension Fund against BFA, BTC, and the current members of the iShares Trust Board of Trustees and the Board of Directors of iShares, Inc. (collectively, “Defendants”) for alleged violations of, among other things, Sections 36(a) and 36(b) of the 1940 Act. The complaint purports to be brought derivatively on behalf of iShares Trust and iShares, Inc., as well as the following eight funds: iShares Russell MidCap Index Fund; iShares MSCI EAFE Index Fund; iShares MSCI Emerging Markets Index Fund; iShares Russell 2000 Growth Index Fund; iShares Russell 2000 Value Index Fund; iShares Core S&P Mid-Cap ETF; iShares Core S&P Small-Cap ETF; and iShares Dow Jones U.S. Real Estate Index Fund. The complaint alleges, among other things, that BFA and BTC breached their fiduciary duties under the 1940 Act by charging allegedly excessive fees in connection with the provision of securities lending services to the above eight funds, that the individual defendants breached their fiduciary duties under the 1940 Act by approving those fee arrangements, and that the securities lending contracts are unenforceable under Section 47(b) of the 1940 Act. Plaintiffs seek injunctive relief, rescission of the securities lending contracts, and monetary damages of an unspecified amount. Defendants believe the claims are without merit and intend to vigorously defend themselves against the allegations in the lawsuit. On March 11, 2013, the Defendants filed a motion to dismiss the lawsuit.
| 10. | 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 |
35 |
Table of Contents
Supplemental Information (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
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 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 |
|||||||||||||||||||||||
| $ | 0.18635 | $ | — | $ | 0.09021 | $ | 0.27656 | 67 | % | — | % | 33 | % | 100 | % | |||||||||||||||
| 36 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
37 |
Table of Contents
Notes:
| 38 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Fund’s website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund also discloses its complete schedule of portfolio holdings on a daily and monthly basis on the Fund’s website.
©2013 BlackRock, Inc. All rights reserved. ISHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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iS-SAR-85-0213
Table of Contents
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI BRIC Index Fund | BKF | NYSE Arca |
| Ø | iShares MSCI Emerging Markets Asia Index Fund | EEMA | NASDAQ |
| Ø | iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund | EMDI | NASDAQ |
| Ø | iShares MSCI Emerging Markets Energy Sector Capped Index Fund | EMEY | NASDAQ |
| Ø | iShares MSCI Emerging Markets Growth Index Fund | EGRW | NASDAQ |
| Ø | iShares MSCI Emerging Markets Minimum Volatility Index Fund | EEMV | NYSE Arca |
| Ø | iShares MSCI Emerging Markets Small Cap Index Fund | EEMS | NYSE Arca |
| Ø | iShares MSCI Emerging Markets Value Index Fund | EVAL | NASDAQ |
Table of Contents
| 5 | ||||
| 15 | ||||
| 17 | ||||
| 17 | ||||
| 23 | ||||
| iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund |
31 | |||
| iShares MSCI Emerging Markets Energy Sector Capped Index Fund |
33 | |||
| 35 | ||||
| 42 | ||||
| 47 | ||||
| 57 | ||||
| 64 | ||||
| 74 | ||||
| 82 | ||||
| 93 |
Table of Contents
iSHARES® MSCI BRIC INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (6.61)% | (6.84)% | (5.93)% | (3.94)% | (4.00)% | (3.64)% | (4.66)% | (4.77)% | (4.31)% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/28/13 | Five Years Ended 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (6.61)% | (6.84)% | (5.93)% | (18.19)% | (18.45)% | (16.94)% | (22.36)% | (22.83)% | (20.83)% | ||||||||
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.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI BRIC INDEX FUND
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 28, 2013, the total return for the Fund was 12.88%, net of fees, while the total return for the Index was 13.28%.
| 6 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 3.77% | 4.17% | 4.33% | 5.51% | 5.15% | 6.13% | 5.84% | 5.45% | 6.51% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (2/8/12). “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 (2/9/12), 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 six-month period ended February 28, 2013, the total return for the Fund was 14.45%, net of fees, while the total return for the Index was 14.79%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY SECTOR INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 1.37% | 2.09% | 2.20% | 2.50% | 2.50% | 3.37% | 2.65% | 2.64% | 3.57% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (2/8/12). “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 (2/9/12), 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.
| 8 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY SECTOR INDEX FUND
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 six-month period ended February 28, 2013, the total return for the Fund was 8.82%, net of fees, while the total return for the Index was 9.21%.
| * | Other includes sectors which individually represent less than 1% of net assets. |
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS ENERGY SECTOR CAPPED INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (17.25)% | (17.29)% | (16.63)% | (15.99)% | (16.26)% | (15.20)% | (16.83)% | (17.11)% | (16.04)% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (2/8/12). “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 (2/9/12), 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. 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 28, 2013, the total return for the Fund was 3.59%, net of fees, while the total return for the Index was 3.62%.
| * | Other includes sectors which individually represent less than 1% of net assets. |
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 3.43% | 5.52% | 4.26% | 5.82% | 7.17% | 6.73% | 6.16% | 7.60% | 7.15% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (2/8/12). “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 (2/9/12), 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 six-month period ended February 28, 2013, the total return for the Fund was 12.82%, net of fees, while the total return for the Index was 13.32%.
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 10.08% | 10.06% | 10.28% | 19.78% | 19.76% | 20.13% | 27.96% | 27.94% | 28.52% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (10/18/11). “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. 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 six-month period ended February 28, 2013, the total return for the Fund was 11.11%, net of fees, while the total return for the Index was 11.18%.
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 5.43% | 6.35% | 5.32% | 1.71% | 2.51% | 2.68% | 2.64% | 3.89% | 4.15% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (8/16/11). “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. 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 28, 2013, the total return for the Fund was 16.17%, net of fees, while the total return for the Index was 15.94%.
| FUND PERFORMANCE OVERVIEWS |
13 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (3.93)% | 0.00% | (3.60)% | (2.98)% | 0.22% | (2.54)% | (3.15)% | 0.23% | (2.69)% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (2/8/12). “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 (2/9/12), 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 six-month period ended February 28, 2013, the total return for the Fund was 10.58%, net of fees, while the total return for the Index was 10.76%.
| 14 | 2013 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, 2012 to February 28, 2013.
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 (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| BRIC |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,128.80 | 0.67 | % | $ | 3.54 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.67 | 3.36 | ||||||||||||
| Emerging Markets Asia |
||||||||||||||||
| Actual |
1,000.00 | 1,144.50 | 0.49 | 2.61 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.49 | 2.46 | ||||||||||||
| Emerging Markets Consumer Discretionary Sector |
||||||||||||||||
| Actual |
1,000.00 | 1,088.20 | 0.67 | 3.47 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.67 | 3.36 | ||||||||||||
| Emerging Markets Energy Sector Capped |
||||||||||||||||
| Actual |
1,000.00 | 1,035.90 | 0.67 | 3.38 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.67 | 3.36 | ||||||||||||
| SHAREHOLDER EXPENSES |
15 |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund | Beginning Account Value (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| Emerging Markets Growth |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,128.20 | 0.49 | % | $ | 2.59 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.49 | 2.46 | ||||||||||||
| Emerging Markets Minimum Volatility |
||||||||||||||||
| Actual |
1,000.00 | 1,111.10 | 0.25 | 1.31 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,023.60 | 0.25 | 1.25 | ||||||||||||
| Emerging Markets Small Cap |
||||||||||||||||
| Actual |
1,000.00 | 1,161.70 | 0.67 | 3.59 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.67 | 3.36 | ||||||||||||
| Emerging Markets Value |
||||||||||||||||
| Actual |
1,000.00 | 1,105.80 | 0.49 | 2.56 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.49 | 2.46 | ||||||||||||
| 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 (181 days) and divided by the number of days in the year (365 days). |
| 16 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 28, 2013
| 18 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 28, 2013
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 28, 2013
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 28, 2013
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 28, 2013
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 28, 2013
| 28 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 28, 2013
| 30 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY SECTOR INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY SECTOR INDEX FUND
February 28, 2013
| 32 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ENERGY SECTOR CAPPED INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ENERGY SECTOR CAPPED INDEX FUND
February 28, 2013
| 34 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 28, 2013
| 36 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 28, 2013
| 38 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 28, 2013
| 40 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| 42 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| 44 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| 46 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
47 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| 48 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
49 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| 50 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
51 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| 52 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
53 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| 54 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
55 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 28, 2013
| 56 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
57 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 28, 2013
| 58 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
59 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 28, 2013
| 60 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
61 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 28, 2013
| 62 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 28, 2013
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
63 |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2013
| iShares MSCI BRIC Index Fund |
iShares MSCI Index Fund |
iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 759,341,629 | $ | 170,411,043 | $ | 2,480,952 | ||||||
| Affiliated (Note 2) |
15,589,321 | 299,230 | 30,677 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 774,930,950 | $ | 170,710,273 | $ | 2,511,629 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 773,476,615 | $ | 170,559,210 | $ | 2,605,546 | ||||||
| Affiliated (Note 2) |
15,589,321 | 299,230 | 30,677 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
789,065,936 | 170,858,439 | 2,636,223 | |||||||||
| Foreign currencies, at valueb |
726,154 | 76,944 | 1,837 | |||||||||
| Cash |
47,930 | — | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
5,903,118 | 74,469 | 11,958 | |||||||||
| Dividends and interest |
1,484,950 | 74,056 | 6,353 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
797,228,088 | 171,083,908 | 2,656,371 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
5,904,858 | 205,687 | 10,920 | |||||||||
| Collateral for securities on loan (Note 5) |
15,354,027 | — | 30,405 | |||||||||
| Foreign taxes (Note 1) |
— | 75 | 7 | |||||||||
| Investment advisory fees (Note 2) |
394,542 | 54,505 | 1,302 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
21,653,427 | 260,267 | 42,634 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 775,574,661 | $ | 170,823,641 | $ | 2,613,737 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 907,081,764 | $ | 170,976,739 | $ | 3,272,295 | ||||||
| Distributions in excess of net investment income |
(666,704 | ) | (45,759 | ) | (2,009 | ) | ||||||
| Accumulated net realized loss |
(145,001,022 | ) | (255,402 | ) | (781,095 | ) | ||||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
14,160,623 | 148,063 | 124,546 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 775,574,661 | $ | 170,823,641 | $ | 2,613,737 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
19,350,000 | 3,000,000 | 50,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 40.08 | $ | 56.94 | $ | 52.27 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $14,393,682, $ — and $28,812, respectively. See Note 5. |
| b | Cost of foreign currencies: $721,138, $76,726 and $1,836, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| 64 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
|
iShares MSCI Index Fund |
iShares MSCI Index Fund |
iShares MSCI Emerging Markets Minimum Volatility Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 2,492,939 | $ | 2,514,420 | $ | 1,342,664,802 | ||||||
| Affiliated (Note 2) |
676 | 37,952 | 3,483,868 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 2,493,615 | $ | 2,552,372 | $ | 1,346,148,670 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 2,066,482 | $ | 2,789,534 | $ | 1,420,076,360 | ||||||
| Affiliated (Note 2) |
676 | 37,952 | 3,483,868 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
2,067,158 | 2,827,486 | 1,423,560,228 | |||||||||
| Foreign currencies, at valueb |
1,647 | 2,760 | 718,796 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
— | 12,948 | 271,007 | |||||||||
| Due from custodian (Note 4) |
— | — | 2,546,901 | |||||||||
| Dividends and interest |
2,783 | 5,476 | 2,331,885 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
2,071,588 | 2,848,670 | 1,429,428,817 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
— | 13,262 | 2,546,901 | |||||||||
| Collateral for securities on loan (Note 5) |
— | 34,611 | 3,483,868 | |||||||||
| Due to custodian |
— | — | 138,105 | |||||||||
| Foreign taxes (Note 1) |
— | 25 | 1,085 | |||||||||
| Investment advisory fees (Note 2) |
1,062 | 1,057 | 233,329 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
1,062 | 48,955 | 6,403,288 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,070,526 | $ | 2,799,715 | $ | 1,423,025,529 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 3,421,694 | $ | 3,245,142 | $ | 1,352,616,085 | ||||||
| Undistributed (distributions in excess of) net investment income |
(542 | ) | (2,552 | ) | 1,127,295 | |||||||
| Accumulated net realized loss |
(924,148 | ) | (718,010 | ) | (8,129,643 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
(426,478 | ) | 275,135 | 77,411,792 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,070,526 | $ | 2,799,715 | $ | 1,423,025,529 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
50,000 | 50,000 | 23,300,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 41.41 | $ | 55.99 | $ | 61.07 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $32,911 and $3,322,764, respectively. See Note 5. |
| b | Cost of foreign currencies: $1,659, $2,772 and $719,090, 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 |
65 |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Emerging Markets Small Cap Index Fund |
Index Fund |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 18,911,743 | $ | 10,136,416 | ||||
| Affiliated (Note 2) |
30,250 | 22,059 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 18,941,993 | $ | 10,158,475 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (Note 1): |
||||||||
| Unaffiliated |
$ | 19,462,304 | $ | 9,836,253 | ||||
| Affiliated (Note 2) |
30,250 | 22,059 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
19,492,554 | 9,858,312 | ||||||
| Foreign currencies, at valuea |
14,805 | 8,943 | ||||||
| Cash |
499 | — | ||||||
| Receivables: |
||||||||
| Investment securities sold |
50,938 | 3,068 | ||||||
| Dividends and interest |
17,935 | 19,952 | ||||||
|
|
|
|
|
|||||
| Total Assets |
19,576,731 | 9,890,275 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
43,196 | — | ||||||
| Foreign taxes (Note 1) |
38 | 4 | ||||||
| Investment advisory fees (Note 2) |
8,962 | 3,754 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
52,196 | 3,758 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 19,524,535 | $ | 9,886,517 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 27,537,894 | $ | 10,727,361 | ||||
| Distributions in excess of net investment income |
(48,034 | ) | (2,971 | ) | ||||
| Accumulated net realized loss |
(8,515,868 | ) | (537,644 | ) | ||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
550,543 | (300,229 | ) | |||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 19,524,535 | $ | 9,886,517 | ||||
|
|
|
|
|
|||||
| Shares outstandingb |
400,000 | 200,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 48.81 | $ | 49.43 | ||||
|
|
|
|
|
|||||
| a | Cost of foreign currencies: $14,779 and $8,987, respectively. |
| b | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| 66 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI BRIC Index Fund |
iShares MSCI Index Fund |
iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 5,770,425 | $ | 144,873 | $ | 15,333 | ||||||
| Interest — affiliated (Note 2) |
229 | 12 | 1 | |||||||||
| Securities lending income — affiliated (Note 2) |
292,134 | — | 276 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
6,062,788 | 144,885 | 15,610 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
2,509,403 | 163,511 | 8,475 | |||||||||
| Mauritius income taxes (Note 1) |
22,026 | — | — | |||||||||
| Commitment fees (Note 7) |
2,488 | 52 | 5 | |||||||||
| Interest expense (Note 7) |
588 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
2,534,505 | 163,563 | 8,480 | |||||||||
| Less investment advisory fees waived (Note 2) |
— | (45,687 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
2,534,505 | 117,876 | 8,480 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
3,528,283 | 27,009 | 7,130 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(7,527,804 | ) | (84,910 | ) | (5,833 | ) | ||||||
| In-kind redemptions — unaffiliated |
871,379 | — | — | |||||||||
| Foreign currency transactions |
(90,965 | ) | (72,130 | ) | 63 | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(6,747,390 | ) | (157,040 | ) | (5,770 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
90,987,585 | 1,846,862 | 212,445 | |||||||||
| Translation of assets and liabilities in foreign currencies |
67,953 | (88 | ) | (47 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
91,055,538 | 1,846,774 | 212,398 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
84,308,148 | 1,689,734 | 206,628 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 87,836,431 | $ | 1,716,743 | $ | 213,758 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $458,846, $19,666 and $2,901, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
67 |
Table of Contents
Consolidated Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Period ended February 28, 2013
| iShares MSCI Index Fund |
iShares MSCI Index Fund |
iShares MSCI Emerging Markets Minimum Volatility Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 15,878 | $ | 17,358 | $ | 5,557,639 | ||||||
| Interest — unaffiliated |
— | — | 639 | |||||||||
| Interest — affiliated (Note 2) |
1 | 2 | 297 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 390 | 45,659 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
15,879 | 17,750 | 5,604,234 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
7,076 | 10,190 | 2,447,173 | |||||||||
| Commitment fees (Note 7) |
4 | 8 | 331 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
7,080 | 10,198 | 2,447,504 | |||||||||
| Less investment advisory fees waived (Note 2) |
— | (2,847 | ) | (1,524,852 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
7,080 | 7,351 | 922,652 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
8,799 | 10,399 | 4,681,582 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(7,882 | ) | (265,227 | ) | (3,312,040 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | (149,502 | ) | — | ||||||||
| Foreign currency transactions |
228 | 2,353 | (117,472 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(7,654 | ) | (412,376 | ) | (3,429,512 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
70,917 | 743,386 | 69,312,355 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(22 | ) | 176 | 3,037 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
70,895 | 743,562 | 69,315,392 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
63,241 | 331,186 | 65,885,880 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 72,040 | $ | 341,585 | $ | 70,567,462 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $2,368, $2,004 and $677,247, respectively. |
See notes to consolidated financial statements.
