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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, 2014
Date of reporting period: February 28, 2014
Table of Contents
Item 1. Reports to Stockholders.
Table of Contents
FEBRUARY 28, 2014
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2014 SEMI-ANNUAL REPORT (UNAUDITED)
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iShares, Inc.
| Ø | iShares MSCI Japan ETF | EWJ | NYSE Arca |
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Table of Contents
iSHARES® MSCI JAPAN ETF
Performance as of February 28, 2014
The iShares MSCI Japan ETF (the “Fund”) seeks to track the investment results of an index composed of Japanese equities, as represented by the MSCI Japan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 5.80%, net of fees, while the total return for the Index was 5.99%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
13.72% | 14.94% | 14.25% | 13.72% | 14.94% | 14.25% | ||||||||||||||||||||
| 5 Years |
10.47% | 11.24% | 11.10% | 64.56% | 70.36% | 69.27% | ||||||||||||||||||||
| 10 Years |
3.04% | 3.03% | 3.62% | 34.97% | 34.74% | 42.64% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 6 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
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| $ | 1,000.00 | $ | 1,058.00 | $ | 2.50 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 6 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEW |
5 |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| SCHEDULE OF INVESTMENTS |
7 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2014
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2014
| SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2014
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2014
| SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2014
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statement of Assets and Liabilities (Unaudited)
iSHARES® MSCI JAPAN ETF
February 28, 2014
| ASSETS |
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| Investments, at cost: |
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| Unaffiliated |
$ | 14,785,502,881 | ||
| Affiliated (Note 2) |
60,953,415 | |||
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| Total cost of investments |
$ | 14,846,456,296 | ||
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| Investments in securities, at fair value (including securities on loana) (Note 1): |
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| Unaffiliated |
$ | 13,924,970,112 | ||
| Affiliated (Note 2) |
60,953,415 | |||
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| Total fair value of investments |
13,985,923,527 | |||
| Foreign currency, at valueb |
33,827,840 | |||
| Foreign currency pledged to broker, at valueb |
2,552,981 | |||
| Receivables: |
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| Investment securities sold |
35,744,329 | |||
| Dividends and interest |
14,713,827 | |||
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| Total Assets |
14,072,762,504 | |||
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| LIABILITIES |
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| Payables: |
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| Investment securities purchased |
40,647,682 | |||
| Collateral for securities on loan (Note 1) |
57,937,420 | |||
| Futures variation margin |
1,251,036 | |||
| Investment advisory fees (Note 2) |
4,989,277 | |||
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| Total Liabilities |
104,825,415 | |||
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| NET ASSETS |
$ | 13,967,937,089 | ||
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| Net assets consist of: |
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| Paid-in capital |
$ | 15,769,552,093 | ||
| Distributions in excess of net investment income |
(37,905,859 | ) | ||
| Accumulated net realized loss |
(902,312,678 | ) | ||
| Net unrealized depreciation |
(861,396,467 | ) | ||
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| NET ASSETS |
$ | 13,967,937,089 | ||
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| Shares outstandingc |
1,212,600,000 | |||
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| Net asset value per share |
$ | 11.52 | ||
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| a | Securities on loan with a value of $55,000,422. See Note 1. |
| b | Cost of foreign currency including currency at broker, if any: $36,264,152. |
| 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 ETF
Six months ended February 28, 2014
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 98,570,285 | ||
| Interest — affiliated (Note 2) |
1,117 | |||
| Securities lending income — affiliated (Note 2) |
1,722,770 | |||
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| Total investment income |
100,294,172 | |||
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| EXPENSES |
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| Investment advisory fees (Note 2) |
31,001,737 | |||
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| Total expenses |
31,001,737 | |||
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| Net investment income |
69,292,435 | |||
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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 |
(74,863,219 | ) | ||
| In-kind redemptions — unaffiliated |
144,501,466 | |||
| Futures contracts |
4,604,611 | |||
| Foreign currency transactions |
(4,891,850 | ) | ||
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| Net realized gain |
69,351,008 | |||
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| Net change in unrealized appreciation/depreciation on: |
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| Investments |
405,686,935 | |||
| Futures contracts |
(1,149,940 | ) | ||
| Translation of assets and liabilities in foreign currencies |
652,057 | |||
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| Net change in unrealized appreciation/depreciation |
405,189,052 | |||
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| Net realized and unrealized gain |
474,540,060 | |||
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| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 543,832,495 | ||
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| a | Net of foreign withholding tax of $8,137,809. |
See notes to financial statements.
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Statements of Changes in Net Assets
iSHARES® MSCI JAPAN ETF
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
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| INCREASE (DECREASE) IN NET ASSETS |
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| OPERATIONS: |
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| Net investment income |
$ | 69,292,435 | $ | 88,231,088 | ||||
| Net realized gain |
69,351,008 | 326,567,847 | ||||||
| Net change in unrealized appreciation/depreciation |
405,189,052 | 632,581,952 | ||||||
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| Net increase in net assets resulting from operations |
543,832,495 | 1,047,380,887 | ||||||
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| DISTRIBUTIONS TO SHAREHOLDERS: |
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| From net investment income |
(100,587,778 | ) | (94,344,922 | ) | ||||
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| Total distributions to shareholders |
(100,587,778 | ) | (94,344,922 | ) | ||||
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| CAPITAL SHARE TRANSACTIONS: |
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| Proceeds from shares sold |
3,923,491,607 | 9,039,143,715 | ||||||
| Cost of shares redeemed |
(860,741,228 | ) | (4,159,272,055 | ) | ||||
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| Net increase in net assets from capital share transactions |
3,062,750,379 | 4,879,871,660 | ||||||
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| INCREASE IN NET ASSETS |
3,505,995,096 | 5,832,907,625 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
10,461,941,993 | 4,629,034,368 | ||||||
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| End of period |
$ | 13,967,937,089 | $ | 10,461,941,993 | ||||
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| Distributions in excess of net investment income included in net assets at end of period |
$ | (37,905,859 | ) | $ | (6,610,516 | ) | ||
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| SHARES ISSUED AND REDEEMED |
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| Shares sold |
332,400,000 | 831,000,000 | ||||||
| Shares redeemed |
(73,800,000 | ) | (390,000,000 | ) | ||||
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| Net increase in shares outstanding |
258,600,000 | 441,000,000 | ||||||
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See notes to financial statements.
| FINANCIAL STATEMENTS |
15 |
Table of Contents
iSHARES® MSCI JAPAN ETF
(For a share outstanding throughout each period)
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
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| Net asset value, beginning of period |
$ | 10.97 | $ | 9.02 | $ | 9.80 | $ | 9.43 | $ | 10.24 | $ | 11.62 | ||||||||||||
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| Income from investment operations: |
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| Net investment incomea |
0.06 | 0.13 | 0.18 | 0.16 | 0.12 | 0.13 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.58 | 1.97 | (0.77 | ) | 0.37 | (0.77 | ) | (1.39 | ) | |||||||||||||||
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| Total from investment operations |
0.64 | 2.10 | (0.59 | ) | 0.53 | (0.65 | ) | (1.26 | ) | |||||||||||||||
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| Less distributions from: |
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| Net investment income |
(0.09 | ) | (0.15 | ) | (0.19 | ) | (0.16 | ) | (0.16 | ) | (0.12 | ) | ||||||||||||
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| Total distributions |
(0.09 | ) | (0.15 | ) | (0.19 | ) | (0.16 | ) | (0.16 | ) | (0.12 | ) | ||||||||||||
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| Net asset value, end of period |
$ | 11.52 | $ | 10.97 | $ | 9.02 | $ | 9.80 | $ | 9.43 | $ | 10.24 | ||||||||||||
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| Total return |
5.80 | %c | 23.46 | % | (5.96 | )% | 5.54 | % | (6.41 | )% | (10.68 | )% | ||||||||||||
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| Ratios/Supplemental data: |
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| Net assets, end of period (000s) |
$ | 13,967,937 | $ | 10,461,942 | $ | 4,629,034 | $ | 7,194,509 | $ | 3,942,769 | $ | 6,164,170 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.50 | % | 0.53 | % | 0.51 | % | 0.54 | % | 0.56 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.09 | % | 1.18 | % | 1.95 | % | 1.53 | % | 1.20 | % | 1.46 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 4 | % | 3 | % | 4 | % | 5 | % | 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 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited)
iSHARES® MSCI JAPAN 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 MSCI ETF | Diversification Classification | |
| Japan |
Diversified |
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.
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 Fund invests in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
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 and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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
| NOTES TO FINANCIAL STATEMENTS |
17 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
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 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, reviews of 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 is not necessarily an indication of the risk associated with investing in the 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 |
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
| • | Level 3 — Unobservable inputs for the asset or liability, including the Global Valuation Committee’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.
As of February 28, 2014, 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, 2014 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 foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2014, 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 ETF
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.
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. 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 BlackRock Fund Advisors (“BFA”), the Fund’s investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the statement of assets and liabilities. Income earned by the Fund from securities lending is disclosed in the statement of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. The Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
As of February 28, 2014, the Fund had securities on loan with a market value of $55,000,422 as disclosed in the Fund’s statement of assets and liabilities. The value of the related collateral, as disclosed in the Fund’s schedule of investments, exceeded the value of the securities on loan at period end.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of the Fund’s assets. BFA is a California corporation indirectly owned by (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
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”), an affiliate of BFA, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014, the Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees the Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Fund retains a portion of securities lending income and remits a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) the Fund retains 75% of securities lending income (commencing January 1, 2015 the amount the Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, the Fund retained 65% of securities lending income and paid no collateral investment fees.
For the six months ended February 28, 2014, the Fund paid to BTC securities lending agent services and collateral investment fees in the amount of $788,858.
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Fund and BTC) and pursuant to a securities lending agreement, (i) the Fund will receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle Date after January 1, 2015, the Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
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.
| NOTES TO FINANCIAL STATEMENTS |
21 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
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, 2014, were $114,767,515 and $95,461,426, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 28, 2014, were $3,835,259,408 and $842,300,788, 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 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. | 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, 2013, 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 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||
| $243,977,849 | $68,122,871 | $ | 27,817,841 | $ | 44,443,527 | $ | 116,295,478 | $ | 173,577,101 | $ | 139,228,194 | $ | 813,462,861 | |||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
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, 2014, the cost of investments for federal income tax purposes was $14,963,583,128. Net unrealized depreciation was $977,659,601, of which $664,914,836 represented gross unrealized appreciation on securities and $1,642,574,437 represented gross unrealized depreciation on securities.
Management has analyzed tax laws and regulations and their application to the Fund as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.
| 6. | 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, 2014 and the related locations in the statement of assets and liabilities, presented by risk exposure category:
| Liabilities | ||||
| Equity contracts: |
||||
| Variation margin/Net assets consist of – net unrealized appreciation (depreciation)a |
$ | (1,251,036 | ) | |
|
|
|
|||
| a | Represents cumulative depreciation 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, 2014 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 |
$ | 4,604,611 | $ | (1,149,940 | ) | |||
|
|
|
|
|
|||||
| NOTES TO FINANCIAL STATEMENTS |
23 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
For the six months ended February 28, 2014, the average quarter-end number of contracts and notional value of open futures contracts for the Fund were 474 and $57,301,927, respectively.
| 7. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Supplemental Information (Unaudited)
iSHARES® MSCI JAPAN 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 |
|||||||||||||||||||||||
| $ | 0.058257 | $ | — | $ | 0.029470 | $ | 0.087727 | 66 | % | — | % | 34 | % | 100 | % | |||||||||||||||
| SUPPLEMENTAL INFORMATION |
25 |
Table of Contents
Notes:
| 26 | 2012 iSHARES 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.
©2014 BlackRock. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are their respective owners.
iS-SAR-81-0214
Table of Contents
FEBRUARY 28, 2014
| 2014 SEMI-ANNUAL REPORT (UNAUDITED) |
|
iShares, Inc.
| Ø | iShares MSCI Austria Capped ETF | EWO | NYSE Arca |
| Ø | iShares MSCI Belgium Capped ETF | EWK | NYSE Arca |
| Ø | iShares MSCI Emerging Markets Eastern Europe ETF | ESR | NYSE Arca |
| Ø | iShares MSCI EMU ETF | EZU | NYSE Arca |
| Ø | iShares MSCI France ETF | EWQ | NYSE Arca |
| Ø | iShares MSCI Italy Capped ETF | EWI | NYSE Arca |
| Ø | iShares MSCI Netherlands ETF | EWN | NYSE Arca |
| Ø | iShares MSCI Spain Capped ETF | EWP | NYSE Arca |
| Ø | iShares MSCI Sweden ETF | EWD | NYSE Arca |
| Ø | iShares MSCI Switzerland Capped ETF | EWL | NYSE Arca |
| Ø | iShares MSCI United Kingdom ETF | EWU | NYSE Arca |
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Table of Contents
iSHARES® MSCI AUSTRIA CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Austria Capped ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Austrian equities, as represented by the MSCI Austria Investable Market Index 25/50 (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 15.51%, net of fees, while the total return for the Index was 15.81%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
15.84% | 15.97% | 16.16% | 15.84% | 15.97% | 16.16% | ||||||||||||||||||||
| 5 Years |
18.12% | 18.28% | 18.35% | 129.92% | 131.47% | 132.14% | ||||||||||||||||||||
| 10 Years |
5.54% | 5.43% | 5.52% | 71.44% | 69.76% | 71.16% | ||||||||||||||||||||
Index performance through January 31, 2008 reflects the performance of the MSCI Austria Index. Index performance beginning on February 1, 2008 through February 11, 2013 reflects the performance of the MSCI Austria Investable Market Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Austria Investable Market Index 25/50.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,155.10 | $ | 2.62 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI BELGIUM CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Belgium Capped ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Belgian equities, as represented by the MSCI Belgium Investable Market Index 25/50 (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 23.02%, net of fees, while the total return for the Index was 23.10%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
27.00% | 26.85% | 26.86% | 27.00% | 26.85% | 26.86% | ||||||||||||||||||||
| 5 Years |
22.03% | 22.07% | 24.17% | 170.61% | 171.07% | 195.15% | ||||||||||||||||||||
| 10 Years |
5.55% | 5.46% | 5.94% | 71.70% | 70.22% | 78.16% | ||||||||||||||||||||
Index performance through November 30, 2007 reflects the performance of the MSCI Belgium Index. Index performance beginning on December 1, 2007 through November 8, 2012 reflects the performance of the MSCI Belgium Investable Market Index. Index performance beginning on November 9, 2012 reflects the performance of the MSCI Belgium Investable Market Index 25/50.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,230.20 | $ | 2.71 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets Eastern Europe ETF (the “Fund”) seeks to track the investment results of an index composed of Eastern European emerging market equities, as represented by the MSCI Emerging Markets Eastern Europe Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 0.70%, net of fees, while the total return for the Index was 1.04%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(6.98)% | (7.93)% | (6.21)% | (6.98)% | (7.93)% | (6.21)% | ||||||||||||||||||||
| Since Inception |
1.30% | 0.98% | 1.84% | 5.88% | 4.40% | 8.40% | ||||||||||||||||||||
The inception date of the Fund was 9/30/09. The first day of secondary market trading was 10/2/09.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,007.00 | $ | 3.33 | $ | 1,000.00 | $ | 1,021.50 | $ | 3.36 | 0.67% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMU ETF
Performance as of February 28, 2014
The iShares MSCI EMU ETF (the “Fund”) seeks to track the investment results of an index composed of equities from countries within the European Monetary Union, as represented by the MSCI EMU Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 22.16%, net of fees, while the total return for the Index was 22.47%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
30.44% | 30.34% | 30.69% | 30.44% | 30.34% | 30.69% | ||||||||||||||||||||
| 5 Years |
16.90% | 17.06% | 16.98% | 118.34% | 119.85% | 119.09% | ||||||||||||||||||||
| 10 Years |
5.97% | 5.82% | 6.11% | 78.51% | 76.15% | 80.97% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,221.60 | $ | 2.64 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.41 | 0.48% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI FRANCE ETF
Performance as of February 28, 2014
The iShares MSCI France ETF (the “Fund”) seeks to track the investment results of an index composed of French equities, as represented by the MSCI France Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 18.15%, net of fees, while the total return for the Index was 18.31%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
27.70% | 27.33% | 27.67% | 27.70% | 27.33% | 27.67% | ||||||||||||||||||||
| 5 Years |
16.39% | 16.53% | 16.43% | 113.62% | 114.84% | 113.99% | ||||||||||||||||||||
| 10 Years |
5.97% | 5.86% | 6.10% | 78.65% | 76.70% | 80.72% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| 1,000.00 | $ | 1,181.50 | $ | 2.65 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | |||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI ITALY CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Italy Capped ETF (the “Fund”) seeks to track the investment results of an index composed of Italian equities, as represented by the MSCI Italy 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 28.24%, net of fees, while the total return for the Index was 28.43%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
36.63% | 36.92% | 36.97% | 36.63% | 36.92% | 36.97% | ||||||||||||||||||||
| 5 Years |
9.92% | 10.20% | 10.28% | 60.43% | 62.51% | 63.14% | ||||||||||||||||||||
| 10 Years |
1.08% | 1.01% | 1.09% | 11.33% | 10.53% | 11.41% | ||||||||||||||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Italy Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Italy 25/50 Index.
Certain sectors and markets performed exceptionally well based on market conditions during the six-month and one-year periods. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,282.40 | $ | 2.77 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI NETHERLANDS ETF
Performance as of February 28, 2014
The iShares MSCI Netherlands ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Dutch equities, as represented by the MSCI Netherlands Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 14.91%, net of fees, while the total return for the Index was 15.17%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
29.28% | 29.14% | 29.80% | 29.28% | 29.14% | 29.80% | ||||||||||||||||||||
| 5 Years |
19.44% | 19.63% | 20.16% | 143.12% | 145.01% | 150.48% | ||||||||||||||||||||
| 10 Years |
7.13% | 7.04% | 7.63% | 99.16% | 97.45% | 108.65% | ||||||||||||||||||||
Index performance through January 31, 2008 reflects the performance of the MSCI Netherlands Index. Index performance beginning on February 1, 2008 reflects the performance of the MSCI Netherlands Investable Market Index.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,149.10 | $ | 2.61 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SPAIN CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Spain Capped ETF (the “Fund”) seeks to track the investment results of an index composed of Spanish equities, as represented by the MSCI Spain 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 33.17%, net of fees, while the total return for the Index was 33.83%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
37.25% | 37.34% | 37.74% | 37.25% | 37.34% | 37.74% | ||||||||||||||||||||
| 5 Years |
13.49% | 13.65% | 13.21% | 88.28% | 89.56% | 85.98% | ||||||||||||||||||||
| 10 Years |
7.43% | 7.34% | 7.12% | 104.71% | 103.12% | 98.85% | ||||||||||||||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Spain Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Spain 25/50 Index.
Certain sectors and markets performed exceptionally well based on market conditions during the six-month and one-year periods. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,331.70 | $ | 2.78 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.41 | 0.48% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SWEDEN ETF
Performance as of February 28, 2014
The iShares MSCI Sweden ETF (the “Fund”) seeks to track the investment results of an index composed of Swedish equities, as represented by the MSCI Sweden Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 15.46%, net of fees, while the total return for the Index was 15.76%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
17.31% | 17.53% | 17.13% | 17.31% | 17.53% | 17.13% | ||||||||||||||||||||
| 5 Years |
27.53% | 27.69% | 27.49% | 237.33% | 239.51% | 236.79% | ||||||||||||||||||||
| 10 Years |
11.11% | 10.99% | 11.13% | 186.77% | 183.61% | 187.25% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,154.60 | $ | 2.62 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
13 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SWITZERLAND CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Switzerland Capped ETF (the “Fund”) seeks to track the investment results of an index composed of Swiss equities, as represented by the MSCI Switzerland 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 16.86%, net of fees, while the total return for the Index was 17.11%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
20.98% | 21.37% | 21.28% | 20.98% | 21.37% | 21.28% | ||||||||||||||||||||
| 5 Years |
21.63% | 21.90% | 21.67% | 166.22% | 169.18% | 166.65% | ||||||||||||||||||||
| 10 Years |
10.19% | 10.14% | 9.70% | 163.80% | 162.65% | 152.35% | ||||||||||||||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Switzerland Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Switzerland 25/50 Index.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,168.60 | $ | 2.63 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 or more information. |
| * | Excludes money market funds. |
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI UNITED KINGDOM ETF
Performance as of February 28, 2014
The iShares MSCI United Kingdom ETF (the “Fund”) seeks to track the investment results of an index composed of U.K. equities, as represented by the MSCI United Kingdom Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 15.82%, net of fees, while the total return for the Index was 16.13%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
21.40% | 21.42% | 22.03% | 21.40% | 21.42% | 22.03% | ||||||||||||||||||||
| 5 Years |
19.47% | 19.71% | 20.23% | 143.35% | 145.84% | 151.23% | ||||||||||||||||||||
| 10 Years |
6.25% | 6.07% | 6.89% | 83.35% | 80.27% | 94.72% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 16 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,158.20 | $ | 2.62 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 16 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
15 |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI AUSTRIA CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRIA CAPPED ETF
February 28, 2014
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI BELGIUM CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BELGIUM CAPPED ETF
February 28, 2014
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE ETF
February 28, 2014
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU ETF
February 28, 2014
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU ETF
February 28, 2014
| 26 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRANCE ETF
February 28, 2014
| 28 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRANCE ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ITALY CAPPED ETF
February 28, 2014
| 30 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ITALY CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| 32 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI NETHERLANDS ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SPAIN CAPPED ETF
February 28, 2014
| 34 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SWEDEN ETF
February 28, 2014
| 36 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SWITZERLAND CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SWITZERLAND CAPPED ETF
February 28, 2014
| 38 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI UNITED KINGDOM ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI UNITED KINGDOM ETF
February 28, 2014
| 40 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI UNITED KINGDOM ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Austria Capped ETF |
iShares MSCI Belgium Capped ETF |
iShares MSCI Emerging Markets Eastern Europe ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 112,102,448 | $ | 65,401,998 | $ | 162,285,169 | ||||||
| Affiliated (Note 2) |
335,407 | 2,752,633 | 116,650 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 112,437,855 | $ | 68,154,631 | $ | 162,401,819 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 99,503,627 | $ | 74,405,334 | $ | 146,815,402 | ||||||
| Affiliated (Note 2) |
335,407 | 2,752,633 | 116,650 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
99,839,034 | 77,157,967 | 146,932,052 | |||||||||
| Foreign currency, at valueb |
28,356 | 90,709 | 57,062 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
4,446,494 | 2,012,872 | 639,529 | |||||||||
| Due from custodian (Note 4) |
2,223,756 | — | — | |||||||||
| Dividends and interest |
819,506 | 34,798 | 3,744 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
107,357,146 | 79,296,346 | 147,632,387 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
6,702,616 | 2,078,188 | 672,464 | |||||||||
| Collateral for securities on loan (Note 1) |
151,091 | 2,712,288 | — | |||||||||
| Investment advisory fees (Note 2) |
33,043 | 26,367 | 79,088 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
6,886,750 | 4,816,843 | 751,552 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 100,470,396 | $ | 74,479,503 | $ | 146,880,835 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 197,632,510 | $ | 115,630,649 | $ | 166,493,490 | ||||||
| Distributions in excess of net investment income |
(497,614 | ) | (1,116,261 | ) | (180,322 | ) | ||||||
| Accumulated net realized loss |
(84,078,742 | ) | (49,040,514 | ) | (3,961,955 | ) | ||||||
| Net unrealized appreciation (depreciation) |
(12,585,758 | ) | 9,005,629 | (15,470,378 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 100,470,396 | $ | 74,479,503 | $ | 146,880,835 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
4,900,000 | 4,320,000 | 6,150,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 20.50 | $ | 17.24 | $ | 23.88 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $143,886, $2,575,136 and $ —, respectively. See Note 1. |
| b | Cost of foreign currency: $27,960, $89,959 and $57,256, respectively. |
| c | $0.001 par value, number of shares authorized: 100 million, 136.2 million and 200 million, respectively. |
See notes to financial statements.
| 42 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI EMU ETF |
iShares MSCI France ETF |
iShares MSCI Italy Capped ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 9,170,510,152 | $ | 401,360,450 | $ | 912,941,373 | ||||||
| Affiliated (Note 2) |
68,162,961 | 77,231 | 40,291,703 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 9,238,673,113 | $ | 401,437,681 | $ | 953,233,076 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 10,158,722,101 | $ | 391,564,211 | $ | 1,110,441,663 | ||||||
| Affiliated (Note 2) |
68,162,961 | 77,231 | 40,291,703 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
10,226,885,062 | 391,641,442 | 1,150,733,366 | |||||||||
| Foreign currency, at valueb |
9,109,891 | 106,704 | 631,359 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
16,763,524 | 307,853 | 13,653,807 | |||||||||
| Due from custodian (Note 4) |
2,098,566 | — | — | |||||||||
| Dividends and interest |
5,318,191 | 94 | 112,086 | |||||||||
| Capital shares sold |
296,548 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
10,260,471,782 | 392,056,093 | 1,165,130,618 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
22,308,957 | 272,788 | 13,980,341 | |||||||||
| Collateral for securities on loan (Note 1) |
64,423,446 | 22,736 | 39,775,352 | |||||||||
| Securities related to in-kind transactions (Note 4) |
74,831 | — | — | |||||||||
| Investment advisory fees (Note 2) |
3,499,188 | 138,695 | 374,331 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
90,306,422 | 434,219 | 54,130,024 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 10,170,165,360 | $ | 391,621,874 | $ | 1,111,000,594 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 9,441,673,545 | $ | 408,119,554 | $ | 1,009,377,072 | ||||||
| Undistributed (distributions in excess of) net investment income |
8,206,471 | (256,744 | ) | (494,913 | ) | |||||||
| Accumulated net realized loss |
(268,263,559 | ) | (6,445,909 | ) | (95,388,232 | ) | ||||||
| Net unrealized appreciation (depreciation) |
988,548,903 | (9,795,027 | ) | 197,506,667 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 10,170,165,360 | $ | 391,621,874 | $ | 1,111,000,594 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
241,100,000 | 13,400,000 | 66,750,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 42.18 | $ | 29.23 | $ | 16.64 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $60,948,796, $21,542 and $37,126,485, respectively. See Note 1. |
| b | Cost of foreign currency: $8,931,400, $105,492 and $624,982, respectively. |
| c | $0.001 par value, number of shares authorized: 1 billion, 340.2 million and 95.4 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
43 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Netherlands ETF |
iShares MSCI Spain Capped ETF |
iShares MSCI Sweden ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 289,427,037 | $ | 1,161,333,857 | $ | 455,498,519 | ||||||
| Affiliated (Note 2) |
8,375,772 | 1,077,235 | 4,141,950 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 297,802,809 | $ | 1,162,411,092 | $ | 459,640,469 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 312,918,800 | $ | 1,318,048,286 | $ | 527,975,536 | ||||||
| Affiliated (Note 2) |
8,375,772 | 1,077,235 | 4,141,950 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
321,294,572 | 1,319,125,521 | 532,117,486 | |||||||||
| Foreign currency, at valueb |
114,573 | 1,162,445 | 76,368 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
1,359,783 | 52,097,773 | 1,865,946 | |||||||||
| Due from custodian (Note 4) |
— | 7,331,155 | — | |||||||||
| Dividenads and interest |
426,771 | 442 | 905 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
323,195,699 | 1,379,717,336 | 534,060,705 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
1,304,882 | 59,632,272 | 1,704,327 | |||||||||
| Collateral for securities on loan (Note 1) |
8,371,994 | — | 4,140,000 | |||||||||
| Investment advisory fees (Note 2) |
112,811 | 457,447 | 187,214 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
9,789,687 | 60,089,719 | 6,031,541 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 313,406,012 | $ | 1,319,627,617 | $ | 528,029,164 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 329,067,582 | $ | 1,269,368,498 | $ | 504,590,706 | ||||||
| Undistributed (distributions in excess of) net investment income |
168,648 | 6,564,849 | (4,596,545 | ) | ||||||||
| Accumulated net realized loss |
(39,332,642 | ) | (113,025,327 | ) | (44,446,662 | ) | ||||||
| Net unrealized appreciation |
23,502,424 | 156,719,597 | 72,481,665 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 313,406,012 | $ | 1,319,627,617 | $ | 528,029,164 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
12,150,000 | 33,075,000 | 14,400,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 25.79 | $ | 39.90 | $ | 36.67 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $7,966,681, $ — and $3,932,700, respectively. See Note 1. |
| b | Cost of foreign currency: $112,142, $1,157,289 and $74,702, respectively. |
| c | $0.001 par value, number of shares authorized: 255 million, 127.8 million and 63.6 million, respectively. |
See notes to financial statements.
| 44 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Switzerland Capped ETF |
iShares MSCI United Kingdom ETF |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 829,505,949 | $ | 3,944,051,702 | ||||
| Affiliated (Note 2) |
443,188 | 4,577,234 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 829,949,137 | $ | 3,948,628,936 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 1,075,738,422 | $ | 4,320,892,701 | ||||
| Affiliated (Note 2) |
443,188 | 4,577,234 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
1,076,181,610 | 4,325,469,935 | ||||||
| Foreign currency, at valueb |
460,553 | 6,136,633 | ||||||
| Foreign currency pledged to broker, at valueb |
— | 2,522,317 | ||||||
| Receivables: |
||||||||
| Investment securities sold |
4,440,042 | 24,389,443 | ||||||
| Dividends and interest |
8,955,129 | 55,970,200 | ||||||
| Futures variation margin |
— | 550,654 | ||||||
|
|
|
|
|
|||||
| Total Assets |
1,090,037,334 | 4,415,039,182 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
4,585,851 | 23,902,510 | ||||||
| Collateral for securities on loan (Note 1) |
— | 4,291,219 | ||||||
| Investment advisory fees (Note 2) |
386,112 | 1,559,605 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
4,971,963 | 29,753,334 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 1,085,065,371 | $ | 4,385,285,848 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 885,783,998 | $ | 4,052,446,584 | ||||
| Undistributed net investment income |
2,129,248 | 144,026,314 | ||||||
| Accumulated net realized loss |
(49,363,901 | ) | (189,217,279 | ) | ||||
| Net unrealized appreciation |
246,516,026 | 378,030,229 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 1,085,065,371 | $ | 4,385,285,848 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
31,625,000 | 206,600,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 34.31 | $ | 21.23 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $ — and $4,083,532, respectively. See Note 1. |
| b | Cost of foreign currency including currency at broker, if any: $451,054 and $8,624,445, respectively. |
| c | $0.001 par value, number of shares authorized: 318.625 million and 934.2 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
45 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Capped ETF |
iShares MSCI Belgium Capped ETF |
iShares MSCI Emerging Markets Eastern Europe ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 346,388 | $ | 518,144 | $ | 707,534 | ||||||
| Interest — affiliated (Note 2) |
7 | 12 | 21 | |||||||||
| Securities lending income — affiliated (Note 2) |
17,383 | 39,373 | 1,458 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
363,778 | 557,529 | 709,013 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
240,005 | 161,702 | 478,245 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
240,005 | 161,702 | 478,245 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
123,773 | 395,827 | 230,768 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(9,510,475 | ) | (1,214,140 | ) | (2,079,157 | ) | ||||||
| In-kind redemptions — unaffiliated |
5,493,442 | 5,067,148 | 1,147,965 | |||||||||
| Foreign currency transactions |
(34,819 | ) | 5,837 | 12,764 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(4,051,852 | ) | 3,858,845 | (918,428 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
16,503,984 | 9,446,711 | (1,006,263 | ) | ||||||||
| Translation of assets and liabilities in foreign currencies |
37,472 | 2,265 | 8,115 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
16,541,456 | 9,448,976 | (998,148 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
12,489,604 | 13,307,821 | (1,916,576 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 12,613,377 | $ | 13,703,648 | $ | (1,685,808 | ) | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $13,612, $68,909 and $120,361, respectively. |
See notes to financial statements.
| 46 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI EMU ETF |
iShares MSCI France ETF |
iShares MSCI Italy Capped ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 46,018,813 | $ | 2,933,895 | $ | 6,307,211 | ||||||
| Interest — affiliated (Note 2) |
644 | 36 | 57 | |||||||||
| Securities lending income — affiliated (Note 2) |
279,341 | 2,292 | 593,106 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
46,298,798 | 2,936,223 | 6,900,374 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
17,144,735 | 1,212,678 | 2,079,141 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
17,144,735 | 1,212,678 | 2,079,141 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
29,154,063 | 1,723,545 | 4,821,233 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(45,591,591 | ) | (9,509,904 | ) | (513,545 | ) | ||||||
| In-kind redemptions — unaffiliated |
20,242,417 | 48,650,090 | 11,508,382 | |||||||||
| Foreign currency transactions |
44,665 | 18,133 | 32,856 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(25,304,509 | ) | 39,158,319 | 11,027,693 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
1,232,840,382 | 41,411,596 | 192,667,689 | |||||||||
| Translation of assets and liabilities in foreign currencies |
330,498 | 6,177 | 846 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
1,233,170,880 | 41,417,773 | 192,668,535 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
1,207,866,371 | 80,576,092 | 203,696,228 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 1,237,020,434 | $ | 82,299,637 | $ | 208,517,461 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $5,514,874, $511,051 and $1,079,485, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
47 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Netherlands ETF |
iShares MSCI Spain Capped ETF |
iShares MSCI Sweden ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 1,072,560 | $ | 17,574,304 | $ | 107,690 | ||||||
| Interest — affiliated (Note 2) |
10 | 134 | 24 | |||||||||
| Securities lending income — affiliated (Note 2) |
16,778 | 51,364 | 1,355 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
1,089,348 | 17,625,802 | 109,069 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
715,603 | 2,014,422 | 1,161,709 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
715,603 | 2,014,422 | 1,161,709 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
373,745 | 15,611,380 | (1,052,640 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
275,937 | (17,491,063 | ) | (2,774,268 | ) | |||||||
| In-kind redemptions — unaffiliated |
5,694,961 | 1,737,655 | 4,536,404 | |||||||||
| Foreign currency transactions |
(15,376 | ) | 29,017 | 10,561 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
5,955,522 | (15,724,391 | ) | 1,772,697 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
32,459,288 | 189,456,145 | 66,878,175 | |||||||||
| Translation of assets and liabilities in foreign currencies |
16,628 | 6,814 | 3,005 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
32,475,916 | 189,462,959 | 66,881,180 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
38,431,438 | 173,738,568 | 68,653,877 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 38,805,183 | $ | 189,349,948 | $ | 67,601,237 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $184,129, $978,960 and $19,004, respectively. |
See notes to financial statements.
| 48 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Switzerland Capped ETF |
iShares MSCI United Kingdom ETF |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 4,650,303 | $ | 174,814,212 | b | |||
| Interest — unaffiliated |
— | 831 | ||||||
| Interest — affiliated (Note 2) |
44 | 565 | ||||||
| Securities lending income — affiliated (Note 2) |
— | 3,606 | ||||||
|
|
|
|
|
|||||
| Total investment income |
4,650,347 | 174,819,214 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
2,383,112 | 8,380,560 | ||||||
|
|
|
|
|
|||||
| Total expenses |
2,383,112 | 8,380,560 | ||||||
|
|
|
|
|
|||||
| Net investment income |
2,267,235 | 166,438,654 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
802,069 | (20,127,274 | ) | |||||
| In-kind redemptions — unaffiliated |
6,636,153 | 18,785,857 | ||||||
| Futures contracts |
— | 524,301 | ||||||
| Foreign currency transactions |
18,478 | 1,693,805 | ||||||
|
|
|
|
|
|||||
| Net realized gain |
7,456,700 | 876,689 | ||||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
142,912,885 | 328,291,898 | ||||||
| Futures contracts |
— | 443,562 | ||||||
| Translation of assets and liabilities in foreign currencies |
317,552 | 678,181 | ||||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
143,230,437 | 329,413,641 | ||||||
|
|
|
|
|
|||||
| Net realized and unrealized gain |
150,687,137 | 330,290,330 | ||||||
|
|
|
|
|
|||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 152,954,372 | $ | 496,728,984 | ||||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $957,691 and $765,426, respectively. |
| b | Includes $125,275,366 related to a one-time special distribution from Vodafone Group PLC. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Austria Capped ETF |
iShares MSCI Belgium Capped ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 123,773 | $ | 1,528,895 | $ | 395,827 | $ | 1,598,407 | ||||||||
| Net realized gain (loss) |
(4,051,852 | ) | (11,669,743 | ) | 3,858,845 | (8,125,719 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
16,541,456 | 26,255,911 | 9,448,976 | 16,321,817 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
12,613,377 | 16,115,063 | 13,703,648 | 9,794,505 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(621,114 | ) | (1,541,991 | ) | (1,582,228 | ) | (1,577,907 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(621,114 | ) | (1,541,991 | ) | (1,582,228 | ) | (1,577,907 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
61,246,183 | 81,897,298 | 10,965,629 | 43,904,093 | ||||||||||||
| Cost of shares redeemed |
(54,991,277 | ) | (68,004,259 | ) | (19,823,297 | ) | (6,290,893 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
6,254,906 | 13,893,039 | (8,857,668 | ) | 37,613,200 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
18,247,169 | 28,466,111 | 3,263,752 | 45,829,798 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
82,223,227 | 53,757,116 | 71,215,751 | 25,385,953 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 100,470,396 | $ | 82,223,227 | $ | 74,479,503 | $ | 71,215,751 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (497,614 | ) | $ | (273 | ) | $ | (1,116,261 | ) | $ | 70,140 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
3,100,000 | 4,700,000 | 680,000 | 3,280,000 | ||||||||||||
| Shares redeemed |
(2,800,000 | ) | (3,800,000 | ) | (1,320,000 | ) | (440,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
300,000 | 900,000 | (640,000 | ) | 2,840,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 50 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Eastern Europe ETF |
iShares MSCI EMU ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 230,768 | $ | 1,488,815 | $ | 29,154,063 | $ | 56,484,613 | ||||||||
| Net realized gain (loss) |
(918,428 | ) | (3,516,141 | ) | (25,304,509 | ) | 59,795,938 | |||||||||
| Net change in unrealized appreciation/depreciation |
(998,148 | ) | (6,591,687 | ) | 1,233,170,880 | 153,686,966 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(1,685,808 | ) | (8,619,013 | ) | 1,237,020,434 | 269,967,517 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(1,078,584 | ) | (885,320 | ) | (24,490,340 | ) | (54,004,208 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(1,078,584 | ) | (885,320 | ) | (24,490,340 | ) | (54,004,208 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
52,211,501 | 124,132,179 | 5,492,217,238 | 3,656,727,115 | ||||||||||||
| Cost of shares redeemed |
(24,363,720 | ) | (13,432,406 | ) | (74,561,691 | ) | (1,126,936,712 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
27,847,781 | 110,699,773 | 5,417,655,547 | 2,529,790,403 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
25,083,389 | 101,195,440 | 6,630,185,641 | 2,745,753,712 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
121,797,446 | 20,602,006 | 3,539,979,719 | 794,226,007 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 146,880,835 | $ | 121,797,446 | $ | 10,170,165,360 | $ | 3,539,979,719 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (180,322 | ) | $ | 667,494 | $ | 8,206,471 | $ | 3,542,748 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
2,000,000 | 4,800,000 | 140,700,000 | 108,500,000 | ||||||||||||
| Shares redeemed |
(950,000 | ) | (550,000 | ) | (1,800,000 | ) | (33,600,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
1,050,000 | 4,250,000 | 138,900,000 | 74,900,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
51 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI France ETF |
iShares MSCI Italy Capped ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,723,545 | $ | 13,818,058 | $ | 4,821,233 | $ | 13,795,086 | ||||||||
| Net realized gain (loss) |
39,158,319 | 17,439,638 | 11,027,693 | (42,529,871 | ) | |||||||||||
| Net change in unrealized appreciation/depreciation |
41,417,773 | 64,371,651 | 192,668,535 | 57,298,873 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
82,299,637 | 95,629,347 | 208,517,461 | 28,564,088 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(2,097,626 | ) | (13,699,998 | ) | (5,316,146 | ) | (13,839,281 | ) | ||||||||
| Return of capital |
— | — | — | (452,885 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(2,097,626 | ) | (13,699,998 | ) | (5,316,146 | ) | (14,292,166 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
31,520,953 | 198,782,962 | 243,748,220 | 687,838,080 | ||||||||||||
| Cost of shares redeemed |
(246,940,457 | ) | (155,498,446 | ) | (53,070,680 | ) | (181,200,015 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(215,419,504 | ) | 43,284,516 | 190,677,540 | 506,638,065 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(135,217,493 | ) | 125,213,865 | 393,878,855 | 520,909,987 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
526,839,367 | 401,625,502 | 717,121,739 | 196,211,752 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 391,621,874 | $ | 526,839,367 | $ | 1,111,000,594 | $ | 717,121,739 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (256,744 | ) | $ | 117,337 | $ | (494,913 | ) | $ | — | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,200,000 | 8,000,000 | 15,450,000 | 52,350,000 | ||||||||||||
| Shares redeemed |
(9,000,000 | ) | (6,200,000 | ) | (3,600,000 | ) | (14,100,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(7,800,000 | ) | 1,800,000 | 11,850,000 | 38,250,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 52 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Netherlands ETF |
iShares MSCI Spain Capped ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 373,745 | $ | 3,074,875 | $ | 15,611,380 | $ | 11,916,599 | ||||||||
| Net realized gain (loss) |
5,955,522 | 1,741,733 | (15,724,391 | ) | (33,347,860 | ) | ||||||||||
| Net change in unrealized appreciation/depreciation |
32,475,916 | 22,041,313 | 189,462,959 | 54,581,536 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
38,805,183 | 26,857,921 | 189,349,948 | 33,150,275 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(974,869 | ) | (2,491,248 | ) | (13,210,639 | ) | (10,629,551 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(974,869 | ) | (2,491,248 | ) | (13,210,639 | ) | (10,629,551 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
46,871,621 | 192,481,969 | 733,765,598 | 465,959,787 | ||||||||||||
| Cost of shares redeemed |
(24,685,825 | ) | (41,855,281 | ) | (8,055,171 | ) | (265,795,649 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
22,185,796 | 150,626,688 | 725,710,427 | 200,164,138 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
60,016,110 | 174,993,361 | 901,849,736 | 222,684,862 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
253,389,902 | 78,396,541 | 417,777,881 | 195,093,019 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 313,406,012 | $ | 253,389,902 | $ | 1,319,627,617 | $ | 417,777,881 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 168,648 | $ | 769,772 | $ | 6,564,849 | $ | 4,164,108 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,950,000 | 8,900,000 | 19,575,000 | 15,225,000 | ||||||||||||
| Shares redeemed |
(1,050,000 | ) | (1,950,000 | ) | (225,000 | ) | (8,925,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
900,000 | 6,950,000 | 19,350,000 | 6,300,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
53 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Sweden ETF |
iShares MSCI Switzerland Capped ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | (1,052,640 | ) | $ | 12,162,620 | $ | 2,267,235 | $ | 18,633,070 | |||||||
| Net realized gain |
1,772,697 | 2,931,080 | 7,456,700 | 36,591,404 | ||||||||||||
| Net change in unrealized appreciation/depreciation |
66,881,180 | 56,694,094 | 143,230,437 | 102,892,043 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
67,601,237 | 71,787,794 | 152,954,372 | 158,116,517 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(3,094,821 | ) | (12,548,817 | ) | — | (19,030,631 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(3,094,821 | ) | (12,548,817 | ) | — | (19,030,631 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
49,786,274 | 90,137,660 | 49,097,035 | 352,868,105 | ||||||||||||
| Cost of shares redeemed |
(20,269,421 | ) | (86,203,125 | ) | (19,846,475 | ) | (143,663,266 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
29,516,853 | 3,934,535 | 29,250,560 | 209,204,839 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
94,023,269 | 63,173,512 | 182,204,932 | 348,290,725 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
434,005,895 | 370,832,383 | 902,860,439 | 554,569,714 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 528,029,164 | $ | 434,005,895 | $ | 1,085,065,371 | $ | 902,860,439 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (4,596,545 | ) | $ | (449,084 | ) | $ | 2,129,248 | $ | (137,987 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,425,000 | 2,850,000 | 1,500,000 | 12,500,000 | ||||||||||||
| Shares redeemed |
(600,000 | ) | (2,850,000 | ) | (625,000 | ) | (5,000,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
825,000 | — | 875,000 | 7,500,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 54 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI United Kingdom ETF |
||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 166,438,654 | $ | 60,304,419 | ||||
| Net realized gain (loss) |
876,689 | (34,126,101 | ) | |||||
| Net change in unrealized appreciation/depreciation |
329,413,641 | 153,873,682 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
496,728,984 | 180,052,000 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(41,057,233 | ) | (51,302,175 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(41,057,233 | ) | (51,302,175 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
1,313,917,143 | 1,203,907,210 | ||||||
| Cost of shares redeemed |
(55,099,196 | ) | (18,354,984 | ) | ||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
1,258,817,947 | 1,185,552,226 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
1,714,489,698 | 1,314,302,051 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
2,670,796,150 | 1,356,494,099 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 4,385,285,848 | $ | 2,670,796,150 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 144,026,314 | $ | 18,644,893 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
65,200,000 | 64,800,000 | ||||||
| Shares redeemed |
(2,600,000 | ) | (1,000,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
62,600,000 | 63,800,000 | ||||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
55 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Austria Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 17.87 | $ | 14.53 | $ | 18.76 | $ | 17.27 | $ | 20.21 | $ | 29.78 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.02 | 0.32 | 0.35 | 0.42 | 0.43 | 0.51 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
2.74 | 3.36 | (4.09 | ) | 1.53 | (2.62 | ) | (9.36 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.76 | 3.68 | (3.74 | ) | 1.95 | (2.19 | ) | (8.85 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.13 | ) | (0.34 | ) | (0.49 | ) | (0.46 | ) | (0.75 | ) | (0.72 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.13 | ) | (0.34 | ) | (0.49 | ) | (0.46 | ) | (0.75 | ) | (0.72 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 20.50 | $ | 17.87 | $ | 14.53 | $ | 18.76 | $ | 17.27 | $ | 20.21 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
15.51 | %c | 25.49 | % | (19.81 | )% | 10.92 | % | (11.07 | )% | (28.52 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 100,470 | $ | 82,223 | $ | 53,757 | $ | 136,974 | $ | 110,520 | $ | 159,666 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.52 | % | 0.52 | % | 0.54 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.25 | % | 1.82 | % | 2.32 | % | 1.95 | % | 2.20 | % | 3.25 | % | ||||||||||||
| Portfolio turnover ratee |
16 | % | 26 | % | 13 | % | 12 | % | 11 | % | 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.
| 56 | 2014 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 ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 14.36 | $ | 11.97 | $ | 12.60 | $ | 11.78 | $ | 12.06 | $ | 17.64 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.09 | 0.42 | 0.38 | 0.35 | 0.19 | 0.22 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.17 | 2.36 | (0.33 | ) | 0.80 | (0.27 | ) | (5.46 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.26 | 2.78 | 0.05 | 1.15 | (0.08 | ) | (5.24 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.38 | ) | (0.39 | ) | (0.67 | ) | (0.33 | ) | (0.20 | ) | (0.34 | ) | ||||||||||||
| Return of capital |
— | — | (0.01 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.38 | ) | (0.39 | ) | (0.68 | ) | (0.33 | ) | (0.20 | ) | (0.34 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 17.24 | $ | 14.36 | $ | 11.97 | $ | 12.60 | $ | 11.78 | $ | 12.06 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
23.02 | %c | 23.43 | % | 1.11 | % | 9.59 | % | (0.60 | )% | (29.15 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 74,480 | $ | 71,216 | $ | 25,386 | $ | 31,256 | $ | 58,896 | $ | 53,042 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.50 | % | 0.53 | % | 0.52 | % | 0.54 | % | 0.56 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.19 | % | 3.01 | % | 3.35 | % | 2.56 | % | 1.55 | % | 2.23 | % | ||||||||||||
| Portfolio turnover ratee |
7 | % | 24 | % | 19 | % | 12 | % | 17 | % | 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 | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
57 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets Eastern Europe ETF | ||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Period from Sep 30, 2009 a to Aug. 31, 2010 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 23.88 | $ | 24.24 | $ | 29.28 | $ | 25.66 | $ | 24.65 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.04 | 0.73 | 1.01 | 0.67 | 0.26 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
0.14 | (0.77 | ) | (4.92 | ) | 3.45 | 0.89 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
0.18 | (0.04 | ) | (3.91 | ) | 4.12 | 1.15 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.18 | ) | (0.32 | ) | (1.13 | ) | (0.50 | ) | (0.13 | ) | ||||||||||
| Net realized gain |
— | — | — | — | (0.01 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.18 | ) | (0.32 | ) | (1.13 | ) | (0.50 | ) | (0.14 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 23.88 | $ | 23.88 | $ | 24.24 | $ | 29.28 | $ | 25.66 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
0.70 | %d | (0.20 | )% | (13.14 | )% | 15.86 | % | 4.68 | %d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 146,881 | $ | 121,797 | $ | 20,602 | $ | 32,212 | $ | 12,832 | ||||||||||
| Ratio of expenses to average net assetse |
0.67 | % | 0.67 | % | 0.69 | % | 0.68 | % | 0.69 | % | ||||||||||
| Ratio of expenses to average net assets prior to waived fees |
n/a | n/a | n/a | 0.68 | % | n/a | ||||||||||||||
| Ratio of net investment income to average net assetse |
0.32 | % | 2.96 | % | 3.97 | % | 2.06 | % | 1.05 | % | ||||||||||
| Portfolio turnover ratef |
4 | % | 9 | % | 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.
| 58 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI EMU ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 34.64 | $ | 29.09 | $ | 31.55 | $ | 30.75 | $ | 35.64 | $ | 45.97 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.16 | 0.92 | 1.02 | 1.23 | 0.80 | 0.93 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
7.51 | 5.55 | (2.38 | ) | 0.71 | (4.76 | ) | (9.97 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
7.67 | 6.47 | (1.36 | ) | 1.94 | (3.96 | ) | (9.04 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.13 | ) | (0.92 | ) | (1.10 | ) | (1.14 | ) | (0.93 | ) | (1.29 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.13 | ) | (0.92 | ) | (1.10 | ) | (1.14 | ) | (0.93 | ) | (1.29 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 42.18 | $ | 34.64 | $ | 29.09 | $ | 31.55 | $ | 30.75 | $ | 35.64 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
22.16 | %c | 22.43 | % | (3.99 | )% | 5.78 | % | (11.19 | )% | (19.05 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 10,170,165 | $ | 3,539,980 | $ | 794,226 | $ | 738,233 | $ | 823,972 | $ | 741,270 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.48 | % | 0.50 | % | 0.53 | % | 0.52 | % | 0.54 | % | 0.56 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.82 | % | 2.74 | % | 3.55 | % | 3.38 | % | 2.29 | % | 3.07 | % | ||||||||||||
| Portfolio turnover ratef |
2 | % | 5 | % | 7 | % | 8 | % | 5 | % | 8 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | 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.
| FINANCIAL HIGHLIGHTS |
59 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI France ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 24.85 | $ | 20.70 | $ | 22.60 | $ | 21.03 | $ | 24.28 | $ | 30.70 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.09 | 0.69 | 0.59 | 0.86 | 0.65 | 0.66 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
4.41 | 4.14 | (1.80 | ) | 1.38 | (3.30 | ) | (6.13 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.50 | 4.83 | (1.21 | ) | 2.24 | (2.65 | ) | (5.47 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.12 | ) | (0.68 | ) | (0.69 | ) | (0.67 | ) | (0.60 | ) | (0.95 | ) | ||||||||||||
| Return of capital |
— | — | (0.00 | )c | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.12 | ) | (0.68 | ) | (0.69 | ) | (0.67 | ) | (0.60 | ) | (0.95 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 29.23 | $ | 24.85 | $ | 20.70 | $ | 22.60 | $ | 21.03 | $ | 24.28 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
18.15 | %d | 23.56 | % | (5.05 | )% | 10.24 | % | (10.98 | )% | (17.11 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 391,622 | $ | 526,839 | $ | 401,626 | $ | 357,137 | $ | 239,706 | $ | 184,511 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.49 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsf |
0.69 | % | 2.94 | % | 2.91 | % | 3.38 | % | 2.71 | % | 3.18 | % | ||||||||||||
| Portfolio turnover rateg |
2 | % | 5 | % | 6 | % | 6 | % | 6 | % | 6 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | 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.
| 60 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Italy Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 13.06 | $ | 11.78 | $ | 13.58 | $ | 15.00 | $ | 19.05 | $ | 25.04 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.08 | 0.36 | 0.41 | 0.54 | 0.39 | 0.47 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.60 | 1.23 | (1.79 | ) | (1.47 | ) | (3.99 | ) | (5.82 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.68 | 1.59 | (1.38 | ) | (0.93 | ) | (3.60 | ) | (5.35 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.10 | ) | (0.30 | ) | (0.42 | ) | (0.49 | ) | (0.44 | ) | (0.64 | ) | ||||||||||||
| Return of capital |
— | (0.01 | ) | (0.00 | )c | — | (0.01 | ) | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.10 | ) | (0.31 | ) | (0.42 | ) | (0.49 | ) | (0.45 | ) | (0.64 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 16.64 | $ | 13.06 | $ | 11.78 | $ | 13.58 | $ | 15.00 | $ | 19.05 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
28.24 | %d | 13.58 | % | (9.98 | )% | (6.80 | )% | (19.11 | )% | (20.78 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,111,001 | $ | 717,122 | $ | 196,212 | $ | 144,612 | $ | 76,500 | $ | 125,716 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.49 | % | 0.50 | % | 0.53 | % | 0.51 | % | 0.54 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsf |
1.13 | % | 2.78 | % | 3.41 | % | 3.15 | % | 2.17 | % | 2.85 | % | ||||||||||||
| Portfolio turnover rateg |
8 | % | 45 | % | 14 | % | 16 | % | 12 | % | 18 | % | ||||||||||||
| 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.
| FINANCIAL HIGHLIGHTS |
61 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Netherlands ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 22.52 | $ | 18.23 | $ | 18.45 | $ | 17.89 | $ | 18.52 | $ | 24.38 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.03 | 0.44 | 0.39 | 0.48 | 0.45 | 0.35 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.32 | 4.19 | (0.08 | ) | 0.55 | (0.70 | ) | (5.55 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.35 | 4.63 | 0.31 | 1.03 | (0.25 | ) | (5.20 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.08 | ) | (0.34 | ) | (0.53 | ) | (0.47 | ) | (0.38 | ) | (0.66 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.08 | ) | (0.34 | ) | (0.53 | ) | (0.47 | ) | (0.38 | ) | (0.66 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 25.79 | $ | 22.52 | $ | 18.23 | $ | 18.45 | $ | 17.89 | $ | 18.52 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
14.91 | %c | 25.57 | % | 1.96 | % | 5.44 | % | (1.44 | )% | (20.59 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 313,406 | $ | 253,390 | $ | 78,397 | $ | 121,740 | $ | 147,611 | $ | 83,351 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.50 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.25 | % | 2.09 | % | 2.21 | % | 2.26 | % | 2.31 | % | 2.24 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 11 | % | 10 | % | 6 | % | 9 | % | 15 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 62 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Spain Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 30.44 | $ | 26.28 | $ | 35.89 | $ | 37.02 | $ | 47.65 | $ | 50.41 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.70 | 1.33 | 2.12 | 2.14 | 1.64 | 1.75 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
9.34 | 4.07 | (8.93 | ) | (1.36 | ) | (10.01 | ) | (2.14 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
10.04 | 5.40 | (6.81 | ) | 0.78 | (8.37 | ) | (0.39 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.58 | ) | (1.24 | ) | (2.80 | ) | (1.91 | ) | (2.26 | ) | (2.37 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.58 | ) | (1.24 | ) | (2.80 | ) | (1.91 | ) | (2.26 | ) | (2.37 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 39.90 | $ | 30.44 | $ | 26.28 | $ | 35.89 | $ | 37.02 | $ | 47.65 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
33.17 | %c | 20.88 | % | (19.36 | )% | 1.78 | % | (17.91 | )% | 0.64 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,319,628 | $ | 417,778 | $ | 195,093 | $ | 180,360 | $ | 194,362 | $ | 278,734 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.54 | % | 0.56 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
3.76 | % | 4.45 | % | 7.60 | % | 5.31 | % | 3.72 | % | 4.70 | % | ||||||||||||
| Portfolio turnover ratee |
14 | % | 24 | % | 17 | % | 14 | % | 9 | % | 19 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
63 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Sweden ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 31.97 | $ | 27.32 | $ | 26.82 | $ | 24.46 | $ | 22.86 | $ | 24.48 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.08 | ) | 0.97 | 0.83 | 1.18 | 0.48 | 0.40 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
5.00 | 4.70 | 0.58 | 2.22 | 1.73 | (1.56 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.92 | 5.67 | 1.41 | 3.40 | 2.21 | (1.16 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.22 | ) | (1.02 | ) | (0.86 | ) | (1.04 | ) | (0.61 | ) | (0.46 | ) | ||||||||||||
| Return of capital |
— | — | (0.05 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.22 | ) | (1.02 | ) | (0.91 | ) | (1.04 | ) | (0.61 | ) | (0.46 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 36.67 | $ | 31.97 | $ | 27.32 | $ | 26.82 | $ | 24.46 | $ | 22.86 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
15.46 | %c | 21.02 | % | 5.57 | % | 13.40 | % | 9.70 | % | (4.04 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 528,029 | $ | 434,006 | $ | 370,832 | $ | 329,887 | $ | 249,491 | $ | 190,333 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.53 | % | 0.51 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.44 | )% | 3.13 | % | 3.17 | % | 3.80 | % | 1.97 | % | 2.34 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 7 | % | 7 | % | 9 | % | 10 | % | 9 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 64 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Switzerland Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 29.36 | $ | 23.85 | $ | 24.67 | $ | 21.64 | $ | 20.71 | $ | 23.09 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.07 | 0.67 | 0.63 | 0.59 | 0.39 | 0.25 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
4.88 | 5.44 | (0.80 | ) | 2.97 | 0.90 | (2.30 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.95 | 6.11 | (0.17 | ) | 3.56 | 1.29 | (2.05 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.60 | ) | (0.65 | ) | (0.53 | ) | (0.36 | ) | (0.33 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.60 | ) | (0.65 | ) | (0.53 | ) | (0.36 | ) | (0.33 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 34.31 | $ | 29.36 | $ | 23.85 | $ | 24.67 | $ | 21.64 | $ | 20.71 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
16.86 | %c | 25.71 | % | (0.53 | )% | 16.30 | % | 6.35 | % | (8.63 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,085,065 | $ | 902,860 | $ | 554,570 | $ | 524,159 | $ | 405,755 | $ | 271,855 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.56 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.46 | % | 2.38 | % | 2.73 | % | 2.35 | % | 1.80 | % | 1.42 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 13 | % | 8 | % | 7 | % | 7 | % | 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 |
65 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI United Kingdom ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 18.55 | $ | 16.91 | $ | 16.43 | $ | 15.01 | $ | 15.02 | $ | 19.35 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.96 | e | 0.66 | 0.64 | 0.54 | 0.46 | 0.50 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.96 | 1.49 | 0.46 | 1.35 | (0.03 | ) | (4.26 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.92 | 2.15 | 1.10 | 1.89 | 0.43 | (3.76 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.24 | ) | (0.51 | ) | (0.62 | ) | (0.47 | ) | (0.44 | ) | (0.57 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.24 | ) | (0.51 | ) | (0.62 | ) | (0.47 | ) | (0.44 | ) | (0.57 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 21.23 | $ | 18.55 | $ | 16.91 | $ | 16.43 | $ | 15.01 | $ | 15.02 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
15.82 | %c | 12.91 | % | 6.94 | % | 12.50 | % | 2.87 | % | (18.68 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 4,385,286 | $ | 2,670,796 | $ | 1,356,494 | $ | 1,199,333 | $ | 930,412 | $ | 739,124 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
9.64 | %e | 3.61 | % | 3.88 | % | 3.07 | % | 2.98 | % | 3.90 | % | ||||||||||||
| Portfolio turnover ratef |
5 | % | 4 | % | 7 | % | 4 | % | 7 | % | 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 | Includes a one-time special distribution from Vodafone Group PLC which represented $0.72 per share and 7.25% of average net assets, annualized. |
| 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 | 2014 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”):
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.
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.
Each Fund may invest in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
The United States and the European Union have imposed economic sanctions on certain Russian individuals and a financial institution. The United States or the European Union could also institute broader sanctions on Russia. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities, impairing the ability of the iShares Emerging Markets Eastern Europe ETF to buy, sell, receive or deliver those securities. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian securities.
Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
| NOTES TO FINANCIAL STATEMENTS |
67 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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 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, reviews of 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
| 68 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
transparency of the instrument and is not necessarily an indication of the risk associated with investing in the 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 Global Valuation Committee’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 Funds’ investments according to the fair value hierarchy as of February 28, 2014. The breakdown of each Fund’s investments into major categories is disclosed in its respective schedule of investments.
| iShares ETF and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Austria Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 99,503,601 | $ | — | $ | 26 | $ | 99,503,627 | ||||||||
| Money Market Funds |
335,407 | — | — | 335,407 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 99,839,008 | $ | — | $ | 26 | $ | 99,839,034 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Belgium Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 73,950,456 | $ | 454,878 | $ | — | $ | 74,405,334 | ||||||||
| Money Market Funds |
2,752,633 | — | — | 2,752,633 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 76,703,089 | $ | 454,878 | $ | — | $ | 77,157,967 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Eastern Europe |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 141,354,595 | $ | — | $ | — | $ | 141,354,595 | ||||||||
| Preferred Stocks |
5,460,807 | — | — | 5,460,807 | ||||||||||||
| Money Market Funds |
116,650 | — | — | 116,650 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 146,932,052 | $ | — | $ | — | $ | 146,932,052 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI EMU |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 9,958,986,084 | $ | — | $ | 8 | $ | 9,958,986,092 | ||||||||
| Preferred Stocks |
199,736,009 | — | — | 199,736,009 | ||||||||||||
| Money Market Funds |
68,162,961 | — | — | 68,162,961 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 10,226,885,054 | $ | — | $ | 8 | $ | 10,226,885,062 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
69 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI France |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 391,564,211 | $ | — | $ | — | $ | 391,564,211 | ||||||||
| Money Market Funds |
77,231 | — | — | 77,231 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 391,641,442 | $ | — | $ | — | $ | 391,641,442 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Italy Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,110,441,663 | $ | — | $ | — | $ | 1,110,441,663 | ||||||||
| Money Market Funds |
40,291,703 | — | — | 40,291,703 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,150,733,366 | $ | — | $ | — | $ | 1,150,733,366 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Netherlands |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 312,918,799 | $ | — | $ | 1 | $ | 312,918,800 | ||||||||
| Money Market Funds |
8,375,772 | — | — | 8,375,772 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 321,294,571 | $ | — | $ | 1 | $ | 321,294,572 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Spain Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,318,048,286 | $ | — | $ | — | $ | 1,318,048,286 | ||||||||
| Money Market Funds |
1,077,235 | — | — | 1,077,235 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,319,125,521 | $ | — | $ | — | $ | 1,319,125,521 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Sweden |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 527,975,536 | $ | — | $ | — | $ | 527,975,536 | ||||||||
| Money Market Funds |
4,141,950 | — | — | 4,141,950 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 532,117,486 | $ | — | $ | — | $ | 532,117,486 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Switzerland Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,075,738,422 | $ | — | $ | — | $ | 1,075,738,422 | ||||||||
| Money Market Funds |
443,188 | — | — | 443,188 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,076,181,610 | $ | — | $ | — | $ | 1,076,181,610 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI United Kingdom |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 4,320,892,701 | $ | — | $ | — | $ | 4,320,892,701 | ||||||||
| Money Market Funds |
4,577,234 | — | — | 4,577,234 | ||||||||||||
| Futures Contractsa |
550,654 | — | — | 550,654 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 4,326,020,589 | $ | — | $ | — | $ | 4,326,020,589 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Futures contracts are shown at the net unrealized appreciation (depreciation) on the contracts. |
| 70 | 2014 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, 2014 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, 2014, 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 |
71 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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. 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 BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the statements of assets and liabilities. Income earned by the Funds from securities lending is disclosed in the statements of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. Each Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, a Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and a Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
As of February 28, 2014, the following Funds had securities on loan with a market value as disclosed in the Funds’ statements of assets and liabilities:
As of February 28, 2014, the value of the related collateral, as disclosed in the Funds’ schedules of investments, exceeded the market value of the securities on loan.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for
| 72 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
substantially all expenses of the Funds, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
For its investment advisory services to each Fund, except for the iShares MSCI Emerging Markets Eastern Europe ETF, 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 ETF, 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”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014, each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Funds retain a portion of securities lending income and remit a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) each Fund retains 75% of securities lending income (commencing January 1, 2015 the amount each Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, each Fund retained 65% of securities lending income and paid no collateral investment fees.
| NOTES TO FINANCIAL STATEMENTS |
73 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For the six months ended February 28, 2014, each Fund paid to BTC the following amounts in total for securities lending agent services and collateral investment fees:
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Funds and BTC) and pursuant to a securities lending agreement, (i) each Fund will receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle Date after January 1, 2015, each Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
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.
Cross trades for the six months ended February 28, 2014, if any, were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.