| 68 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Emerging Markets Small Cap Index Fund |
iShares MSCI Index Fund |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 63,515 | $ | 72,438 | ||||
| Interest — affiliated (Note 2) |
8 | 4 | ||||||
|
|
|
|
|
|||||
| Total investment income |
63,523 | 72,442 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
35,151 | 28,158 | ||||||
| Commitment fees (Note 7) |
15 | 12 | ||||||
| Interest expense (Note 7) |
9 | 10 | ||||||
|
|
|
|
|
|||||
| Total expenses |
35,175 | 28,180 | ||||||
| Less investment advisory fees waived (Note 2) |
— | (7,868 | ) | |||||
|
|
|
|
|
|||||
| Net expenses |
35,175 | 20,312 | ||||||
|
|
|
|
|
|||||
| Net investment income |
28,348 | 52,130 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
78,071 | (268,965 | ) | |||||
| In-kind redemptions — unaffiliated |
— | (68,998 | ) | |||||
| Foreign currency transactions |
(3,136 | ) | 63 | |||||
|
|
|
|
|
|||||
| Net realized gain (loss) |
74,935 | (337,900 | ) | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
1,294,230 | 1,004,032 | ||||||
| Translation of assets and liabilities in foreign currencies |
208 | (2 | ) | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
1,294,438 | 1,004,030 | ||||||
|
|
|
|
|
|||||
| Net realized and unrealized gain |
1,369,373 | 666,130 | ||||||
|
|
|
|
|
|||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 1,397,721 | $ | 718,260 | ||||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $7,764 and $9,630, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
69 |
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 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 3,528,283 | $ | 20,024,020 | $ | 27,009 | $ | 287,805 | ||||||||
| Net realized loss |
(6,747,390 | ) | (66,583,732 | ) | (157,040 | ) | (102,757 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
91,055,538 | (88,532,330 | ) | 1,846,774 | (1,698,711 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
87,836,431 | (135,092,042 | ) | 1,716,743 | (1,513,663 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(3,563,136 | ) | (18,504,865 | ) | (193,214 | ) | (162,964 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(3,563,136 | ) | (18,504,865 | ) | (193,214 | ) | (162,964 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
14,043,604 | 247,215,549 | 149,229,447 | 21,747,292 | ||||||||||||
| Cost of shares redeemed |
(7,890,916 | ) | (274,663,908 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
6,152,688 | (27,448,359 | ) | 149,229,447 | 21,747,292 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
90,425,983 | (181,045,266 | ) | 150,752,976 | 20,070,665 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
685,148,678 | 866,193,944 | 20,070,665 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 775,574,661 | $ | 685,148,678 | $ | 170,823,641 | $ | 20,070,665 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (666,704 | ) | $ | (631,851 | ) | $ | (45,759 | ) | $ | 120,446 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
350,000 | 6,050,000 | 2,600,000 | 400,000 | ||||||||||||
| Shares redeemed |
(200,000 | ) | (7,350,000 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
150,000 | (1,300,000 | ) | 2,600,000 | 400,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| 70 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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 |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
Six
months (Unaudited) |
Period from to August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 7,130 | $ | 43,745 | $ | 8,799 | $ | 176,464 | ||||||||
| Net realized loss |
(5,770 | ) | (958,390 | ) | (7,654 | ) | (1,795,340 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
212,398 | (87,852 | ) | 70,895 | (497,373 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
213,758 | (1,002,497 | ) | 72,040 | (2,116,249 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(24,239 | ) | (26,130 | ) | (9,341 | ) | (168,198 | ) | ||||||||
| Return of capital |
— | — | — | (6,779 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(24,239 | ) | (26,130 | ) | (9,341 | ) | (174,977 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
— | 10,313,556 | — | 10,227,402 | ||||||||||||
| Cost of shares redeemed |
— | (6,860,711 | ) | — | (5,928,349 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
— | 3,452,845 | — | 4,299,053 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
189,519 | 2,424,218 | 62,699 | 2,007,827 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
2,424,218 | — | 2,007,827 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 2,613,737 | $ | 2,424,218 | $ | 2,070,526 | $ | 2,007,827 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (2,009 | ) | $ | 15,100 | $ | (542 | ) | $ | — | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
— | 200,000 | — | 200,000 | ||||||||||||
| Shares redeemed |
— | (150,000 | ) | — | (150,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
— | 50,000 | — | 50,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
71 |
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 |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 10,399 | $ | 131,338 | $ | 4,681,582 | $ | 4,314,839 | ||||||||
| Net realized loss |
(412,376 | ) | (311,230 | ) | (3,429,512 | ) | (3,849,500 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
743,562 | (468,427 | ) | 69,315,392 | 8,096,400 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
341,585 | (648,319 | ) | 70,567,462 | 8,561,739 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(53,645 | ) | (85,048 | ) | (5,305,769 | ) | (2,260,368 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(53,645 | ) | (85,048 | ) | (5,305,769 | ) | (2,260,368 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
— | 10,854,325 | 970,536,762 | 411,979,067 | ||||||||||||
| Cost of shares redeemed |
(7,609,183 | ) | — | — | (31,053,364 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(7,609,183 | ) | 10,854,325 | 970,536,762 | 380,925,703 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(7,321,243 | ) | 10,120,958 | 1,035,798,455 | 387,227,074 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
10,120,958 | — | 387,227,074 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 2,799,715 | $ | 10,120,958 | $ | 1,423,025,529 | $ | 387,227,074 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (2,552 | ) | $ | 40,694 | $ | 1,127,295 | $ | 1,751,482 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
— | 200,000 | 16,300,000 | 7,600,000 | ||||||||||||
| Shares redeemed |
(150,000 | ) | — | — | (600,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(150,000 | ) | 200,000 | 16,300,000 | 7,000,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| 72 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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 28, 2013 (Unaudited) |
Year ended August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 28,348 | $ | 404,898 | $ | 52,130 | $ | 199,208 | ||||||||
| Net realized gain (loss) |
74,935 | (10,768,599 | ) | (337,900 | ) | (206,720 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
1,294,438 | 643,945 | 1,004,030 | (1,304,259 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
1,397,721 | (9,719,756 | ) | 718,260 | (1,311,771 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(313,809 | ) | (500,104 | ) | (98,842 | ) | (148,491 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(313,809 | ) | (500,104 | ) | (98,842 | ) | (148,491 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
9,752,064 | 9,491,705 | 2,481,237 | 10,520,963 | ||||||||||||
| Cost of shares redeemed |
— | (60,026,674 | ) | (2,274,839 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
9,752,064 | (50,534,969 | ) | 206,398 | 10,520,963 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
10,835,976 | (60,754,829 | ) | 825,816 | 9,060,701 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
8,688,559 | 69,443,388 | 9,060,701 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 19,524,535 | $ | 8,688,559 | $ | 9,886,517 | $ | 9,060,701 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (48,034 | ) | $ | 237,427 | $ | (2,971 | ) | $ | 43,741 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
200,000 | 200,000 | 50,000 | 200,000 | ||||||||||||
| Shares redeemed |
— | (1,400,000 | ) | (50,000 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
200,000 | (1,200,000 | ) | — | 200,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
73 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI BRIC Index Fund | ||||||||||||||||||||||||
| Six months (Unaudited) |
Year ended Aug. 31, 2012 (Consolidated) |
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 |
$ | 35.68 | $ | 42.25 | $ | 42.94 | $ | 37.57 | $ | 44.13 | $ | 56.50 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.18 | 0.98 | 0.89 | 0.66 | 0.58 | 0.72 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
4.41 | (6.62 | ) | (0.58 | ) | 5.35 | (6.60 | ) | (12.93 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.59 | (5.64 | ) | 0.31 | 6.01 | (6.02 | ) | (12.21 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.19 | ) | (0.93 | ) | (1.00 | ) | (0.64 | ) | (0.54 | ) | (0.16 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.19 | ) | (0.93 | ) | (1.00 | ) | (0.64 | ) | (0.54 | ) | (0.16 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 40.08 | $ | 35.68 | $ | 42.25 | $ | 42.94 | $ | 37.57 | $ | 44.13 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
12.88 | %d | (13.33 | )% | 0.49 | % | 15.95 | % | (13.08 | )% | (21.65 | )%d | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 775,575 | $ | 685,149 | $ | 866,194 | $ | 946,814 | $ | 497,839 | $ | 161,092 | ||||||||||||
| Ratio of expenses to average net assetse |
0.67 | % | 0.69 | % | 0.67 | % | 0.69 | % | 0.72 | % | 0.72 | % | ||||||||||||
| Ratio of expenses to average net assets prior to waived feese,f |
n/a | n/a | 0.67 | % | n/a | n/a | n/a | |||||||||||||||||
| Ratio of net investment income to average net assetse |
0.94 | % | 2.55 | % | 1.86 | % | 1.52 | % | 1.87 | % | 1.74 | % | ||||||||||||
| Portfolio turnover rateg |
4 | % | 32 | % | 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 rates for the six months ended February 28, 2013, the years ended August 31, 2012, August 31, 2011, August 31, 2010, August 31, 2009 and the period ended August 31, 2008 were 4%, 20%, 10%, 8%, 6% and 2%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 74 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Financial Highlights
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets Asia Index Fund | ||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 50.18 | $ | 54.71 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.03 | 0.87 | ||||||
| Net realized and unrealized gain (loss)c |
7.21 | (4.99 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
7.24 | (4.12 | ) | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.48 | ) | (0.41 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.48 | ) | (0.41 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 56.94 | $ | 50.18 | ||||
|
|
|
|
|
|||||
| Total return |
14.45 | %d | (7.52 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 170,824 | $ | 20,071 | ||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | ||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | ||||
| Ratio of net investment income to average net assetse |
0.11 | % | 3.05 | % | ||||
| Portfolio turnover ratef |
1 | % | 3 | % | ||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each 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 rates for the six months ended February 28, 2013 and the period ended August 31, 2012 were 1% and 3%, respectively. 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 each period)
| iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund | ||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 48.48 | $ | 51.54 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.14 | 0.26 | ||||||
| Net realized and unrealized gain (loss)c |
4.13 | (3.19 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
4.27 | (2.93 | ) | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.48 | ) | (0.13 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.48 | ) | (0.13 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 52.27 | $ | 48.48 | ||||
|
|
|
|
|
|||||
| Total return |
8.82 | %d | (5.68 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 2,614 | $ | 2,424 | ||||
| Ratio of expenses to average net assetse |
0.67 | % | 0.68 | % | ||||
| Ratio of net investment income to average net assetse |
0.56 | % | 0.94 | % | ||||
| Portfolio turnover ratef |
4 | % | 54 | % | ||||
| 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 rates for the six months ended February 28, 2013 and the period ended August 31, 2012 were 4% and 5%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 76 | 2013 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 Energy Sector Capped Index Fund | ||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 40.16 | $ | 51.12 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.18 | 1.05 | ||||||
| Net realized and unrealized gain (loss)c |
1.26 | (11.14 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
1.44 | (10.09 | ) | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.19 | ) | (0.84 | ) | ||||
| Return of capital |
— | (0.03 | ) | |||||
|
|
|
|
|
|||||
| Total distributions |
(0.19 | ) | (0.87 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 41.41 | $ | 40.16 | ||||
|
|
|
|
|
|||||
| Total return |
3.59 | %d | (19.71 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 2,071 | $ | 2,008 | ||||
| Ratio of expenses to average net assetse |
0.67 | % | 0.68 | % | ||||
| Ratio of net investment income to average net assetse |
0.83 | % | 4.23 | % | ||||
| Portfolio turnover ratef |
2 | % | 29 | % | ||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each 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 rates for the six months ended February 28, 2013 and the period ended August 31, 2012 were 2% and 3%, 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 each period)
| iShares MSCI Emerging Markets Growth Index Fund | ||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 50.60 | $ | 54.24 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.19 | 0.66 | ||||||
| Net realized and unrealized gain (loss)c |
6.27 | (3.87 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
6.46 | (3.21 | ) | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(1.07 | ) | (0.43 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(1.07 | ) | (0.43 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 55.99 | $ | 50.60 | ||||
|
|
|
|
|
|||||
| Total return |
12.82 | %d | (5.90 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 2,800 | $ | 10,121 | ||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | ||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | ||||
| Ratio of net investment income to average net assetse |
0.69 | % | 2.27 | % | ||||
| Portfolio turnover ratef |
11 | % | 12 | % | ||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each 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 rates for the six months ended February 28, 2013 and the period ended August 31, 2012 were 11% and 12%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 78 | 2013 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 Minimum Volatility Index Fund | ||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 55.32 | $ | 49.30 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.37 | 1.93 | ||||||
| Net realized and unrealized gainc |
5.76 | 5.41 | ||||||
|
|
|
|
|
|||||
| Total from investment operations |