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.
| 74 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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, 2014 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI Austria Capped |
$ | 15,709,212 | $ | 16,537,855 | ||||
| MSCI Belgium Capped |
4,489,456 | 5,671,064 | ||||||
| MSCI Emerging Markets Eastern Europe |
5,364,828 | 5,245,399 | ||||||
| MSCI EMU |
206,425,800 | 177,654,130 | ||||||
| MSCI France |
11,419,592 | 16,767,626 | ||||||
| MSCI Italy Capped |
73,479,639 | 75,247,677 | ||||||
| MSCI Netherlands |
8,977,388 | 8,627,741 | ||||||
| MSCI Spain Capped |
146,387,586 | 120,861,171 | ||||||
| MSCI Sweden |
4,646,410 | 8,664,116 | ||||||
| MSCI Switzerland Capped |
18,118,322 | 19,231,940 | ||||||
| MSCI United Kingdom |
264,271,987 | 164,596,165 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2014 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI Austria Capped |
$ | 60,467,005 | $ | 54,033,174 | ||||
| MSCI Belgium Capped |
10,940,001 | 19,764,823 | ||||||
| MSCI Emerging Markets Eastern Europe |
52,004,396 | 24,266,954 | ||||||
| MSCI EMU |
5,463,231,267 | 74,121,661 | ||||||
| MSCI France |
31,439,809 | 241,590,657 | ||||||
| MSCI Italy Capped |
243,290,792 | 53,004,732 | ||||||
| MSCI Netherlands |
46,311,148 | 24,672,321 | ||||||
| MSCI Spain Capped |
710,699,774 | 7,833,330 | ||||||
| MSCI Sweden |
49,773,985 | 20,268,430 | ||||||
| MSCI Switzerland Capped |
48,413,599 | 19,567,434 | ||||||
| MSCI United Kingdom |
1,304,923,636 | 54,390,707 | ||||||
| 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 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
| NOTES TO FINANCIAL STATEMENTS |
75 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the statements of assets and liabilities.
| 5. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
As of August 31, 2013, 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 ETF | Expiring a | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Total | ||||||||||||||||||||||||
| MSCI Austria Capped |
$ | 13,211,949 | $ | — | $ | 9,795,917 | $ | 2,587,916 | $ | 7,102,366 | $ | 16,657,011 | $ | 13,826,937 | $ | 63,182,096 | ||||||||||||||||
| MSCI Belgium Capped |
5,919,544 | — | — | 1,698,444 | 5,953,120 | 10,826,174 | 19,023,517 | 43,420,799 | ||||||||||||||||||||||||
| MSCI Emerging Markets Eastern Europe |
950,241 | — | — | — | — | — | 204,914 | 1,155,155 | ||||||||||||||||||||||||
| MSCI EMU |
40,686,903 | — | — | — | 26,644,200 | 68,035,542 | 30,230,739 | 165,597,384 | ||||||||||||||||||||||||
| MSCI France |
7,140,691 | — | 158,472 | 335,795 | 3,408,374 | 7,008,530 | 2,858,814 | 20,910,676 | ||||||||||||||||||||||||
| MSCI Italy Capped |
8,953,638 | — | — | 472,268 | 2,743,650 | 18,169,627 | 9,459,662 | 39,798,845 | ||||||||||||||||||||||||
| MSCI Netherlands |
6,234,179 | 403,525 | 260,715 | 1,195,162 | 5,819,153 | 22,256,170 | 2,329,005 | 38,497,909 | ||||||||||||||||||||||||
| MSCI Spain Capped |
20,350,046 | — | — | — | 5,946,927 | 15,120,672 | 8,619,903 | 50,037,548 | ||||||||||||||||||||||||
| MSCI Sweden |
7,978,720 | 107,613 | — | 100,015 | 13,686,746 | 8,483,510 | 5,244,977 | 35,601,581 | ||||||||||||||||||||||||
| MSCI Switzerland Capped |
6,801,347 | — | — | — | 2,837,786 | 22,569,380 | 6,955,758 | 39,164,271 | ||||||||||||||||||||||||
| MSCI United Kingdom |
32,715,559 | 7,063,063 | — | 261,754 | 16,140,312 | 23,559,917 | 22,514,433 | 102,255,038 | ||||||||||||||||||||||||
| 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.
| 76 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2014, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares ETF | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| MSCI Austria Capped |
$ | 117,856,700 | $ | 3,168,490 | $ | (21,186,156 | ) | $ | (18,017,666 | ) | ||||||
| MSCI Belgium Capped |
72,543,493 | 12,676,928 | (8,062,454 | ) | 4,614,474 | |||||||||||
| MSCI Emerging Markets Eastern Europe |
163,147,967 | 5,086,583 | (21,302,498 | ) | (16,215,915 | ) | ||||||||||
| MSCI EMU |
9,300,844,043 | 1,058,531,208 | (132,490,189 | ) | 926,041,019 | |||||||||||
| MSCI France |
418,741,826 | 26,066,013 | (53,166,397 | ) | (27,100,384 | ) | ||||||||||
| MSCI Italy Capped |
992,375,216 | 204,362,111 | (46,003,961 | ) | 158,358,150 | |||||||||||
| MSCI Netherlands |
302,635,884 | 28,996,400 | (10,337,712 | ) | 18,658,688 | |||||||||||
| MSCI Spain Capped |
1,206,244,018 | 158,228,822 | (45,347,319 | ) | 112,881,503 | |||||||||||
| MSCI Sweden |
468,888,507 | 89,750,397 | (26,521,418 | ) | 63,228,979 | |||||||||||
| MSCI Switzerland Capped |
842,572,274 | 261,742,912 | (28,133,576 | ) | 233,609,336 | |||||||||||
| MSCI United Kingdom |
4,017,437,325 | 522,165,433 | (214,132,823 | ) | 308,032,610 | |||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.
| 6. | 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 United Kingdom ETF as of February 28, 2014 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 – net unrealized appreciation (depreciation)a |
$ | 550,654 | ||
|
|
|
|||
| a | Represents cumulative appreciation of futures contracts as reported in the schedules of investments. |
| NOTES TO FINANCIAL STATEMENTS |
77 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table shows the realized and unrealized gains (losses) on futures contracts held by the iShares MSCI United Kingdom ETF during the six months ended February 28, 2014 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 |
$ | 524,301 | $ | 443,562 | ||||
|
|
|
|
|
|||||
For the six months ended February 28, 2014, the average quarter-end number of contracts and notional value of open futures contracts for the iShares MSCI United Kingdom ETF were 338 and $36,764,585, respectively.
| 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.
| 78 | 2014 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 ETF | 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 |
||||||||||||||||||||||||
| MSCI Austria Capped |
$ | 0.029896 | $ | — | $ | 0.102256 | $ | 0.132152 | 23 | % | — | % | 77 | % | 100 | % | ||||||||||||||||
| MSCI Belgium Capped |
0.246975 | — | 0.137061 | 0.384036 | 64 | — | 36 | 100 | ||||||||||||||||||||||||
| MSCI EMU |
0.113723 | — | 0.012062 | 0.125785 | 90 | — | 10 | 100 | ||||||||||||||||||||||||
| MSCI Italy Capped |
0.084443 | — | 0.011864 | 0.096307 | 88 | — | 12 | 100 | ||||||||||||||||||||||||
| MSCI Spain Capped |
0.515203 | — | 0.064211 | 0.579414 | 89 | — | 11 | 100 | ||||||||||||||||||||||||
| MSCI Sweden |
0.099153 | — | 0.122698 | 0.221851 | 45 | — | 55 | 100 | ||||||||||||||||||||||||
| MSCI United Kingdom |
0.224237 | — | 0.012814 | 0.237051 | 95 | — | 5 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
79 |
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Notes:
| 80 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes:
| NOTES |
81 |
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Notes:
| 82 | 2014 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 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.
©2014 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.
iS-SAR-82-0214
Table of Contents
FEBRUARY 28, 2014
| 2014 SEMI-ANNUAL REPORT (UNAUDITED) |
|
iShares, Inc.
| Ø | iShares MSCI Australia ETF | EWA | NYSE Arca |
| Ø | iShares MSCI Hong Kong ETF | EWH | NYSE Arca |
| Ø | iShares MSCI Japan Small-Cap ETF | SCJ | NYSE Arca |
| Ø | iShares MSCI Malaysia ETF | EWM | NYSE Arca |
| Ø | iShares MSCI Pacific ex Japan ETF | EPP | NYSE Arca |
| Ø | iShares MSCI Singapore ETF | EWS | NYSE Arca |
| Ø | iShares MSCI South Korea Capped ETF | EWY | NYSE Arca |
| Ø | iShares MSCI Taiwan ETF | EWT | NYSE Arca |
| Ø | iShares MSCI Thailand Capped ETF | THD | NYSE Arca |
Table of Contents
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| 80 |
Table of Contents
iSHARES® MSCI AUSTRALIA ETF
Performance as of February 28, 2014
The iShares MSCI Australia ETF (the “Fund”) seeks to track the investment results of an index composed of Australian equities, as represented by the MSCI Australia Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 8.03%, net of fees, while the total return for the Index was 8.29%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(3.59)% | (2.66)% | (3.19)% | (3.59)% | (2.66)% | (3.19)% | ||||||||||||||||||||
| 5 Years |
22.19% | 22.61% | 22.77% | 172.33% | 177.04% | 178.92% | ||||||||||||||||||||
| 10 Years |
10.91% | 10.82% | 10.83% | 181.55% | 179.35% | 179.50% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,080.30 | $ | 2.53 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI HONG KONG ETF
Performance as of February 28, 2014
The iShares MSCI Hong Kong ETF (the “Fund”) seeks to track the investment results of an index composed of Hong Kong equities, as represented by the MSCI Hong Kong Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.83%, net of fees, while the total return for the Index was 8.17%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
3.73% | 3.30% | 4.39% | 3.73% | 3.30% | 4.39% | ||||||||||||||||||||
| 5 Years |
18.86% | 19.24% | 19.53% | 137.22% | 141.06% | 144.04% | ||||||||||||||||||||
| 10 Years |
9.03% | 8.96% | 9.63% | 137.32% | 135.81% | 150.67% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,078.30 | $ | 2.52 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI JAPAN SMALL-CAP ETF
Performance as of February 28, 2014
The iShares MSCI Japan Small-Cap ETF (the “Fund”) seeks to track the investment results of an index composed of small-capitalization Japanese equities, as represented by the MSCI Japan Small Cap Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.87%, net of fees, while the total return for the Index was 8.30%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
14.05% | 15.53% | 14.84% | 14.05% | 15.53% | 14.84% | ||||||||||||||||||||
| 5 Years |
13.02% | 13.96% | 13.53% | 84.39% | 92.25% | 88.59% | ||||||||||||||||||||
| Since Inception |
3.32% | 3.46% | 3.69% | 22.45% | 23.46% | 25.20% | ||||||||||||||||||||
The inception date of the Fund was 12/20/07. The first day of secondary market trading was 12/21/07.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,078.70 | $ | 2.53 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI MALAYSIA ETF
Performance as of February 28, 2014
The iShares MSCI Malaysia ETF (the “Fund”) seeks to track the investment results of an index composed of Malaysian equities, as represented by the MSCI Malaysia Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.29%, net of fees, while the total return for the Index was 7.58%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
8.77% | 8.25% | 9.33% | 8.77% | 8.25% | 9.33% | ||||||||||||||||||||
| 5 Years |
20.49% | 20.40% | 21.15% | 153.92% | 152.96% | 160.95% | ||||||||||||||||||||
| 10 Years |
11.41% | 11.19% | 12.01% | 194.53% | 188.74% | 210.84% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,072.90 | $ | 2.52 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI PACIFIC EX JAPAN ETF
Performance as of February 28, 2014
The iShares MSCI Pacific ex Japan ETF (the “Fund”) seeks to track the investment results of an index composed of Pacific region developed market equities, excluding Japan, as represented by the MSCI Pacific ex Japan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.58%, net of fees, while the total return for the Index was 7.85%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(1.73)% | (1.29)% | (1.35)% | (1.73)% | (1.29)% | (1.35)% | ||||||||||||||||||||
| 5 Years |
21.45% | 21.88% | 21.98% | 164.18% | 168.91% | 170.09% | ||||||||||||||||||||
| 10 Years |
10.47% | 10.35% | 10.57% | 170.60% | 167.67% | 173.11% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,075.80 | $ | 2.52 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SINGAPORE ETF
Performance as of February 28, 2014
The iShares MSCI Singapore ETF (the “Fund”) seeks to track the investment results of an index composed of Singaporean equities, as represented by the MSCI Singapore Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 3.84%, net of fees, while the total return for the Index was 3.86%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(3.91)% | (3.68)% | (3.28)% | (3.91)% | (3.68)% | (3.28)% | ||||||||||||||||||||
| 5 Years |
21.35% | 21.49% | 21.74% | 163.16% | 164.72% | 167.43% | ||||||||||||||||||||
| 10 Years |
11.25% | 11.05% | 11.34% | 190.39% | 185.29% | 192.84% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,038.40 | $ | 2.48 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SOUTH KOREA CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI South Korea Capped ETF (the “Fund”) seeks to track the investment results of an index composed of South Korean equities, as represented by the MSCI Korea 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 8.20%, net of fees, while the total return for the Index was 8.40%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
0.14% | 0.45% | 0.56% | 0.14% | 0.45% | 0.56% | ||||||||||||||||||||
| 5 Years |
23.63% | 24.21% | 24.45% | 188.86% | 195.63% | 198.55% | ||||||||||||||||||||
| 10 Years |
9.41% | 9.20% | 10.12% | 145.85% | 141.14% | 162.16% | ||||||||||||||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Korea Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Korea 25/50 Index.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,082.00 | $ | 3.20 | $ | 1,000.00 | $ | 1,021.70 | $ | 3.11 | 0.62% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI TAIWAN ETF
Performance as of February 28, 2014
The iShares MSCI Taiwan ETF (the “Fund”) seeks to track the investment results of an index composed of Taiwanese equities, as represented by the MSCI Taiwan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 5.11%, net of fees, while the total return for the Index was 5.41%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
6.04% | 5.93% | 6.59% | 6.04% | 5.93% | 6.59% | ||||||||||||||||||||
| 5 Years |
17.63% | 18.23% | 18.24% | 125.23% | 131.03% | 131.14% | ||||||||||||||||||||
| 10 Years |
3.80% | 3.70% | 4.44% | 45.26% | 43.75% | 54.37% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,051.10 | $ | 3.15 | $ | 1,000.00 | $ | 1,021.70 | $ | 3.11 | 0.62% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI THAILAND CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Thailand Capped ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Thai equities, as represented by the MSCI Thailand Investable Market Index 25/50 (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 2.52%, net of fees, while the total return for the Index was 2.19%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(21.61)% | (21.39)% | (21.77)% | (21.61)% | (21.39)% | (21.77)% | ||||||||||||||||||||
| 5 Years |
29.19% | 29.25% | 29.69% | 259.91% | 260.64% | 266.92% | ||||||||||||||||||||
| Since Inception |
8.41% | 8.39% | 8.78% | 61.46% | 61.24% | 64.70% | ||||||||||||||||||||
The inception date of the Fund was 3/26/08. The first day of secondary market trading was 3/28/08.
Index performance through February 11, 2013 reflects the performance of the MSCI Thailand Investable Market Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Thailand Investable Market Index 25/50.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,025.20 | $ | 3.11 | $ | 1,000.00 | $ | 1,021.70 | $ | 3.11 | 0.62% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
13 |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRALIA ETF
February 28, 2014
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRALIA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI HONG KONG ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| 26 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| 28 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2014
| 30 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MALAYSIA ETF
February 28, 2014
| 32 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI PACIFIC EX JAPAN ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI PACIFIC EX JAPAN ETF
February 28, 2014
| 34 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI PACIFIC EX JAPAN ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| 36 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SINGAPORE ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SOUTH KOREA CAPPED ETF
February 28, 2014
| 38 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA CAPPED ETF
February 28, 2014
| 40 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TAIWAN ETF
February 28, 2014
| 42 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TAIWAN ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI THAILAND CAPPED ETF
February 28, 2014
| 44 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND CAPPED ETF
February 28, 2014
| 46 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
47 |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Japan Small-Cap ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 1,706,321,265 | $ | 2,090,978,902 | $ | 127,060,607 | ||||||
| Affiliated (Note 2) |
1,828,538 | 64,460,311 | 2,692,394 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 1,708,149,803 | $ | 2,155,439,213 | $ | 129,753,001 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 1,725,110,638 | $ | 2,186,321,656 | $ | 130,900,366 | ||||||
| Affiliated (Note 2) |
1,828,538 | 64,460,311 | 2,692,394 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
1,726,939,176 | 2,250,781,967 | 133,592,760 | |||||||||
| Foreign currency, at valueb |
6,192,472 | 3,668,741 | 221,768 | |||||||||
| Foreign currency pledged to broker, at valueb |
172,900 | 421,341 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
10,798,079 | — | 10,778 | |||||||||
| Dividends and interest |
12,800,075 | 11,780 | 275,422 | |||||||||
| Capital shares sold |
— | — | 5,291,344 | |||||||||
| Futures variation margin |
428,994 | 123,869 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
1,757,331,696 | 2,255,007,698 | 139,392,072 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
9,608,019 | — | 5,187,317 | |||||||||
| Collateral for securities on loan (Note 1) |
1,647,000 | 61,076,718 | 2,679,324 | |||||||||
| Capital shares redeemed |
— | — | 77,671 | |||||||||
| Investment advisory fees (Note 2) |
635,283 | 773,154 | 48,289 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
11,890,302 | 61,849,872 | 7,992,601 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,745,441,394 | $ | 2,193,157,826 | $ | 131,399,471 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 1,932,524,455 | $ | 2,475,594,652 | $ | 129,402,958 | ||||||
| Undistributed (distributions in excess of) net investment income |
(8,905,315 | ) | 1,482,126 | (1,506,842 | ) | |||||||
| Accumulated net realized loss |
(197,281,854 | ) | (379,385,327 | ) | (339,715 | ) | ||||||
| Net unrealized appreciation |
19,104,108 | 95,466,375 | 3,843,070 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,745,441,394 | $ | 2,193,157,826 | $ | 131,399,471 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
70,200,000 | 108,525,000 | 2,500,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 24.86 | $ | 20.21 | $ | 52.56 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $1,553,126, $58,028,244 and $2,497,146, respectively. See Note 1. |
| b | Cost of foreign currency including currency pledged to broker, if any: $6,401,411, $4,090,330 and $221,620, respectively. |
| c | $0.001 par value, number of shares authorized: 627.8 million, 375 million and 500 million, respectively. |
See notes to financial statements.
| 48 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Malaysia ETF |
iShares MSCI Pacific ex Japan ETF |
iShares MSCI Singapore ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 348,381,437 | $ | 2,597,966,591 | $ | 980,190,768 | ||||||
| Affiliated (Note 2) |
67,740 | 35,020,232 | 52,039,708 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 348,449,177 | $ | 2,632,986,823 | $ | 1,032,230,476 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 783,522,674 | $ | 2,798,143,587 | $ | 977,980,263 | ||||||
| Affiliated (Note 2) |
67,740 | 35,020,232 | 52,039,708 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
783,590,414 | 2,833,163,819 | 1,030,019,971 | |||||||||
| Foreign currency, at valueb |
1,182,532 | 4,856,607 | 1,761,423 | |||||||||
| Foreign currency pledged to broker, at valueb |
— | — | 102,617 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
1,240,437 | 12,980,335 | 5,293,457 | |||||||||
| Dividends and interest |
1,312,292 | 13,782,936 | 918,354 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
787,325,675 | 2,864,783,697 | 1,038,095,822 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
1,212,855 | 12,360,882 | 3,552,039 | |||||||||
| Collateral for securities on loan (Note 1) |
— | 34,897,397 | 51,870,009 | |||||||||
| Capital shares redeemed |
— | 594,614 | 89,831 | |||||||||
| Futures variation margin |
— | — | 15,063 | |||||||||
| Investment advisory fees (Note 2) |
283,548 | 1,066,950 | 359,211 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
1,496,403 | 48,919,843 | 55,886,153 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 785,829,272 | $ | 2,815,863,854 | $ | 982,209,669 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 384,957,707 | $ | 2,998,159,150 | $ | 1,204,319,657 | ||||||
| Undistributed (distributions in excess of) net investment income |
5,524,610 | (12,378,044 | ) | (18,339,403 | ) | |||||||
| Accumulated net realized loss |
(39,814,134 | ) | (370,006,369 | ) | (201,541,076 | ) | ||||||
| Net unrealized appreciation (depreciation) |
435,161,089 | 200,089,117 | (2,229,509 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 785,829,272 | $ | 2,815,863,854 | $ | 982,209,669 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
51,000,000 | 60,000,000 | 77,300,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 15.41 | $ | 46.93 | $ | 12.71 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $33,060,660 and $49,119,632, respectively. See Note 1. |
| b | Cost of foreign currency including currency pledged to broker, if any: $1,171,251, $4,862,845 and $1,867,615, respectively. |
| c | $0.001 par value, number of shares authorized: 300 million, 1 billion and 300 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI South Korea Capped ETF |
iShares MSCI Taiwan ETF |
iShares MSCI Thailand Capped ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 2,322,033,423 | $ | 1,696,221,459 | $ | 570,882,738 | ||||||
| Affiliated (Note 2) |
166,111,750 | 214,218,479 | 6,602,012 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 2,488,145,173 | $ | 1,910,439,938 | $ | 577,484,750 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 4,100,972,192 | $ | 2,795,275,923 | $ | 456,153,340 | ||||||
| Affiliated (Note 2) |
166,111,750 | 214,218,479 | 6,602,012 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
4,267,083,942 | 3,009,494,402 | 462,755,352 | |||||||||
| Cash pledged to broker |
— | 48,000 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
59,268,553 | 5,413,386 | 9,871,478 | |||||||||
| Dividends and interest |
37,188,008 | 229,463 | 1,198,820 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
4,363,540,503 | 3,015,185,251 | 473,825,650 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
46,876,949 | 4,077,235 | 9,238,191 | |||||||||
| Collateral for securities on loan (Note 1) |
163,024,851 | 211,844,660 | 6,050,275 | |||||||||
| Capital shares redeemed |
— | — | 31,675 | |||||||||
| Foreign taxes (Note 1) |
3,061 | 40,220 | — | |||||||||
| Investment advisory fees (Note 2) |
1,945,973 | 1,322,372 | 222,510 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
211,850,834 | 217,284,487 | 15,542,651 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 4,151,689,669 | $ | 2,797,900,764 | $ | 458,282,999 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 3,327,105,431 | $ | 2,809,553,527 | $ | 591,691,416 | ||||||
| Undistributed (distributions in excess of) net investment income |
(52,384,408 | ) | (13,063,774 | ) | 997,509 | |||||||
| Accumulated net realized loss |
(901,489,165 | ) | (1,097,645,590 | ) | (19,677,677 | ) | ||||||
| Net unrealized appreciation (depreciation) |
1,778,457,811 | 1,099,056,601 | (114,728,249 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 4,151,689,669 | $ | 2,797,900,764 | $ | 458,282,999 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingb |
67,500,000 | 199,400,000 | 6,650,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 61.51 | $ | 14.03 | $ | 68.91 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $155,395,514, $197,896,450 and $5,445,522, respectively. See Note 1. |
| b | $0.001 par value, number of shares authorized: 200 million, 900 million and 200 million, respectively. |
See notes to financial statements.
| 50 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Japan Small-Cap ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 48,007,404 | $ | 22,096,529 | $ | 809,155 | ||||||
| Interest — unaffiliated |
3,465 | — | — | |||||||||
| Interest — affiliated (Note 2) |
291 | 307 | 17 | |||||||||
| Securities lending income — affiliated (Note 2) |
11,817 | 136,442 | 30,602 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
48,022,977 | 22,233,278 | 839,774 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
4,696,921 | 5,408,575 | 290,238 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
4,696,921 | 5,408,575 | 290,238 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
43,326,056 | 16,824,703 | 549,536 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(18,065,549 | ) | (13,326,885 | ) | (240,688 | ) | ||||||
| In-kind redemptions — unaffiliated |
38,080,086 | 39,082,004 | 2,666,924 | |||||||||
| Futures contracts |
440,229 | (200,114 | ) | — | ||||||||
| Foreign currency transactions |
77,640 | (10,811 | ) | (28,907 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain |
20,532,406 | 25,544,194 | 2,397,329 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
74,550,129 | 117,789,233 | 3,283,030 | |||||||||
| Futures contracts |
(277,380 | ) | 230,847 | — | ||||||||
| Translation of assets and liabilities in foreign currencies |
318,681 | (2,067 | ) | 4,717 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
74,591,430 | 118,018,013 | 3,287,747 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
95,123,836 | 143,562,207 | 5,685,076 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 138,449,892 | $ | 160,386,910 | $ | 6,234,612 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $586,585, $ — and $73,153, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
51 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Malaysia ETF |
iShares MSCI Pacific ex Japan ETF |
iShares MSCI Singapore ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 18,875,301 | $ | 61,280,143 | $ | 8,008,886 | ||||||
| Interest — affiliated (Note 2) |
121 | 621 | 186 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 297,124 | 829,284 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
18,875,422 | 61,577,888 | 8,838,356 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,980,179 | 7,899,197 | 2,757,993 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,980,179 | 7,899,197 | 2,757,993 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
16,895,243 | 53,678,691 | 6,080,363 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
24,102,824 | (25,765,315 | ) | (2,290,330 | ) | |||||||
| In-kind redemptions — unaffiliated |
— | 148,084,577 | 19,382,026 | |||||||||
| Futures contracts |
— | — | 69,301 | |||||||||
| Foreign currency transactions |
(91,841 | ) | 32,575 | 59,258 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain |
24,010,983 | 122,351,837 | 17,220,255 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
14,269,443 | 18,394,683 | 17,896,445 | |||||||||
| Futures contracts |
— | — | 70,717 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(50,841 | ) | 255,033 | (26,394 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
14,218,602 | 18,649,716 | 17,940,768 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
38,229,585 | 141,001,553 | 35,161,023 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 55,124,828 | $ | 194,680,244 | $ | 41,241,386 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $680,391, $823,106 and $119,426, respectively. |
See notes to financial statements.
| 52 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI South Korea Capped ETF |
iShares MSCI Taiwan ETF |
iShares MSCI Thailand Capped ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 37,363,771 | $ | 3,248,241 | $ | 4,144,322 | ||||||
| Interest — unaffiliated |
1,362 | 84 | — | |||||||||
| Interest — affiliated (Note 2) |
1,253 | 1,455 | 150 | |||||||||
| Securities lending income — affiliated (Note 2) |
1,468,590 | 1,533,018 | b | 16,229 | ||||||||
|
|
|
|
|
|
|
|||||||
| 38,834,976 | 4,782,798 | 4,160,701 | ||||||||||
| Less: Other foreign taxes (Note 1) |
(3,357 | ) | (826,580 | ) | (6,886 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
38,831,619 | 3,956,218 | 4,153,815 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
12,719,149 | 8,564,460 | 1,741,050 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
12,719,149 | 8,564,460 | 1,741,050 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
26,112,470 | (4,608,242 | ) | 2,412,765 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(32,780,057 | ) | (13,422,410 | ) | (10,478,839 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | — | 12,906,533 | |||||||||
| Futures contracts |
— | 1,311,746 | — | |||||||||
| Foreign currency transactions |
(527,202 | ) | (29,199 | ) | (120,586 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(33,307,259 | ) | (12,139,863 | ) | 2,307,108 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
271,010,985 | 150,435,448 | 5,323,587 | |||||||||
| Futures contracts |
— | (485,635 | ) | — | ||||||||
| Translation of assets and liabilities in foreign currencies |
(479,924 | ) | (10,983 | ) | 45,595 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
270,531,061 | 149,938,830 | 5,369,182 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
237,223,802 | 137,798,967 | 7,676,290 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 263,336,272 | $ | 133,190,725 | $ | 10,089,055 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $10,514,484, $744,642 and $460,480, respectively. |
| b | Net of foreign tax paid of $354,860. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
53 |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 43,326,056 | $ | 95,118,733 | $ | 16,824,703 | $ | 71,264,718 | ||||||||
| Net realized gain |
20,532,406 | 67,936,094 | 25,544,194 | 176,369,407 | ||||||||||||
| Net change in unrealized appreciation/depreciation |
74,591,430 | 13,198,281 | 118,018,013 | 55,861,708 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
138,449,892 | 176,253,108 | 160,386,910 | 303,495,833 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(47,170,688 | ) | (130,032,525 | ) | (20,218,078 | ) | (71,372,977 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(47,170,688 | ) | (130,032,525 | ) | (20,218,078 | ) | (71,372,977 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
88,774,098 | 352,326,670 | 195,289,926 | 1,549,740,139 | ||||||||||||
| Cost of shares redeemed |
(351,460,828 | ) | (975,397,089 | ) | (267,157,351 | ) | (1,522,980,733 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(262,686,730 | ) | (623,070,419 | ) | (71,867,425 | ) | 26,759,406 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(171,407,526 | ) | (576,849,836 | ) | 68,301,407 | 258,882,262 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
1,916,848,920 | 2,493,698,756 | 2,124,856,419 | 1,865,974,157 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 1,745,441,394 | $ | 1,916,848,920 | $ | 2,193,157,826 | $ | 2,124,856,419 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (8,905,315 | ) | $ | (5,060,683 | ) | $ | 1,482,126 | $ | 4,875,501 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
3,400,000 | 14,000,000 | 9,750,000 | 81,300,000 | ||||||||||||
| Shares redeemed |
(14,400,000 | ) | (39,400,000 | ) | (13,575,000 | ) | (79,125,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(11,000,000 | ) | (25,400,000 | ) | (3,825,000 | ) | 2,175,000 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 54 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Japan Small-Cap ETF |
iShares MSCI Malaysia ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 549,536 | $ | 836,485 | $ | 16,895,243 | $ | 26,000,206 | ||||||||
| Net realized gain (loss) |
2,397,329 | (227,736 | ) | 24,010,983 | 17,549,880 | |||||||||||
| Net change in unrealized appreciation/depreciation |
3,287,747 | 6,085,205 | 14,218,602 | (15,851,478 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
6,234,612 | 6,693,954 | 55,124,828 | 27,698,608 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(1,933,040 | ) | (1,107,270 | ) | (13,690,575 | ) | (23,444,016 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(1,933,040 | ) | (1,107,270 | ) | (13,690,575 | ) | (23,444,016 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
48,735,436 | 49,278,602 | 25,932,707 | 93,307,043 | ||||||||||||
| Cost of shares redeemed |
(10,625,224 | ) | (8,694,664 | ) | (90,676,125 | ) | (225,115,455 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
38,110,212 | 40,583,938 | (64,743,418 | ) | (131,808,412 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
42,411,784 | 46,170,622 | (23,309,165 | ) | (127,553,820 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
88,987,687 | 42,817,065 | 809,138,437 | 936,692,257 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 131,399,471 | $ | 88,987,687 | $ | 785,829,272 | $ | 809,138,437 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (1,506,842 | ) | $ | (123,338 | ) | $ | 5,524,610 | $ | 2,319,942 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
900,000 | 1,000,000 | 1,650,000 | 6,150,000 | ||||||||||||
| Shares redeemed |
(200,000 | ) | (200,000 | ) | (6,075,000 | ) | (15,225,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
700,000 | 800,000 | (4,425,000 | ) | (9,075,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
55 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Pacific ex Japan ETF |
iShares MSCI Singapore ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 53,678,691 | $ | 136,122,747 | $ | 6,080,363 | $ | 48,795,283 | ||||||||
| Net realized gain |
122,351,837 | 310,413,133 | 17,220,255 | 90,919,970 | ||||||||||||
| Net change in unrealized appreciation/depreciation |
18,649,716 | (214,606,307 | ) | 17,940,768 | (131,975,048 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
194,680,244 | 231,929,573 | 41,241,386 | 7,740,205 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(68,006,609 | ) | (156,573,693 | ) | (22,837,450 | ) | (63,036,613 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(68,006,609 | ) | (156,573,693 | ) | (22,837,450 | ) | (63,036,613 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
294,242,691 | 971,290,034 | 17,820,214 | 206,627,419 | ||||||||||||
| Cost of shares redeemed |
(613,119,958 | ) | (1,227,160,297 | ) | (189,491,873 | ) | (528,540,126 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease in net assets from capital share transactions |
(318,877,267 | ) | (255,870,263 | ) | (171,671,659 | ) | (321,912,707 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DECREASE IN NET ASSETS |
(192,203,632 | ) | (180,514,383 | ) | (153,267,723 | ) | (377,209,115 | ) | ||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
3,008,067,486 | 3,188,581,869 | 1,135,477,392 | 1,512,686,507 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 2,815,863,854 | $ | 3,008,067,486 | $ | 982,209,669 | $ | 1,135,477,392 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (12,378,044 | ) | $ | 1,949,874 | $ | (18,339,403 | ) | $ | (1,582,316 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
6,000,000 | 20,400,000 | 1,300,000 | 15,200,000 | ||||||||||||
| Shares redeemed |
(13,500,000 | ) | (26,700,000 | ) | (14,900,000 | ) | (39,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease in shares outstanding |
(7,500,000 | ) | (6,300,000 | ) | (13,600,000 | ) | (24,600,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 56 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI South Korea Capped ETF |
iShares MSCI Taiwan ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | 26,112,470 | $ | 12,511,437 | $ | (4,608,242 | ) | $ | 47,025,597 | |||||||
| Net realized gain (loss) |
(33,307,259 | ) | 693,348 | (12,139,863 | ) | (46,800,296 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
270,531,061 | 69,998,753 | 149,938,830 | 230,468,377 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
263,336,272 | 83,203,538 | 133,190,725 | 230,693,678 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(61,830,398 | ) | (18,847,855 | ) | (51,978,221 | ) | (53,961,288 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(61,830,398 | ) | (18,847,855 | ) | (51,978,221 | ) | (53,961,288 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
695,365,250 | 699,217,627 | 197,917,711 | 608,307,506 | ||||||||||||
| Cost of shares redeemed |
(121,697,900 | ) | (56,608,080 | ) | (123,226,369 | ) | (390,170,968 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
573,667,350 | 642,609,547 | 74,691,342 | 218,136,538 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
775,173,224 | 706,965,230 | 155,903,846 | 394,868,928 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
3,376,516,445 | 2,669,551,215 | 2,641,996,918 | 2,247,127,990 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 4,151,689,669 | $ | 3,376,516,445 | $ | 2,797,900,764 | $ | 2,641,996,918 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (52,384,408 | ) | $ | (16,666,480 | ) | $ | (13,063,774 | ) | $ | 43,522,689 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
11,050,000 | 11,900,000 | 14,000,000 | 45,000,000 | ||||||||||||
| Shares redeemed |
(2,100,000 | ) | (1,050,000 | ) | (8,800,000 | ) | (29,400,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
8,950,000 | 10,850,000 | 5,200,000 | 15,600,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
57 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Thailand Capped ETF |
||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 2,412,765 | $ | 18,562,467 | ||||
| Net realized gain |
2,307,108 | 93,291,603 | ||||||
| Net change in unrealized appreciation/depreciation |
5,369,182 | (137,693,757 | ) | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
10,089,055 | (25,839,687 | ) | |||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(4,154,577 | ) | (18,144,635 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(4,154,577 | ) | (18,144,635 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
179,387,771 | 476,258,075 | ||||||
| Cost of shares redeemed |
(268,912,044 | ) | (486,368,459 | ) | ||||
|
|
|
|
|
|||||
| Net decrease in net assets from capital share transactions |
(89,524,273 | ) | (10,110,384 | ) | ||||
|
|
|
|
|
|||||
| DECREASE IN NET ASSETS |
(83,589,795 | ) | (54,094,706 | ) | ||||
| NET ASSETS |
||||||||
| Beginning of period |
541,872,794 | 595,967,500 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 458,282,999 | $ | 541,872,794 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 997,509 | $ | 2,739,321 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
2,400,000 | 5,700,000 | ||||||
| Shares redeemed |
(3,750,000 | ) | (6,150,000 | ) | ||||
|
|
|
|
|
|||||
| Net decrease in shares outstanding |
(1,350,000 | ) | (450,000 | ) | ||||
|
|
|
|
|
|||||
See notes to financial statements.
| 58 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Australia ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 23.61 | $ | 23.39 | $ | 24.18 | $ | 20.92 | $ | 20.33 | $ | 23.96 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.56 | 1.02 | 1.04 | 0.99 | 0.72 | 0.78 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.29 | 0.64 | (0.72 | ) | 3.33 | 0.69 | (3.47 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.85 | 1.66 | 0.32 | 4.32 | 1.41 | (2.69 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.60 | ) | (1.44 | ) | (1.11 | ) | (1.06 | ) | (0.82 | ) | (0.94 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.60 | ) | (1.44 | ) | (1.11 | ) | (1.06 | ) | (0.82 | ) | (0.94 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 24.86 | $ | 23.61 | $ | 23.39 | $ | 24.18 | $ | 20.92 | $ | 20.33 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
8.03 | %c | 7.06 | % | 1.84 | % | 20.54 | % | 6.86 | % | (8.91 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,745,441 | $ | 1,916,849 | $ | 2,493,699 | $ | 3,090,425 | $ | 2,196,817 | $ | 1,593,676 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
4.48 | % | 4.05 | % | 4.61 | % | 3.95 | % | 3.24 | % | 4.92 | % | ||||||||||||
| Portfolio turnover ratee |
4 | % | 6 | % | 9 | % | 9 | % | 8 | % | 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 |
59 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Hong Kong ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 18.91 | $ | 16.94 | $ | 17.59 | $ | 16.02 | $ | 14.39 | $ | 15.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.15 | 0.48 | 0.54 | 0.42 | 0.42 | 0.52 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.33 | 2.05 | (0.65 | ) | 1.56 | 1.69 | (1.46 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.48 | 2.53 | (0.11 | ) | 1.98 | 2.11 | (0.94 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.18 | ) | (0.56 | ) | (0.54 | ) | (0.41 | ) | (0.48 | ) | (0.54 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.18 | ) | (0.56 | ) | (0.54 | ) | (0.41 | ) | (0.48 | ) | (0.54 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 20.21 | $ | 18.91 | $ | 16.94 | $ | 17.59 | $ | 16.02 | $ | 14.39 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
7.83 | %c | 15.04 | % | (0.33 | )% | 12.27 | % | 14.85 | % | (4.77 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,193,158 | $ | 2,124,856 | $ | 1,865,974 | $ | 1,607,982 | $ | 1,976,317 | $ | 1,951,777 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.51 | % | 2.47 | % | 3.26 | % | 2.25 | % | 2.67 | % | 4.29 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 12 | % | 11 | % | 15 | % | 5 | % | 9 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 60 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Japan Small-Cap ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 49.44 | $ | 42.82 | $ | 46.49 | $ | 40.74 | $ | 44.45 | $ | 43.24 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.24 | 0.65 | 0.82 | 0.78 | 0.61 | 0.60 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.65 | 6.97 | (3.25 | ) | 5.87 | (3.39 | ) | 1.29 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.89 | 7.62 | (2.43 | ) | 6.65 | (2.78 | ) | 1.89 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.77 | ) | (1.00 | ) | (1.24 | ) | (0.90 | ) | (0.93 | ) | (0.68 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.77 | ) | (1.00 | ) | (1.24 | ) | (0.90 | ) | (0.93 | ) | (0.68 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 52.56 | $ | 49.44 | $ | 42.82 | $ | 46.49 | $ | 40.74 | $ | 44.45 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
7.87 | %c | 18.07 | % | (5.18 | )% | 16.38 | % | (6.25 | )% | 4.62 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 131,399 | $ | 88,988 | $ | 42,817 | $ | 74,387 | $ | 36,664 | $ | 35,556 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.50 | % | 0.53 | % | 0.51 | % | 0.53 | % | 0.56 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.92 | % | 1.36 | % | 1.84 | % | 1.72 | % | 1.46 | % | 1.59 | % | ||||||||||||
| Portfolio turnover ratee |
5 | % | 17 | % | 7 | % | 10 | % | 7 | % | 7 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
61 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Malaysia ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 14.60 | $ | 14.52 | $ | 13.92 | $ | 12.98 | $ | 9.79 | $ | 9.39 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.32 | 0.41 | 0.38 | 0.41 | 0.24 | 0.28 | ||||||||||||||||||
| Net realized and unrealized gainb |
0.75 | 0.04 | 0.76 | 0.92 | 3.20 | 0.40 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.07 | 0.45 | 1.14 | 1.33 | 3.44 | 0.68 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.26 | ) | (0.37 | ) | (0.52 | ) | (0.39 | ) | (0.25 | ) | (0.28 | ) | ||||||||||||
| Return of capital |
— | — | (0.02 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.26 | ) | (0.37 | ) | (0.54 | ) | (0.39 | ) | (0.25 | ) | (0.28 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 15.41 | $ | 14.60 | $ | 14.52 | $ | 13.92 | $ | 12.98 | $ | 9.79 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
7.29 | %c | 3.02 | % | 8.61 | % | 10.19 | % | 35.76 | % | 8.00 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 785,829 | $ | 809,138 | $ | 936,692 | $ | 978,402 | $ | 794,142 | $ | 513,000 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.56 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
4.15 | % | 2.71 | % | 2.73 | % | 2.84 | % | 2.17 | % | 3.45 | % | ||||||||||||
| Portfolio turnover ratee |
7 | % | 17 | % | 24 | % | 49 | % | 29 | % | 52 | % | ||||||||||||
| 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, 2014 and the years ended August 31, 2013, August 31, 2012, August 31, 2011, August 31, 2010, and August 31, 2009, were 4%, 8%, 14%, 14%, 10%, and 12%, respectively. See Note 4. |
See notes to financial statements.
| 62 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Pacific ex Japan ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 44.56 | $ | 43.21 | $ | 44.47 | $ | 39.25 | $ | 36.85 | $ | 41.37 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.78 | 1.69 | 1.73 | 1.64 | 1.25 | 1.38 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
2.56 | 1.71 | (1.14 | ) | 5.31 | 2.52 | (4.79 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.34 | 3.40 | 0.59 | 6.95 | 3.77 | (3.41 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.97 | ) | (2.05 | ) | (1.85 | ) | (1.73 | ) | (1.37 | ) | (1.11 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.97 | ) | (2.05 | ) | (1.85 | ) | (1.73 | ) | (1.37 | ) | (1.11 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 46.93 | $ | 44.56 | $ | 43.21 | $ | 44.47 | $ | 39.25 | $ | 36.85 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
7.58 | %c | 7.87 | % | 1.82 | % | 17.61 | % | 10.27 | % | (7.23 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,815,864 | $ | 3,008,067 | $ | 3,188,582 | $ | 3,548,867 | $ | 3,438,149 | $ | 3,382,554 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
3.35 | % | 3.59 | % | 4.16 | % | 3.53 | % | 3.09 | % | 4.83 | % | ||||||||||||
| Portfolio turnover ratee |
4 | % | 8 | % | 7 | % | 10 | % | 7 | % | 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.
| FINANCIAL HIGHLIGHTS |
63 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Singapore ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 12.49 | $ | 13.10 | $ | 13.05 | $ | 12.17 | $ | 10.25 | $ | 11.44 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.07 | 0.44 | 0.41 | 0.45 | 0.32 | 0.32 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.41 | (0.47 | ) | 0.11 | 0.92 | 1.97 | (1.16 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.48 | (0.03 | ) | 0.52 | 1.37 | 2.29 | (0.84 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.26 | ) | (0.58 | ) | (0.47 | ) | (0.49 | ) | (0.37 | ) | (0.35 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.26 | ) | (0.58 | ) | (0.47 | ) | (0.49 | ) | (0.37 | ) | (0.35 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 12.71 | $ | 12.49 | $ | 13.10 | $ | 13.05 | $ | 12.17 | $ | 10.25 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
3.84 | %c | (0.38 | )% | 4.67 | % | 11.27 | % | 22.68 | % | (5.87 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 982,210 | $ | 1,135,477 | $ | 1,512,687 | $ | 1,713,199 | $ | 1,730,001 | $ | 1,294,039 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.07 | % | 3.23 | % | 3.32 | % | 3.34 | % | 2.80 | % | 3.97 | % | ||||||||||||
| Portfolio turnover ratee |
0 | %f | 10 | % | 3 | % | 10 | % | 9 | % | 15 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
| f | Rounds to less than 1%. |
See notes to financial statements.
| 64 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI South Korea Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 57.67 | $ | 55.97 | $ | 56.74 | $ | 47.76 | $ | 42.01 | $ | 43.55 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.39 | 0.23 | 0.23 | 0.29 | 0.32 | 0.30 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
4.35 | 1.83 | (0.63 | ) | 9.19 | 5.82 | (1.45 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.74 | 2.06 | (0.40 | ) | 9.48 | 6.14 | (1.15 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.90 | ) | (0.36 | ) | (0.37 | ) | (0.43 | ) | (0.39 | ) | (0.39 | ) | ||||||||||||
| Return of capital |
— | — | — | (0.07 | ) | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.90 | ) | (0.36 | ) | (0.37 | ) | (0.50 | ) | (0.39 | ) | (0.39 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 61.51 | $ | 57.67 | $ | 55.97 | $ | 56.74 | $ | 47.76 | $ | 42.01 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
8.20 | %c | 3.65 | % | (0.62 | )% | 19.76 | % | 14.65 | % | (2.31 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 4,151,690 | $ | 3,376,516 | $ | 2,669,551 | $ | 4,071,225 | $ | 3,255,168 | $ | 2,398,550 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.27 | % | 0.40 | % | 0.42 | % | 0.49 | % | 0.67 | % | 0.91 | % | ||||||||||||
| Portfolio turnover ratef |
7 | % | 13 | % | 12 | % | 18 | % | 14 | % | 62 | % | ||||||||||||
| 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, 2014 and the years ended August 31, 2013, August 31, 2012, August 31, 2011, August 31, 2010 and August 31, 2009 were 3%, 11%, 8%, 6%, 6%, and 8%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
65 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Taiwan ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 13.60 | $ | 12.58 | $ | 13.78 | $ | 12.19 | $ | 10.94 | $ | 13.13 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.02 | ) | 0.24 | 0.28 | 0.39 | 0.23 | 0.30 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.71 | 1.05 | (1.01 | ) | 1.49 | 1.23 | (1.89 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.69 | 1.29 | (0.73 | ) | 1.88 | 1.46 | (1.59 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.26 | ) | (0.27 | ) | (0.47 | ) | (0.29 | ) | (0.21 | ) | (0.60 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.26 | ) | (0.27 | ) | (0.47 | ) | (0.29 | ) | (0.21 | ) | (0.60 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 14.03 | $ | 13.60 | $ | 12.58 | $ | 13.78 | $ | 12.19 | $ | 10.94 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
5.11 | %c | 10.30 | % | (4.80 | )% | 15.24 | % | 13.30 | % | (9.67 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,797,901 | $ | 2,641,997 | $ | 2,247,128 | $ | 2,857,512 | $ | 2,721,439 | $ | 3,035,331 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.33 | )% | 1.80 | % | 2.25 | % | 2.64 | % | 1.90 | % | 3.18 | % | ||||||||||||
| Portfolio turnover ratef |
7 | % | 21 | % | 22 | % | 23 | % | 9 | % | 52 | % | ||||||||||||
| 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, 2014 and the years ended August 31, 2013, August 31, 2012, August 31, 2011, August 31, 2010 and August 31, 2009 were 2%, 6%, 7%, 8%, 4% and 14%, respectively. See Note 4. |
See notes to financial statements.
| 66 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Thailand Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 67.73 | $ | 70.53 | $ | 66.27 | $ | 55.06 | $ | 36.87 | $ | 38.83 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.31 | 1.84 | 1.76 | 1.65 | 1.44 | 1.17 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.41 | (2.75 | ) | 4.37 | 11.10 | 17.95 | (1.88 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.72 | (0.91 | ) | 6.13 | 12.75 | 19.39 | (0.71 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.54 | ) | (1.89 | ) | (1.87 | ) | (1.54 | ) | (1.20 | ) | (1.25 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.54 | ) | (1.89 | ) | (1.87 | ) | (1.54 | ) | (1.20 | ) | (1.25 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 68.91 | $ | 67.73 | $ | 70.53 | $ | 66.27 | $ | 55.06 | $ | 36.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
2.52 | %c | (1.65 | )% | 9.57 | % | 23.33 | % | 53.19 | % | (0.33 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 458,283 | $ | 541,873 | $ | 595,968 | $ | 632,840 | $ | 520,304 | $ | 94,021 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.86 | % | 2.22 | % | 2.66 | % | 2.56 | % | 3.22 | % | 4.00 | % | ||||||||||||
| Portfolio turnover ratef |
8 | % | 24 | % | 12 | % | 22 | % | 14 | % | 15 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | 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. |
| 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 rate excludes 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
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”):
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.
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.
Each Fund invests in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
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.
SECURITY VALUATION
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not open. U.S. GAAP
| 68 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 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, reviews of 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 is not necessarily an indication of the risk associated with investing in the 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 |
69 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| • | Level 3 — Unobservable inputs for the asset or liability, including the Global Valuation Committee’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 Funds’ investments according to the fair value hierarchy as of February 28, 2014. The breakdown of each Fund’s investments into major categories is disclosed in its respective schedule of investments.
| iShares ETF and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Australia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,725,110,377 | $ | — | $ | 261 | $ | 1,725,110,638 | ||||||||
| Money Market Funds |
1,828,538 | — | — | 1,828,538 | ||||||||||||
| Futures Contractsa |
428,994 | — | — | 428,994 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,727,367,909 | $ | — | $ | 261 | $ | 1,727,368,170 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Hong Kong |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,186,321,656 | $ | — | $ | — | $ | 2,186,321,656 | ||||||||
| Money Market Funds |
64,460,311 | — | — | 64,460,311 | ||||||||||||
| Futures Contractsa |
123,869 | — | — | 123,869 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,250,905,836 | $ | — | $ | — | $ | 2,250,905,836 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Japan Small-Cap |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 130,900,366 | $ | — | $ | — | $ | 130,900,366 | ||||||||
| Money Market Funds |
2,692,394 | — | — | 2,692,394 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 133,592,760 | $ | — | $ | — | $ | 133,592,760 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Malaysia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 783,522,674 | $ | — | $ | — | $ | 783,522,674 | ||||||||
| Money Market Funds |
67,740 | — | — | 67,740 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 783,590,414 | $ | — | $ | — | $ | 783,590,414 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Pacific ex Japan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,798,143,214 | $ | — | $ | 373 | $ | 2,798,143,587 | ||||||||
| Money Market Funds |
35,020,232 | — | — | 35,020,232 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,833,163,446 | $ | — | $ | 373 | $ | 2,833,163,819 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 70 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Singapore |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 977,980,263 | $ | — | $ | — | $ | 977,980,263 | ||||||||
| Money Market Funds |
52,039,708 | — | — | 52,039,708 | ||||||||||||
| Liabilities: |
||||||||||||||||
| Futures Contractsa |
(15,063 | ) | — | — | (15,063 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,030,004,908 | $ | — | $ | — | $ | 1,030,004,908 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI South Korea Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,989,620,562 | $ | — | $ | — | $ | 3,989,620,562 | ||||||||
| Preferred Stocks |
111,351,630 | — | — | 111,351,630 | ||||||||||||
| Money Market Funds |
166,111,750 | — | — | 166,111,750 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 4,267,083,942 | $ | — | $ | — | $ | 4,267,083,942 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Taiwan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,795,275,921 | $ | — | $ | 2 | $ | 2,795,275,923 | ||||||||
| Money Market Funds |
214,218,479 | — | — | 214,218,479 | ||||||||||||
| Futures Contractsa |
2,446 | — | — | 2,446 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,009,496,846 | $ | — | $ | 2 | $ | 3,009,496,848 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Thailand Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 456,092,890 | $ | — | $ | — | $ | 456,092,890 | ||||||||
| Warrants |
60,450 | 0 | b | — | 60,450 | |||||||||||
| Money Market Funds |
6,602,012 | — | — | 6,602,012 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 462,755,352 | $ | 0 | b | $ | — | $ | 462,755,352 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 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, 2014 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.
| NOTES TO FINANCIAL STATEMENTS |
71 |
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, 2014, 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.
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. 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 BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates.
| 72 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the statements of assets and liabilities. Income earned by the Funds from securities lending is disclosed in the statements of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. Each Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, a Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and a Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
As of February 28, 2014, the following Funds had securities on loan with a market value as disclosed in the Funds’ statements of assets and liabilities:
As of February 28, 2014, the value of the related collateral, as disclosed in the Funds’ schedules of investments, exceeded the market value of the securities on loan.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by 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 ETFs, BFA is entitled to an annual investment advisory fee
| NOTES TO FINANCIAL STATEMENTS |
73 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 ETFs, 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 ETF, 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 | ||||
| 0.5000 | % | First $46 billion | |||
| 0.4750 | a | Over $46 billion, up to and including $81 billion | |||
| 0.4513 | a | Over $81 billion, up to and including $141 billion | |||
| 0.4287 | a | Over $141 billion | |||
| a | Investment advisory fee level reflects a 5% reduction (rounded to the fourth decimal place) from the investment advisory fee at the prior aggregate average daily net asset level. |
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014, each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Funds retain a portion of securities lending income and remit a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) each Fund retains 75% of securities lending income (commencing January 1, 2015 the amount each Fund will retain is expected to change to 70% of securities lending income) and
| 74 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
(ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, each Fund retained 65% of securities lending income and paid no collateral investment fees.
For the six months ended February 28, 2014, each Fund paid to BTC the following amounts in total for securities lending agent services and collateral investment fees:
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Funds and BTC) and pursuant to a securities lending agreement, (i) each Fund will receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle Date after January 1, 2015, each Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
For the six months ended February 28, 2014, BTC, the Funds’ securities lending agent, has agreed to voluntarily reimburse the iShares MSCI Taiwan ETF in the amount of $113,579, related to the foreign tax on the securities lending income. Such reimbursement is included in “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 |
75 |
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, 2014 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI Australia |
$ | 68,942,356 | $ | 71,713,874 | ||||
| MSCI Hong Kong |
61,590,985 | 47,430,712 | ||||||
| MSCI Japan Small-Cap |
10,267,308 | 6,090,173 | ||||||
| MSCI Malaysia |
57,037,060 | 119,185,711 | ||||||
| MSCI Pacific ex Japan |
139,219,552 | 153,464,816 | ||||||
| MSCI Singapore |
4,981,705 | 24,010,117 | ||||||
| MSCI South Korea Capped |
783,811,815 | 297,647,197 | ||||||
| MSCI Taiwan |
233,466,786 | 192,740,719 | ||||||
| MSCI Thailand Capped |
44,138,733 | 41,047,237 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2014 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI Australia |
$ | 88,066,462 | $ | 349,540,551 | ||||
| MSCI Hong Kong |
165,404,442 | 252,130,729 | ||||||
| MSCI Japan Small-Cap |
42,714,459 | 10,477,299 | ||||||
| MSCI Pacific ex Japan |
288,441,397 | 600,732,335 | ||||||
| MSCI Singapore |
17,158,499 | 182,881,134 | ||||||
| MSCI Thailand Capped |
174,901,010 | 267,824,525 | ||||||
| 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 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. | 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
| 76 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, 2013, 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 ETF | Non- Expiring a |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | ||||||||||||||||||||||||
| MSCI Australia |
$ | 61,564,683 | $ | — | $ | 7,066 | $ | 529,868 | $ | 24,006,125 | $ | 23,348,244 | $ | 12,127,364 | $ | 121,583,350 | ||||||||||||||||
| MSCI Hong Kong |
132,365,884 | 425,440 | 2,899,247 | 3,185,408 | 29,235,556 | 114,836,904 | 34,565,959 | 317,514,398 | ||||||||||||||||||||||||
| MSCI Japan Small-Cap |
590,294 | — | — | — | 131,718 | 541,322 | 203,697 | 1,467,031 | ||||||||||||||||||||||||
| MSCI Malaysia |
— | — | — | — | 29,674,200 | — | — | 29,674,200 | ||||||||||||||||||||||||
| MSCI Pacific ex Japan |
136,545,276 | — | — | — | 66,207,828 | 104,799,503 | 36,600,987 | 344,153,594 | ||||||||||||||||||||||||
| MSCI Singapore |
31,047,538 | — | — | 807,115 | 15,680,510 | 132,420,824 | 11,588,528 | 191,544,515 | ||||||||||||||||||||||||
| MSCI South Korea Capped |
13,308,753 | — | — | — | 60,990,953 | 226,591,665 | 78,503,704 | 379,395,075 | ||||||||||||||||||||||||
| MSCI Taiwan |
26,586,528 | 14,435,986 | 64,999,586 | 16,734,578 | 343,375,145 | 363,052,013 | 19,669,958 | 848,853,794 | ||||||||||||||||||||||||
| MSCI Thailand Capped |
900,335 | — | — | — | 555,444 | 2,321,428 | 1,304,910 | 5,082,117 | ||||||||||||||||||||||||
| 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, 2014, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares ETF | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| MSCI Australia |
$ | 1,780,963,363 | $ | 178,031,752 | $ | (232,055,939 | ) | $ | (54,024,187 | ) | ||||||
| MSCI Hong Kong |
2,195,621,417 | 262,879,528 | (207,718,978 | ) | 55,160,550 | |||||||||||
| MSCI Japan Small-Cap |
131,159,667 | 11,762,194 | (9,329,101 | ) | 2,433,093 | |||||||||||
| MSCI Malaysia |
381,320,895 | 439,968,040 | (37,698,521 | ) | 402,269,519 | |||||||||||
| MSCI Pacific ex Japan |
2,739,490,058 | 359,023,765 | (265,350,004 | ) | 93,673,761 | |||||||||||
| MSCI Singapore |
1,057,808,537 | 77,377,495 | (105,166,061 | ) | (27,788,566 | ) | ||||||||||
| MSCI South Korea Capped |
3,017,095,071 | 1,792,702,702 | (542,713,831 | ) | 1,249,988,871 | |||||||||||
| MSCI Taiwan |
2,125,906,842 | 1,173,701,494 | (290,113,934 | ) | 883,587,560 | |||||||||||
| MSCI Thailand Capped |
592,956,848 | 3,459,569 | (133,661,065 | ) | (130,201,496 | ) | ||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.
| NOTES TO FINANCIAL STATEMENTS |
77 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 6. | 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 Funds as of February 28, 2014 and the related locations in the statements of assets and liabilities, presented by risk exposure category:
| Assets | ||||||||||||
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Taiwan ETF |
||||||||||
| Equity contracts: |
||||||||||||
| Variation margin/Net assets consist of — net unrealized appreciation (depreciation)a |
$ | 428,994 | $ | 123,869 | $ | 2,446 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Represents cumulative appreciation of futures contracts as reported in the schedules of investments. |
| Liabilities | ||||
| iShares MSCI Singapore ETF |
||||
| Equity contracts: |
||||
| Variation margin/Net assets consist of — net unrealized appreciation (depreciation)a |
$ | (15,063 | ) | |
|
|
|
|||
| a | Represents cumulative depreciation of futures contracts as reported in the schedules of investments. |
| 78 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table shows the realized and unrealized gains (losses) on futures contracts held by the Funds during the six months ended February 28, 2014 and the related locations in the statements of operations, presented by risk exposure category:
| Net Realized Gain (Loss) | ||||||||||||||||
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Singapore ETF |
iShares MSCI Taiwan ETF |
|||||||||||||
| Equity contracts: |
||||||||||||||||
| Futures contracts |
$ | 440,229 | $ | (200,114 | ) | $ | 69,301 | $ | 1,311,746 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net Change in Unrealized Appreciation/Depreciation | ||||||||||||||||
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Singapore ETF |
iShares MSCI Taiwan ETF |
|||||||||||||
| Equity contracts: |
||||||||||||||||
| Futures contracts |
$ | (277,380 | ) | $ | 230,847 | $ | 70,717 | $ | (485,635 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
The following table shows the average quarter-end balances of open futures contracts for the six months ended February 28, 2014:
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Singapore ETF |
iShares MSCI Taiwan ETF |
|||||||||||||
| Average number of contracts purchased |
164 | 51 | 116 | 259 | ||||||||||||
| Average value of contracts purchased |
$ | 19,388,210 | $ | 7,543,152 | $ | 6,520,506 | $ | 7,327,740 | ||||||||
| 7. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| NOTES TO FINANCIAL STATEMENTS |
79 |
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 ETF | 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 |
||||||||||||||||||||||||
| MSCI Australia |
$ | 0.368183 | $ | — | $ | 0.231891 | $ | 0.600074 | 61 | % | — | % | 39 | % | 100 | % | ||||||||||||||||
| MSCI Japan Small-Cap |
0.374796 | — | 0.398420 | 0.773216 | 48 | — | 52 | 100 | ||||||||||||||||||||||||
| MSCI Malaysia |
0.189489 | — | 0.067611 | 0.257100 | 74 | — | 26 | 100 | ||||||||||||||||||||||||
| MSCI Pacific ex Japan |
0.695424 | — | 0.270261 | 0.965685 | 72 | — | 28 | 100 | ||||||||||||||||||||||||
| MSCI Singapore |
0.070075 | — | 0.188853 | 0.258928 | 27 | — | 73 | 100 | ||||||||||||||||||||||||
| MSCI South Korea Capped |
0.244213 | — | 0.653832 | 0.898045 | 27 | — | 73 | 100 | ||||||||||||||||||||||||
| MSCI Taiwan |
0.237828 | — | 0.024159 | 0.261987 | 91 | — | 9 | 100 | ||||||||||||||||||||||||
| 80 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
81 |
Table of Contents
Notes:
| 82 | 2014 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.
©2014 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.
iS-SAR-83-0214
Table of Contents
FEBRUARY 28, 2014
|
2014 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI Brazil Capped ETF | EWZ | NYSE Arca |
| Ø | iShares MSCI Canada ETF | EWC | NYSE Arca |
| Ø | iShares MSCI Chile Capped ETF | ECH | NYSE Arca |
| Ø | iShares MSCI Colombia Capped ETF | ICOL | NYSE Arca |
| Ø | iShares MSCI Israel Capped ETF | EIS | NYSE Arca |
| Ø | iShares MSCI Mexico Capped ETF | EWW | NYSE Arca |
| Ø | iShares MSCI South Africa ETF | EZA | NYSE Arca |
| Ø | iShares MSCI Turkey ETF | TUR | NYSE Arca |
| Ø | iShares MSCI USA ETF | EUSA | NYSE Arca |
Table of Contents
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| 76 |
Table of Contents
iSHARES® MSCI BRAZIL CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Brazil Capped ETF (the “Fund”) seeks to track the investment results of an index composed of Brazilian equities, as represented by the MSCI Brazil 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was -2.28%, net of fees, while the total return for the Index was -1.98%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(23.56)% | (23.18)% | (23.17)% | (23.56)% | (23.18)% | (23.17)% | ||||||||||||||||||||
| 5 Years |
7.08% | 7.07% | 7.63% | 40.81% | 40.73% | 44.40% | ||||||||||||||||||||
| 10 Years |
12.61% | 12.55% | 13.60% | 227.83% | 226.14% | 257.84% | ||||||||||||||||||||
Index performance through February 11, 2013 reflects the performance of the MSCI Brazil Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Brazil 25/50 Index.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 977.20 | $ | 3.04 | $ | 1,000.00 | $ | 1,021.70 | $ | 3.11 | 0.62% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI CANADA ETF
Performance as of February 28, 2014
The iShares MSCI Canada ETF (the “Fund”) seeks to track the investment results of an index composed of Canadian equities, as represented by the MSCI Canada Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 8.08%, net of fees, while the total return for the Index was 8.17%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
5.22% | 5.92% | 5.37% | 5.22% | 5.92% | 5.37% | ||||||||||||||||||||
| 5 Years |
16.26% | 16.37% | 16.53% | 112.37% | 113.44% | 114.90% | ||||||||||||||||||||
| 10 Years |
8.92% | 8.88% | 9.12% | 134.96% | 134.05% | 139.25% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,080.80 | $ | 2.53 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI CHILE CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Chile Capped ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Chilean equities, as represented by the MSCI Chile Investable Market Index 25/50 (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was -7.38%, net of fees, while the total return for the Index was -7.41%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(32.76)% | (32.73)% | (32.56)% | (32.76)% | (32.73)% | (32.56)% | ||||||||||||||||||||
| 5 Years |
7.43% | 7.09% | 8.47% | 43.08% | 40.84% | 50.16% | ||||||||||||||||||||
| Since Inception |
(0.33)% | (0.42)% | 0.36% | (2.04)% | (2.64)% | 2.26% | ||||||||||||||||||||
The inception date of the Fund was 11/12/07. The first day of secondary market trading was 11/16/07.