6.13 | 7.34 | ||||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.38 | ) | (1.32 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.38 | ) | (1.32 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 61.07 | $ | 55.32 | ||||
|
|
|
|
|
|||||
| Total return |
11.11 | %d | 15.16 | %d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 1,423,026 | $ | 387,227 | ||||
| Ratio of expenses to average net assetse |
0.25 | % | 0.25 | % | ||||
| Ratio of expenses to average net assets prior to waived feese |
0.66 | % | 0.69 | % | ||||
| Ratio of net investment income to average net assetse |
1.27 | % | 4.08 | % | ||||
| Portfolio turnover ratef |
10 | % | 31 | % | ||||
| 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 rates for the six months ended February 28, 2013 and the period ended August 31, 2012 were 10% and 16%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
79 |
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. 28, 2013 (Unaudited) |
Year ended Aug. 31, 2012 |
Period from to Aug. 31, 2011 |
||||||||||
| Net asset value, beginning of period |
$ | 43.44 | $ | 49.60 | $ | 50.54 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.13 | 0.50 | 0.07 | |||||||||
| Net realized and unrealized gain (loss)c |
6.81 | (5.52 | ) | (1.01 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
6.94 | (5.02 | ) | (0.94 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(1.57 | ) | (1.14 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(1.57 | ) | (1.14 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 48.81 | $ | 43.44 | $ | 49.60 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
16.17 | %d | (9.98 | )% | (1.86 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 19,525 | $ | 8,689 | $ | 69,443 | ||||||
| Ratio of expenses to average net assetse |
0.67 | % | 0.69 | % | 0.69 | % | ||||||
| Ratio of net investment income to average net assetse |
0.54 | % | 1.13 | % | 3.33 | % | ||||||
| Portfolio turnover ratef |
8 | % | 32 | % | 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 rates for the six months ended February 28, 2013, the year ended August 31, 2012 and the period ended August 31, 2011 were 6%, 17% and 2%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 80 | 2013 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 Value Index Fund | ||||||||
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 45.30 | $ | 52.58 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.30 | 1.00 | ||||||
| Net realized and unrealized gain (loss)c |
4.49 | (7.54 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
4.79 | (6.54 | ) | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.66 | ) | (0.74 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.66 | ) | (0.74 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 49.43 | $ | 45.30 | ||||
|
|
|
|
|
|||||
| Total return |
10.58 | %d | (12.41 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 9,887 | $ | 9,061 | ||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | ||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | ||||
| Ratio of net investment income to average net assetse |
1.26 | % | 3.73 | % | ||||
| Portfolio turnover ratef |
26 | % | 12 | % | ||||
| 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 rates for the six months ended February 28, 2013 and the period ended August 31, 2012 were 13% and 12%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
81 |
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”):
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.
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
| 82 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of investments for the Funds. The investments of each Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument. 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 |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
83 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; 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. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2013. The breakdown of each Fund’s investments into major categories is disclosed in its respective consolidated schedule of investments.
| iShares MSCI Index Fund and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| BRIC |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 656,037,568 | $ | — | $ | — | $ | 656,037,568 | ||||||||
| Preferred Stocks |
117,439,047 | — | — | 117,439,047 | ||||||||||||
| Rights |
— | 0 | a | — | 0 | a | ||||||||||
| Money Market Funds |
15,589,321 | — | — | 15,589,321 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 789,065,936 | $ | 0 | a | $ | — | $ | 789,065,936 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Asia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 168,926,048 | $ | — | $ | — | $ | 168,926,048 | ||||||||
| Preferred Stocks |
1,633,161 | — | — | 1,633,161 | ||||||||||||
| Money Market Funds |
299,230 | — | — | 299,230 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 170,858,439 | $ | — | $ | — | $ | 170,858,439 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Consumer Discretionary Sector |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,536,200 | $ | — | $ | — | $ | 2,536,200 | ||||||||
| Preferred Stocks |
69,346 | — | — | 69,346 | ||||||||||||
| Money Market Funds |
30,677 | — | — | 30,677 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,636,223 | $ | — | $ | — | $ | 2,636,223 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 84 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Emerging Markets Energy Sector Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,875,383 | $ | — | $ | — | $ | 1,875,383 | ||||||||
| Preferred Stocks |
191,099 | — | — | 191,099 | ||||||||||||
| Money Market Funds |
676 | — | — | 676 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,067,158 | $ | — | $ | — | $ | 2,067,158 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Growth |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,587,461 | $ | — | $ | — | $ | 2,587,461 | ||||||||
| Preferred Stocks |
201,939 | — | — | 201,939 | ||||||||||||
| Rights |
134 | 0 | a | — | 134 | |||||||||||
| Money Market Funds |
37,952 | — | — | 37,952 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,827,486 | $ | 0 | a | $ | — | $ | 2,827,486 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Minimum Volatility |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,368,827,989 | $ | — | $ | — | $ | 1,368,827,989 | ||||||||
| Preferred Stocks |
51,248,371 | — | — | 51,248,371 | ||||||||||||
| Rights |
— | 0 | a | — | 0 | a | ||||||||||
| Money Market Funds |
3,483,868 | — | — | 3,483,868 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,423,560,228 | $ | 0 | a | $ | — | $ | 1,423,560,228 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Small Cap |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 19,119,843 | $ | 52,959 | $ | 14,410 | $ | 19,187,212 | ||||||||
| Preferred Stocks |
271,618 | — | — | 271,618 | ||||||||||||
| Rights |
2,705 | 769 | — | 3,474 | ||||||||||||
| Money Market Funds |
30,250 | — | — | 30,250 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 19,424,416 | $ | 53,728 | $ | 14,410 | $ | 19,492,554 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Value |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 9,045,761 | $ | — | $ | 0 | a | $ | 9,045,761 | |||||||
| Preferred Stocks |
790,007 | — | — | 790,007 | ||||||||||||
| Rights |
485 | — | — | 485 | ||||||||||||
| Money Market Funds |
22,059 | — | — | 22,059 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 9,858,312 | $ | — | $ | 0 | a | $ | 9,858,312 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
85 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund had transfers from Level 2 to Level 1 during the period ended February 28, 2013 in the amount of $29,038, measured as of the beginning of the period resulting from the resumption of trading after a temporary suspension.
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 28, 2013 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, stock dividends, capital gains on investments, or certain foreign currency transactions. 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 stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, 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 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 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.
| 86 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As a result of legislative changes enacted by the 2012 India Finance Act (“the Act”) and its general anti-avoidance rules (“GAAR”), which are effective April 1, 2013 but have been proposed to be deferred until April 1, 2016, the Subsidiaries’ ability to leverage the treaty between Mauritius and India may be adversely impacted, and therefore the Funds may be subject to taxes on capital gains and/or dividends realized on Indian securities. The Act also includes provisions that impose Indian tax on the transfer of shares of an Indian company. However, until more definitive guidance on the legislative changes is available, the impact to the Funds, if any, cannot be determined at this time.
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 December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, 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.
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
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
87 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, 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.
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. The Funds benefit from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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.
| 88 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For the six months ended February 28, 2013, BTC earned securities lending agent fees from the Funds as follows:
| iShares MSCI Index Fund | Securities Lending Agent Fees |
|||
| BRIC |
$ | 157,303 | ||
| Emerging Markets Consumer Discretionary Sector |
148 | |||
| Emerging Markets Growth |
210 | |||
| Emerging Markets Minimum Volatility |
24,586 | |||
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Funds for 1940 Act purposes.
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 28, 2013 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| BRIC |
$ | 36,234,533 | $ | 32,364,219 | ||||
| Emerging Markets Asia |
99,207,767 | 817,238 | ||||||
| Emerging Markets Consumer Discretionary Sector |
97,330 | 114,677 | ||||||
| Emerging Markets Energy Sector Capped |
107,012 | 51,338 | ||||||
| Emerging Markets Growth |
430,962 | 4,406,853 | ||||||
| Emerging Markets Minimum Volatility |
622,925,541 | 75,185,098 | ||||||
| Emerging Markets Small Cap |
6,038,299 | 825,346 | ||||||
| Emerging Markets Value |
2,306,404 | 2,246,206 | ||||||
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
89 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
In-kind transactions (see Note 4) for the six months ended February 28, 2013 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| BRIC |
$ | 7,617,762 | $ | 4,281,342 | ||||
| Emerging Markets Asia |
50,398,716 | — | ||||||
| Emerging Markets Growth |
— | 3,654,055 | ||||||
| Emerging Markets Minimum Volatility |
421,377,435 | — | ||||||
| Emerging Markets Small Cap |
4,235,333 | — | ||||||
| Emerging Markets Value |
1,233,785 | 1,130,070 | ||||||
| 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 may also 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 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 market value of the loaned securities is determined at the close of each business day of the Funds and any additional required collateral is delivered to the Funds on the next business day. 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. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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.
| 90 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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.
As of August 31, 2012, the Funds’ fiscal year-end, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| iShares MSCI Index Fund | Non- Expiring a |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||
| BRIC |
$ | 63,224,174 | $ | 1,540,740 | $ | 11,268,086 | $ | 7,760,558 | $ | 83,793,558 | ||||||||||
| Emerging Markets Asia |
97,800 | — | — | — | 97,800 | |||||||||||||||
| Emerging Markets Consumer Discretionary Sector |
769,548 | — | — | — | 769,548 | |||||||||||||||
| Emerging Markets Energy Sector Capped |
911,455 | — | — | — | 911,455 | |||||||||||||||
| Emerging Markets Growth |
302,438 | — | — | — | 302,438 | |||||||||||||||
| Emerging Markets Minimum Volatility |
1,248,753 | — | — | — | 1,248,753 | |||||||||||||||
| Emerging Markets Small Cap |
62,813 | — | — | — | 62,813 | |||||||||||||||
| Emerging Markets Value |
188,505 | — | — | — | 188,505 | |||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
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 |
91 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2013, 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 |
$ | 788,561,846 | $ | 104,927,044 | $ | (104,422,954 | ) | $ | 504,090 | |||||||
| Emerging Markets Asia |
170,714,381 | 4,852,562 | (4,708,504 | ) | 144,058 | |||||||||||
| Emerging Markets Consumer Discretionary Sector |
2,517,406 | 278,851 | (160,034 | ) | 118,817 | |||||||||||
| Emerging Markets Energy Sector Capped |
2,498,654 | 70,449 | (501,945 | ) | (431,496 | ) | ||||||||||
| Emerging Markets Growth |
2,556,910 | 393,534 | (122,958 | ) | 270,576 | |||||||||||
| Emerging Markets Minimum Volatility |
1,349,746,008 | 93,758,310 | (19,944,090 | ) | 73,814,220 | |||||||||||
| Emerging Markets Small Cap |
19,088,474 | 1,691,100 | (1,287,020 | ) | 404,080 | |||||||||||
| Emerging Markets Value |
10,174,983 | 557,048 | (873,719 | ) | (316,671 | ) | ||||||||||
Management has reviewed the tax positions as of February 28, 2013, 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 parties to a $125 million credit agreement with State Street Bank and Trust Company, which expires October 30, 2013. 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 six months ended February 28, 2013, the maximum amounts borrowed, the average borrowings and the average interest rates under the credit agreement were as follows:
| iShares MSCI Index Fund | Maximum Amount Borrowed |
Average Borrowings |
Average Interest Rates |
|||||||||
| BRIC |
$ | 2,700,000 | $ | 118,333 | 1.22 | % | ||||||
| Emerging Markets Small Cap |
56,000 | 1,556 | 1.21 | |||||||||
| Emerging Markets Value |
60,000 | 1,667 | 1.21 | |||||||||
| 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.
| 92 | 2013 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 |
||||||||||||||||||||||||
| BRIC |
$ | 0.13596 | $ | — | $ | 0.04962 | $ | 0.18558 | 73 | % | — | % | 27 | % | 100 | % | ||||||||||||||||
| Emerging Markets Asia |
0.37280 | — | 0.11024 | 0.48304 | 77 | — | 23 | 100 | ||||||||||||||||||||||||
| Emerging Markets Consumer Discretionary Sector |
0.37873 | — | 0.10605 | 0.48478 | 78 | — | 22 | 100 | ||||||||||||||||||||||||
| Emerging Markets Energy Sector Capped |
0.16910 | — | 0.01772 | 0.18682 | 91 | — | 9 | 100 | ||||||||||||||||||||||||
| Emerging Markets Growth |
0.98354 | — | 0.08936 | 1.07290 | 92 | — | 8 | 100 | ||||||||||||||||||||||||
| Emerging Markets Minimum Volatility |
0.29915 | — | 0.08533 | 0.38448 | 78 | — | 22 | 100 | ||||||||||||||||||||||||
| Emerging Markets Small Cap |
1.47432 | — | 0.09472 | 1.56904 | 94 | — | 6 | 100 | ||||||||||||||||||||||||
| Emerging Markets Value |
0.55065 | — | 0.10830 | 0.65895 | 84 | — | 16 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
93 |
Table of Contents
Notes:
| 94 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Funds’ website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website.