Index performance through February 11, 2013 reflects the performance of the MSCI Chile Investable Market Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Chile Investable Market Index 25/50.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 926.20 | $ | 2.96 | $ | 1,000.00 | $ | 1,021.70 | $ | 3.11 | 0.62% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI COLOMBIA CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Colombia Capped ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Colombian equities, as represented by the MSCI All Colombia Capped Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was -10.94%, net of fees, while the total return for the Index was -11.08%.
| Cumulative Total Returns | ||||||||||||
| NAV | MARKET | INDEX | ||||||||||
| Since Inception |
(8.48)% | (8.32)% | (8.83)% | |||||||||
The inception date of the Fund was 6/18/13. The first day of secondary market trading was 6/20/13.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 890.60 | $ | 2.86 | $ | 1,000.00 | $ | 1,021.80 | $ | 3.06 | 0.61% | ||||||||||||||
| a | Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (181 days) and divided by the number of days in the year (365 days). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI ISRAEL CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Israel Capped ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Israeli equities, as represented by the MSCI Israel Capped Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 18.89%, net of fees, while the total return for the Index was 19.08%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
18.36% | 19.19% | 18.46% | 18.36% | 19.19% | 18.46% | ||||||||||||||||||||
| 5 Years |
12.86% | 13.74% | 13.14% | 83.07% | 90.31% | 85.36% | ||||||||||||||||||||
| Since Inception |
2.63% | 2.82% | 3.06% | 16.67% | 17.91% | 19.58% | ||||||||||||||||||||
The inception date of the Fund was 3/26/08. The first day of secondary market trading was 3/28/08.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,188.90 | $ | 3.36 | $ | 1,000.00 | $ | 1,021.70 | $ | 3.11 | 0.62% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI MEXICO CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Mexico Capped ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Mexican equities, as represented by the MSCI Mexico Investable Market Index 25/50 (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was -1.03%, net of fees, while the total return for the Index was -1.56%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(13.54)% | (13.74)% | (13.37)% | (13.54)% | (13.74)% | (13.37)% | ||||||||||||||||||||
| 5 Years |
22.12% | 22.20% | 21.57% | 171.65% | 172.49% | 165.50% | ||||||||||||||||||||
| 10 Years |
13.57% | 13.51% | 13.30% | 257.03% | 255.12% | 248.65% | ||||||||||||||||||||
Index performance through November 30, 2007 reflects the performance of the MSCI Mexico Index. Index performance beginning on December 1, 2007 through February 11, 2013 reflects the performance of the MSCI Mexico Investable Market Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Mexico Investable Market Index 25/50.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 989.70 | $ | 2.42 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SOUTH AFRICA ETF
Performance as of February 28, 2014
The iShares MSCI South Africa ETF (the “Fund”) seeks to track the investment results of an index composed of South African equities, as represented by the MSCI South Africa Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.78%, net of fees, while the total return for the Index was 8.15%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(1.04)% | (1.13)% | (0.40)% | (1.04)% | (1.13)% | (0.40)% | ||||||||||||||||||||
| 5 Years |
18.59% | 18.60% | 19.41% | 134.57% | 134.66% | 142.79% | ||||||||||||||||||||
| 10 Years |
11.05% | 10.89% | 11.99% | 185.14% | 181.17% | 210.32% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,077.80 | $ | 3.19 | $ | 1,000.00 | $ | 1,021.70 | $ | 3.11 | 0.62% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI TURKEY ETF
Performance as of February 28, 2014
The iShares MSCI Turkey ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Turkish equities, as represented by the MSCI Turkey Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was -12.57%, net of fees, while the total return for the Index was -12.05%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(34.19)% | (34.06)% | (33.60)% | (34.19)% | (34.06)% | (33.60)% | ||||||||||||||||||||
| 5 Years |
16.77% | 16.62% | 17.43% | 117.10% | 115.69% | 123.27% | ||||||||||||||||||||
| Since Inception |
(0.72)% | (0.79)% | (0.30)% | (4.21)% | (4.59)% | (1.75)% | ||||||||||||||||||||
The inception date of the Fund was 3/26/08. The first day of secondary market trading was 3/28/08.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 874.30 | $ | 2.88 | $ | 1,000.00 | $ | 1,021.70 | $ | 3.11 | 0.62% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI USA ETF
Performance as of February 28, 2014
The iShares MSCI USA ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. equities, as represented by the MSCI USA Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 15.15%, net of fees, while the total return for the Index was 15.26%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
25.53% | 25.77% | 25.77% | 25.53% | 25.77% | 25.77% | ||||||||||||||||||||
| Since Inception |
15.46% | 15.49% | 15.67% | 73.20% | 73.37% | 74.39% | ||||||||||||||||||||
The inception date of the Fund was 5/5/10. The first day of secondary market trading was 5/7/10.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,151.50 | $ | 0.80 | $ | 1,000.00 | $ | 1,024.10 | $ | 0.75 | 0.15% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
13 |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI BRAZIL CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRAZIL CAPPED ETF
February 28, 2014
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRAZIL CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CANADA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CANADA ETF
February 28, 2014
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI CHILE CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CHILE CAPPED ETF
February 28, 2014
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI COLOMBIA CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ISRAEL CAPPED ETF
February 28, 2014
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ISRAEL CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI MEXICO CAPPED ETF
February 28, 2014
| 26 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MEXICO CAPPED ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SOUTH AFRICA ETF
February 28, 2014
| 28 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH AFRICA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| 30 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TURKEY ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TURKEY ETF
February 28, 2014
| 32 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| 34 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| 36 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| 38 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| 40 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2014
| 42 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Brazil Capped ETF |
iShares MSCI |
iShares MSCI Chile |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 3,031,183,660 | $ | 3,341,695,509 | $ | 241,563,146 | ||||||
| Affiliated (Note 2) |
664,005 | 44,703,127 | 977,105 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 3,031,847,665 | $ | 3,386,398,636 | $ | 242,540,251 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 4,105,878,469 | $ | 3,055,004,737 | $ | 283,187,888 | ||||||
| Affiliated (Note 2) |
664,005 | 44,703,127 | 977,105 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
4,106,542,474 | 3,099,707,864 | 284,164,993 | |||||||||
| Foreign currency, at valueb |
16,176,684 | 9,396,734 | 541,992 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
33,400,863 | 28,756,304 | 1,910,419 | |||||||||
| Dividends and interest |
12,180,126 | 3,775,256 | 1,052 | |||||||||
| Capital shares sold |
9,874,821 | — | — | |||||||||
| Futures variation margin |
— | 652,534 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
4,178,174,968 | 3,142,288,692 | 286,618,456 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
45,702,644 | 29,933,974 | 1,846,402 | |||||||||
| Due to broker for foreign currency pledged for futures, at valueb |
— | 358,573 | — | |||||||||
| Collateral for securities on loan (Note 1) |
— | 44,399,295 | — | |||||||||
| Capital shares redeemed |
— | 274,158 | — | |||||||||
| Securities related to in-kind transactions (Note 4) |
— | 111,830 | — | |||||||||
| Investment advisory fees (Note 2) |
1,967,063 | 1,127,786 | 133,169 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
47,669,707 | 76,205,616 | 1,979,571 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 4,130,505,261 | $ | 3,066,083,076 | $ | 284,638,885 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 4,867,666,114 | $ | 3,682,430,422 | $ | 381,587,999 | ||||||
| Undistributed (distributions in excess of) net investment income |
(2,393,247 | ) | (6,241,434 | ) | 476,643 | |||||||
| Accumulated net realized loss |
(1,809,560,298 | ) | (324,088,450 | ) | (139,050,420 | ) | ||||||
| Net unrealized appreciation (depreciation) |
1,074,792,692 | (286,017,462 | ) | 41,624,663 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 4,130,505,261 | $ | 3,066,083,076 | $ | 284,638,885 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
100,750,000 | 105,200,000 | 6,450,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 41.00 | $ | 29.15 | $ | 44.13 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $42,213,088 and $ —, respectively. See Note 1. |
| b | Cost of foreign currency including currency pledged to broker, if any: $16,176,684, $9,018,695 and $541,992, 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 |
43 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Colombia Capped ETF |
iShares Capped ETF |
iShares Capped ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 19,496,577 | $ | 136,447,518 | $ | 2,921,093,336 | ||||||
| Affiliated (Note 2) |
7,457 | 719,123 | 89,985,992 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 19,504,034 | $ | 137,166,641 | $ | 3,011,079,328 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 17,195,189 | $ | 128,084,163 | $ | 2,482,069,397 | ||||||
| Affiliated (Note 2) |
7,457 | 719,123 | 89,985,992 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
17,202,646 | 128,803,286 | 2,572,055,389 | |||||||||
| Foreign currency, at valueb |
2,085 | 152,294 | 3,216,719 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
321,274 | 4,506,235 | 20,401,809 | |||||||||
| Dividends and interest |
4,102 | 191,730 | 659,964 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
17,530,107 | 133,653,545 | 2,596,333,881 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
303,053 | 4,673,609 | 20,850,517 | |||||||||
| Collateral for securities on loan (Note 1) |
— | 547,801 | 89,078,460 | |||||||||
| Capital shares redeemed |
— | — | 111,134 | |||||||||
| Investment advisory fees (Note 2) |
7,984 | 55,517 | 948,765 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
311,037 | 5,276,927 | 110,988,876 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 17,219,070 | $ | 128,376,618 | $ | 2,485,345,005 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 19,207,616 | $ | 168,323,056 | $ | 3,121,372,424 | ||||||
| Undistributed (distributions in excess of) net investment income |
(2,877 | ) | (400,581 | ) | 154,440 | |||||||
| Undistributed net realized gain (accumulated net realized loss) |
315,823 | (31,183,706 | ) | (197,131,815 | ) | |||||||
| Net unrealized depreciation |
(2,301,492 | ) | (8,362,151 | ) | (439,050,044 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 17,219,070 | $ | 128,376,618 | $ | 2,485,345,005 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
750,000 | 2,550,000 | 41,100,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 22.96 | $ | 50.34 | $ | 60.47 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $520,717 and $83,696,157, respectively. See Note 1. |
| b | Cost of foreign currency: $2,178, $151,845 and $3,198,109, respectively. |
| c | $0.001 par value, number of shares authorized: 25 million, 500 million and 255 million, respectively. |
See notes to financial statements.
| 44 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI South Africa ETF |
iShares MSCI Turkey ETF |
iShares MSCI USA ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 545,340,021 | $ | 731,842,950 | $ | 112,659,954 | ||||||
| Affiliated (Note 2) |
13,467,130 | 27,961,634 | 1,764,174 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 558,807,151 | $ | 759,804,584 | $ | 114,424,128 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 456,073,625 | $ | 518,003,296 | $ | 141,395,038 | ||||||
| Affiliated (Note 2) |
13,467,130 | 27,961,634 | 1,927,267 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
469,540,755 | 545,964,930 | 143,322,305 | |||||||||
| Foreign currency, at valueb |
298,583 | 382,517 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
1,367,635 | — | 692,218 | |||||||||
| Due from custodian (Note 4) |
— | 80,079 | — | |||||||||
| Dividends and interest |
10,902 | 60,678 | 293,291 | |||||||||
| Capital shares sold |
— | 3,014 | 9,192 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
471,217,875 | 546,491,218 | 144,317,006 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
1,384,222 | 80,079 | 706,626 | |||||||||
| Collateral for securities on loan (Note 1) |
13,204,470 | 27,838,942 | 1,116,626 | |||||||||
| Investment advisory fees (Note 2) |
208,645 | 251,197 | 15,591 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
14,797,337 | 28,170,218 | 1,838,843 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 456,420,538 | $ | 518,321,000 | $ | 142,478,163 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 586,975,120 | $ | 793,219,393 | $ | 86,755,127 | ||||||
| Undistributed (distributions in excess of) net investment income (loss) |
(1,324,522 | ) | (791,979 | ) | 400,594 | |||||||
| Undistributed net realized gain (accumulated net realized loss) |
(39,968,077 | ) | (60,255,262 | ) | 26,424,265 | |||||||
| Net unrealized appreciation (depreciation) |
(89,261,983 | ) | (213,851,152 | ) | 28,898,177 | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 456,420,538 | $ | 518,321,000 | $ | 142,478,163 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
7,300,000 | 12,100,000 | 3,550,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 62.52 | $ | 42.84 | $ | 40.13 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $12,525,775, $25,883,781 and $1,093,212, respectively. See Note 1. |
| b | Cost of foreign currency: $294,149, $394,015 and $ —, respectively. |
| c | $0.001 par value, number of shares authorized: 400 million, 200 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
45 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Brazil |
iShares MSCI |
iShares MSCI Chile Capped ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 81,907,135 | $ | 41,960,060 | $ | 1,993,718 | ||||||
| Interest — unaffiliated |
— | 2,318 | — | |||||||||
| Interest — affiliated (Note 2) |
531 | 376 | 51 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 126,394 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
81,907,666 | 42,089,148 | 1,993,769 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
15,056,025 | 8,207,494 | 1,123,600 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
15,056,025 | 8,207,494 | 1,123,600 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
66,851,641 | 33,881,654 | 870,169 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(27,593,263 | ) | (40,448,015 | ) | (28,238,404 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | 41,199,629 | — | |||||||||
| Futures contracts |
— | 1,257,273 | — | |||||||||
| Foreign currency transactions |
(2,446,389 | ) | (1,200,572 | ) | (229,512 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(30,039,652 | ) | 808,315 | (28,467,916 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(23,595,015 | ) | 225,772,884 | (5,586,734 | ) | |||||||
| Futures contracts |
— | 232,926 | — | |||||||||
| Translation of assets and liabilities in foreign currencies |
2,843,490 | 267,768 | 2,514 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(20,751,525 | ) | 226,273,578 | (5,584,220 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(50,791,177 | ) | 227,081,893 | (34,052,136 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 16,060,464 | $ | 260,963,547 | $ | (33,181,967 | ) | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $7,101,288, $7,267,684 and $576,806, respectively. |
See notes to financial statements.
| 46 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Colombia |
iShares MSCI Israel Capped ETF |
iShares MSCI Mexico |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 184,254 | $ | 1,060,400 | $ | 33,323,705 | ||||||
| Interest — affiliated (Note 2) |
5 | 11 | 225 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 17,938 | 689,930 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
184,259 | 1,078,349 | 34,013,860 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
57,875 | 283,324 | 6,008,476 | |||||||||
| Interest expense (Note 7) |
263 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
58,138 | 283,324 | 6,008,476 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
126,121 | 795,025 | 28,005,384 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
358,128 | (1,961,085 | ) | (36,842,038 | ) | |||||||
| Investments — affiliated (Note 2) |
— | — | (19,863,537 | ) | ||||||||
| In-kind redemptions — unaffiliated |
— | 4,015,775 | 38,600,988 | |||||||||
| In-kind redemptions — affiliated (Note 2) |
— | — | (64,003 | ) | ||||||||
| Foreign currency transactions |
(5,388 | ) | 20,078 | (360,093 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
352,740 | 2,074,768 | (18,528,683 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(2,676,329 | ) | 12,764,677 | (72,392,166 | ) | |||||||
| Translation of assets and liabilities in foreign currencies |
1,485 | 2,527 | 183,496 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(2,674,844 | ) | 12,767,204 | (72,208,670 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(2,322,104 | ) | 14,841,972 | (90,737,353 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (2,195,983 | ) | $ | 15,636,997 | $ | (62,731,969 | ) | ||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $5,949, $243,488 and $239,701, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
47 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI South Africa ETF |
iShares MSCI Turkey ETF |
iShares MSCI USA ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 8,279,008 | $ | 380,762 | $ | 1,699,555 | ||||||
| Dividends — affiliated (Note 2) |
— | — | 7,027 | |||||||||
| Interest — affiliated (Note 2) |
54 | 15 | 27 | |||||||||
| Securities lending income — affiliated (Note 2) |
48,371 | 271,314 | 3,408 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
8,327,433 | 652,091 | 1,710,017 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,653,951 | 1,444,017 | 123,147 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,653,951 | 1,444,017 | 123,147 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
6,673,482 | (791,926 | ) | 1,586,870 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(2,189,237 | ) | (9,272,696 | ) | 50,788 | |||||||
| Investments — affiliated (Note 2) |
— | — | (77 | ) | ||||||||
| In-kind redemptions — unaffiliated |
38,830,454 | (8,892,341 | ) | 26,723,336 | ||||||||
| In-kind redemptions — affiliated (Note 2) |
— | — | 146,006 | |||||||||
| Foreign currency transactions |
(49,074 | ) | (69,927 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
36,592,143 | (18,234,964 | ) | 26,920,053 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(4,905,942 | ) | (36,862,725 | ) | (4,614,566 | ) | ||||||
| Short positions (Note 1) |
— | — | (7 | ) | ||||||||
| Translation of assets and liabilities in foreign currencies |
18,173 | 13,955 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(4,887,769 | ) | (36,848,770 | ) | (4,614,573 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
31,704,374 | (55,083,734 | ) | 22,305,480 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 38,377,856 | $ | (55,875,660 | ) | $ | 23,892,350 | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $1,264,388, $67,152 and $134, respectively. |
See notes to financial statements.
| 48 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Brazil Capped ETF |
iShares MSCI Canada ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 66,851,641 | $ | 234,016,311 | $ | 33,881,654 | $ | 90,664,360 | ||||||||
| Net realized gain (loss) |
(30,039,652 | ) | (504,905,186 | ) | 808,315 | (217,797 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
(20,751,525 | ) | (731,631,556 | ) | 226,273,578 | (21,929,084 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting |
16,060,464 | (1,002,520,431 | ) | 260,963,547 | 68,517,479 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(57,932,331 | ) | (201,420,612 | ) | (45,530,772 | ) | (101,089,405 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(57,932,331 | ) | (201,420,612 | ) | (45,530,772 | ) | (101,089,405 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
788,078,104 | 2,841,464,893 | 108,760,061 | 644,392,669 | ||||||||||||
| Cost of shares redeemed |
(1,599,331,310 | ) | (4,024,510,606 | ) | (686,333,014 | ) | (1,438,141,791 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease in net assets from capital share transactions |
(811,253,206 | ) | (1,183,045,713 | ) | (577,572,953 | ) | (793,749,122 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DECREASE IN NET ASSETS |
(853,125,073 | ) | (2,386,986,756 | ) | (362,140,178 | ) | (826,321,048 | ) | ||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
4,983,630,334 | 7,370,617,090 | 3,428,223,254 | 4,254,544,302 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 4,130,505,261 | $ | 4,983,630,334 | $ | 3,066,083,076 | $ | 3,428,223,254 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (2,393,247 | ) | $ | (11,312,557 | ) | $ | (6,241,434 | ) | $ | 5,407,684 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
17,500,000 | 56,450,000 | 3,800,000 | 22,700,000 | ||||||||||||
| Shares redeemed |
(33,950,000 | ) | (79,350,000 | ) | (24,000,000 | ) | (51,900,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease in shares outstanding |
(16,450,000 | ) | (22,900,000 | ) | (20,200,000 | ) | (29,200,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Chile Capped ETF |
iShares MSCI Colombia Capped ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Period from to August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 870,169 | $ | 5,971,692 | $ | 126,121 | $ | 18,943 | ||||||||
| Net realized gain (loss) |
(28,467,916 | ) | (18,305,706 | ) | 352,740 | (39,871 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
(5,584,220 | ) | (89,351,302 | ) | (2,674,844 | ) | 373,352 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(33,181,967 | ) | (101,685,316 | ) | (2,195,983 | ) | 352,424 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(393,526 | ) | (5,669,647 | ) | (144,987 | ) | — | |||||||||
| Return of capital |
— | (235,875 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(393,526 | ) | (5,905,522 | ) | (144,987 | ) | — | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
147,527,856 | 96,241,277 | 1,372,079 | 17,835,537 | ||||||||||||
| Cost of shares redeemed |
(194,203,094 | ) | (172,557,468 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(46,675,238 | ) | (76,316,191 | ) | 1,372,079 | 17,835,537 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(80,250,731 | ) | (183,907,029 | ) | (968,891 | ) | 18,187,961 | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
364,889,616 | 548,796,645 | 18,187,961 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 284,638,885 | $ | 364,889,616 | $ | 17,219,070 | $ | 18,187,961 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 476,643 | $ | — | $ | (2,877 | ) | $ | 15,989 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
2,950,000 | 1,600,000 | 50,000 | 700,000 | ||||||||||||
| Shares redeemed |
(4,150,000 | ) | (3,050,000 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(1,200,000 | ) | (1,450,000 | ) | 50,000 | 700,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Commencement of operations. |
See notes to financial statements.
| 50 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Israel Capped ETF |
iShares MSCI Mexico Capped ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 795,025 | $ | 1,746,415 | $ | 28,005,384 | $ | 23,387,350 | ||||||||
| Net realized gain (loss) |
2,074,768 | (2,451,315 | ) | (18,528,683 | ) | 58,110,855 | ||||||||||
| Net change in unrealized appreciation/depreciation |
12,767,204 | 13,324,637 | (72,208,670 | ) | (251,180,438 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
15,636,997 | 12,619,737 | (62,731,969 | ) | (169,682,233 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(1,081,474 | ) | (1,885,659 | ) | (32,082,799 | ) | (20,571,276 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(1,081,474 | ) | (1,885,659 | ) | (32,082,799 | ) | (20,571,276 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
64,670,585 | 4,057,008 | 1,079,574,097 | 2,551,091,943 | ||||||||||||
| Cost of shares redeemed |
(21,559,275 | ) | (12,993,789 | ) | (716,466,520 | ) | (1,326,485,790 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
43,111,310 | (8,936,781 | ) | 363,107,577 | 1,224,606,153 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
57,666,833 | 1,797,297 | 268,292,809 | 1,034,352,644 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
70,709,785 | 68,912,488 | 2,217,052,196 | 1,182,699,552 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 128,376,618 | $ | 70,709,785 | $ | 2,485,345,005 | $ | 2,217,052,196 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (400,581 | ) | $ | (114,132 | ) | $ | 154,440 | $ | 4,231,855 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,350,000 | 100,000 | 16,500,000 | 36,200,000 | ||||||||||||
| Shares redeemed |
(450,000 | ) | (300,000 | ) | (11,200,000 | ) | (19,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
900,000 | (200,000 | ) | 5,300,000 | 16,400,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
51 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI South Africa ETF |
iShares MSCI Turkey ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | 6,673,482 | $ | 10,563,037 | $ | (791,926 | ) | $ | 12,304,114 | |||||||
| Net realized gain (loss) |
36,592,143 | 9,898,524 | (18,234,964 | ) | 23,341,248 | |||||||||||
| Net change in unrealized appreciation/depreciation |
(4,887,769 | ) | (55,224,683 | ) | (36,848,770 | ) | (125,847,399 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
38,377,856 | (34,763,122 | ) | (55,875,660 | ) | (90,202,037 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(6,998,718 | ) | (13,575,195 | ) | — | (12,901,893 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(6,998,718 | ) | (13,575,195 | ) | — | (12,901,893 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
147,170,567 | 295,390,025 | 297,567,739 | 506,879,433 | ||||||||||||
| Cost of shares redeemed |
(269,698,492 | ) | (171,404,561 | ) | (159,447,125 | ) | (528,983,742 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(122,527,925 | ) | 123,985,464 | 138,120,614 | (22,104,309 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(91,148,787 | ) | 75,647,147 | 82,244,954 | (125,208,239 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
547,569,325 | 471,922,178 | 436,076,046 | 561,284,285 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 456,420,538 | $ | 547,569,325 | $ | 518,321,000 | $ | 436,076,046 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Distributions in excess of net investment income (loss) included in net assets at end of period |
$ | (1,324,522 | ) | $ | (999,286 | ) | $ | (791,979 | ) | $ | (53 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
2,300,000 | 4,800,000 | 6,150,000 | 7,950,000 | ||||||||||||
| Shares redeemed |
(4,300,000 | ) | (2,800,000 | ) | (2,950,000 | ) | (9,050,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(2,000,000 | ) | 2,000,000 | 3,200,000 | (1,100,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 52 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI USA ETF |
||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 1,586,870 | $ | 3,339,631 | ||||
| Net realized gain |
26,920,053 | 4,666,050 | ||||||
| Net change in unrealized appreciation/depreciation |
(4,614,573 | ) | 18,945,599 | |||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
23,892,350 | 26,951,280 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(1,805,132 | ) | (3,310,642 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(1,805,132 | ) | (3,310,642 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
30,147,905 | 36,217,071 | ||||||
| Cost of shares redeemed |
(89,587,130 | ) | (25,497,372 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets from capital share transactions |
(59,439,225 | ) | 10,719,699 | |||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN NET ASSETS |
(37,352,007 | ) | 34,360,337 | |||||
| NET ASSETS |
||||||||
| Beginning of period |
179,830,170 | 145,469,833 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 142,478,163 | $ | 179,830,170 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 400,594 | $ | 618,856 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
800,000 | 1,100,000 | ||||||
| Shares redeemed |
(2,350,000 | ) | (800,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in shares outstanding |
(1,550,000 | ) | 300,000 | |||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
53 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Brazil Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 42.52 | $ | 52.61 | $ | 65.00 | $ | 68.07 | $ | 58.26 | $ | 73.27 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.62 | 1.59 | 1.73 | 2.24 | 1.56 | 1.56 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(1.55 | ) | (10.32 | ) | (12.64 | ) | (1.69 | ) | 10.83 | (14.63 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.93 | ) | (8.73 | ) | (10.91 | ) | 0.55 | 12.39 | (13.07 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.59 | ) | (1.36 | ) | (0.56 | ) | (3.62 | ) | (2.58 | ) | (1.94 | ) | ||||||||||||
| Return of capital |
— | — | (0.92 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.59 | ) | (1.36 | ) | (1.48 | ) | (3.62 | ) | (2.58 | ) | (1.94 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 41.00 | $ | 42.52 | $ | 52.61 | $ | 65.00 | $ | 68.07 | $ | 58.26 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(2.28 | )%c | (16.85 | )% | (16.79 | )% | 0.36 | % | 21.12 | % | (16.05 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 4,130,505 | $ | 4,983,630 | $ | 7,370,617 | $ | 11,332,121 | $ | 9,240,453 | $ | 8,777,366 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
2.75 | % | 3.02 | % | 2.92 | % | 3.08 | % | 2.24 | % | 3.38 | % | ||||||||||||
| Portfolio turnover ratef |
21 | % | 56 | % | 7 | % | 11 | % | 13 | % | 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 | Ratios for the years ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates 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, 2014 and the years ended August 31, 2013, August 31, 2012, August 31, 2011, August 31, 2010 and August 31, 2009 were 5%, 20%, 6%, 11%, 13% and 14%, respectively. See Note 4. |
See notes to financial statements.
| 54 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Canada ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 27.34 | $ | 27.52 | $ | 29.89 | $ | 26.10 | $ | 23.70 | $ | 30.55 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.29 | 0.60 | 0.53 | 0.53 | 0.43 | 0.41 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.91 | (0.10 | ) | (2.33 | ) | 3.78 | 2.39 | (6.84 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.20 | 0.50 | (1.80 | ) | 4.31 | 2.82 | (6.43 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.39 | ) | (0.68 | ) | (0.57 | ) | (0.52 | ) | (0.42 | ) | (0.42 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.39 | ) | (0.68 | ) | (0.57 | ) | (0.52 | ) | (0.42 | ) | (0.42 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 29.15 | $ | 27.34 | $ | 27.52 | $ | 29.89 | $ | 26.10 | $ | 23.70 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
8.08 | %c | 1.84 | % | (5.87 | )% | 16.50 | % | 11.91 | % | (20.51 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,066,083 | $ | 3,428,223 | $ | 4,254,544 | $ | 5,092,547 | $ | 3,447,242 | $ | 2,393,638 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.49 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
2.01 | % | 2.12 | % | 1.94 | % | 1.70 | % | 1.63 | % | 2.00 | % | ||||||||||||
| Portfolio turnover ratef |
3 | % | 7 | % | 5 | % | 8 | % | 6 | % | 6 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Ratios for the years ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
55 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Chile Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 47.70 | $ | 60.31 | $ | 67.11 | $ | 67.37 | $ | 44.61 | $ | 44.80 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.11 | 0.68 | 0.97 | 0.95 | 0.59 | 0.76 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(3.63 | ) | (12.58 | ) | (6.80 | ) | (0.23 | ) | 22.86 | (0.42 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(3.52 | ) | (11.90 | ) | (5.83 | ) | 0.72 | 23.45 | 0.34 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.05 | ) | (0.68 | ) | (0.92 | ) | (0.98 | ) | (0.66 | ) | (0.53 | ) | ||||||||||||
| Return of capital |
— | (0.03 | ) | (0.05 | ) | (0.00 | )c | (0.03 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.05 | ) | (0.71 | ) | (0.97 | ) | (0.98 | ) | (0.69 | ) | (0.53 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 44.13 | $ | 47.70 | $ | 60.31 | $ | 67.11 | $ | 67.37 | $ | 44.61 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(7.38 | )%d | (19.87 | )% | (8.68 | )% | 0.93 | % | 52.88 | % | 0.89 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 284,639 | $ | 364,890 | $ | 548,797 | $ | 708,018 | $ | 670,350 | $ | 263,205 | ||||||||||||
| Ratio of expenses to average net assetse |
0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
0.48 | % | 1.12 | % | 1.55 | % | 1.30 | % | 1.05 | % | 1.98 | % | ||||||||||||
| Portfolio turnover ratef |
46 | % | 34 | % | 48 | % | 38 | % | 42 | % | 53 | % | ||||||||||||
| 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 | Annualized for periods of less than one year. |
| 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, 2014 and the years ended August 31, 2013, August 31, 2012, August 31, 2011, August 31, 2010, and August 31, 2009 were 5%, 16%, 20%, 12%, 9% and 14%, respectively. See Note 4. |
See notes to financial statements.
| 56 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Colombia Capped ETF
| Six months ended Feb. 28, 2014 (Unaudited) |
Period from Jun. 18, 2013a to Aug. 31, 2013 |
|||||||
| Net asset value, beginning of period |
$ | 25.98 | $ | 25.28 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.17 | 0.03 | ||||||
| Net realized and unrealized gain (loss)c |
(3.00 | ) | 0.67 | |||||
|
|
|
|
|
|||||
| Total from investment operations |
(2.83 | ) | 0.70 | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.19 | ) | — | |||||
|
|
|
|
|
|||||
| Total distributions |
(0.19 | ) | — | |||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 22.96 | $ | 25.98 | ||||
|
|
|
|
|
|||||
| Total return |
(10.94 | )%d | 2.77 | %d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 17,219 | $ | 18,188 | ||||
| Ratio of expenses to average net assetse |
0.61 | % | 0.61 | % | ||||
| Ratio of net investment income to average net assetse |
1.33 | % | 0.61 | % | ||||
| Portfolio turnover ratef |
15 | % | 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 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, 2014 and for the period ended August 31, 2013 were 15% and 2%, 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 ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 42.85 | $ | 37.25 | $ | 45.89 | $ | 49.41 | $ | 46.87 | $ | 48.62 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.41 | 0.95 | 1.12 | 1.39 | 1.40 | 0.98 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
7.65 | 5.68 | (8.66 | ) | (3.18 | ) | 2.63 | (1.75 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
8.06 | 6.63 | (7.54 | ) | (1.79 | ) | 4.03 | (0.77 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.57 | ) | (1.03 | ) | (1.07 | ) | (1.73 | ) | (1.49 | ) | (0.98 | ) | ||||||||||||
| Return of capital |
— | — | (0.03 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.57 | ) | (1.03 | ) | (1.10 | ) | (1.73 | ) | (1.49 | ) | (0.98 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 50.34 | $ | 42.85 | $ | 37.25 | $ | 45.89 | $ | 49.41 | $ | 46.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
18.89 | %c | 17.82 | % | (16.52 | )% | (4.26 | )% | 8.57 | % | (0.63 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 128,377 | $ | 70,710 | $ | 68,912 | $ | 78,018 | $ | 128,473 | $ | 107,792 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.66 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.74 | % | 2.20 | % | 2.75 | % | 2.49 | % | 2.64 | % | 2.66 | % | ||||||||||||
| Portfolio turnover ratee |
8 | % | 14 | % | 20 | % | 17 | % | 21 | % | 27 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 58 | 2014 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 ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 61.93 | $ | 60.96 | $ | 58.39 | $ | 48.17 | $ | 42.59 | $ | 51.94 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.73 | 0.75 | 0.73 | 0.80 | 0.72 | 0.43 | ||||||||||||||||||
| Net realized and unrealized |
(1.32 | ) | 0.85 | 2.76 | 10.15 | 5.61 | (9.17 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.59 | ) | 1.60 | 3.49 | 10.95 | 6.33 | (8.74 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.87 | ) | (0.63 | ) | (0.92 | ) | (0.73 | ) | (0.75 | ) | (0.61 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.87 | ) | (0.63 | ) | (0.92 | ) | (0.73 | ) | (0.75 | ) | (0.61 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 60.47 | $ | 61.93 | $ | 60.96 | $ | 58.39 | $ | 48.17 | $ | 42.59 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(1.03 | )%c | 2.53 | % | 6.13 | % | 22.67 | % | 14.83 | % | (16.50 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,485,345 | $ | 2,217,052 | $ | 1,182,700 | $ | 1,243,731 | $ | 1,450,039 | $ | 694,278 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.50 | % | 0.53 | % | 0.52 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.26 | % | 1.09 | % | 1.26 | % | 1.35 | % | 1.46 | % | 1.25 | % | ||||||||||||
| Portfolio turnover ratee |
6 | % | 32 | % | 10 | % | 5 | % | 11 | % | 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 ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 58.88 | $ | 64.65 | $ | 69.06 | $ | 58.74 | $ | 51.99 | $ | 55.80 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.78 | 1.32 | 2.10 | 1.65 | 1.18 | 1.94 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.78 | (5.31 | ) | (4.41 | ) | 11.08 | 6.92 | (3.84 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.56 | (3.99 | ) | (2.31 | ) | 12.73 | 8.10 | (1.90 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.92 | ) | (1.78 | ) | (2.10 | ) | (2.41 | ) | (1.35 | ) | (1.91 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.92 | ) | (1.78 | ) | (2.10 | ) | (2.41 | ) | (1.35 | ) | (1.91 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 62.52 | $ | 58.88 | $ | 64.65 | $ | 69.06 | $ | 58.74 | $ | 51.99 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
7.78 | %c | (6.35 | )% | (3.17 | )% | 21.58 | % | 15.80 | % | (2.23 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 456,421 | $ | 547,569 | $ | 471,922 | $ | 504,102 | $ | 505,191 | $ | 488,728 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.66 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.50 | % | 2.08 | % | 3.26 | % | 2.38 | % | 2.09 | % | 4.81 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 5 | % | 4 | % | 4 | % | 5 | % | 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.
| 60 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Turkey ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 49.00 | $ | 56.13 | $ | 47.73 | $ | 60.81 | $ | 48.01 | $ | 52.42 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.09 | ) | 1.07 | 0.86 | 0.84 | 1.00 | 0.78 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
(6.07 | ) | (7.08 | ) | 8.70 | (12.59 | ) | 13.02 | (4.22 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(6.16 | ) | (6.01 | ) | 9.56 | (11.75 | ) | 14.02 | (3.44 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (1.12 | ) | (1.16 | ) | (1.33 | ) | (1.22 | ) | (0.97 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (1.12 | ) | (1.16 | ) | (1.33 | ) | (1.22 | ) | (0.97 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 42.84 | $ | 49.00 | $ | 56.13 | $ | 47.73 | $ | 60.81 | $ | 48.01 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(12.57 | )%c | (11.05 | )% | 20.37 | % | (19.74 | )% | 29.55 | % | (5.56 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 518,321 | $ | 436,076 | $ | 561,284 | $ | 448,677 | $ | 601,988 | $ | 242,435 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.34 | )% | 1.67 | % | 1.75 | % | 1.30 | % | 1.81 | % | 2.39 | % | ||||||||||||
| Portfolio turnover ratee |
4 | % | 9 | % | 9 | % | 12 | % | 13 | % | 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 |
61 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI USA ETF | ||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Period from May 5, 2010a to Aug. 31, 2010 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 35.26 | $ | 30.31 | $ | 26.17 | $ | 22.44 | $ | 24.83 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.36 | 0.69 | 0.59 | 0.51 | 0.17 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
4.96 | 4.96 | 3.94 | 3.73 | (2.49 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
5.32 | 5.65 | 4.53 | 4.24 | (2.32 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.45 | ) | (0.70 | ) | (0.39 | ) | (0.51 | ) | (0.07 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.45 | ) | (0.70 | ) | (0.39 | ) | (0.51 | ) | (0.07 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 40.13 | $ | 35.26 | $ | 30.31 | $ | 26.17 | $ | 22.44 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
15.15 | %d | 18.85 | % | 17.44 | % | 18.89 | % | (9.37 | )%d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 142,478 | $ | 179,830 | $ | 145,470 | $ | 5,233 | $ | 2,244 | ||||||||||
| Ratio of expenses to average net assetse |
0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | 0.15 | % | ||||||||||
| Ratio of net investment income to average net assetse |
1.93 | % | 2.10 | % | 2.04 | % | 1.90 | % | 2.21 | % | ||||||||||
| Portfolio turnover ratef |
3 | % | 5 | % | 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 | 2014 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”):
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.