©2013 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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iS-SAR-810-0213
Table of Contents
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI All Country World Minimum Volatility Index Fund | ACWV | NYSE Arca |
| Ø | iShares MSCI Emerging Markets EMEA Index Fund | EEME | NASDAQ |
| Ø | iShares MSCI Frontier 100 Index Fund | FM | NYSE Arca |
| Ø | iShares MSCI World Index Fund | URTH | NYSE Arca |
Table of Contents
| 5 | ||||
| 9 | ||||
| 11 | ||||
| iShares MSCI All Country World Minimum Volatility Index Fund |
11 | |||
| 16 | ||||
| 19 | ||||
| 22 | ||||
| 37 | ||||
| 43 | ||||
| 47 | ||||
| 57 | ||||
| 60 |
Table of Contents
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 13.12% | 13.06% | 12.71% | 15.23% | 15.38% | 14.91% | 21.37% | 21.58% | 20.95% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (10/18/11). “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. 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 six-month period ended February 28, 2013, the total return for the Fund was 7.98%, net of fees, while the total return for the Index was 7.80%.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS EMEA INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (3.65)% | (3.38)% | (3.08)% | 8.21% | 8.02% | 8.90% | 9.20% | 8.99% | 10.00% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (1/18/12). “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 (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 six-month period ended February 28, 2013, the total return for the Fund was 6.10%, net of fees, while the total return for the Index was 6.43%.
| 6 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI FRONTIER 100 INDEX FUND
Performance as of February 28, 2013
| Cumulative Total Returns | ||||||||||
| Inception to 2/28/13 | ||||||||||
| NAV | MARKET | INDEX | ||||||||
| 13.23% | 15.45% | 13.46% | ||||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 9/12/12.
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 (9/13/12), 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 Frontier 100 Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Frontier Markets 100 Index (the “Index”). The Index is designed to measure equity performance of a subset of frontier market countries that meet minimum liquidity standards. 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 September 12, 2012 (inception date of the Fund) through February 28, 2013, the total return for the Fund was 13.23%, net of fees, while the total return for the Index was 13.46%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI WORLD INDEX FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 11.08% | 11.66% | 10.69% | 17.19% | 17.75% | 16.80% | 19.75% | 20.40% | 19.37% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (1/10/12). “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 (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 six-month period ended February 28, 2013, the total return for the Fund was 11.13%, net of fees, while the total return for the Index was 10.85%.
| 8 | 2013 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, 2012 (or commencement of operations, as applicable) to February 28, 2013.
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 (9/1/12) a |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period b |
||||||||||||
| All Country World Minimum Volatility |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,079.80 | 0.20 | % | $ | 1.03 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,023.80 | 0.20 | 1.00 | ||||||||||||
| Emerging Markets EMEA |
||||||||||||||||
| Actual |
1,000.00 | 1,061.00 | 0.49 | 2.50 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.49 | 2.46 | ||||||||||||
| Frontier 100 |
||||||||||||||||
| Actual |
1,000.00 | 1,132.30 | 0.79 | 3.90 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,020.90 | 0.79 | 3.96 | ||||||||||||
| SHAREHOLDER EXPENSES |
9 |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund | Beginning Account Value (9/1/12) a |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period b |
||||||||||||
| World |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,111.30 | 0.24 | % | $ | 1.26 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,023.60 | 0.24 | 1.20 | ||||||||||||
| a | The beginning of the period (commencement of operations) is September 12, 2012 for the iShares MSCI Frontier 100 Index Fund. |
| 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 (169 days for the iShares MSCI Frontier 100 Index Fund and 181 days for all other Funds) and divided by the number of days in the year (365 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 (181 days) and divided by the number of days in the year (365 days). |
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| 14 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS EMEA INDEX FUND
February 28, 2013
| 16 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EMEA INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EMEA INDEX FUND
February 28, 2013
| 18 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI FRONTIER 100 INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRONTIER 100 INDEX FUND
February 28, 2013
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRONTIER 100 INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| 28 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| 30 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| 32 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| 34 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 28, 2013
| 36 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2013
| iShares MSCI All Country World Minimum Volatility Index Fund |
iShares MSCI Emerging Index Fund |
iShares MSCI Frontier 100 Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 705,950,326 | $ | 5,578,943 | $ | 50,867,245 | ||||||
| Affiliated (Note 2) |
17,726,500 | 5,763 | 1,820,771 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 723,676,826 | $ | 5,584,706 | $ | 52,688,016 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 771,115,208 | $ | 5,391,257 | $ | 52,718,284 | ||||||
| Affiliated (Note 2) |
17,929,443 | 5,763 | 1,820,771 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
789,044,651 | 5,397,020 | 54,539,055 | |||||||||
| Foreign currencies, at valueb |
386,739 | 1,492 | 1,149,441 | |||||||||
| Cash |
— | — | 71,518 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
1,197,253 | — | — | |||||||||
| Dividends and interest |
1,962,142 | 4,855 | 74,874 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
792,590,785 | 5,403,367 | 55,834,888 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
1,642,489 | — | 2,891,181 | |||||||||
| Collateral for securities on loan (Note 5) |
14,978,954 | — | — | |||||||||
| Deferred foreign capital gains taxes (Note 1) |
— | — | 21,085 | |||||||||
| Investment advisory fees (Note 2) |
115,873 | 2,087 | 26,775 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
16,737,316 | 2,087 | 2,939,041 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 775,853,469 | $ | 5,401,280 | $ | 52,895,847 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 713,305,691 | $ | 5,166,157 | $ | 51,056,893 | ||||||
| Undistributed (distributions in excess of) net investment income |
1,394,467 | (7,891 | ) | 149,563 | ||||||||
| Undistributed net realized gain (accumulated net realized loss) |
(4,199,148 | ) | 430,882 | (139,925 | ) | |||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
65,352,459 | (187,868 | ) | 1,829,316 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 775,853,469 | $ | 5,401,280 | $ | 52,895,847 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
13,100,000 | 100,000 | 1,850,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 59.23 | $ | 54.01 | $ | 28.59 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $14,570,384, $ — and $ —, respectively. See Note 5. |
| b | Cost of foreign currencies: $389,785, $1,507 and $1,149,451, 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 Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| World Index Fund |
||||
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 5,004,073 | ||
| Affiliated (Note 2) |
26,826 | |||
|
|
|
|||
| Total cost of investments |
$ | 5,030,899 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 5,819,221 | ||
| Affiliated (Note 2) |
28,496 | |||
|
|
|
|||
| Total fair value of investments |
5,847,717 | |||
| Foreign currencies, at valueb |
8,061 | |||
| Receivables: |
||||
| Dividends and interest |
17,847 | |||
|
|
|
|||
| Total Assets |
5,873,625 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Collateral for securities on loan (Note 5) |
14,967 | |||
| Investment advisory fees (Note 2) |
1,079 | |||
|
|
|
|||
| Total Liabilities |
16,046 | |||
|
|
|
|||
| NET ASSETS |
$ | 5,857,579 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 4,475,069 | ||
| Undistributed net investment income |
345 | |||
| Undistributed net realized gain |
565,680 | |||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
816,485 | |||
|
|
|
|||
| NET ASSETS |
$ | 5,857,579 | ||
|
|
|
|||
| Shares outstandingc |
100,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 58.58 | ||
|
|
|
|||
| a | Securities on loan with a value of $14,498. See Note 5. |
| b | Cost of foreign currencies: $8,242. |
| c | $0.001 par value, number of shares authorized: 500 million. |
See notes to financial statements.
| 38 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Period ended February 28, 2013
| iShares MSCI All Country World Minimum Volatility Index Fund |
iShares MSCI Emerging Index Fund |
iShares MSCI Frontier 100 Index Funda |
||||||||||
| NET INVESTMENT INCOME |
| |||||||||||
| Dividends — unaffiliatedb |
$ | 8,629,088 | $ | 77,968 | $ | 230,061 | ||||||
| Dividends — affiliated (Note 2) |
296 | — | — | |||||||||
| Interest — unaffiliated |
60 | — | — | |||||||||
| Interest — affiliated (Note 2) |
443 | 3 | 85 | |||||||||
| Securities lending income — affiliated (Note 2) |
67,482 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
8,697,369 | 77,971 | 230,146 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,109,494 | 28,766 | 80,486 | |||||||||
| Commitment fees (Note 7) |
— | — | 5 | |||||||||
| Interest expense (Note 7) |
— | — | 92 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,109,494 | 28,766 | 80,583 | |||||||||
| Less investment advisory fees waived (Note 2) |
(457,950 | ) | (8,038 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
651,544 | 20,728 | 80,583 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
8,045,825 | 57,243 | 149,563 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliatedc |
(1,086,168 | ) | (39,023 | ) | (68,182 | ) | ||||||
| Investments — affiliated (Note 2) |
14,078 | — | — | |||||||||
| In-kind redemptions — unaffiliated |
— | 527,309 | — | |||||||||
| Foreign currency transactions |
(61,074 | ) | 1,356 | (71,743 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(1,133,164 | ) | 489,642 | (139,925 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
|
Investmentsd |
45,839,899 | 158,834 | 1,829,954 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(19,342 | ) | 275 | (638 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
45,820,557 | 159,109 | 1,829,316 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
44,687,393 | 648,751 | 1,689,391 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 52,733,218 | $ | 705,994 | $ | 1,838,954 | ||||||
|
|
|
|
|
|
|
|||||||
| a | For the period from September 12, 2012 (commencement of operations) to February 28, 2013. |
| b | Net of foreign withholding tax of $326,780, $10,827 and $6,253, respectively. |
| c | Net of foreign capital gains taxes of $ —, $ — and $152, respectively. |
| d | Net of deferred foreign capital gains taxes of $ —, $ — and $21,085, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
39 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| World Index Fund |
||||
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 106,951 | ||
| Dividends — affiliated (Note 2) |
218 | |||
| Interest — affiliated (Note 2) |
6 | |||
| Securities lending income — affiliated (Note 2) |
269 | |||
|
|
|
|||
| Total investment income |
107,444 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
10,660 | |||
|
|
|
|||
| Total expenses |
10,660 | |||
|
|
|
|||
| Net investment income |
96,784 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(6,663 | ) | ||
| In-kind redemptions — unaffiliated |
593,734 | |||
| In-kind redemptions — affiliated (Note 2) |
313 | |||
| Foreign currency transactions |
(270 | ) | ||
|
|
|
|||
| Net realized gain |
587,114 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
234,323 | |||
| Translation of assets and liabilities in foreign currencies |
(213 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
234,110 | |||
|
|
|
|||
| Net realized and unrealized gain |
821,224 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 918,008 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $3,252. |
See notes to financial statements.
| 40 | 2013 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 |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 8,045,825 | $ | 4,968,807 | $ | 57,243 | $ | 208,486 | ||||||||
| Net realized gain (loss) |
(1,133,164 | ) | (3,082,429 | ) | 489,642 | (225,573 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
45,820,557 | 19,531,902 | 159,109 | (346,977 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
52,733,218 | 21,418,280 | 705,994 | (364,064 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(9,515,750 | ) | (2,087,970 | ) | (88,858 | ) | (178,240 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(9,515,750 | ) | (2,087,970 | ) | (88,858 | ) | (178,240 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
153,860,413 | 559,445,278 | — | 15,732,186 | ||||||||||||
| Cost of shares redeemed |
— | — | (5,559,099 | ) | (4,846,639 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
153,860,413 | 559,445,278 | (5,559,099 | ) | 10,885,547 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
197,077,881 | 578,775,588 | (4,941,963 | ) | 10,343,243 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
578,775,588 | — | 10,343,243 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 775,853,469 | $ | 578,775,588 | $ | 5,401,280 | $ | 10,343,243 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 1,394,467 | $ | 2,864,392 | $ | (7,891 | ) | $ | 23,724 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
2,700,000 | 10,400,000 | — | 300,000 | ||||||||||||
| Shares redeemed |
— | — | (100,000 | ) | (100,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
2,700,000 | 10,400,000 | (100,000 | ) | 200,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Commencement of operations. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
41 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Frontier 100 Index Fund |
iShares MSCI World Index Fund |
|||||||||||
| Period from to February 28, 2013 |
Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||
| OPERATIONS: |
||||||||||||
| Net investment income |
$ | 149,563 | $ | 96,784 | $ | 354,495 | ||||||
| Net realized gain (loss) |
(139,925 | ) | 587,114 | 247,405 | ||||||||
| Net change in unrealized appreciation/depreciation |
1,829,316 | 234,110 | 582,375 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net increase in net assets resulting from operations |
1,838,954 | 918,008 | 1,184,275 | |||||||||
|
|
|
|
|
|
|
|||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||
| From net investment income |
— | (153,715 | ) | (295,901 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total distributions to shareholders |
— | (153,715 | ) | (295,901 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||
| Proceeds from shares sold |
51,056,893 | — | 20,127,850 | |||||||||
| Cost of shares redeemed |
— | (5,595,722 | ) | (10,327,216 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in net assets from capital share transactions |
51,056,893 | (5,595,722 | ) | 9,800,634 | ||||||||
|
|
|
|
|
|
|
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
52,895,847 | (4,831,429 | ) | 10,689,008 | ||||||||
| NET ASSETS |
||||||||||||
| Beginning of period |
— | 10,689,008 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| End of period |
$ | 52,895,847 | $ | 5,857,579 | $ | 10,689,008 | ||||||
|
|
|
|
|
|
|
|||||||
| Undistributed net investment income included in net assets at end of period |
$ | 149,563 | $ | 345 | $ | 57,276 | ||||||
|
|
|
|
|
|
|
|||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||
| Shares sold |
1,850,000 | — | 400,000 | |||||||||
| Shares redeemed |
— | (100,000 | ) | (200,000 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in shares outstanding |
1,850,000 | (100,000 | ) | 200,000 | ||||||||
|
|
|
|
|
|
|
|||||||
| a | Commencement of operations. |
See notes to financial statements.
| 42 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI All Country World Minimum Volatility Index Fund
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 55.65 | $ | 50.02 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.69 | 1.49 | ||||||
| Net realized and unrealized gainc |
3.70 | 4.67 | ||||||
|
|
|
|
|
|||||
| Total from investment operations |
4.39 | 6.16 | ||||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.81 | ) | (0.53 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.81 | ) | (0.53 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 59.23 | $ | 55.65 | ||||
|
|
|
|
|
|||||
| Total return |
7.98 | %d | 12.41 | %d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 775,853 | $ | 578,776 | ||||
| Ratio of expenses to average net assetse |
0.20 | % | 0.23 | % | ||||
| Ratio of expenses to average net assets prior to waived feese |
0.34 | % | 0.34 | % | ||||
| Ratio of net investment income to average net assetse |
2.47 | % | 3.17 | % | ||||
| Portfolio turnover ratef |
11 | % | 22 | % | ||||
| 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 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 28, 2013 and the period ended August 31, 2012 were 11% and 22%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
43 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Emerging Markets EMEA Index Fund
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 51.72 | $ | 51.16 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.36 | 1.43 | ||||||
| Net realized and unrealized gainc |
2.82 | 0.02 | ||||||
|
|
|
|
|
|||||
| Total from investment operations |
3.18 | 1.45 | ||||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.89 | ) | (0.89 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.89 | ) | (0.89 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 54.01 | $ | 51.72 | ||||
|
|
|
|
|
|||||
| Total return |
6.10 | %d | 2.91 | %d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 5,401 | $ | 10,343 | ||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | ||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | ||||
| Ratio of net investment income to average net assetse |
1.35 | % | 4.46 | % | ||||
| Portfolio turnover ratef |
4 | % | 5 | % | ||||
| 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.
| 44 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Frontier 100 Index Fund
| Period from to Feb. 28, 2013 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 25.25 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.19 | |||
| Net realized and unrealized gainc |
3.15 | |||
|
|
|
|||
| Total from investment operations |
3.34 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 28.59 | ||
|
|
|
|||
| Total return |
13.23 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 52,896 | ||
| Ratio of expenses to average net assetse |
0.79 | % | ||
| Ratio of net investment income to average net assetse |
1.47 | % | ||
| Portfolio turnover ratef |
4 | % | ||
| 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 28, 2013 was 4%. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
45 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI World Index Fund
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 53.45 | $ | 50.32 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.60 | 0.98 | ||||||
| Net realized and unrealized gainc |
5.30 | 2.89 | ||||||
|
|
|
|
|
|||||
| Total from investment operations |
5.90 | 3.87 | ||||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.77 | ) | (0.74 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.77 | ) | (0.74 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 58.58 | $ | 53.45 | ||||
|
|
|
|
|
|||||
| Total return |
11.13 | %d | 7.76 | %d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 5,858 | $ | 10,689 | ||||
| Ratio of expenses to average net assetse |
0.24 | % | 0.24 | % | ||||
| Ratio of net investment income to average net assetse |
2.18 | % | 2.91 | % | ||||
| Portfolio turnover ratef |
1 | % | 3 | % | ||||
| 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.
| 46 | 2013 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 Index Fund | Diversification Classification | |
| All Country World Minimum Volatility |
Non-diversified | |
| Emerging Markets EMEA |
Non-diversified | |
| Frontier 100a |
Non-diversified | |
| World |
Diversified |
| a | The Fund commenced operations on September 12, 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 |
47 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY VALUATION
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of investments for the Funds. The investments of each Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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. |
| • | Exchange-traded funds and closed-end funds 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 fund is primarily traded. Funds 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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument. The three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| 48 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| • | 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 (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; 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. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2013. 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 |
$ | 768,631,113 | $ | — | $ | — | $ | 768,631,113 | ||||||||
| Investment Companies |
1,937,861 | — | — | 1,937,861 | ||||||||||||
| Preferred Stocks |
2,484,095 | — | — | 2,484,095 | ||||||||||||
| Money Market Funds |
15,991,582 | — | — | 15,991,582 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 789,044,651 | $ | — | $ | — | $ | 789,044,651 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets EMEA |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,300,595 | $ | — | $ | — | $ | 5,300,595 | ||||||||
| Preferred Stocks |
90,662 | — | — | 90,662 | ||||||||||||
| Money Market Funds |
5,763 | — | — | 5,763 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,397,020 | $ | — | $ | — | $ | 5,397,020 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Frontier 100 |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 52,698,586 | $ | 101 | $ | — | $ | 52,698,687 | ||||||||
| Rights |
— | 19,597 | — | 19,597 | ||||||||||||
| Money Market Funds |
1,820,771 | — | — | 1,820,771 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 54,519,357 | $ | 19,698 | $ | — | $ | 54,539,055 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
49 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| World |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,819,474 | $ | — | $ | — | $ | 5,819,474 | ||||||||
| Preferred Stocks |
12,761 | — | — | 12,761 | ||||||||||||
| Money Market Funds |
15,482 | — | — | 15,482 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,847,717 | $ | — | $ | — | $ | 5,847,717 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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 28, 2013 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, stock dividends, capital gains on investments, or certain foreign currency transactions. 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 stock dividends are presented as “other foreign taxes,” and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, if any, are disclosed in the Funds’ statements of assets and liabilities.
| 50 | 2013 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 December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, 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 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 asset 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 voluntarily waived a portion of its investment advisory fees for the iShares MSCI All Country World Minimum Volatility Index Fund in the amount of $449,647.
| NOTES TO FINANCIAL STATEMENTS |
51 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, 2014 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 period ended February 28, 2013, BFA waived its investment advisory fees for the Fund in the amount of $8,303.
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 | % | ||
| Frontier 100 |
0.79 | |||
| 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. The Funds benefit from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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 28, 2013, BTC earned securities lending agent fees from the Funds as follows:
| iShares MSCI Index Fund | Securities Lending Agent Fees |
|||
| All Country World Minimum Volatility |
$ | 36,337 | ||
| World |
145 | |||
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Funds for 1940 Act purposes.
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.
| 52 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Investments in issuers considered to be affiliates of the Funds (excluding short-term investments) during the period ended February 28, 2013, 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 at End |
Value at End of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| All Country World Minimum Volatility |
||||||||||||||||||||||||||||
| iShares S&P India Nifty 50 Index Fund |
73,268 | 17,648 | (9,800 | ) | 81,116 | $ | 1,937,861 | $ | 296 | $ | 14,078 | |||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| World |
||||||||||||||||||||||||||||
| BlackRock Inc. |
58 | — | (30 | ) | 28 | $ | 6,713 | $ | 87 | $ | 682 | |||||||||||||||||
| PNC Financial Services Group Inc. (The) |
227 | — | (126 | ) | 101 | 6,301 | 131 | (369 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 13,014 | $ | 218 | $ | 313 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
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 28, 2013 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| All Country World Minimum Volatility |
$ | 85,190,825 | $ | 74,948,155 | ||||
| Emerging Markets EMEA |
364,516 | 331,486 | ||||||
| Frontier 100 |
50,919,804 | 992,878 | ||||||
| World |
105,132 | 171,847 | ||||||
In-kind transactions (see Note 4) for the period ended February 28, 2013 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| All Country World Minimum Volatility |
$ | 141,040,116 | $ | — | ||||
| Emerging Markets EMEA |
— | 5,540,471 | ||||||
| Frontier 100 |
1,015,128 | — | ||||||
| World |
— | 5,567,743 | ||||||
| 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.
| NOTES TO FINANCIAL STATEMENTS |
53 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 may also 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 market value of the loaned securities is determined at the close of each business day of the Funds and any additional required collateral is delivered to the Funds on the next business day. 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. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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.
| 54 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of August 31, 2012, the Funds’ fiscal year-end, the Funds had non-expiring capital loss carryforwards available to offset future realized capital gains as follows:
| iShares MSCI Index Fund | Non- Expiring |
|||
| All Country World Minimum Volatility |
$ | 1,876,800 | ||
| Emerging Markets EMEA |
55,073 | |||
| World |
19,493 | |||
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 28, 2013, 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 |
$ | 725,611,301 | $ | 71,773,437 | $ | (8,340,087 | ) | $ | 63,433,350 | |||||||
| Emerging Markets EMEA |
5,594,325 | 336,733 | (534,038 | ) | (197,305 | ) | ||||||||||
| Frontier 100 |
52,688,016 | 2,493,302 | (642,263 | ) | 1,851,039 | |||||||||||
| World |
5,040,960 | 955,059 | (148,302 | ) | 806,757 | |||||||||||
Management has reviewed the tax positions as of February 28, 2013, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 7. | LINE OF CREDIT |
The Funds, along with certain other iShares funds, are parties to a $125 million credit agreement with State Street Bank and Trust Company, which expires October 30, 2013. 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 28, 2013, the iShares MSCI Frontier 100 Index Fund’s maximum amount borrowed, the average borrowings and the average interest rate under the credit agreement were $255,000, $15,233 and 1.20%, respectively.
The iShares MSCI All Country World Minimum Volatility Index Fund, iShares MSCI Emerging Markets EMEA Index Fund and iShares MSCI World Index Fund did not borrow under the credit agreement during the period ended February 28, 2013.
| NOTES TO FINANCIAL STATEMENTS |
55 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 8. | 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.
| 56 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited)
iSHARES®, INC.
iShares MSCI Frontier 100 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 to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) on behalf of the Fund. The Independent Directors requested, and BFA provided, such information as the Independent Directors, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed Advisory Contract.
At a meeting held on June 20-21, 2012, the Board, including a majority of the Independent Directors, approved the selection of BFA and the Advisory Contract for the Fund, 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 Fund, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
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 any proposed 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, sponsor, inception date, or other differentiating factors, but that 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), as applicable. 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 also received a detailed explanation from BFA regarding its rationale for including funds that had been excluded from Lipper’s consideration due to Lipper’s methodology parameters, as well as information showing the effect of including these additional funds in the analysis. 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 proposed 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 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 Fund supported the Board’s approval of the Advisory Contract.
Nature, Extent and Quality of Services to be 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, to supporting iShares funds and their shareholders. The Board noted that BFA became an indirect wholly-owned subsidiary of BlackRock in December 2009. The Board acknowledged that additional resources to support iShares funds and their shareholders have been added or enhanced since then, including, in such areas as investor education, product management, customized portfolio consulting support, 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
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
57 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
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. 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 Advisory Contract.
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 proposed relationships had not yet commenced. The Board noted that it expects to receive profitability information from BFA on at least an annual basis following the Fund’s launch 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 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, noting that the issue of economies of scale with respect to the iShares funds that are in operation was focused on extensively the Board during its meetings and addressed by management. The Board reviewed information provided by BFA regarding scale benefits shared with the iShares funds through breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board received information regarding BFA’s historical profitability, including BFA’s and its affiliates’ costs in providing services. The cost information distinguished between fixed and variable costs, and explained how the nature of such costs may impact the existence of scale benefits. The Board noted that the Advisory Contract for the Fund did not provide for any breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board noted that should material economies of scale exist in the future, a breakpoint structure for the Fund may be appropriate. Based on this review, as well as the other factors considered at the meeting, the Board, recognizing its responsibility to consider this issue at least annually following an initial two-year period, concluded that the investment advisory fee rate incorporates potential economies of scale 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 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 the same 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, generally more extensive services to be 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
| 58 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
publicly traded exchange traded fund, as compared to Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund expenses to be borne by BFA under this arrangement. 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 the 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 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 proposed relationship had not yet commenced. However, the Board noted that BFA generally 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 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, will be 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 with respect to the appropriateness of approving the Advisory Contract.