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.
Certain Funds invest in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
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 and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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 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, reviews of 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 is not necessarily an indication of the risk associated with investing in the 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; |
| 64 | 2014 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 Global Valuation Committee’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 Funds’ investments according to the fair value hierarchy as of February 28, 2014. The breakdown of each Fund’s investments into major categories is disclosed in its respective schedule of investments.
| iShares ETF and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Brazil Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,455,434,516 | $ | — | $ | — | $ | 2,455,434,516 | ||||||||
| Preferred Stocks |
1,650,140,413 | — | — | 1,650,140,413 | ||||||||||||
| Rights |
303,540 | — | — | 303,540 | ||||||||||||
| Money Market Funds |
664,005 | — | — | 664,005 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 4,106,542,474 | $ | — | $ | — | $ | 4,106,542,474 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Canada |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,055,004,737 | $ | — | $ | — | $ | 3,055,004,737 | ||||||||
| Money Market Funds |
44,703,127 | — | — | 44,703,127 | ||||||||||||
| Futures Contractsa |
652,534 | — | — | 652,534 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,100,360,398 | $ | — | $ | — | $ | 3,100,360,398 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Chile Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 264,701,482 | $ | — | $ | — | $ | 264,701,482 | ||||||||
| Preferred Stocks |
18,434,216 | — | — | 18,434,216 | ||||||||||||
| Rights |
52,190 | — | — | 52,190 | ||||||||||||
| Money Market Funds |
977,105 | — | — | 977,105 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 284,164,993 | $ | — | $ | — | $ | 284,164,993 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
65 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Colombia Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 13,594,389 | $ | — | $ | — | $ | 13,594,389 | ||||||||
| Preferred Stocks |
3,600,800 | — | — | 3,600,800 | ||||||||||||
| Money Market Funds |
7,457 | — | — | 7,457 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 17,202,646 | $ | — | $ | — | $ | 17,202,646 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Israel Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 126,973,429 | $ | 1,110,733 | $ | — | $ | 128,084,162 | ||||||||
| Warrants |
1 | — | — | 1 | ||||||||||||
| Money Market Funds |
719,123 | — | — | 719,123 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 127,692,553 | $ | 1,110,733 | $ | — | $ | 128,803,286 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Mexico Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,480,873,346 | $ | 1,196,051 | $ | — | $ | 2,482,069,397 | ||||||||
| Money Market Funds |
89,985,992 | — | — | 89,985,992 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,570,859,338 | $ | 1,196,051 | $ | — | $ | 2,572,055,389 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI South Africa |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 456,073,625 | $ | — | $ | — | $ | 456,073,625 | ||||||||
| Money Market Funds |
13,467,130 | — | — | 13,467,130 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 469,540,755 | $ | — | $ | — | $ | 469,540,755 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Turkey |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 518,003,296 | $ | — | $ | — | $ | 518,003,296 | ||||||||
| Money Market Funds |
27,961,634 | — | — | 27,961,634 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 545,964,930 | $ | — | $ | — | $ | 545,964,930 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI USA |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 142,080,915 | $ | — | $ | — | $ | 142,080,915 | ||||||||
| Money Market Funds |
1,241,390 | — | — | 1,241,390 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 143,322,305 | $ | — | $ | — | $ | 143,322,305 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | 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, 2014 are
| 66 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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.
SHORT POSITIONS
From time to time, in order to track the performance of their respective benchmark index, the Funds may sell non-index securities that will be received through corporate actions occurring on the opening of market trading on the following business day. Such short positions are valued consistent with how securities are valued as described under “Security Valuation.” The obligation to deliver the securities is recorded as a liability in the Funds’ statements of assets and liabilities and is equal to the current fair value of the securities to be delivered. Any market fluctuations between the value of the obligation to sell these securities and the current fair value are reflected as unrealized appreciation (depreciation) in the Funds’ statements of operations. Upon receipt of the securities related to the corporate actions, the Funds record a realized gain (loss). Dividends on securities sold short, if any, are reflected as an expense in the statements of operations. Details of the short position resulting from the non-index securities sold by the Funds, if any, are included in their respective schedule of investments.
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, 2014, 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.
| NOTES TO FINANCIAL STATEMENTS |
67 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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.
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. 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 BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the statements of assets and liabilities. Income earned by the Funds from securities lending is disclosed in the statements of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. Each Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, a Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and a Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
| 68 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2014, the following Funds had securities on loan with a market value as disclosed in the Funds’ statements of assets and liabilities:
| iShares ETF | Market Value of Securities on Loan |
|||
| MSCI Canada |
$ | 42,213,088 | ||
| MSCI Israel Capped |
520,717 | |||
| MSCI Mexico Capped |
83,696,157 | |||
| MSCI South Africa |
12,525,775 | |||
| MSCI Turkey |
25,883,781 | |||
| MSCI USA |
1,093,212 | |||
As of February 28, 2014, the value of the related collateral, as disclosed in the Funds’ schedules of investments, exceeded the market value of the securities on loan.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by 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 ETFs, 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, iShares MSCI Israel Capped, iShares MSCI South Africa and iShares MSCI Turkey ETFs, 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 | ||||
| NOTES TO FINANCIAL STATEMENTS |
69 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee based on the average daily net assets of each Fund as follows:
| iShares ETF | Investment Advisory Fee |
|||
| MSCI Colombia Capped |
0.61 | % | ||
| MSCI USA |
0.15 | |||
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014, each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Funds retain a portion of securities lending income and remit a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) all Funds except the iShares MSCI USA ETF retain 75% of securities lending income (commencing January 1, 2015 the amount each Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, Fund retained 65% of securities lending income and paid no collateral investment fees.
Pursuant to a securities lending agreement effective January 1, 2014, (i) the iShares MSCI USA ETF retains 70% of securities lending income and (ii) the amount retained can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, the Fund retained 65% of securities lending income and paid no collateral investment fees.
For the six months ended February 28, 2014, each Fund paid to BTC the following amounts in total for securities lending agent services and collateral investment fees:
| iShares ETF |
Fees Paid to BTC |
|||
| MSCI Canada |
$ | 65,362 | ||
| MSCI Israel Capped |
8,703 | |||
| MSCI Mexico Capped |
339,690 | |||
| MSCI South Africa |
23,488 | |||
| MSCI Turkey |
126,835 | |||
| MSCI USA |
1,829 | |||
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Funds and BTC) and pursuant to a securities lending agreement, all Funds except the iShares MSCI USA ETF will (i) receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle Date after January 1,
| 70 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
2015, each Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. The iShares MSCI USA ETF will (i) receive for the remainder of that calendar year 75% of securities lending income and (ii) the amount retained can never be less than 65% of the total of securities lending income plus the collateral investment fees.
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.
Cross trades for the six months ended February 28, 2014, if any, were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.
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 money market funds) during the six months ended February 28, 2014, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:
| iShares ETF and Name of Affiliated Issuer |
Shares Held at Beginning of Period |
Shares Purchased |
Shares Sold |
Shares Held at End of Period |
Value at End of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| MSCI Mexico Capped |
||||||||||||||||||||||||||||
| Desarrolladora Homex SAB de CV |
28,207,210 | 5,221,000 | (33,428,210 | ) | — | $ | — | $ | — | $ | (19,927,540 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| MSCI USA |
||||||||||||||||||||||||||||
| BlackRock Inc. |
1,575 | 262 | (750 | ) | 1,087 | $ | 331,361 | $ | 2,559 | $ | 86,413 | |||||||||||||||||
| PNC Financial Services Group Inc. (The) |
6,204 | 1,081 | (2,950 | ) | 4,335 | 354,516 | 4,468 | 59,516 | ||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 685,877 | $ | 7,027 | $ | 145,929 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| NOTES TO FINANCIAL STATEMENTS |
71 |
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, 2014 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI Brazil Capped |
$ | 1,018,876,247 | $ | 1,807,696,826 | ||||
| MSCI Canada |
97,972,987 | 114,876,232 | ||||||
| MSCI Chile Capped |
164,931,324 | 212,494,347 | ||||||
| MSCI Colombia Capped |
4,069,448 | 2,777,953 | ||||||
| MSCI Israel Capped |
7,652,726 | 7,825,734 | ||||||
| MSCI Mexico Capped |
152,615,322 | 147,704,978 | ||||||
| MSCI South Africa |
10,892,643 | 5,569,661 | ||||||
| MSCI Turkey |
19,645,955 | 21,147,567 | ||||||
| MSCI USA |
4,513,647 | 5,078,231 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2014 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI Canada |
$ | 107,624,414 | $ | 678,547,923 | ||||
| MSCI Colombia Capped |
96,013 | – | ||||||
| MSCI Israel Capped |
64,385,157 | 21,309,247 | ||||||
| MSCI Mexico Capped |
1,062,342,694 | 713,124,218 | ||||||
| MSCI South Africa |
140,718,580 | 269,059,695 | ||||||
| MSCI Turkey |
297,207,711 | 158,326,213 | ||||||
| MSCI USA |
30,016,384 | 89,058,594 | ||||||
| 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 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.
| 72 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 5. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
As of August 31, 2013, 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 ETF | Non- Expiring a |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | ||||||||||||||||||||||||
| MSCI Brazil Capped |
$ | 542,485,416 | $ | — | $ | — | $ | — | $ | — | $ | 198,226,310 | $ | — | $ | 740,711,726 | ||||||||||||||||
| MSCI Canada |
60,743,987 | — | 5,363,291 | 5,107,471 | 27,886,883 | 68,928,677 | 14,903,919 | 182,934,228 | ||||||||||||||||||||||||
| MSCI Chile Capped |
57,337,145 | — | — | — | 1,886,881 | 11,712,090 | 976,991 | 71,913,107 | ||||||||||||||||||||||||
| MSCI Colombia Capped |
36,917 | — | — | — | — | — | — | 36,917 | ||||||||||||||||||||||||
| MSCI Israel Capped |
8,974,706 | — | — | — | 784,479 | 10,801,191 | 7,130,249 | 27,690,625 | ||||||||||||||||||||||||
| MSCI Mexico Capped |
37,504,583 | 632,766 | — | 853,150 | 8,973,988 | 2,789,471 | 22,863,665 | 73,617,623 | ||||||||||||||||||||||||
| MSCI South Africa |
16,619,692 | 260,738 | 1,607,845 | 972,024 | 15,339,464 | 14,856,365 | 6,137,142 | 55,793,270 | ||||||||||||||||||||||||
| MSCI Turkey |
21,068,743 | — | — | — | 720,636 | 5,982,737 | 3,859,184 | 31,631,300 | ||||||||||||||||||||||||
| MSCI USA |
175,480 | — | — | — | — | — | — | 175,480 | ||||||||||||||||||||||||
| 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, 2014, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares ETF | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| MSCI Brazil Capped |
$ | 3,710,500,662 | $ | 1,254,830,596 | $ | (858,788,784 | ) | $ | 396,041,812 | |||||||
| MSCI Canada |
3,448,725,441 | 337,671,790 | (686,689,367 | ) | (349,017,577 | ) | ||||||||||
| MSCI Chile Capped |
275,593,573 | 54,730,572 | (46,159,152 | ) | 8,571,420 | |||||||||||
| MSCI Colombia Capped |
19,504,034 | 524,653 | (2,826,041 | ) | (2,301,388 | ) | ||||||||||
| MSCI Israel Capped |
138,416,477 | 7,833,449 | (17,446,640 | ) | (9,613,191 | ) | ||||||||||
| MSCI Mexico Capped |
3,111,502,470 | 33,086,520 | (572,533,601 | ) | (539,447,081 | ) | ||||||||||
| MSCI South Africa |
569,881,913 | 35,978,850 | (136,320,008 | ) | (100,341,158 | ) | ||||||||||
| MSCI Turkey |
769,427,014 | 2,598,636 | (226,060,720 | ) | (223,462,084 | ) | ||||||||||
| MSCI USA |
114,744,436 | 29,880,383 | (1,302,514 | ) | 28,577,869 | |||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.
| NOTES TO FINANCIAL STATEMENTS |
73 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 6. | 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 ETF as of February 28, 2014 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 — net unrealized appreciation (depreciation)a |
$ | 652,534 | ||
|
|
|
|||
| 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 iShares MSCI Canada ETF during the six months ended February 28, 2014 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 |
$ | 1,257,273 | $ | 232,926 | ||||
|
|
|
|
|
|||||
For the six months ended February 28, 2014, the average quarter-end number of contracts and notional value of open futures contracts for the iShares MSCI Canada ETF were 74 and $10,655,308, respectively.
| 7. | LINE OF CREDIT |
The iShares MSCI Colombia Capped ETF, along with certain other iShares funds, is a party to a $150 million credit agreement with State Street Bank and Trust Company, which expires October 29, 2014. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings. 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 securities of certain foreign markets.
| 74 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For the six months ended February 28, 2014, the Fund’s maximum amount borrowed, the average borrowings and the weighted average interest rate under the credit agreement were $900,000, $44,751 and 1.17%, 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 |
75 |
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 ETF | 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 |
||||||||||||||||||||||||
| MSCI Brazil Capped |
$ | 0.379245 | $ | — | $ | 0.208304 | $ | 0.587549 | 65 | % | — | % | 35 | % | 100 | % | ||||||||||||||||
| MSCI Canada |
0.275358 | — | 0.112468 | 0.387826 | 71 | — | 29 | 100 | ||||||||||||||||||||||||
| MSCI Colombia Capped |
0.193316 | — | — | 0.193316 | 100 | — | — | 100 | ||||||||||||||||||||||||
| MSCI Israel Capped |
0.375337 | — | 0.193860 | 0.569197 | 66 | — | 34 | 100 | ||||||||||||||||||||||||
| MSCI Mexico Capped |
0.827210 | — | 0.045802 | 0.873012 | 95 | — | 5 | 100 | ||||||||||||||||||||||||
| MSCI South Africa |
0.879485 | — | 0.041399 | 0.920884 | 96 | — | 4 | 100 | ||||||||||||||||||||||||
| MSCI USA |
0.411014 | — | 0.037882 | 0.448896 | 92 | — | 8 | 100 | ||||||||||||||||||||||||
| 76 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
77 |
Table of Contents
Notes:
| 78 | 2014 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.
©2014 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.
iS-SAR-84-0214
Table of Contents
FEBRUARY 28, 2014
|
2014 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI Emerging Markets ETF | EEM | NYSE Arca |
Table of Contents
| 5 | ||||
| 6 | ||||
| 6 | ||||
| 7 | ||||
| 22 | ||||
| 25 | ||||
| 26 | ||||
| 36 |
Table of Contents
iSHARES® MSCI EMERGING MARKETS ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities, as represented by the MSCI Emerging Markets Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 4.39%, net of fees, while the total return for the Index was 4.77%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(6.55)% | (6.62)% | (6.01)% | (6.55)% | (6.62)% | (6.01)% | ||||||||||||||||||||
| 5 Years |
15.27% | 15.24% | 16.88% | 103.51% | 103.27% | 118.16% | ||||||||||||||||||||
| 10 Years |
9.35% | 9.16% | 9.91% | 144.42% | 140.33% | 157.32% | ||||||||||||||||||||
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 6 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,043.90 | $ | 3.40 | $ | 1,000.00 | $ | 1,021.50 | $ | 3.36 | 0.67% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 6 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEW |
5 |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
7 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
13 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
21 |
Table of Contents
Consolidated Statement of Assets and Liabilities (Unaudited)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2014
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 31,413,378,106 | ||
| Affiliated (Note 2) |
1,154,126,744 | |||
|
|
|
|||
| Total cost of investments |
$ | 32,567,504,850 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 30,786,720,758 | ||
| Affiliated (Note 2) |
1,154,126,744 | |||
|
|
|
|||
| Total fair value of investments |
31,940,847,502 | |||
| Foreign currency, at valueb |
29,640,678 | |||
| Cash |
647,000 | |||
| Cash pledged to broker |
7,337,999 | |||
| Receivables: |
||||
| Investment securities sold |
448,042,614 | |||
| Dividends and interest |
71,873,537 | |||
|
|
|
|||
| Total Assets |
32,498,389,330 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
141,193,494 | |||
| Collateral for securities on loan (Note 1) |
1,107,390,776 | |||
| Capital shares redeemed |
324,279,382 | |||
| Futures variation margin |
906,750 | |||
| Foreign taxes (Note 1) |
61,307 | |||
| Securities related to in-kind transactions (Note 4) |
25,799 | |||
| Investment advisory fees (Note 2) |
16,337,556 | |||
|
|
|
|||
| Total Liabilities |
1,590,195,064 | |||
|
|
|
|||
| NET ASSETS |
$ | 30,908,194,266 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 38,826,219,709 | ||
| Distributions in excess of net investment income |
(57,175,898 | ) | ||
| Accumulated net realized loss |
(7,233,573,606 | ) | ||
| Net unrealized depreciation |
(627,275,939 | ) | ||
|
|
|
|||
| NET ASSETS |
$ | 30,908,194,266 | ||
|
|
|
|||
| Shares outstandingc |
777,150,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 39.77 | ||
|
|
|
|||
| a | Securities on loan with a value of $1,039,943,814. See Note 1. |
| b | Cost of foreign currency: $29,553,174. |
| c | $0.001 par value, number of shares authorized: 2 billion. |
See notes to consolidated financial statements.
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statement of Operations (Unaudited)
iSHARES® MSCI EMERGING MARKETS ETF
Six months ended February 28, 2014
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 329,715,043 | ||
| Interest — affiliated (Note 2) |
10,299 | |||
| Securities lending income — affiliated (Note 2)b |
9,073,458 | |||
|
|
|
|||
| 338,798,800 | ||||
| Less: Other foreign taxes (Note 1) |
(1,243,923 | ) | ||
|
|
|
|||
| Total investment income |
337,554,877 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
130,400,386 | |||
| Mauritius income taxes (Note 1) |
644,890 | |||
| Commitment fees (Note 7) |
46,665 | |||
|
|
|
|||
| Total expenses |
131,091,941 | |||
| Less investment advisory fees waived (Note 2) |
(298,237 | ) | ||
|
|
|
|||
| Net expenses |
130,793,704 | |||
|
|
|
|||
| Net investment income |
206,761,173 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(1,269,323,388 | ) | ||
| In-kind redemptions — unaffiliated |
522,035,267 | |||
| Futures contracts |
11,229,013 | |||
| Foreign currency transactions |
(13,415,057 | ) | ||
|
|
|
|||
| Net realized loss |
(749,474,165 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
1,712,601,295 | |||
| Futures contracts |
4,834,131 | |||
| Translation of assets and liabilities in foreign currencies |
2,483,119 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
1,719,918,545 | |||
|
|
|
|||
| Net realized and unrealized gain |
970,444,380 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 1,177,205,553 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $40,581,045. |
| b | Net of securities lending income tax paid $631,009. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
23 |
Table of Contents
Consolidated Statements of Changes in Net Assets
iSHARES® MSCI EMERGING MARKETS ETF
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 206,761,173 | $ | 751,988,177 | ||||
| Net realized loss |
(749,474,165 | ) | (879,811,483 | ) | ||||
| Net change in unrealized appreciation/depreciation |
1,719,918,545 | (306,437,138 | ) | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
1,177,205,553 | (434,260,444 | ) | |||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(363,107,821 | ) | (729,020,568 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(363,107,821 | ) | (729,020,568 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
6,065,174,387 | 15,077,037,675 | ||||||
| Cost of shares redeemed |
(10,775,270,185 | ) | (13,366,192,611 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets from capital share transactions |
(4,710,095,798 | ) | 1,710,845,064 | |||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN NET ASSETS |
(3,895,998,066 | ) | 547,564,052 | |||||
| NET ASSETS |
||||||||
| Beginning of period |
34,804,192,332 | 34,256,628,280 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 30,908,194,266 | $ | 34,804,192,332 | ||||
|
|
|
|
|
|||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (57,175,898 | ) | $ | 99,170,750 | |||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
145,350,000 | 355,500,000 | ||||||
| Shares redeemed |
(273,600,000 | ) | (323,550,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in shares outstanding |
(128,250,000 | ) | 31,950,000 | |||||
|
|
|
|
|
|||||
See notes to consolidated financial statements.
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI EMERGING MARKETS ETF
(For a share outstanding throughout each period)
| Six months ended Feb. 28, 2014 (Consolidated) (Unaudited) |
Year ended Aug. 31, 2013 (Consolidated) |
Year ended Aug. 31, 2012 (Consolidated) |
Year ended Aug. 31, 2011 (Consolidated) |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 38.44 | $ | 39.22 | $ | 42.71 | $ | 40.19 | $ | 35.48 | $ | 40.07 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.22 | 0.75 | 0.86 | 0.81 | 0.58 | 0.66 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.48 | (0.76 | ) | (3.53 | ) | 2.56 | 4.73 | (4.66 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.70 | (0.01 | ) | (2.67 | ) | 3.37 | 5.31 | (4.00 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.37 | ) | (0.77 | ) | (0.82 | ) | (0.85 | ) | (0.60 | ) | (0.59 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.37 | ) | (0.77 | ) | (0.82 | ) | (0.85 | ) | (0.60 | ) | (0.59 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 39.77 | $ | 38.44 | $ | 39.22 | $ | 42.71 | $ | 40.19 | $ | 35.48 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
4.39 | %c | (0.08 | )% | (6.18 | )% | 8.23 | % | 14.97 | % | (9.47 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 30,908,194 | $ | 34,804,192 | $ | 34,256,628 | $ | 33,496,549 | $ | 39,766,955 | $ | 30,268,121 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.67 | % | 0.67 | % | 0.68 | % | 0.67 | % | 0.68 | % | 0.72 | % | ||||||||||||
| Ratio of expenses to average net assets prior to waived feesd,e |
0.67 | % | 0.67 | % | 0.69 | % | 0.67 | % | 0.68 | % | 0.72 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
1.06 | % | 1.78 | % | 2.13 | % | 1.76 | % | 1.45 | % | 2.32 | % | ||||||||||||
| Portfolio turnover ratef |
11 | % | 24 | % | 15 | % | 17 | % | 14 | % | 5 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Ratios for the years ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered 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, 2014 and the years ended August 31, 2013, August 31, 2012 and August 31, 2011 were 3%, 9%, 10% and 15%, respectively. See Note 4. |
See notes to consolidated financial statements.
| FINANCIAL HIGHLIGHTS |
25 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
iSHARES® MSCI EMERGING MARKETS 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 consolidated financial statements relate only to the following fund (the “Fund”):
| iShares ETF | Diversification Classification | |
| MSCI Emerging Markets |
Diversified |
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.
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 Fund invests in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
The United States and the European Union have imposed economic sanctions on certain Russian individuals and a financial institution. The United States or the European Union could also institute broader sanctions on Russia. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities, impairing the ability of the Fund to buy, sell, receive or deliver those securities. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian securities.
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.
| 26 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
| 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 and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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 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, reviews of 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
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
27 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
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 is not necessarily an indication of the risk associated with investing in the 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 Global Valuation Committee’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.
As of February 28, 2014, 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 consolidated 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, 2014 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
| 28 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
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, 2014, 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.
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. Any securities lending cash collateral may be
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
29 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
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 BlackRock Fund Advisors (“BFA”), the Fund’s investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the consolidated statement of assets and liabilities. Income earned by the Fund from securities lending is disclosed in the consolidated statement of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. The Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
As of February 28, 2014, the Fund had securities on loan with a market value of $1,039,943,814 as disclosed in the Fund’s consolidated statement of assets and liabilities. As of February 28, 2014, the value of the related collateral, as disclosed in the Fund’s consolidated schedule of investments, exceeded the market value of the securities on loan.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of the Fund’s assets. BFA is a California corporation indirectly owned by 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.
| 30 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
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 $298,237.
BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund, through December 31, 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, 2014.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014, the Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees the Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Fund retains a portion of securities lending income and remits a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) the Fund retains 75% of securities lending income (commencing January 1, 2015 the amount the Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, the Fund retained 65% of securities lending income and paid no collateral investment fees.
For the six months ended February 28, 2014, the Fund paid to BTC securities lending agent services and collateral investment fees in the amount of $4,579,204.
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Fund and BTC) and pursuant to a securities lending agreement, (i) the Fund will receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle Date after January 1, 2015, the Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
31 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
For the six months ended February 28, 2014, BTC, the Fund’s securities lending agent, has agreed to voluntarily reimburse the Fund in the amount of $204,293, 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, 2014, were $4,217,107,650 and $6,725,717,467, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 28, 2014, were $2,880,796,515 and $5,103,974,841, 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 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 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
| 5. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the 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, 2013, 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 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||
| $1,554,579,736 | $ | 11,239,258 | $ | 29,973,301 | $ | 13,844,901 | $ | 228,196,854 | $ | 1,201,366,175 | $ | 873,167,649 | $ | 3,912,367,874 | ||||||||||||||
| 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, 2014, the cost of investments for federal income tax purposes was $33,282,086,410. Net unrealized depreciation was $1,341,238,908, of which $4,770,495,082 represented gross unrealized appreciation on securities and $6,111,733,990 represented gross unrealized depreciation on securities.
Management has analyzed tax laws and regulations and their application to the Fund as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s consolidated financial statements.
| 6. | 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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
33 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
The following table shows the value of futures contracts held by the Fund as of February 28, 2014 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 of – net unrealized appreciation (depreciation)a |
$ | 153,097 | ||
|
|
|
|||
| 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, 2014 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 |
$ | 11,229,013 | $ | 4,834,131 | ||||
|
|
|
|
|
|||||
For the six months ended February 28, 2014, the average quarter-end number of contracts and notional value of open futures contracts for the Fund were 2,857 and $135,054,592, respectively.
| 7. | LINE OF CREDIT |
The Fund, along with certain other iShares funds, is a party to a $150 million credit agreement with State Street Bank and Trust Company, which expires October 29, 2014. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings. 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 securities of certain foreign markets. The Fund did not borrow under the credit agreement during the six months ended February 28, 2014.
| 8. | 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 (the “Plaintiffs”) 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 Mid-Cap ETF; iShares MSCI EAFE ETF; iShares MSCI Emerging Markets ETF; iShares Russell 2000 Growth ETF; iShares Russell 2000 Value ETF; iShares Core S&P Mid-Cap ETF; iShares Core S&P Small-Cap ETF; and iShares U.S. Real Estate ETF. 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
| 34 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
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. On August 28, 2013, the court dismissed the claims without prejudice. The deadline for the Plaintiffs’ request to amend the complaint was September 17, 2013. The Plaintiffs submitted a motion to extend the time to file and the court granted the 30-day extension until October 17, 2013. The Plaintiffs did not amend their complaint prior to this deadline. The Court dismissed the complaint with prejudice on October 24, 2013. The Plaintiffs filed a notice of appeal on November 8, 2013. On February 13, 2014, the Plaintiffs filed an appeal brief with the United States Court of Appeals for the Sixth Circuit. The Defendants filed a response on March 17, 2014 and the Plaintiffs will have 30 days from the date of the response to reply back to the court.
| 9. | 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 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 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 |
|||||||||||||||||||||||||||||
| 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 |
|||||||||||||||||||||||
| $ | 0.244875 | $ | — | $ | 0.120903 | $ | 0.365778 | 67 | % | — | % | 33 | % | 100 | % | |||||||||||||||
| 36 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
37 |
Table of Contents
Notes:
| 38 | 2012 iSHARES 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.