Based on the considerations described above, the Board determined that the investment advisory fee rate under the Advisory Contract does not constitute a fee that is 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 Advisory Contract.
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
59 |
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 |
$ | 0.70619 | $ | — | $ | 0.10712 | $ | 0.81331 | 87 | % | — | % | 13 | % | 100 | % | ||||||||||||||||
| World |
0.69853 | — | 0.07005 | 0.76858 | 91 | — | 9 | 100 | ||||||||||||||||||||||||
| 60 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
61 |
Table of Contents
Notes:
| 62 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Funds’ website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website.
©2013 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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iS-SAR-811-0213
Table of Contents
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI Global Agriculture Producers Fund | VEGI | NYSE Arca |
| Ø | iShares MSCI Global Energy Producers Fund | FILL | NYSE Arca |
| Ø | iShares MSCI Global Gold Miners Fund | RING | NYSE Arca |
| Ø | iShares MSCI Global Select Metals & Mining Producers Fund | PICK | NYSE Arca |
| Ø | iShares MSCI Global Silver Miners Fund | SLVP | NYSE Arca |
Table of Contents
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| 12 | ||||
| 12 | ||||
| 15 | ||||
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| 28 | ||||
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| 40 | ||||
| 49 |
Table of Contents
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 9.07% | 9.24% | 9.25% | 11.48% | 11.97% | 11.67% | 12.44% | 12.97% | 12.71% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (1/31/12). “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 (2/2/12), 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 six-month period ended February 28, 2013, the total return for the Fund was 11.36%, net of fees, while the total return for the Index was 11.42%.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (5.74)% | (6.39)% | (5.79)% | (0.17)% | (0.50)% | (0.18)% | (0.18)% | (0.54)% | (0.19)% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (1/31/12). “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 (2/2/12), 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 six-month period ended February 28, 2013, the total return for the Fund was 3.73%, net of fees, while the total return for the Index was 3.71%.
| 6 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL GOLD MINERS FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (34.94)% | (34.68)% | (34.84)% | (32.88)% | (33.11)% | (32.66)% | (34.97)% | (35.21)% | (34.84)% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (1/31/12). “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 (2/2/12), 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 Gold 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 six-month period ended February 28, 2013, the total return for the Fund was -19.26%, net of fees, while the total return for the Index was -19.22%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (13.89)% | (15.23)% | (14.10)% | (11.67)% | (12.37)% | (11.78)% | (12.53)% | (13.28)% | (12.70)% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (1/31/12). “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 (2/2/12), 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 six-month period ended February 28, 2013, the total return for the Fund was 13.24%, net of fees, while the total return for the Index was 13.26%.
| 8 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL SILVER MINERS FUND
Performance as of February 28, 2013
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/28/13 | Inception to 2/28/13 | Inception to 2/28/13 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (28.06)% | (28.02)% | (27.83)% | (24.52)% | (24.31)% | (24.19)% | (26.18)% | (25.97)% | (25.92)% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (1/31/12). “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 (2/2/12), 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 six-month period ended February 28, 2013, the total return for the Fund was -12.97%, net of fees, while the total return for the Index was -12.83%.
| 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, 2012 to February 28, 2013.
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 Account Value (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| Global Agriculture Producers |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,113.60 | 0.38 | % | $ | 1.99 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.38 | 1.91 | ||||||||||||
| Global Energy Producers |
||||||||||||||||
| Actual |
1,000.00 | 1,037.30 | 0.39 | 1.97 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.39 | 1.96 | ||||||||||||
| Global Gold Miners |
||||||||||||||||
| Actual |
1,000.00 | 807.40 | 0.39 | 1.75 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.39 | 1.96 | ||||||||||||
| Global Select Metals & Mining Producers |
||||||||||||||||
| Actual |
1,000.00 | 1,132.40 | 0.39 | 2.06 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.39 | 1.96 | ||||||||||||
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Fund | Beginning Account Value (9/1/12) |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period a |
||||||||||||
| Global Silver Miners |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 870.30 | 0.39 | % | $ | 1.81 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.39 | 1.96 | ||||||||||||
| 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 (181 days) and divided by the number of days in the year (365 days). |
| SHAREHOLDER EXPENSES |
11 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
February 28, 2013
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
February 28, 2013
| 14 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 28, 2013
| 16 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 28, 2013
| 18 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL GOLD MINERS FUND
February 28, 2013
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL GOLD MINERS FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 28, 2013
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 28, 2013
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 28, 2013
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL SILVER MINERS FUND
February 28, 2013
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Global Agriculture Producers Fund |
iShares MSCI Global Energy Producers Fund |
iShares MSCI Global Gold Miners Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 12,766,387 | $ | 5,028,160 | $ | 36,592,950 | ||||||
| Affiliated (Note 2) |
155,979 | 1,360 | 335,414 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 12,922,366 | $ | 5,029,520 | $ | 36,928,364 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 13,667,781 | $ | 4,817,217 | $ | 25,707,332 | ||||||
| Affiliated (Note 2) |
157,237 | 1,360 | 335,414 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
13,825,018 | 4,818,577 | 26,042,746 | |||||||||
| Foreign currencies, at valueb |
9,236 | 4,752 | 39,702 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
34,723 | 9,762 | 656,613 | |||||||||
| Dividends and interest |
11,257 | 20,434 | 27,816 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
13,880,234 | 4,853,525 | 26,766,877 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
32,046 | 31,361 | 668,878 | |||||||||
| Collateral for securities on loan (Note 5) |
44,800 | 758 | 332,634 | |||||||||
| Investment advisory fees (Note 2) |
4,097 | 1,458 | 8,236 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
80,943 | 33,577 | 1,009,748 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 13,799,291 | $ | 4,819,948 | $ | 25,757,129 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 12,880,660 | $ | 5,040,238 | $ | 37,790,119 | ||||||
| Undistributed net investment income |
16,863 | 16,886 | 26,576 | |||||||||
| Accumulated net realized loss |
(756 | ) | (26,115 | ) | (1,173,921 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
902,524 | (211,061 | ) | (10,885,645 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 13,799,291 | $ | 4,819,948 | $ | 25,757,129 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
500,000 | 200,000 | 1,600,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 27.60 | $ | 24.10 | $ | 16.10 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $40,199, $720 and $311,193, respectively. See Note 5. |
| b | Cost of foreign currencies: $9,332, $4,863 and $39,739, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to financial statements.
| 28 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2013
| iShares MSCI Global Select Producers Fund |
iShares MSCI Global Silver |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 216,963,134 | $ | 2,387,292 | ||||
| Affiliated (Note 2) |
3,589,492 | 75,654 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 220,552,626 | $ | 2,462,946 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 238,906,991 | $ | 1,801,187 | ||||
| Affiliated (Note 2) |
3,589,492 | 75,654 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
242,496,483 | 1,876,841 | ||||||
| Foreign currencies, at valueb |
123,206 | 713 | ||||||
| Receivables: |
||||||||
| Investment securities sold |
635,656 | 21,073 | ||||||
| Dividends and interest |
142,454 | 566 | ||||||
|
|
|
|
|
|||||
| Total Assets |
243,397,799 | 1,899,193 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
546,241 | 19,243 | ||||||
| Collateral for securities on loan (Note 5) |
3,417,188 | 75,271 | ||||||
| Foreign taxes (Note 1) |
37 | — | ||||||
| Securities related to in-kind transactions (Note 4) |
137,860 | — | ||||||
| Investment advisory fees (Note 2) |
74,274 | 586 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
4,175,600 | 95,100 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 239,222,199 | $ | 1,804,093 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 214,822,186 | $ | 2,516,572 | ||||
| Distributions in excess of net investment income |
(368,019 | ) | (17,693 | ) | ||||
| Undistributed net realized gain (accumulated net realized loss) |
2,827,263 | (108,664 | ) | |||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
21,940,769 | (586,122 | ) | |||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 239,222,199 | $ | 1,804,093 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
11,200,000 | 100,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 21.36 | $ | 18.04 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $3,118,393 and $71,647, respectively. See Note 5. |
| b | Cost of foreign currencies: $125,250 and $732, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
29 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2013
| Global Agriculture Producers Fund |
iShares MSCI Global Energy Producers Fund |
iShares MSCI Global Gold |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 77,678 | $ | 61,107 | $ | 252,247 | ||||||
| Dividends — affiliated (Note 2) |
16 | — | — | |||||||||
| Interest — affiliated (Note 2) |
4 | 2 | 15 | |||||||||
| Securities lending income — affiliated (Note 2) |
255 | 41 | 3,889 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
77,953 | 61,150 | 256,151 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
21,523 | 9,306 | 66,973 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
21,523 | 9,306 | 66,973 | |||||||||
| Less investment advisory fees waived (Note 2) |
(426 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
21,097 | 9,306 | 66,973 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
56,856 | 51,844 | 189,178 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
24,050 | (1,862 | ) | (799,338 | ) | |||||||
| Investments — affiliated (Note 2) |
(776 | ) | — | — | ||||||||
| In-kind redemptions — unaffiliated |
— | — | 251,258 | |||||||||
| Foreign currency transactions |
246 | 439 | (412 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
23,520 | (1,423 | ) | (548,492 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
986,282 | 125,473 | (6,791,294 | ) | ||||||||
| Translation of assets and liabilities in foreign currencies |
(127 | ) | (211 | ) | (289 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
986,155 | 125,262 | (6,791,583 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
1,009,675 | 123,839 | (7,340,075 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 1,066,531 | $ | 175,683 | $ | (7,150,897 | ) | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $4,377, $3,947 and $23,516, respectively. |
See notes to financial statements.
| 30 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2013
| iShares MSCI Global Select Producers Fund |
iShares MSCI Global Silver |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 1,863,501 | $ | 3,651 | ||||
| Interest — unaffiliated |
6 | — | ||||||
| Interest — affiliated (Note 2) |
97 | 1 | ||||||
| Securities lending income — affiliated (Note 2) |
25,990 | 33 | ||||||
|
|
|
|
|
|||||
| Total investment income |
1,889,594 | 3,685 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
443,913 | 4,280 | ||||||
|
|
|
|
|
|||||
| Total expenses |
443,913 | 4,280 | ||||||
|
|
|
|
|
|||||
| Net investment income (loss) |
1,445,681 | (595 | ) | |||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(266,576 | ) | (22,909 | ) | ||||
| In-kind redemptions — unaffiliated |
3,152,196 | — | ||||||
| Foreign currency transactions |
(21,430 | ) | 29 | |||||
|
|
|
|
|
|||||
| Net realized gain (loss) |
2,864,190 | (22,880 | ) | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
22,610,693 | (244,631 | ) | |||||
| Translation of assets and liabilities in foreign currencies |
7,209 | (26 | ) | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
22,617,902 | (244,657 | ) | |||||
|
|
|
|
|
|||||
| Net realized and unrealized gain (loss) |
25,482,092 | (267,537 | ) | |||||
|
|
|
|
|
|||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 26,927,773 | $ | (268,132 | ) | |||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $97,228 and $426, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
31 |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Global Agriculture Producers Fund |
iShares MSCI Global Energy Producers Fund |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 56,856 | $ | 55,484 | $ | 51,844 | $ | 84,128 | ||||||||
| Net realized gain (loss) |
23,520 | (25,900 | ) | (1,423 | ) | (23,866 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
986,155 | (83,631 | ) | 125,262 | (336,323 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
1,066,531 | (54,047 | ) | 175,683 | (276,061 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(54,229 | ) | (39,624 | ) | (56,855 | ) | (63,057 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(54,229 | ) | (39,624 | ) | (56,855 | ) | (63,057 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
2,822,379 | 10,058,281 | — | 5,040,238 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
2,822,379 | 10,058,281 | — | 5,040,238 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
3,834,681 | 9,964,610 | 118,828 | 4,701,120 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
9,964,610 | — | 4,701,120 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 13,799,291 | $ | 9,964,610 | $ | 4,819,948 | $ | 4,701,120 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 16,863 | $ | 14,236 | $ | 16,886 | $ | 21,897 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED |
||||||||||||||||
| Shares sold |
100,000 | 400,000 | — | 200,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
100,000 | 400,000 | — | 200,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Commencement of operations. |
See notes to financial statements.
| 32 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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 |
|||||||||||||||
| Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 189,178 | $ | 170,562 | $ | 1,445,681 | $ | 49,211 | ||||||||
| Net realized gain (loss) |
(548,492 | ) | (806,071 | ) | 2,864,190 | (38,123 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
(6,791,583 | ) | (4,094,062 | ) | 22,617,902 | (677,133 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(7,150,897 | ) | (4,729,571 | ) | 26,927,773 | (666,045 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(197,530 | ) | (135,773 | ) | (1,835,810 | ) | (25,905 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(197,530 | ) | (135,773 | ) | (1,835,810 | ) | (25,905 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
10,340,969 | 39,170,494 | 118,580,509 | 124,215,632 | ||||||||||||
| Cost of shares redeemed |
(9,319,826 | ) | (2,220,737 | ) | (27,973,955 | ) | — | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
1,021,143 | 36,949,757 | 90,606,554 | 124,215,632 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(6,327,284 | ) | 32,084,413 | 115,698,517 | 123,523,682 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
32,084,413 | — | 123,523,682 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 25,757,129 | $ | 32,084,413 | $ | 239,222,199 | $ | 123,523,682 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 26,576 | $ | 34,928 | $ | (368,019 | ) | $ | 22,110 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
500,000 | 1,700,000 | 6,000,000 | 6,500,000 | ||||||||||||
| Shares redeemed |
(500,000 | ) | (100,000 | ) | (1,300,000 | ) | — | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
— | 1,600,000 | 4,700,000 | 6,500,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 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 Silver Miners Fund |
||||||||
| Six months ended February 28, 2013 (Unaudited) |
Period from to August 31, 2012 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$ | (595 | ) | $ | 15,055 | |||
| Net realized loss |
(22,880 | ) | (560,995 | ) | ||||
| Net change in unrealized appreciation/depreciation |
(244,657 | ) | (341,465 | ) | ||||
|
|
|
|
|
|||||
| Net decrease in net assets resulting from operations |
(268,132 | ) | (887,405 | ) | ||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(22,190 | ) | (14,066 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(22,190 | ) | (14,066 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
— | 4,939,471 | ||||||
| Cost of shares redeemed |
— | (1,943,585 | ) | |||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
— | 2,995,886 | ||||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN NET ASSETS |
(290,322 | ) | 2,094,415 | |||||
| NET ASSETS |
||||||||
| Beginning of period |
2,094,415 | — | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 1,804,093 | $ | 2,094,415 | ||||
|
|
|
|
|
|||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (17,693 | ) | $ | 5,092 | |||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
— | 200,000 | ||||||
| Shares redeemed |
— | (100,000 | ) | |||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
— | 100,000 | ||||||
|
|
|
|
|
|||||
| a | Commencement of operations. |
| 34 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Global Agriculture Producers Fund
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 24.91 | $ | 24.88 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.14 | 0.28 | ||||||
| Net realized and unrealized gain (loss)c |
2.69 | (0.05 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
2.83 | 0.23 | ||||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.14 | ) | (0.20 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.14 | ) | (0.20 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 27.60 | $ | 24.91 | ||||
|
|
|
|
|
|||||
| Total return |
11.36 | %d | 0.97 | %d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 13,799 | $ | 9,965 | ||||
| Ratio of expenses to average net assetse |
0.38 | % | 0.38 | % | ||||
| Ratio of expenses to average net assets prior to waived feese |
0.39 | % | 0.39 | % | ||||
| Ratio of net investment income to average net assetse |
1.03 | % | 1.93 | % | ||||
| Portfolio turnover ratef |
3 | % | 6 | % | ||||
| 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 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 periods ended February 28, 2013 and August 31, 2012 were 3% and 6% respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
35 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Global Energy Producers Fund
| Six months Feb. 28, 2013 |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 23.51 | $ | 24.79 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.26 | 0.43 | ||||||
| Net realized and unrealized gain (loss)c |
0.61 | (1.39 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
0.87 | (0.96 | ) | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.28 | ) | (0.32 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.28 | ) | (0.32 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 24.10 | $ | 23.51 | ||||
|
|
|
|
|
|||||
| Total return |
3.73 | %d | (3.77 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 4,820 | $ | 4,701 | ||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | ||||
| Ratio of net investment income to average net assetse |
2.17 | % | 3.16 | % | ||||
| Portfolio turnover ratef |
2 | % | 5 | % | ||||
| 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 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 periods ended February 28, 2013 and August 31, 2012 were 2% and 5% respectively. See Note 4. |
See notes to financial statements.
| 36 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Global Gold Miners Fund
| Six months Feb. 28, 2013 |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 20.05 | $ | 25.00 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.11 | 0.15 | ||||||
| Net realized and unrealized lossc |
(3.96 | ) | (5.02 | ) | ||||
|
|
|
|
|
|||||
| Total from investment operations |
(3.85 | ) | (4.87 | ) | ||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.10 | ) | (0.08 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.10 | ) | (0.08 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 16.10 | $ | 20.05 | ||||
|
|
|
|
|
|||||
| Total return |
(19.26 | )%d | (19.45 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 25,757 | $ | 32,084 | ||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | ||||
| Ratio of net investment income to average net assetse |
1.10 | % | 1.25 | % | ||||
| Portfolio turnover ratef |
10 | % | 11 | % | ||||
| 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 |
37 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Global Select Metals & Mining Producers Fund
| Six months Feb. 28, 2013 |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 19.00 | $ | 24.76 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.13 | 0.37 | ||||||
| Net realized and unrealized gain (loss)c |
2.39 | (6.00 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
2.52 | (5.63 | ) | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.16 | ) | (0.13 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.16 | ) | (0.13 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 21.36 | $ | 19.00 | ||||
|
|
|
|
|
|||||
| Total return |
13.24 | %d | (22.76 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 239,222 | $ | 123,524 | ||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | ||||
| Ratio of net investment income to average net assetse |
1.27 | % | 2.98 | % | ||||
| Portfolio turnover ratef |
5 | % | 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 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 periods ended February 28, 2013 and August 31, 2012 were 3% and 1% respectively. See Note 4. |
See notes to financial statements.
| 38 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Global Silver Miners Fund
| Six months ended Feb. 28, 2013 (Unaudited) |
Period from to Aug. 31, 2012 |
|||||||
| Net asset value, beginning of period |
$ | 20.94 | $ | 24.87 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment income (loss)b |
(0.01 | ) | 0.11 | |||||
| Net realized and unrealized lossc |
(2.67 | ) | (3.90 | ) | ||||
|
|
|
|
|
|||||
| Total from investment operations |
(2.68 | ) | (3.79 | ) | ||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.22 | ) | (0.14 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.22 | ) | (0.14 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 18.04 | $ | 20.94 | ||||
|
|
|
|
|
|||||
| Total return |
(12.97 | )%d | (15.18 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 1,804 | $ | 2,094 | ||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | ||||
| Ratio of net investment income (loss) to average net assetse |
(0.05 | )% | 0.86 | % | ||||
| Portfolio turnover ratef |
4 | % | 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 | 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 |
39 |
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 Producers |
Non-diversified | |
| Global Energy Producers |
Non-diversified | |
| Global Gold Miners |
Non-diversified | |
| Global Select Metals & Mining Producers |
Non-diversified | |
| Global Silver Miners |
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 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.
| 40 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY VALUATION
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of investments for the Funds. The investments of each Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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. |
| • | Exchange-traded funds and closed-end funds 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 fund is primarily traded. Funds 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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument. The three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| NOTES TO FINANCIAL STATEMENTS |
41 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| • | 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 (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; 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. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2013. The breakdown of each Fund’s investments into major categories is disclosed in its respective schedule of investments.
| iShares MSCI Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Global Agriculture Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 13,490,668 | $ | 8,969 | $ | — | $ | 13,499,637 | ||||||||
| Investment Companies |
107,505 | — | — | 107,505 | ||||||||||||
| Preferred Stocks |
168,144 | — | — | 168,144 | ||||||||||||
| Money Market Funds |
49,732 | — | — | 49,732 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 13,816,049 | $ | 8,969 | $ | — | $ | 13,825,018 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Global Energy Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 4,741,518 | $ | 746 | $ | — | $ | 4,742,264 | ||||||||
| Preferred Stocks |
74,953 | — | — | 74,953 | ||||||||||||
| Money Market Funds |
1,360 | — | — | 1,360 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 4,817,831 | $ | 746 | $ | — | $ | 4,818,577 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Global Gold Miners |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 25,707,330 | $ | — | $ | 2 | $ | 25,707,332 | ||||||||
| Money Market Funds |
335,414 | — | — | 335,414 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 26,042,744 | $ | — | $ | 2 | $ | 26,042,746 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 42 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Global Select Metals & Mining Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 225,170,707 | $ | — | $ | 128,603 | $ | 225,299,310 | ||||||||
| Preferred Stocks |
13,607,680 | — | — | 13,607,680 | ||||||||||||
| Warrants |
— | 1 | — | 1 | ||||||||||||
| Money Market Funds |
3,589,492 | — | — | 3,589,492 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 242,367,879 | $ | 1 | $ | 128,603 | $ | 242,496,483 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Global Silver Miners |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,801,187 | $ | — | $ | — | $ | 1,801,187 | ||||||||
| Money Market Funds |
75,654 | — | — | 75,654 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,876,841 | $ | — | $ | — | $ | 1,876,841 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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 28, 2013 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, stock dividends, capital gains on investments, or certain foreign currency transactions. 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 stock dividends are
| NOTES TO FINANCIAL STATEMENTS |
43 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
presented as “other foreign taxes,” and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, 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 December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, 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 six months ended February 28, 2013.
| 44 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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. The Funds benefit from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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 28, 2013, BTC earned securities lending agent fees from the Funds as follows:
| iShares MSCI Fund | Securities Lending Agent Fees |
|||
| Global Agriculture Producers |
$ | 137 | ||
| Global Energy Producers |
22 | |||
| Global Gold Miners |
2,094 | |||
| Global Select Metals & Mining Producers |
13,994 | |||
| Global Silver Miners |
18 | |||
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Funds for 1940 Act purposes.
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 underlying index, may invest in shares of other iShares funds that invest in securities in each Fund’s respective underlying index.
Investments in issuers considered to be affiliates of the Funds (excluding short-term investments) during the six months ended February 28, 2013, 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 of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| Global Agriculture Producers |
||||||||||||||||||||||||||||
| iShares S&P India Nifty 50 Index Fund |
3,572 | 1,343 | (415 | ) | 4,500 | $ | 107,505 | $ | 16 | $ | (776 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| NOTES TO FINANCIAL STATEMENTS |
45 |
Table of Contents
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 28, 2013 were as follows:
| iShares MSCI Fund | Purchases | Sales | ||||||
| Global Agriculture Producers |
$ | 525,640 | $ | 346,646 | ||||
| Global Energy Producers |
106,359 | 87,269 | ||||||
| Global Gold Miners |
3,425,433 | 3,282,327 | ||||||
| Global Select Metals & Mining Producers |
23,802,647 | 9,928,863 | ||||||
| Global Silver Miners |
96,121 | 118,050 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2013 were as follows:
| iShares MSCI Fund | In-kind Purchases |
In-kind Sales |
||||||
| Global Agriculture Producers |
$ | 2,648,193 | $ | — | ||||
| Global Gold Miners |
10,171,857 | 9,294,384 | ||||||
| Global Select Metals & Mining Producers |
100,426,024 | 23,808,795 | ||||||
| 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 may also 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
| 46 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 market value of the loaned securities is determined at the close of each business day of the Funds and any additional required collateral is delivered to the Funds on the next business day. 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. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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.
As of August 31, 2012, the Funds’ fiscal year-end, the Funds had non-expiring capital loss carryforwards available to offset future realized capital gains as follows:
| iShares MSCI Fund | Non- Expiring |
|||
| Global Agriculture Producers |
$ | 20,341 | ||
| Global Energy Producers |
20,639 | |||
| Global Gold Miners |
259,179 | |||
| Global Select Metals & Mining Producers |
9,471 | |||
| Global Silver Miners |
83,082 | |||
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 FINANCIAL STATEMENTS |
47 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2013, 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 |
$ | 12,926,366 | $ | 1,169,384 | $ | (270,732 | ) | $ | 898,652 | |||||||
| Global Energy Producers |
5,036,143 | 295,370 | (512,936 | ) | (217,566 | ) | ||||||||||
| Global Gold Miners |
37,294,614 | 5,823 | (11,257,691 | ) | (11,251,868 | ) | ||||||||||
| Global Select Metals & Mining Producers |
220,581,562 | 25,852,363 | (3,937,442 | ) | 21,914,921 | |||||||||||
| Global Silver Miners |
2,472,054 | 8,996 | (604,209 | ) | (595,213 | ) | ||||||||||
Management has reviewed the tax positions as of February 28, 2013, 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.
| 48 | 2013 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 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 |
||||||||||||||||||||||||
| Global Agriculture Producers |
$ | 0.12482 | $ | — | $ | 0.01075 | $ | 0.13557 | 92 | % | — | % | 8 | % | 100 | % | ||||||||||||||||
| Global Energy Producers |
0.26922 | — | 0.01506 | 0.28428 | 95 | — | 5 | 100 | ||||||||||||||||||||||||
| Global Gold Miners |
0.10375 | — | 0.00021 | 0.10396 | 100 | — | 0 | a | 100 | |||||||||||||||||||||||
| Global Select Metals & Mining Producers |
0.11686 | — | 0.04418 | 0.16104 | 73 | — | 27 | 100 | ||||||||||||||||||||||||
| Global Silver Miners |
0.11827 | — | 0.10363 | 0.22190 | 53 | — | 47 | 100 | ||||||||||||||||||||||||
| a | Rounds to less than 1%. |
| SUPPLEMENTAL INFORMATION |
49 |
Table of Contents
Notes:
| 50 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Funds’ website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website.
©2013 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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iS-SAR-812-0213
Table of Contents
FEBRUARY 28, 2013
|
2013 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares Core MSCI Emerging Markets ETF | IEMG | NYSE Arca |
Table of Contents
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 30 | ||||
| 33 | ||||
| 34 | ||||
| 41 | ||||
| 44 |
Table of Contents
iSHARES® CORE MSCI EMERGING MARKETS ETF
Performance as of February 28, 2013
| Cumulative Total Returns | ||||||||
| Inception to 2/28/13 | ||||||||
| NAV | MARKET | INDEX | ||||||
| 4.90% | 4.83% | 4.93% | ||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 10/18/12.
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 (10/22/12), 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 Core MSCI Emerging Markets ETF (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Investable Market Index (the “Index”). The Index is designed to measure large-, mid- and small-cap 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 period from October 18, 2012 (inception date of the Fund) through February 28, 2013, the total return for the Fund was 4.90%, net of fees, while the total return for the Index was 4.93%.
| FUND PERFORMANCE OVERVIEW |
5 |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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, 2012 (or commencement of operations, as applicable) to February 28, 2013.