©2014 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.
iS-SAR-85-0214
Table of Contents
FEBRUARY 28, 2014
| 2014 SEMI-ANNUAL REPORT (UNAUDITED) |
|
iShares, Inc.
| Ø | iShares MSCI BRIC ETF | BKF | NYSE Arca |
| Ø | iShares MSCI Emerging Markets Asia ETF | EEMA | NASDAQ |
| Ø | iShares MSCI Emerging Markets Consumer Discretionary ETF | EMDI | NASDAQ |
| Ø | iShares MSCI Emerging Markets Energy Capped ETF | EMEY | NASDAQ |
| Ø | iShares MSCI Emerging Markets Growth ETF | EGRW | NASDAQ |
| Ø | iShares MSCI Emerging Markets Minimum Volatility ETF | EEMV | NYSE Arca |
| Ø | iShares MSCI Emerging Markets Small-Cap ETF | EEMS | NYSE Arca |
| Ø | iShares MSCI Emerging Markets Value ETF | EVAL | NASDAQ |
Table of Contents
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| 14 | ||||
| 14 | ||||
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| 28 | ||||
| 30 | ||||
| 32 | ||||
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| 90 |
Table of Contents
iSHARES® MSCI BRIC ETF
Performance as of February 28, 2014
The iShares MSCI BRIC ETF (the “Fund”) seeks to track the investment of an index composed of Chinese equities that are available to international investors, and Brazilian, Russian, and Indian equities, as represented by the MSCI BRIC Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 3.42%, net of fees, while the total return for the Index was 3.97%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(9.45)% | (9.74)% | (8.73)% | (9.45)% | (9.74)% | (8.73)% | ||||||||||||||||||||
| 5 Years |
12.23% | 12.27% | 13.01% | 78.08% | 78.34% | 84.33% | ||||||||||||||||||||
| Since Inception |
(5.44)% | (5.58)% | (5.03)% | (29.70)% | (30.34)% | (27.75)% | ||||||||||||||||||||
The inception date of the Fund was 11/12/07. The first day of secondary market trading was 11/16/07.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,034.20 | $ | 3.43 | $ | 1,000.00 | $ | 1,021.40 | $ | 3.41 | 0.68% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 13 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS ASIA ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets Asia ETF (the “Fund”) seeks to track the investment results of an index composed of Asian emerging market equities, as represented by the MSCI Emerging Markets Asia Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.45%, net of fees, while the total return for the Index was 7.25%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(0.60)% | (0.42)% | (0.72)% | (0.60)% | (0.42)% | (0.72)% | ||||||||||||||||||||
| Since Inception |
2.50% | 2.40% | 2.74% | 5.21% | 5.01% | 5.74% | ||||||||||||||||||||
The inception date of the Fund was 2/8/12. The first day of secondary market trading was 2/9/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,074.50 | $ | 2.52 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 13 for more information. |
| * | Excludes money market funds. |
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets Consumer Discretionary ETF (the “Fund”) seeks to track the investment results of an index composed of emerging market equities in the consumer discretionary sector, as represented by the MSCI Emerging Markets Consumer Discretionary Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 10.65%, net of fees, while the total return for the Index was 11.03%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
6.49% | 6.20% | 7.21% | 6.49% | 6.20% | 7.21% | ||||||||||||||||||||
| Since Inception |
4.42% | 4.28% | 5.22% | 9.31% | 9.00% | 11.04% | ||||||||||||||||||||
The inception date of the Fund was 2/8/12. The first day of secondary market trading was 2/9/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,106.50 | $ | 3.50 | $ | 1,000.00 | $ | 1,021.50 | $ | 3.36 | 0.67% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 13 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS ENERGY CAPPED ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets Energy Capped ETF (the “Fund”) seeks to track the investment results of an index composed of emerging market equities in the energy sector, as represented by the MSCI Emerging Markets Energy 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was -3.56%, net of fees, while the total return for the Index was -3.57%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(14.10)% | (13.86)% | (14.03)% | (14.10)% | (13.86)% | (14.03)% | ||||||||||||||||||||
| Since Inception |
(15.08)% | (15.10)% | (14.64)% | (28.56)% | (28.60)% | (27.82)% | ||||||||||||||||||||
The inception date of the Fund was 2/8/12. The first day of secondary market trading was 2/9/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 964.40 | $ | 3.26 | $ | 1,000.00 | $ | 1,021.50 | $ | 3.36 | 0.67% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 13 for more information. |
| * | Excludes money market funds. |
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets Growth ETF (the “Fund”) seeks to track the investment results of an index composed of emerging market equities that exhibit growth characteristics, as represented by the MSCI Emerging Markets Growth Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.27%, net of fees, while the total return for the Index was 7.35%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(3.25)% | (4.87)% | (2.96)% | (3.25)% | (4.87)% | (2.96)% | ||||||||||||||||||||
| Since Inception |
1.31% | 1.14% | 1.91% | 2.71% | 2.36% | 3.98% | ||||||||||||||||||||
The inception date of the Fund was 2/8/12. The first day of secondary market trading was 2/9/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,072.70 | $ | 2.52 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 13 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets Minimum Volatility ETF (the “Fund”) seeks to track the investment results of an index composed of emerging market equities that, in the aggregated, have lower volatility characteristics relative to the broader emerging equity markets, as represented by the MSCI Emerging Markets Minimum Volatility (USD) Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 1.86%, net of fees, while the total return for the Index was 1.97%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(6.30)% | (6.95)% | (6.13)% | (6.30)% | (6.95)% | (6.13)% | ||||||||||||||||||||
| Since Inception |
7.97% | 7.64% | 8.25% | 19.90% | 19.05% | 20.64% | ||||||||||||||||||||
The inception date of the Fund was 10/18/11. The first day of secondary market trading was 10/20/11.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,018.60 | $ | 1.25 | $ | 1,000.00 | $ | 1,023.60 | $ | 1.25 | 0.25% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 13 for more information. |
| * | Excludes money market funds. |
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets Small-Cap ETF (the “Fund”) seeks to track the investment results of an index composed of small-capitalization emerging market equities, as represented by the MSCI Emerging Markets Small Cap Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 9.41%, net of fees, while the total return for the Index was 9.29%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(1.26)% | (3.07)% | (1.40)% | (1.26)% | (3.07)% | (1.40)% | ||||||||||||||||||||
| Since Inception |
0.53% | 0.27% | 1.05% | 1.35% | 0.70% | 2.70% | ||||||||||||||||||||
The inception date of the Fund was 8/16/11. The first day of secondary market trading was 8/18/11.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,094.10 | $ | 3.48 | $ | 1,000.00 | $ | 1,021.50 | $ | 3.36 | 0.67% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 13 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS VALUE ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets Value ETF (the “Fund”) seeks to track the investment results of an index composed of emerging market equities that exhibit value characteristics, as represented by the MSCI Emerging Markets Value Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 2.04%, net of fees, while the total return for the Index was 2.18%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(9.41)% | (12.53)% | (9.14)% | (9.41)% | (12.53)% | (9.14)% | ||||||||||||||||||||
| Since Inception |
(6.16)% | (6.20)% | (5.80)% | (12.26)% | (12.33)% | (11.58)% | ||||||||||||||||||||
The inception date of the Fund was 2/8/12. The first day of secondary market trading was 2/9/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,020.40 | $ | 2.45 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 13 for more information. |
| * | Excludes money market funds. |
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| ABOUT FUND PERFORMANCE / SHAREHOLDER EXPENSES |
13 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
February 28, 2014
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2014
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2014
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2014
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2014
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2014
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2014
| 26 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY ETF
February 28, 2014
| 28 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ENERGY CAPPED ETF
February 28, 2014
| 30 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ENERGY CAPPED ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2014
| 32 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2014
| 34 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2014
| 36 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2014
| 38 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2014
| 40 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2014
| 42 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| 44 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| 46 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
47 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| 48 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
49 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| 50 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
51 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| 52 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
53 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2014
| 54 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
55 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2014
| 56 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
57 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2014
| 58 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2014
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
59 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2014
| 60 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2014
| iShares MSCI BRIC ETF |
iShares MSCI Emerging Markets |
iShares MSCI Emerging Markets |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 453,258,696 | $ | 35,025,343 | $ | 5,216,971 | ||||||
| Affiliated (Note 2) |
10,425,018 | 448,401 | 53,854 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 463,683,714 | $ | 35,473,744 | $ | 5,270,825 | ||||||
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|
|
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|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 419,821,043 | $ | 35,736,129 | $ | 5,515,899 | ||||||
| Affiliated (Note 2) |
10,425,018 | 448,401 | 53,854 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
430,246,061 | 36,184,530 | 5,569,753 | |||||||||
| Foreign currency, at valueb |
433,617 | 25,878 | 2,679 | |||||||||
| Cash |
540,398 | 13,913 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
3,451,161 | 233,205 | 16,864 | |||||||||
| Dividends and interest |
355,062 | 81,147 | 13,191 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
435,026,299 | 36,538,673 | 5,602,487 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
3,461,315 | 213,944 | 17,366 | |||||||||
| Collateral for securities on loan (Note 1) |
10,425,018 | 448,401 | 52,820 | |||||||||
| Foreign taxes (Note 1) |
— | 5 | — | |||||||||
| Investment advisory fees (Note 2) |
221,756 | 13,129 | 2,793 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
14,108,089 | 675,479 | 72,979 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 420,918,210 | $ | 35,863,194 | $ | 5,529,508 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 636,210,843 | $ | 45,157,324 | $ | 6,088,418 | ||||||
| Distributions in excess of net investment income |
(321,952 | ) | (40,495 | ) | (3,362 | ) | ||||||
| Accumulated net realized loss |
(181,538,218 | ) | (9,963,701 | ) | (854,311 | ) | ||||||
| Net unrealized appreciation (depreciation) |
(33,432,463 | ) | 710,066 | 298,763 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 420,918,210 | $ | 35,863,194 | $ | 5,529,508 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
11,900,000 | 650,000 | 100,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 35.37 | $ | 55.17 | $ | 55.30 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $9,772,483, $420,052 and $50,136, respectively. See Note 1. |
| b | Cost of foreign currency: $432,004, $25,610 and $2,683, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
61 |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Emerging Markets |
iShares MSCI Emerging Markets |
iShares MSCI |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 2,340,472 | $ | 5,186,754 | $ | 2,119,879,537 | ||||||
| Affiliated (Note 2) |
24,694 | 162,976 | 54,384,206 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 2,365,166 | $ | 5,349,730 | $ | 2,174,263,743 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 1,723,650 | $ | 5,328,395 | $ | 2,053,363,633 | ||||||
| Affiliated (Note 2) |
24,694 | 162,976 | 54,384,206 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
1,748,344 | 5,491,371 | 2,107,747,839 | |||||||||
| Foreign currency, at valueb |
1,140 | 6,037 | 11,153,079 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
41,699 | 5,392 | 8,527,665 | |||||||||
| Dividends and interest |
2,594 | 8,498 | 4,186,497 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
1,793,777 | 5,511,298 | 2,131,615,080 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
39,944 | 7,227 | 8,433,243 | |||||||||
| Collateral for securities on loan (Note 1) |
23,703 | 156,384 | 53,350,420 | |||||||||
| Foreign taxes (Note 1) |
— | 1 | — | |||||||||
| Investment advisory fees (Note 2) |
913 | 1,951 | 399,428 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
64,560 | 165,563 | 62,183,091 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,729,217 | $ | 5,345,735 | $ | 2,069,431,989 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 3,421,694 | $ | 5,931,623 | $ | 2,222,478,759 | ||||||
| Undistributed (distributions in excess of) net investment income |
182 | (2,717 | ) | (530,735 | ) | |||||||
| Accumulated net realized loss |
(1,075,831 | ) | (724,806 | ) | (85,859,985 | ) | ||||||
| Net unrealized appreciation (depreciation) |
(616,828 | ) | 141,635 | (66,656,050 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,729,217 | $ | 5,345,735 | $ | 2,069,431,989 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
50,000 | 100,000 | 37,100,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 34.58 | $ | 53.46 | $ | 55.78 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $21,694, $147,808 and $49,820,767, respectively. See Note 1. |
| b | Cost of foreign currency: $1,142, $5,989 and $11,256,721, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| 62 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Emerging Markets Small-Cap ETF |
iShares MSCI Emerging Markets |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 37,827,571 | $ | 18,840,122 | ||||
| Affiliated (Note 2) |
1,186,189 | 122,188 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 39,013,760 | $ | 18,962,310 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 37,588,842 | $ | 17,350,082 | ||||
| Affiliated (Note 2) |
1,186,189 | 122,188 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
38,775,031 | 17,472,270 | ||||||
| Foreign currency, at valueb |
58,628 | 15,634 | ||||||
| Cash |
— | 6,854 | ||||||
| Receivables: |
||||||||
| Investment securities sold |
249,657 | 157,681 | ||||||
| Dividends and interest |
61,111 | 34,068 | ||||||
|
|
|
|
|
|||||
| Total Assets |
39,144,427 | 17,686,507 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
279,655 | 132,911 | ||||||
| Collateral for securities on loan (Note 1) |
1,142,421 | 116,440 | ||||||
| Foreign taxes (Note 1) |
28 | — | ||||||
| Investment advisory fees (Note 2) |
19,532 | 6,475 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
1,441,636 | 255,826 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 37,702,791 | $ | 17,430,681 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 46,717,916 | $ | 20,009,220 | ||||
| Undistributed (distributions in excess of) net investment income |
(127,601 | ) | 4,777 | |||||
| Accumulated net realized loss |
(8,649,123 | ) | (1,093,131 | ) | ||||
| Net unrealized depreciation |
(238,401 | ) | (1,490,185 | ) | ||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 37,702,791 | $ | 17,430,681 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
800,000 | 400,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 47.13 | $ | 43.58 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $1,026,486 and $109,073, respectively. See Note 1. |
| b | Cost of foreign currency: $57,932 and $15,526, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
63 |
Table of Contents
Consolidated Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI BRIC ETF |
iShares MSCI Emerging Markets |
iShares MSCI Emerging Markets |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 4,014,680 | $ | 218,366 | $ | 29,925 | ||||||
| Interest — affiliated (Note 2) |
60 | 7 | — | |||||||||
| Securities lending income — affiliated (Note 2) |
93,162 | 4,028 | 903 | |||||||||
| Payment from affiliate (Note 2) |
— | 56,083 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| 4,107,902 | 278,484 | 30,828 | ||||||||||
| Less: Other foreign taxes (Note 1) |
— | (1,860 | ) | (38 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
4,107,902 | 276,624 | 30,790 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,635,866 | 115,321 | 15,254 | |||||||||
| Mauritius income taxes (Note 1) |
18,745 | — | — | |||||||||
| Commitment fees (Note 6) |
1,346 | 84 | 3 | |||||||||
| Interest expense (Note 6) |
390 | 44 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,656,347 | 115,449 | 15,257 | |||||||||
| Less investment advisory fees waived (Note 2) |
— | (32,222 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
1,656,347 | 83,227 | 15,257 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
2,451,555 | 193,397 | 15,533 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(11,222,592 | ) | (103,690 | ) | (34,130 | ) | ||||||
| In-kind redemptions — unaffiliated |
2,284,613 | — | — | |||||||||
| Foreign currency transactions |
(101,446 | ) | (3,858 | ) | (2,884 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(9,039,425 | ) | (107,548 | ) | (37,014 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
24,436,515 | 2,221,079 | 248,544 | |||||||||
| Translation of assets and liabilities in foreign currencies |
72,384 | (15 | ) | (49 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
24,508,899 | 2,221,064 | 248,495 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
15,469,474 | 2,113,516 | 211,481 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 17,921,029 | $ | 2,306,913 | $ | 227,014 | ||||||
|
|
|
|
|
|
|
|||||||
a Net of foreign withholding tax of $332,592, $32,190 and $6,713, respectively.
See notes to consolidated financial statements.
| 64 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Emerging Markets |
iShares MSCI Emerging Markets |
iShares
MSCI |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 15,131 | $ | 35,430 | $ | 21,687,812 | ||||||
| Interest — affiliated (Note 2) |
— | 1 | 313 | |||||||||
| Securities lending income — affiliated (Note 2) |
166 | 701 | 99,590 | |||||||||
|
|
|
|
|
|
|
|||||||
| 15,297 | 36,132 | 21,787,715 | ||||||||||
| Less: Other foreign taxes (Note 1) |
— | (262 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
15,297 | 35,870 | 21,787,715 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
6,288 | 18,194 | 8,286,889 | |||||||||
| Mauritius income taxes (Note 1) |
— | — | 22,266 | |||||||||
| Commitment fees (Note 6) |
3 | 6 | 972 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
6,291 | 18,200 | 8,310,127 | |||||||||
| Less investment advisory fees waived (Note 2) |
— | (5,084 | ) | (5,199,878 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
6,291 | 13,116 | 3,110,249 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
9,006 | 22,754 | 18,677,466 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(72,280 | ) | (78,800 | ) | (79,757,219 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | — | 26,066,792 | |||||||||
| Foreign currency transactions |
(1 | ) | (563 | ) | (1,197,952 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(72,281 | ) | (79,363 | ) | (54,888,379 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(704 | ) | 421,390 | 78,870,258 | ||||||||
| Translation of assets and liabilities in foreign currencies |
97 | 344 | (15,969 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(607 | ) | 421,734 | 78,854,289 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(72,888 | ) | 342,371 | 23,965,910 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (63,882 | ) | $ | 365,125 | $ | 42,643,376 | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $1,787, $4,680 and $2,392,254, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
65 |
Table of Contents
Consolidated Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Emerging Markets Small-Cap ETF |
iShares MSCI Emerging Markets |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 241,561 | $ | 154,453 | ||||
| Interest — unaffiliated |
1 | — | ||||||
| Interest — affiliated (Note 2) |
7 | 3 | ||||||
| Securities lending income — affiliated (Note 2) |
14,993 | 913 | ||||||
| Payment from affiliate (Note 2) |
73,193 | — | ||||||
|
|
|
|
|
|||||
| 329,755 | 155,369 | |||||||
| Less: Other foreign taxes (Note 1) |
(1,052 | ) | (408 | ) | ||||
|
|
|
|
|
|||||
| Total investment income |
328,703 | 154,961 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
111,586 | 53,279 | ||||||
| Commitment fees (Note 6) |
31 | 16 | ||||||
| Interest expense (Note 6) |
71 | 16 | ||||||
|
|
|
|
|
|||||
| Total expenses |
111,688 | 53,311 | ||||||
| Less investment advisory fees waived (Note 2) |
— | (14,887 | ) | |||||
|
|
|
|
|
|||||
| Net expenses |
111,688 | 38,424 | ||||||
|
|
|
|
|
|||||
| Net investment income |
217,015 | 116,537 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(248,813 | ) | (126,601 | ) | ||||
| Foreign currency transactions |
(5,962 | ) | (2,347 | ) | ||||
|
|
|
|
|
|||||
| Net realized loss |
(254,775 | ) | (128,948 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
3,098,029 | 147 | ||||||
| Translation of assets and liabilities in foreign currencies |
1,569 | 972 | ||||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
3,099,598 | 1,119 | ||||||
|
|
|
|
|
|||||
| Net realized and unrealized gain (loss) |
2,844,823 | (127,829 | ) | |||||
|
|
|
|
|
|||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 3,061,838 | $ | (11,292 | ) | |||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $23,538 and $18,142, respectively. |
See notes to consolidated financial statements.
| 66 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI BRIC ETF |
iShares MSCI Emerging Markets Asia ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 2,451,555 | $ | 14,531,717 | $ | 193,397 | $ | 1,481,906 | ||||||||
| Net realized loss |
(9,039,425 | ) | (28,282,720 | ) | (107,548 | ) | (13,002,316 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
24,508,899 | 18,953,553 | 2,221,064 | 187,713 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
17,921,029 | 5,202,550 | 2,306,913 | (11,332,697 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(3,048,808 | ) | (13,252,516 | ) | (570,137 | ) | (1,144,738 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(3,048,808 | ) | (13,252,516 | ) | (570,137 | ) | (1,144,738 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
— | 21,679,666 | 2,785,624 | 208,872,206 | ||||||||||||
| Cost of shares redeemed |
(68,814,952 | ) | (223,917,437 | ) | — | (185,124,642 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(68,814,952 | ) | (202,237,771 | ) | 2,785,624 | 23,747,564 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(53,942,731 | ) | (210,287,737 | ) | 4,522,400 | 11,270,129 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
474,860,941 | 685,148,678 | 31,340,794 | 20,070,665 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 420,918,210 | $ | 474,860,941 | $ | 35,863,194 | $ | 31,340,794 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (321,952 | ) | $ | 275,301 | $ | (40,495 | ) | $ | 336,245 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
— | 550,000 | 50,000 | 3,650,000 | ||||||||||||
| Shares redeemed |
(1,900,000 | ) | (5,950,000 | ) | — | (3,450,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(1,900,000 | ) | (5,400,000 | ) | 50,000 | 200,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
67 |
Table of Contents
Consolidated Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Consumer Discretionary ETF |
iShares MSCI Emerging Markets Energy Capped ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 15,533 | $ | 19,267 | $ | 9,006 | $ | 51,980 | ||||||||
| Net realized loss |
(37,014 | ) | (42,811 | ) | (72,281 | ) | (89,021 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
248,495 | 138,120 | (607 | ) | (118,848 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
227,014 | 114,576 | (63,882 | ) | (155,889 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(21,742 | ) | (30,681 | ) | (12,017 | ) | (46,822 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(21,742 | ) | (30,681 | ) | (12,017 | ) | (46,822 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
2,816,123 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
2,816,123 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
3,021,395 | 83,895 | (75,899 | ) | (202,711 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
2,508,113 | 2,424,218 | 1,805,116 | 2,007,827 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 5,529,508 | $ | 2,508,113 | $ | 1,729,217 | $ | 1,805,116 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (3,362 | ) | $ | 2,847 | $ | 182 | $ | 3,193 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED |
||||||||||||||||
| Shares sold |
50,000 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
50,000 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to consolidated financial statements.
| 68 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Growth ETF |
iShares MSCI Emerging Markets Minimum Volatility ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 22,754 | $ | 56,453 | $ | 18,677,466 | $ | 44,316,678 | ||||||||
| Net realized loss |
(79,363 | ) | (488,613 | ) | (54,888,379 | ) | (21,497,246 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
421,734 | 188,328 | 78,854,289 | (153,606,739 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
365,125 | (243,832 | ) | 42,643,376 | (130,787,307 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(45,668 | ) | (78,638 | ) | (35,096,010 | ) | (29,485,424 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(45,668 | ) | (78,638 | ) | (35,096,010 | ) | (29,485,424 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
— | 2,836,973 | 264,856,705 | 2,246,859,727 | ||||||||||||
| Cost of shares redeemed |
— | (7,609,183 | ) | (658,699,554 | ) | (18,086,598 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
— | (4,772,210 | ) | (393,842,849 | ) | 2,228,773,129 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
319,457 | (5,094,680 | ) | (386,295,483 | ) | 2,068,500,398 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
5,026,278 | 10,120,958 | 2,455,727,472 | 387,227,074 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 5,345,735 | $ | 5,026,278 | $ | 2,069,431,989 | $ | 2,455,727,472 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (2,717 | ) | $ | 20,197 | $ | (530,735 | ) | $ | 15,887,809 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
— | 50,000 | 4,400,000 | 37,500,000 | ||||||||||||
| Shares redeemed |
— | (150,000 | ) | (11,500,000 | ) | (300,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
— | (100,000 | ) | (7,100,000 | ) | 37,200,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
69 |
Table of Contents
Consolidated Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Small-Cap ETF |
iShares MSCI Emerging Markets Value ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 217,015 | $ | 452,278 | $ | 116,537 | $ | 287,929 | ||||||||
| Net realized gain (loss) |
(254,775 | ) | 192,570 | (128,948 | ) | (808,943 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
3,099,598 | (2,594,104 | ) | 1,119 | (187,045 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
3,061,838 | (1,949,256 | ) | (11,292 | ) | (708,059 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(515,875 | ) | (514,561 | ) | (159,964 | ) | (279,968 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(515,875 | ) | (514,561 | ) | (159,964 | ) | (279,968 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
4,513,075 | 24,419,011 | 6,815,327 | 7,122,017 | ||||||||||||
| Cost of shares redeemed |
— | — | — | (4,408,081 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
4,513,075 | 24,419,011 | 6,815,327 | 2,713,936 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
7,059,038 | 21,955,194 | 6,644,071 | 1,725,909 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
30,643,753 | 8,688,559 | 10,786,610 | 9,060,701 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 37,702,791 | $ | 30,643,753 | $ | 17,430,681 | $ | 10,786,610 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (127,601 | ) | $ | 171,259 | $ | 4,777 | $ | 48,204 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
100,000 | 500,000 | 150,000 | 150,000 | ||||||||||||
| Shares redeemed |
— | — | — | (100,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
100,000 | 500,000 | 150,000 | 50,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to consolidated financial statements.
| 70 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI BRIC ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2014 (Consolidated) |
Year ended Aug. 31, 2013 (Consolidated) |
Year ended Aug. 31, 2012 (Consolidated) |
Year ended Aug. 31, 2011 (Consolidated) |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 34.41 | $ | 35.68 | $ | 42.25 | $ | 42.94 | $ | 37.57 | $ | 44.13 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.19 | 0.84 | 0.98 | 0.89 | 0.66 | 0.58 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.00 | (1.25 | ) | (6.62 | ) | (0.58 | ) | 5.35 | (6.60 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.19 | (0.41 | ) | (5.64 | ) | 0.31 | 6.01 | (6.02 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.23 | ) | (0.86 | ) | (0.93 | ) | (1.00 | ) | (0.64 | ) | (0.54 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.23 | ) | (0.86 | ) | (0.93 | ) | (1.00 | ) | (0.64 | ) | (0.54 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 35.37 | $ | 34.41 | $ | 35.68 | $ | 42.25 | $ | 42.94 | $ | 37.57 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
3.42 | %c | (1.17 | )% | (13.33 | )% | 0.49 | % | 15.95 | % | (13.08 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 420,918 | $ | 474,861 | $ | 685,149 | $ | 866,194 | $ | 946,814 | $ | 497,839 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.68 | % | 0.67 | % | 0.69 | % | 0.67 | % | 0.69 | % | 0.72 | % | ||||||||||||
| Ratio of expenses to average net assets prior to waived feesd,e |
n/a | n/a | n/a | 0.67 | % | n/a | n/a | |||||||||||||||||
| Ratio of net investment income to average net assetsd |
1.01 | % | 2.18 | % | 2.55 | % | 1.86 | % | 1.52 | % | 1.87 | % | ||||||||||||
| Portfolio turnover ratef |
3 | % | 10 | % | 32 | % | 13 | % | 9 | % | 7 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Ratios for the years ended March 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 partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rates for the six months ended February 28, 2014 and the years ended August 31, 2013, August 31, 2012, August 31, 2011, August 31, 2010 and August 31, 2009 were 3%, 9%, 20%, 10%, 8% and 6%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
71 |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets Asia ETF | ||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 52.23 | $ | 50.18 | $ | 54.71 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.31 | 1.15 | 0.87 | |||||||||
| Net realized and unrealized gain (loss)c |
3.58 | 1.82 | (4.99 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
3.89 | 2.97 | (4.12 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.95 | ) | (0.92 | ) | (0.41 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.95 | ) | (0.92 | ) | (0.41 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 55.17 | $ | 52.23 | $ | 50.18 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
7.45 | %d,e | 5.88 | % | (7.52 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 35,863 | $ | 31,341 | $ | 20,071 | ||||||
| Ratio of expenses to average net assetsf |
0.49 | % | 0.49 | % | 0.49 | % | ||||||
| Ratio of expenses to average net assets prior to waived feesf |
0.68 | % | 0.68 | % | 0.68 | % | ||||||
| Ratio of net investment income to average net assetsf |
1.14 | % | 2.09 | % | 3.05 | % | ||||||
| Portfolio turnover rateg |
4 | % | 174 | % | 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 | Includes payment from an affiliate. See Note 2. Not including these proceeds, the Fund’s total return would have been 7.28%. |
| f | Annualized for periods of less than one year. |
| 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, 2014, the year ended August 31, 2013 and the period ended August 31, 2012 were 4%, 21% and 3%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 72 | 2014 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 Consumer Discretionary ETF | ||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 50.16 | $ | 48.48 | $ | 51.54 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.18 | 0.39 | 0.26 | |||||||||
| Net realized and unrealized gain (loss)c |
5.18 | 1.90 | (3.19 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
5.36 | 2.29 | (2.93 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.22 | ) | (0.61 | ) | (0.13 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.22 | ) | (0.61 | ) | (0.13 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 55.30 | $ | 50.16 | $ | 48.48 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
10.65 | %d | 4.73 | % | (5.68 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 5,530 | $ | 2,508 | $ | 2,424 | ||||||
| Ratio of expenses to average net assetse |
0.67 | % | 0.67 | % | 0.68 | % | ||||||
| Ratio of net investment income to average net assetse |
0.68 | % | 0.76 | % | 0.94 | % | ||||||
| Portfolio turnover ratef |
4 | % | 10 | % | 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 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, 2014, the year ended August 31, 2013, and the period ended August 31, 2012 were 4%, 10%, and 5%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
73 |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets Energy Capped ETF | ||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 36.10 | $ | 40.16 | $ | 51.12 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.18 | 1.04 | 1.05 | |||||||||
| Net realized and unrealized lossc |
(1.46 | ) | (4.16 | ) | (11.14 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
(1.28 | ) | (3.12 | ) | (10.09 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.24 | ) | (0.94 | ) | (0.84 | ) | ||||||
| Return of capital |
— | — | (0.03 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.24 | ) | (0.94 | ) | (0.87 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 34.58 | $ | 36.10 | $ | 40.16 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
(3.56 | )%d | (7.73 | )% | (19.71 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 1,729 | $ | 1,805 | $ | 2,008 | ||||||
| Ratio of expenses to average net assetse |
0.67 | % | 0.67 | % | 0.68 | % | ||||||
| Ratio of net investment income to average net assetse |
0.96 | % | 2.56 | % | 4.23 | % | ||||||
| Portfolio turnover ratef |
9 | % | 7 | % | 29 | % | ||||||
| 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, 2014 , the year ended August 31, 2013 and the period ended August 31, 2012 were 9%, 7% and 3%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 74 | 2014 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 Growth ETF | ||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 50.26 | $ | 50.60 | $ | 54.24 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.23 | 0.85 | 0.66 | |||||||||
| Net realized and unrealized gain (loss)c |
3.43 | 0.13 | (3.87 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
3.66 | 0.98 | (3.21 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.46 | ) | (1.32 | ) | (0.43 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.46 | ) | (1.32 | ) | (0.43 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 53.46 | $ | 50.26 | $ | 50.60 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
7.27 | %d | 1.76 | % | (5.90 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 5,346 | $ | 5,026 | $ | 10,121 | ||||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | 0.49 | % | ||||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | 0.68 | % | ||||||
| Ratio of net investment income to average net assetse |
0.85 | % | 1.59 | % | 2.27 | % | ||||||
| Portfolio turnover ratef |
14 | % | 64 | % | 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 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, 2014, the year ended August 31, 2013 and the period ended August 31, 2012 were 14%, 28% and 12%, 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 Minimum Volatility ETF | ||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 55.56 | $ | 55.32 | $ | 49.30 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.43 | 1.85 | 1.93 | |||||||||
| Net realized and unrealized gain (loss)c |
0.62 | (0.60 | ) | 5.41 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
1.05 | 1.25 | 7.34 | |||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.83 | ) | (1.01 | ) | (1.32 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.83 | ) | (1.01 | ) | (1.32 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 55.78 | $ | 55.56 | $ | 55.32 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
1.86 | %d | 2.22 | % | 15.16 | %d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 2,069,432 | $ | 2,455,727 | $ | 387,227 | ||||||
| Ratio of expenses to average net assetse |
0.25 | % | 0.25 | % | 0.25 | % | ||||||
| Ratio of expenses to average net assets prior to waived feese |
0.67 | % | 0.67 | % | 0.69 | % | ||||||
| Ratio of net investment income to average net assetse |
1.51 | % | 3.13 | % | 4.08 | % | ||||||
| Portfolio turnover ratef |
18 | % | 23 | % | 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 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 February 28, 2014, the year ended August 31, 2013 and the period ended August 31, 2012 were 12%, 23% and 16%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 76 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets Small-Cap ETF | ||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Period from to Aug. 31, 2011 |
|||||||||||||
| Net asset value, beginning of period |
$ | 43.78 | $ | 43.44 | $ | 49.60 | $ | 50.54 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.30 | 1.07 | 0.50 | 0.07 | ||||||||||||
| Net realized and unrealized gain (loss)c |
3.79 | 1.13 | (5.52 | ) | (1.01 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
4.09 | 2.20 | (5.02 | ) | (0.94 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.74 | ) | (1.86 | ) | (1.14 | ) | — | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.74 | ) | (1.86 | ) | (1.14 | ) | — | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 47.13 | $ | 43.78 | $ | 43.44 | $ | 49.60 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
9.41 | %d,e | 4.85 | % | (9.98 | )% | (1.86 | )%d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 37,703 | $ | 30,644 | $ | 8,689 | $ | 69,443 | ||||||||
| Ratio of expenses to average net assetsf |
0.67 | % | 0.67 | % | 0.69 | % | 0.69 | % | ||||||||
| Ratio of net investment income to average net assetsf |
1.31 | % | 2.26 | % | 1.13 | % | 3.33 | % | ||||||||
| Portfolio turnover rateg |
10 | % | 21 | % | 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 | Includes payment from an affiliate. See Note 2. Not including these proceeds, the Fund’s total return would have been 9.20%. |
| f | Annualized for periods of less than one year. |
| 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, 2014, the years ended August 31, 2013, August 31, 2012, and the period ended August 31, 2011 were 10%, 21%, 17% and 2%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
77 |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets Value ETF | ||
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 43.15 | $ | 45.30 | $ | 52.58 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.34 | 1.34 | 1.00 | |||||||||
| Net realized and unrealized gain (loss)c |
0.55 | (2.11 | ) | (7.54 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
0.89 | (0.77 | ) | (6.54 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.46 | ) | (1.38 | ) | (0.74 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.46 | ) | (1.38 | ) | (0.74 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 43.58 | $ | 43.15 | $ | 45.30 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
2.04 | %d | (1.83 | )% | (12.41 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 17,431 | $ | 10,787 | $ | 9,061 | ||||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | 0.49 | % | ||||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | 0.68 | % | ||||||
| Ratio of net investment income to average net assetse |
1.49 | % | 2.84 | % | 3.73 | % | ||||||
| Portfolio turnover ratef |
14 | % | 47 | % | 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 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, 2014, the year ended August 31, 2013 and the period ended August 31, 2012 were 14%, 26% and 12%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 78 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
iSHARES®, INC.
iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation.
These consolidated financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):
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.
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.
Each Fund invests in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
The United States and the European Union have imposed economic sanctions on certain Russian individuals and a financial institution. The United States or the European Union could also institute broader sanctions on Russia. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities, impairing the ability of the Funds to buy, sell, receive or deliver those securities. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian securities.
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
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
79 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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.