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 (9/1/12) a |
Ending Account Value (2/28/13) |
Annualized Expense Ratio |
Expenses Paid During Period b |
|||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,049.00 | 0.05 | % | $ | 0.19 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,024.50 | 0.05 | 0.25 | ||||||||||||
| a | The beginning of the period (commencement of operations) is October 18, 2012. |
| b | Actual expenses for the Fund 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 (133 days) and divided by the number of days in the year (365 days). Hypothetical expenses, which are based on a hypothetical half year, 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 (181 days) and divided by the number of days in the year (365 days). |
| 6 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
7 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 8 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 10 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 12 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 14 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 16 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 18 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 20 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 22 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 24 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 26 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| 28 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| SCHEDULE OF INVESTMENTS |
29 |
Table of Contents
Statement of Assets and Liabilities (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2013
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 510,951,823 | ||
| Affiliated (Note 2) |
47,768,211 | |||
|
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|
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| Total cost of investments |
$ | 558,720,034 | ||
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|
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| Investments in securities, at fair value (including securities on loana) (Note 1): |
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| Unaffiliated |
$ | 517,036,859 | ||
| Affiliated (Note 2) |
46,003,358 | |||
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|
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| Total fair value of investments |
563,040,217 | |||
| Foreign currencies, at valueb |
10,905,181 | |||
| Cash |
954 | |||
| Receivables: |
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| Investment securities sold |
1,021,296 | |||
| Dividends and interest |
520,887 | |||
| Capital shares sold |
5,148,302 | |||
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|
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| Total Assets |
580,636,837 | |||
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| LIABILITIES |
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| Payables: |
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| Investment securities purchased |
22,006,302 | |||
| Collateral for securities on loan (Note 5) |
4,168,046 | |||
| Foreign taxes (Note 1) |
131 | |||
| Investment advisory fees (Note 2) |
18,658 | |||
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|
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| Total Liabilities |
26,193,137 | |||
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|
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| NET ASSETS |
$ | 554,443,700 | ||
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| Net assets consist of: |
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| Paid-in capital |
$ | 550,166,377 | ||
| Undistributed net investment income |
460,666 | |||
| Accumulated net realized loss |
(498,988 | ) | ||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
4,315,645 | |||
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| NET ASSETS |
$ | 554,443,700 | ||
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|
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| Shares outstandingc |
10,800,000 | |||
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| Net asset value per share |
$ | 51.34 | ||
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| a | Securities on loan with a value of $3,831,228. See Note 5. |
| b | Cost of foreign currencies: $10,905,695. |
| c | $0.001 par value, number of shares authorized: 250 million. |
See notes to financial statements.
| 30 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statement of Operations (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
Period from October 18, 2012 (commencement of operations) through February 28, 2013
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 835,661 | ||
| Dividends — affiliated (Note 2) |
16,710 | |||
| Interest — unaffiliated |
155 | |||
| Interest — affiliated (Note 2) |
1,431 | |||
| Securities lending income — affiliated (Note 2) |
7,494 | |||
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|
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| Total investment income |
861,451 | |||
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| EXPENSES |
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| Investment advisory fees (Note 2) |
165,475 | |||
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|
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| Total expenses |
165,475 | |||
| Less investment advisory fees waived (Note 2) |
(117,159 | ) | ||
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|
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| Net expenses |
48,316 | |||
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|
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| Net investment income |
813,135 | |||
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| NET REALIZED AND UNREALIZED GAIN (LOSS) |
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| Net realized gain (loss) from: |
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| Investments — unaffiliated |
(477,725 | ) | ||
| Investments — affiliated (Note 2) |
(72,175 | ) | ||
| Foreign currency transactions |
50,912 | |||
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|
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| Net realized loss |
(498,988 | ) | ||
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|
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| Net change in unrealized appreciation/depreciation on: |
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| Investments |
4,320,183 | |||
| Translation of assets and liabilities in foreign currencies |
(4,538 | ) | ||
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|
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| Net change in unrealized appreciation/depreciation |
4,315,645 | |||
|
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|
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| Net realized and unrealized gain |
3,816,657 | |||
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|
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| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 4,629,792 | ||
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| a | Net of foreign withholding tax of $118,745. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
31 |
Table of Contents
Statement of Changes in Net Assets
iSHARES® CORE MSCI EMERGING MARKETS ETF
| Period from to February 28,2013 |
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| INCREASE (DECREASE) IN NET ASSETS |
||||
| OPERATIONS: |
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| Net investment income |
$ | 813,135 | ||
| Net realized loss |
(498,988 | ) | ||
| Net change in unrealized appreciation/depreciation |
4,315,645 | |||
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|
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| Net increase in net assets resulting from operations |
4,629,792 | |||
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|
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| DISTRIBUTIONS TO SHAREHOLDERS: |
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| From net investment income |
(352,469 | ) | ||
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|
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| Total distributions to shareholders |
(352,469 | ) | ||
|
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|
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| CAPITAL SHARE TRANSACTIONS: |
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| Proceeds from shares sold |
550,166,377 | |||
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|
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| Net increase in net assets from capital share transactions |
550,166,377 | |||
|
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|
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| INCREASE IN NET ASSETS |
554,443,700 | |||
| NET ASSETS |
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| Beginning of period |
— | |||
|
|
|
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| End of period |
$ | 554,443,700 | ||
|
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|
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| Undistributed net investment income included in net assets at end of period |
$ | 460,666 | ||
|
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|
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| SHARES ISSUED |
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| Shares sold |
10,800,000 | |||
|
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|
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| Net increase in shares outstanding |
10,800,000 | |||
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| a | Commencement of operations. |
See notes to financial statements.
| 32 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES® CORE MSCI EMERGING MARKETS ETF
(For a share outstanding throughout the period)
| Period from to Feb. 28, 2013 |
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| Net asset value, beginning of period |
$ | 49.06 | ||
|
|
|
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| Income from investment operations: |
||||
| Net investment incomeb |
0.16 | |||
| Net realized and unrealized gainc |
2.24 | |||
|
|
|
|||
| Total from investment operations |
2.40 | |||
|
|
|
|||
| Less distributions from: |
||||
| Net investment income |
(0.12 | ) | ||
|
|
|
|||
| Total distributions |
(0.12 | ) | ||
|
|
|
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| Net asset value, end of period |
$ | 51.34 | ||
|
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|
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| Total return |
4.90 | %d | ||
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|
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| Ratios/Supplemental data: |
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| Net assets, end of period (000s) |
$ | 554,444 | ||
| Ratio of expenses to average net assetse |
0.05 | % | ||
| Ratio of expenses to average net assets prior to waived feese |
0.18 | % | ||
| Ratio of net investment income to average net assetse |
0.88 | % | ||
| Portfolio turnover ratef |
4 | % | ||
| 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 28, 2013 was 4%. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
33 |
Table of Contents
Notes to Financial Statements (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 Core ETF | Diversification Classification | |
| MSCI Emerging Marketsa |
Diversified |
| a | The Fund commenced operations on October 18, 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 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.
SECURITY VALUATION
The Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. 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 BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of
| 34 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
investments for the Fund. The investments of the Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and 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. |
| • | Exchange-traded funds and closed-end funds 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 fund is primarily traded. Funds 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 deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
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 financial instruments. 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 a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Fund’s perceived risk of that instrument. 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 (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; and |
| NOTES TO FINANCIAL STATEMENTS |
35 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
| • | 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. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Fund’s investments according to the fair value hierarchy as of February 28, 2013. The breakdown of the Fund’s investments into major categories is disclosed in its schedule of investments.
| Investments | ||||||||||||||||
| Investment Type | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 478,294,439 | $ | 150,218 | $ | 56,909 | $ | 478,501,566 | ||||||||
| Investment Companies |
35,765,793 | — | — | 35,765,793 | ||||||||||||
| Preferred Stocks |
38,506,927 | — | — | 38,506,927 | ||||||||||||
| Rights |
28,352 | 14 | — | 28,366 | ||||||||||||
| Money Market Funds |
10,237,565 | — | — | 10,237,565 | ||||||||||||
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| $ | 562,833,076 | $ | 150,232 | $ | 56,909 | $ | 563,040,217 | |||||||||
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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 28, 2013 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, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates
| 36 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 stock dividends are presented as “other foreign taxes,” and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2013, 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 December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, 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 of 0.18% based on the average daily net assets of the Fund.
BFA has voluntarily waived a portion of its investment advisory fees for the Fund in the amount of $73,530.
| NOTES TO FINANCIAL STATEMENTS |
37 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through October 31, 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 period ended February 28, 2013, BFA waived its investment advisory fees for the Fund in the amount of $43,629.
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. The Fund benefits from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. 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 period ended February 28, 2013, BTC earned securities lending agent fees from the Fund in the amount of $4,035.
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for the Fund. Pursuant to the distribution agreement, BFA is 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. is the largest stockholder of BlackRock and is considered to be an affiliate of the Fund for 1940 Act purposes.
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.
Investments in issuers considered to be affiliates of the Fund (excluding short-term investments) during the period ended February 28, 2013, 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 Chile Capped Investable Market Index Fund |
— | 24,667 | (24,667 | ) | — | $ | — | $ | — | $ | (93,930 | ) | ||||||||||||||||
| iShares MSCI India Index Fund |
— | 1,352,019 | — | 1,352,019 | 33,813,995 | 4,928 | — | |||||||||||||||||||||
| iShares MSCI India Small Cap |
— | 51,223 | — | 51,223 | 1,133,565 | 11,170 | — | |||||||||||||||||||||
| iShares MSCI S&P India Nifty 50 |
— | 243,250 | (209,000 | ) | 34,250 | 818,233 | 612 | 21,755 | ||||||||||||||||||||
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| $ | 35,765,793 | $ | 16,710 | $ | (72,175 | ) | ||||||||||||||||||||||
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| 38 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 28, 2013, were $559,071,397 and $10,037,763, respectively.
There were no in-kind transactions for the period ended February 28, 2013.
| 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 may also 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 market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund on the next business day. 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. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. 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 28, 2013, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of any securities on loan as of February 28, 2013 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 |
39 |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
| 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 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 28, 2013, the cost of investments for federal income tax purposes was $558,720,034. Net unrealized appreciation was $4,320,183, of which $18,532,821 represented gross unrealized appreciation on securities and $14,212,638 represented gross unrealized depreciation on securities.
Management has reviewed the tax positions as of February 28, 2013 and has determined that no provision for income tax is required in the Fund’s financial statements.
| 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 30, 2013. 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 28, 2013.
| 8. | 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.
| 40 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) on behalf of the Fund. The Independent Directors requested, and BFA provided, such information as the Independent Directors, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed the Advisory Contract.
At a meeting held on September 6-7, 2012, the Board, including a majority of the Independent Directors, approved the selection of BFA as investment adviser and approved the Advisory Contract for the Fund, 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 Fund, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
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 any proposed 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, sponsor, inception date, or other differentiating factors, but that 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), as applicable. 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 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 proposed 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 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 Fund supported the Board’s approval of the Advisory Contract.
Nature, Extent and Quality of Services to be 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, to supporting iShares funds and their shareholders. The Board noted that BFA became an indirect wholly-owned subsidiary of BlackRock in December 2009. The Board acknowledged that additional resources to support iShares funds and their shareholders have been added or enhanced since then, including, in such areas as investor education, product management, customized portfolio consulting support, 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 other iShares funds. In that regard, the Board noted that BFA reports to the Board about portfolio
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
41 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 Advisory Contract.
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 proposed relationships had not yet commenced. The Board noted that it expects to receive profitability information from BFA on at least an annual basis following the Fund’s launch 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 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 did not provide for any breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board further noted management’s assertion that future economies of scale for the Fund had been taken into consideration by fixing the investment advisory fee rate at the low end of the market place, effectively giving Fund shareholders, from inception, the benefits of lower fees. The Board noted that it would continue to monitor the sharing of economies of scale to determine the appropriateness of adding breakpoints in the future. Based on this review, as well as the other factors considered at the meeting, the Board, recognizing its responsibility to consider this issue at least annually following an initial two-year period, concluded that the investment advisory fee rate incorporates potential economies of scale 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 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 manage Other Accounts with substantially the same 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, generally more extensive services to be 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 exchange traded fund, as compared to Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund expenses to be borne by BFA under this arrangement. 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 the Other Accounts that are institutional clients of BFA (or its affiliates) and concluded that the differences appeared to be consistent with the factors discussed. The Board further noted that the proposed advisory fee rate for the Fund was lower than that of an iShares index fund that
| 42 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
invests in the same asset class, and acknowledged management’s assertion that the Fund’s advisory fee rate had been proposed for competitive reasons and was reflective of a discount to the full value of the services to be rendered by BFA to the Fund.
Other Benefits to BFA and/or its Affiliates — Except as noted below, the Board did not consider 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 proposed relationship had not yet commenced. However, the Board noted that BFA generally 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 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 lending of the Fund’s securities. 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, will be 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 with respect to the appropriateness of approving the Advisory Contract.
Based on the considerations described above, the Board determined that the investment advisory fee rate under the Advisory Contract does not constitute a fee that is 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 Advisory Contract.
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
43 |
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Supplemental Information (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 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 |
|||||||||||||||||||||||
| $ | 0.04312 | $ | — | $ | 0.07739 | $ | 0.12051 | 36 | % | — | % | 64 | % | 100 | % | |||||||||||||||
| 44 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes:
| 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
45 |
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Notes:
| 46 | 2013 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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|
|
For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Fund’s website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund also discloses its complete schedule of portfolio holdings on a daily and monthly basis on the Fund’s website.
©2013 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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iS-SAR-813-0213
Table of Contents
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.
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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.
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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 26, 2013 |
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 26, 2013 | |
| By: | /s/ Jack Gee | |
| Jack Gee, Treasurer and Chief Financial Officer (Principal Financial Officer) | ||
| Date: | April 26, 2013 | |