SECURITY VALUATION
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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 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, reviews of 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
| 80 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 is not necessarily an indication of the risk associated with investing in the 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 Global Valuation Committee’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 Funds’ investments according to the fair value hierarchy as of February 28, 2014. The breakdown of each Fund’s investments into major categories is disclosed in its respective consolidated schedule of investments.
| iShares ETF and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI BRIC |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 374,068,737 | $ | — | $ | — | $ | 374,068,737 | ||||||||
| Preferred Stocks |
45,740,945 | — | — | 45,740,945 | ||||||||||||
| Rights |
11,361 | — | — | 11,361 | ||||||||||||
| Money Market Funds |
10,425,018 | — | — | 10,425,018 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 430,246,061 | $ | — | $ | — | $ | 430,246,061 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Asia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 35,281,615 | $ | — | $ | — | $ | 35,281,615 | ||||||||
| Preferred Stocks |
454,514 | — | — | 454,514 | ||||||||||||
| Money Market Funds |
448,401 | — | — | 448,401 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 36,184,530 | $ | — | $ | — | $ | 36,184,530 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
81 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Emerging Markets Consumer Discretionary |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,343,220 | $ | — | $ | — | $ | 5,343,220 | ||||||||
| Preferred Stocks |
172,679 | — | — | 172,679 | ||||||||||||
| Money Market Funds |
53,854 | — | — | 53,854 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,569,753 | $ | — | $ | — | $ | 5,569,753 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Energy Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,586,891 | $ | — | $ | — | $ | 1,586,891 | ||||||||
| Preferred Stocks |
136,759 | — | — | 136,759 | ||||||||||||
| Money Market Funds |
24,694 | — | — | 24,694 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,748,344 | $ | — | $ | — | $ | 1,748,344 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Growth |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,095,345 | $ | — | $ | — | $ | 5,095,345 | ||||||||
| Preferred Stocks |
233,050 | — | — | 233,050 | ||||||||||||
| Money Market Funds |
162,976 | — | — | 162,976 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,491,371 | $ | — | $ | — | $ | 5,491,371 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Minimum Volatility |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,980,993,340 | $ | — | $ | — | $ | 1,980,993,340 | ||||||||
| Preferred Stocks |
72,370,293 | — | — | 72,370,293 | ||||||||||||
| Money Market Funds |
54,384,206 | — | — | 54,384,206 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,107,747,839 | $ | — | $ | — | $ | 2,107,747,839 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Small-Cap |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 37,170,260 | $ | 77,740 | $ | 29,872 | $ | 37,277,872 | ||||||||
| Preferred Stocks |
303,759 | — | — | 303,759 | ||||||||||||
| Rights |
981 | 6,230 | — | 7,211 | ||||||||||||
| Money Market Funds |
1,186,189 | — | — | 1,186,189 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 38,661,189 | $ | 83,970 | $ | 29,872 | $ | 38,775,031 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Value |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 16,049,724 | $ | — | $ | — | $ | 16,049,724 | ||||||||
| Preferred Stocks |
1,299,953 | — | — | 1,299,953 | ||||||||||||
| Rights |
405 | — | — | 405 | ||||||||||||
| Money Market Funds |
122,188 | — | — | 122,188 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 17,472,270 | $ | — | $ | — | $ | 17,472,270 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 82 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated 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, 2014 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, 2014, 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.
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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
83 |
Table of Contents
Notes to Consolidated 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.
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. 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 BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the consolidated statements of assets and liabilities. Income earned by the Funds from securities lending is disclosed in the consolidated statements of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. Each Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, a Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and a Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
| 84 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2014, the following Funds had securities on loan with a market value as disclosed in the Funds’ consolidated statements of assets and liabilities:
As of February 28, 2014, the value of the related collateral, as disclosed in the Funds’ consolidated schedules of investments, exceeded the market value of the securities on loan.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by 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, iShares MSCI Emerging Markets Energy Capped, iShares MSCI Emerging Markets Minimum Volatility and iShares MSCI Emerging Markets Small-Cap ETFs, 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 ETF through December 31, 2014 in order to limit total annual operating expenses to 0.25% of average daily net assets.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
85 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee based on the average daily net assets of each Fund as follows:
| iShares ETF |
Investment Advisory Fee |
|||
| MSCI Emerging Markets Asia |
0.68 | % | ||
| MSCI Emerging Markets Growth |
0.68 | |||
| MSCI 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 ETFs 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”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014 each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Funds retain a portion of securities lending income and remit a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) each Fund retains 75% of securities lending income (commencing January 1, 2015 the amount each Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, each Fund retained 65% of securities lending income and paid no collateral investment fees.
For the six months ended February 28, 2014, each Fund paid to BTC the following amounts in total for securities lending agent services and collateral investment fees:
| iShares ETF |
Fees Paid to BTC |
|||
| MSCI BRIC |
$ | 44,614 | ||
| MSCI Emerging Markets Asia |
1,846 | |||
| MSCI Emerging Markets Consumer Discretionary |
396 | |||
| MSCI Emerging Markets Energy Capped |
76 | |||
| MSCI Emerging Markets Growth |
331 | |||
| MSCI Emerging Markets Minimum Volatility |
45,495 | |||
| MSCI Emerging Markets Small-Cap |
7,001 | |||
| MSCI Emerging Markets Value |
431 | |||
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Funds and BTC) and pursuant to a securities lending agreement, (i) each Fund will receive for the remainder
| 86 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
of that calendar year 80% of securities lending income (for any Hurdle Date after January 1, 2015, each Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
The iShares MSCI Emerging Markets Asia ETF and iShares MSCI Emerging Markets Small-Cap ETF received payments from BTC to compensate for foregone securities lending revenue. The payments are reported in the consolidated statements of operations under “Payment from affiliate”.
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, 2014 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI BRIC |
$ | 14,755,609 | $ | 42,669,276 | ||||
| MSCI Emerging Markets Asia |
3,692,924 | 1,254,238 | ||||||
| MSCI Emerging Markets Consumer Discretionary |
1,749,073 | 184,747 | ||||||
| MSCI Emerging Markets Energy Capped |
179,524 | 171,838 | ||||||
| MSCI Emerging Markets Growth |
750,418 | 771,142 | ||||||
| MSCI Emerging Markets Minimum Volatility |
442,652,681 | 684,971,378 | ||||||
| MSCI Emerging Markets Small-Cap |
7,702,391 | 3,505,921 | ||||||
| MSCI Emerging Markets Value |
5,662,123 | 2,202,489 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2014 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI BRIC |
$ | — | $ | 39,527,631 | ||||
| MSCI Emerging Markets Consumer Discretionary |
1,235,754 | — | ||||||
| MSCI Emerging Markets Minimum Volatility |
111,190,843 | 288,184,373 | ||||||
| MSCI Emerging Markets Value |
3,296,483 | — | ||||||
| 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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
87 |
Table of Contents
Notes to Consolidated 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 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. | 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, 2013, 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 ETF | Non- Expiring a |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||
| MSCI BRIC |
$ | 104,204,792 | $ | 1,540,740 | $ | 11,268,086 | $ | 7,760,558 | $ | 124,774,176 | ||||||||||
| MSCI Emerging Markets Asia |
97,875 | — | — | — | 97,875 | |||||||||||||||
| MSCI Emerging Markets Consumer Discretionary |
769,815 | — | — | — | 769,815 | |||||||||||||||
| MSCI Emerging Markets Energy Capped |
913,361 | — | — | — | 913,361 | |||||||||||||||
| MSCI Emerging Markets Growth |
498,606 | — | — | — | 498,606 | |||||||||||||||
| MSCI Emerging Markets Minimum Volatility |
1,230,114 | — | — | — | 1,230,114 | |||||||||||||||
| MSCI Emerging Markets Small-Cap |
8,288,581 | — | — | — | 8,288,581 | |||||||||||||||
| MSCI Emerging Markets Value |
433,576 | — | — | — | 433,576 | |||||||||||||||
| 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, 2014, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares ETF | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| MSCI BRIC |
$ | 475,357,508 | $ | 57,588,063 | $ | (102,699,510 | ) | $ | (45,111,447 | ) | ||||||
| MSCI Emerging Markets Asia |
36,008,049 | 4,035,667 | (3,859,186 | ) | 176,481 | |||||||||||
| MSCI Emerging Markets Consumer Discretionary |
5,276,426 | 704,317 | (410,990 | ) | 293,327 | |||||||||||
| 88 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| MSCI Emerging Markets Energy Capped |
$ | 2,372,146 | $ | 40,845 | $ | (664,647 | ) | $ | (623,802 | ) | ||||||
| MSCI Emerging Markets Growth |
5,368,496 | 616,670 | (493,795 | ) | 122,875 | |||||||||||
| MSCI Emerging Markets Minimum Volatility |
2,190,446,699 | 142,356,939 | (225,055,799 | ) | (82,698,860 | ) | ||||||||||
| MSCI Emerging Markets Small-Cap |
39,192,836 | 4,418,114 | (4,835,919 | ) | (417,805 | ) | ||||||||||
| MSCI Emerging Markets Value |
19,387,023 | 695,481 | (2,610,234 | ) | (1,914,753 | ) | ||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ consolidated financial statements.
| 6. | LINE OF CREDIT |
The Funds, along with certain other iShares funds, are parties to a $150 million credit agreement with State Street Bank and Trust Company, which expires October 29, 2014. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings. 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 securities of certain foreign markets.
For the six months ended February 28, 2014, the maximum amounts borrowed, the average borrowings and the weighted average interest rates under the credit agreement were as follows:
| iShares ETF | Maximum Amount Borrowed |
Average Borrowings |
Weighted Average Interest Rates |
|||||||||
| MSCI BRIC |
$ | 1,165,000 | $ | 66,215 | 1.17 | % | ||||||
| MSCI Emerging Markets Asia |
115,000 | 7,541 | 1.17 | |||||||||
| MSCI Emerging Markets Small-Cap |
200,000 | 12,017 | 1.17 | |||||||||
| MSCI Emerging Markets Value |
56,000 | 2,785 | 1.17 | |||||||||
The iShares MSCI Emerging Markets Consumer Discretionary ETF, the iShares MSCI Emerging Markets Energy Capped ETF, the iShares MSCI Emerging Markets Growth ETF, and the iShares MSCI Emerging Markets Minimum Volatility ETF did not borrow under the credit agreement during the six months ended February 28, 2014.
| 7. | 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.
| NOTES TO CONSOLIDATED 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 ETF | 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 |
||||||||||||||||||||||||
| MSCI BRIC |
$ | 0.183764 | $ | — | $ | 0.043759 | $ | 0.227523 | 81 | % | — | % | 19 | % | 100 | % | ||||||||||||||||
| MSCI Emerging Markets Asia |
0.775928 | — | 0.174300 | 0.950228 | 82 | — | 18 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Consumer Discretionary |
0.094505 | — | 0.122915 | 0.217420 | 43 | — | 57 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Energy Capped |
0.202049 | — | 0.038291 | 0.240340 | 84 | — | 16 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Growth |
0.335223 | — | 0.121457 | 0.456680 | 73 | — | 27 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Minimum Volatility |
0.682834 | — | 0.148825 | 0.831659 | 82 | — | 18 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Small-Cap |
0.583818 | — | 0.153146 | 0.736964 | 79 | — | 21 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Value |
0.337601 | — | 0.119439 | 0.457040 | 74 | — | 26 | 100 | ||||||||||||||||||||||||
| 90 | 2014 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.
©2014 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.
iS-SAR-810-0214
Table of Contents
FEBRUARY 28, 2014
|
2014 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI All Country World Minimum Volatility ETF | ACWV | NYSE Arca |
| Ø | iShares MSCI Emerging Markets EMEA ETF | EEME | NASDAQ |
| Ø | iShares MSCI Frontier 100 ETF | FM | NYSE Arca |
| Ø | iShares MSCI World ETF | URTH | NYSE Arca |
Table of Contents
| 5 | ||||
| 9 | ||||
| 9 | ||||
| 10 | ||||
| 10 | ||||
| 15 | ||||
| 18 | ||||
| 20 | ||||
| 35 | ||||
| 41 | ||||
| 45 | ||||
| 55 |
Table of Contents
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
Performance as of February 28, 2014
The iShares MSCI All Country World Minimum Volatility ETF (the “Fund”) seeks to track the investment results of an index composed of developed and emerging market equities that, in the aggregate, have lower volatility characteristics relative to the broader developed and emerging equity markets, as represented by the MSCI ACWI Minimum Volatility (USD) Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.63%, net of fees, while the total return for the Index was 7.54%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
10.33% | 9.93% | 9.94% | 10.33% | 9.93% | 9.94% | ||||||||||||||||||||
| Since Inception |
13.13% | 13.04% | 12.79% | 33.91% | 33.65% | 32.97% | ||||||||||||||||||||
The inception date of the Fund was 10/18/11. The first day of secondary market trading was 10/20/11.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 9 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,076.30 | $ | 1.03 | $ | 1,000.00 | $ | 1,023.80 | $ | 1.00 | 0.20% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 9 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS EMEA ETF
Performance as of February 28, 2014
The iShares MSCI Emerging Markets EMEA ETF (the “Fund”) seeks to track the investment results of an index composed of European, Middle Eastern and African emerging market equities, as represented by the MSCI Emerging Markets EMEA Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 3.39%, net of fees, while the total return for the Index was 3.73%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(6.40)% | (6.48)% | (6.07)% | (6.40)% | (6.48)% | (6.07)% | ||||||||||||||||||||
| Since Inception |
1.04% | 0.90% | 1.56% | 2.20% | 1.92% | 3.33% | ||||||||||||||||||||
The inception date of the Fund was 1/18/12. The first day of secondary market trading was 1/19/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 9 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,033.90 | $ | 2.47 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 9 for more information. |
| * | Excludes money market funds. |
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI FRONTIER 100 ETF
Performance as of February 28, 2014
The iShares MSCI Frontier 100 ETF (the “Fund”) seeks to track the investment results of an index composed of frontier market equities, as represented by the MSCI Frontier Markets 100 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 14.44%, net of fees, while the total return for the Index was 14.90%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
21.83% | 21.02% | 22.33% | 21.83% | 21.02% | 22.33% | ||||||||||||||||||||
| Since Inception |
24.54% | 25.63% | 25.04% | 37.95% | 39.71% | 38.79% | ||||||||||||||||||||
The inception date of the Fund was 9/12/12. The first day of secondary market trading was 9/13/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 9 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,144.40 | $ | 4.20 | $ | 1,000.00 | $ | 1,020.90 | $ | 3.96 | 0.79% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 9 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI WORLD ETF
Performance as of February 28, 2014
The iShares MSCI World ETF (the “Fund”) seeks to track the investment results of an index composed of developed market equities, as represented by the MSCI World Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 14.67%, net of fees, while the total return for the Index was 14.67%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
21.59% | 21.22% | 21.68% | 21.59% | 21.22% | 21.68% | ||||||||||||||||||||
| Since Inception |
19.22% | 19.36% | 19.06% | 45.61% | 45.95% | 45.25% | ||||||||||||||||||||
The inception date of the Fund was 1/10/12. The first day of secondary market trading was 1/12/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 9 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,146.70 | $ | 1.28 | $ | 1,000.00 | $ | 1,023.60 | $ | 1.20 | 0.24% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 9 for more information. |
| * | Excludes money market funds. |
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| ABOUT FUND PERFORMANCE / SHAREHOLDER EXPENSES |
9 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2014
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2014
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2014
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS EMEA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EMEA ETF
February 28, 2014
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EMEA ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI FRONTIER 100 ETF
February 28, 2014
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRONTIER 100 ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2014
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| 26 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| 28 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| 30 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| 32 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2014
| 34 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2014
| iShares MSCI All Country World Minimum Volatility ETF |
iShares MSCI Emerging Markets |
iShares MSCI 100 ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 994,014,707 | $ | 10,678,018 | $ | 497,096,201 | ||||||
| Affiliated (Note 2) |
29,505,383 | 24,653 | 1,266,706 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 1,023,520,090 | $ | 10,702,671 | $ | 498,362,907 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 1,108,264,519 | $ | 9,856,448 | $ | 544,089,228 | ||||||
| Affiliated (Note 2) |
29,505,383 | 24,653 | 1,266,706 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
1,137,769,902 | 9,881,101 | 545,355,934 | |||||||||
| Foreign currency, at valueb |
493,768 | 9,158 | 308,533 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
4,443,969 | 28,716 | 755 | |||||||||
| Dividends and interest |
3,221,284 | 166 | 2,434,941 | |||||||||
| Capital shares sold |
— | — | 1,416,503 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
1,145,928,923 | 9,919,141 | 549,516,666 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
2,333,466 | 34,122 | 1,417,257 | |||||||||
| Collateral for securities on loan (Note 1) |
28,713,434 | 20,208 | — | |||||||||
| Deferred foreign capital gains taxes (Note 1) |
— | — | 749,979 | |||||||||
| Investment advisory fees (Note 2) |
167,552 | 3,648 | 316,077 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
31,214,452 | 57,978 | 2,483,313 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,114,714,471 | $ | 9,861,163 | $ | 547,033,353 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 1,005,959,212 | $ | 10,937,826 | $ | 502,428,249 | ||||||
| Undistributed (distributions in excess of) net investment income |
3,145,380 | (3,658 | ) | 1,693,975 | ||||||||
| Accumulated net realized loss |
(8,672,275 | ) | (251,435 | ) | (3,445,555 | ) | ||||||
| Net unrealized appreciation (depreciation) |
114,282,154 | (821,570 | ) | 46,356,684 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,114,714,471 | $ | 9,861,163 | $ | 547,033,353 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
17,500,000 | 200,000 | 15,900,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 63.70 | $ | 49.31 | $ | 34.40 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $27,835,585, $19,064 and $ —, respectively. See Note 1. |
| b | Cost of foreign currency: $490,472, $9,155 and $308,170, 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 |
35 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI World ETF |
||||
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 130,838,485 | ||
| Affiliated (Note 2) |
1,262,962 | |||
|
|
|
|||
| Total cost of investments |
$ | 132,101,447 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 139,893,823 | ||
| Affiliated (Note 2) |
1,296,336 | |||
|
|
|
|||
| Total fair value of investments |
141,190,159 | |||
| Foreign currency, at valueb |
157,492 | |||
| Receivables: |
||||
| Investment securities sold |
372,383 | |||
| Due from custodian (Note 4) |
1,334,484 | |||
| Dividends and interest |
395,164 | |||
|
|
|
|||
| Total Assets |
143,449,682 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
1,792,173 | |||
| Collateral for securities on loan (Note 1) |
784,913 | |||
| Investment advisory fees (Note 2) |
24,065 | |||
|
|
|
|||
| Total Liabilities |
2,601,151 | |||
|
|
|
|||
| NET ASSETS |
$ | 140,848,531 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 130,392,861 | ||
| Undistributed net investment income |
705,380 | |||
| Undistributed net realized gain |
657,780 | |||
| Net unrealized appreciation |
9,092,510 | |||
|
|
|
|||
| NET ASSETS |
$ | 140,848,531 | ||
|
|
|
|||
| Shares outstandingc |
2,000,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 70.42 | ||
|
|
|
|||
| a | Securities on loan with a value of $765,824. See Note 1. |
| b | Cost of foreign currency: $155,229. |
| c | $0.001 par value, number of shares authorized: 500 million. |
See notes to financial statements.
| 36 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI All Country World Minimum Volatility ETF |
iShares MSCI Emerging Markets |
iShares MSCI 100 ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 13,841,095 | $ | 67,692 | $ | 4,242,101 | ||||||
| Interest — unaffiliated |
— | — | 3,014 | |||||||||
| Interest — affiliated (Note 2) |
202 | 1 | 762 | |||||||||
| Securities lending income — affiliated (Note 2) |
52,230 | 486 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
13,893,527 | 68,179 | 4,245,877 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,773,559 | 31,556 | 1,520,594 | |||||||||
| Commitment fees (Note 6) |
— | — | 353 | |||||||||
| Interest expense (Note 6) |
— | — | 227 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,773,559 | 31,556 | 1,521,174 | |||||||||
| Less investment advisory fees waived (Note 2) |
(715,208 | ) | (8,817 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
1,058,351 | 22,739 | 1,521,174 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
12,835,176 | 45,440 | 2,724,703 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliatedb |
(7,899,337 | ) | (105,718 | ) | (1,418,369 | ) | ||||||
| Investments — affiliated (Note 2) |
(31,409 | ) | — | — | ||||||||
| In-kind redemptions — unaffiliated |
5,487,166 | — | — | |||||||||
| In-kind redemptions — affiliated (Note 2) |
2,798 | — | — | |||||||||
| Foreign currency transactions |
(124,482 | ) | (221 | ) | (213,794 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(2,565,264 | ) | (105,939 | ) | (1,632,163 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
|
Investmentsc |
65,939,638 | (66,831 | ) | 47,830,282 | ||||||||
| Translation of assets and liabilities in foreign currencies |
43,544 | 210 | 6,115 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
65,983,182 | (66,621 | ) | 47,836,397 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
63,417,918 | (172,560 | ) | 46,204,234 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 76,253,094 | $ | (127,120 | ) | $ | 48,928,937 | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $521,781, $10,680 and $438,383, respectively. |
| b | Net of foreign capital gains taxes of $ —, $ — and $63,314, respectively. |
| c | Net of deferred foreign capital gains taxes of $ —, $ — and $638,193, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
37 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
|
World ETF |
||||
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 1,306,267 | ||
| Dividends — affiliated (Note 2) |
2,312 | |||
| Interest — affiliated (Note 2) |
12 | |||
| Securities lending income — affiliated (Note 2) |
1,227 | |||
|
|
|
|||
| Total investment income |
1,309,818 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
114,099 | |||
|
|
|
|||
| Total expenses |
114,099 | |||
|
|
|
|||
| Net investment income |
1,195,719 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(193,730 | ) | ||
| In-kind redemptions — unaffiliated |
911,279 | |||
| In-kind redemptions — affiliated (Note 2) |
2,215 | |||
| Foreign currency transactions |
(1,715 | ) | ||
|
|
|
|||
| Net realized gain |
718,049 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
9,442,294 | |||
| Translation of assets and liabilities in foreign currencies |
3,998 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
9,446,292 | |||
|
|
|
|||
| Net realized and unrealized gain |
10,164,341 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 11,360,060 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $29,416. |
See notes to financial statements.
| 38 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI All Country World Minimum Volatility ETF |
iShares MSCI Emerging Markets EMEA ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 12,835,176 | $ | 23,353,046 | $ | 45,440 | $ | 162,306 | ||||||||
| Net realized gain (loss) |
(2,565,264 | ) | 15,102,144 | (105,939 | ) | 437,250 | ||||||||||
| Net change in unrealized appreciation/depreciation |
65,983,182 | 28,767,070 | (66,621 | ) | (407,972 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
76,253,094 | 67,222,260 | (127,120 | ) | 191,584 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(14,311,207 | ) | (21,734,941 | ) | (61,483 | ) | (177,671 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(14,311,207 | ) | (21,734,941 | ) | (61,483 | ) | (177,671 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
81,964,054 | 492,714,983 | 5,251,709 | — | ||||||||||||
| Cost of shares redeemed |
(36,951,070 | ) | (109,218,290 | ) | — | (5,559,099 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
45,012,984 | 383,496,693 | 5,251,709 | (5,559,099 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
106,954,871 | 428,984,012 | 5,063,106 | (5,545,186 | ) | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
1,007,759,600 | 578,775,588 | 4,798,057 | 10,343,243 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 1,114,714,471 | $ | 1,007,759,600 | $ | 9,861,163 | $ | 4,798,057 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 3,145,380 | $ | 4,621,411 | $ | (3,658 | ) | $ | 12,385 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,300,000 | 8,200,000 | 100,000 | — | ||||||||||||
| Shares redeemed |
(600,000 | ) | (1,800,000 | ) | — | (100,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
700,000 | 6,400,000 | 100,000 | (100,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
39 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Frontier 100 ETF |
iShares MSCI World ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Period from to |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 2,724,703 | $ | 2,027,213 | $ | 1,195,719 | $ | 313,385 | ||||||||
| Net realized gain (loss) |
(1,632,163 | ) | (2,074,597 | ) | 718,049 | 1,592,421 | ||||||||||
| Net change in unrealized appreciation/depreciation |
47,836,397 | (1,479,713 | ) | 9,446,292 | (936,157 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
48,928,937 | (1,527,097 | ) | 11,360,060 | 969,649 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(788,946 | ) | (2,007,790 | ) | (575,540 | ) | (292,821 | ) | ||||||||
| Return of capital |
— | (180,295 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(788,946 | ) | (2,188,085 | ) | (575,540 | ) | (292,821 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
218,809,803 | 294,121,892 | 112,187,321 | 24,918,447 | ||||||||||||
| Cost of shares redeemed |
— | (10,323,151 | ) | (6,827,567 | ) | (11,580,026 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
218,809,803 | 283,798,741 | 105,359,754 | 13,338,421 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
266,949,794 | 280,083,559 | 116,144,274 | 14,015,249 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
280,083,559 | — | 24,704,257 | 10,689,008 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 547,033,353 | $ | 280,083,559 | $ | 140,848,531 | $ | 24,704,257 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 1,693,975 | $ | (241,782 | ) | $ | 705,380 | $ | 85,201 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
6,600,000 | 9,650,000 | 1,700,000 | 400,000 | ||||||||||||
| Shares redeemed |
— | (350,000 | ) | (100,000 | ) | (200,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
6,600,000 | 9,300,000 | 1,600,000 | 200,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Commencement of operations. |
See notes to financial statements.
| 40 | 2014 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 ETF |
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 59.99 | $ | 55.65 | $ | 50.02 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.75 | 1.68 | 1.49 | |||||||||
| Net realized and unrealized gainc |
3.81 | 4.20 | 4.67 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
4.56 | 5.88 | 6.16 | |||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.85 | ) | (1.54 | ) | (0.53 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.85 | ) | (1.54 | ) | (0.53 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 63.70 | $ | 59.99 | $ | 55.65 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
7.63 | %d | 10.69 | % | 12.41 | %d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 1,114,714 | $ | 1,007,760 | $ | 578,776 | ||||||
| Ratio of expenses to average net assetse |
0.20 | % | 0.20 | % | 0.23 | % | ||||||
| Ratio of expenses to average net assets prior to waived feese |
0.34 | % | 0.34 | % | 0.34 | % | ||||||
| Ratio of net investment income to average net assetse |
2.43 | % | 2.83 | % | 3.17 | % | ||||||
| Portfolio turnover ratef |
13 | % | 13 | % | 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, 2014, the year ended August 31, 2013 and the period ended August 31, 2012 were 12%, 13% and 22%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
41 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets EMEA ETF |
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 47.98 | $ | 51.72 | $ | 51.16 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.25 | 1.26 | 1.43 | |||||||||
| Net realized and unrealized gain (loss)c |
1.39 | (3.22 | ) | 0.02 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
1.64 | (1.96 | ) | 1.45 | ||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.31 | ) | (1.78 | ) | (0.89 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.31 | ) | (1.78 | ) | (0.89 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 49.31 | $ | 47.98 | $ | 51.72 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
3.39 | %d | (3.95 | )% | 2.91 | %d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 9,861 | $ | 4,798 | $ | 10,343 | ||||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | 0.49 | % | ||||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | 0.68 | % | ||||||
| Ratio of net investment income to average net assetse |
0.98 | % | 2.39 | % | 4.46 | % | ||||||
| Portfolio turnover ratef |
6 | % | 8 | % | 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.
| 42 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Frontier 100 ETF |
| Six months ended Feb. 28, 2014 (Unaudited) |
Period from to Aug. 31, 2013 |
|||||||
| Net asset value, beginning of period |
$ | 30.12 | $ | 25.25 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.23 | 0.67 | ||||||
| Net realized and unrealized gainc |
4.12 | 4.51 | ||||||
|
|
|
|
|
|||||
| Total from investment operations |
4.35 | 5.18 | ||||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.07 | ) | (0.28 | ) | ||||
| Return of capital |
— | (0.03 | ) | |||||
|
|
|
|
|
|||||
| Total distributions |
(0.07 | ) | (0.31 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 34.40 | $ | 30.12 | ||||
|
|
|
|
|
|||||
| Total return |
14.44 | %d | 20.54 | %d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 547,033 | $ | 280,084 | ||||
| Ratio of expenses to average net assetse |
0.79 | % | 0.79 | % | ||||
| Ratio of net investment income to average net assetse |
1.42 | % | 2.32 | % | ||||
| Portfolio turnover ratef |
7 | % | 18 | % | ||||
| 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, 2014 and period ended August 31, 2013 were 7% and 10%, 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 World ETF | ||||||||||||
| Six months Feb. 28, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 61.76 | $ | 53.45 | $ | 50.32 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.85 | 1.40 | 0.98 | |||||||||
| Net realized and unrealized gainc |
8.19 | 8.03 | 2.89 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
9.04 | 9.43 | 3.87 | |||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.38 | ) | (1.12 | ) | (0.74 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.38 | ) | (1.12 | ) | (0.74 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 70.42 | $ | 61.76 | $ | 53.45 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
14.67 | %d | 17.84 | % | 7.76 | %d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 140,849 | $ | 24,704 | $ | 10,689 | ||||||
| Ratio of expenses to average net assetse |
0.24 | % | 0.24 | % | 0.24 | % | ||||||
| Ratio of net investment income to average net assetse |
2.52 | % | 2.34 | % | 2.91 | % | ||||||
| Portfolio turnover ratef |
2 | % | 5 | % | 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.
| 44 | 2014 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 ETF | Diversification Classification |
|||
| MSCI All Country World Minimum Volatility |
Non-diversified | |||
| MSCI Emerging Markets EMEA |
Non-diversified | |||
| MSCI Frontier 100 |
Non-diversified | |||
| MSCI World |
Diversified | |||
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.
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.
Each Fund invests in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
The United States and the European Union have imposed economic sanctions on certain Russian individuals and a financial institution. The United States or the European Union could also institute broader sanctions on Russia. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities, impairing the ability of the iShares MSCI Emerging Markets EMEA ETF to buy, sell, receive or deliver those securities. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian securities.
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
| NOTES TO FINANCIAL STATEMENTS |
45 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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 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, reviews of 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
| 46 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
transparency of the instrument and is not necessarily an indication of the risk associated with investing in the 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 Global Valuation Committee’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 Funds’ investments according to the fair value hierarchy as of February 28, 2014. The breakdown of each Fund’s investments into major categories is disclosed in its respective schedule of investments.
| iShares ETF and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI All Country World Minimum Volatility |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,105,398,952 | $ | — | $ | — | $ | 1,105,398,952 | ||||||||
| Preferred Stocks |
2,865,567 | — | — | 2,865,567 | ||||||||||||
| Money Market Funds |
29,505,383 | — | — | 29,505,383 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,137,769,902 | $ | — | $ | — | $ | 1,137,769,902 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets EMEA |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 9,690,492 | $ | — | $ | — | $ | 9,690,492 | ||||||||
| Preferred Stocks |
165,956 | — | — | 165,956 | ||||||||||||
| Money Market Funds |
24,653 | — | — | 24,653 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 9,881,101 | $ | — | $ | — | $ | 9,881,101 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Frontier 100 |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 544,089,131 | $ | 97 | $ | — | $ | 544,089,228 | ||||||||
| Money Market Funds |
1,266,706 | — | — | 1,266,706 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 545,355,837 | $ | 97 | $ | — | $ | 545,355,934 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
47 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI World |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 139,944,814 | $ | — | $ | — | $ | 139,944,814 | ||||||||
| Preferred Stocks |
316,290 | — | — | 316,290 | ||||||||||||
| Money Market Funds |
929,055 | — | — | 929,055 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 141,190,159 | $ | — | $ | — | $ | 141,190,159 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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, 2014 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 or deferred as of February 28, 2014, 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.
| 48 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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.
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. 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 BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the statements of assets and liabilities. Income earned by the Funds from securities lending is disclosed in the statements of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. Each Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, a Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and a Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
As of February 28, 2014, the following Funds had securities on loan with a market value as disclosed in the Funds’ statements of assets and liabilities:
| iShares ETF | Market Value of Securities on Loan |
|||
| MSCI All Country World Minimum Volatility |
$ | 27,835,585 | ||
| MSCI Emerging Markets EMEA |
19,064 | |||
| MSCI World |
765,824 | |||
| NOTES TO FINANCIAL STATEMENTS |
49 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2014, the value of the related collateral, as disclosed in the Funds’ schedules of investments, exceeded the market value of the securities on loan.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by 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 ETF, 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 ETF in the amount of $708,818.
BFA has contractually agreed to waive a portion of its investment advisory fees for the iShares MSCI All Country World Minimum Volatility ETF through December 31, 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 six months ended February 28, 2014, BFA waived its investment advisory fees for iShares MSCI All Country World Minimum Volatility ETF in the amount of $6,390.
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 ETF | Investment Advisory Fee |
|||
| MSCI Emerging Markets EMEA |
0.68 | % | ||
| MSCI Frontier 100 |
0.79 | |||
| MSCI World |
0.24 | |||
BFA has contractually agreed to waive a portion of its investment advisory fees for the iShares MSCI Emerging Markets EMEA ETF 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”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014, each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral
| 50 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
investment fees. The Funds retain a portion of securities lending income and remit a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) the iShares MSCI All Country World Minimum Volatility ETF and iShares MSCI World ETF (the “Group 1 Funds”) retain 70% of securities lending income and (ii) the amount retained can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, each Fund retained 65% of securities lending income and paid no collateral investment fees.
Pursuant to a securities lending agreement effective January 1, 2014, (i) the iShares MSCI Emerging Markets EMEA ETF and iShares MSCI Frontier 100 ETF (the “Group 2 Funds”) retain 75% of securities lending income (commencing January 1, 2015 the amount each Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, each Fund retained 65% of securities lending income and paid no collateral investment fees.
For the six months ended February 28, 2014, each Fund paid to BTC the following amounts in total for securities lending agent services and collateral investment fees:
| iShares ETF | Fees Paid to BTC |
|||
| MSCI All Country World Minimum Volatility |
$ | 28,057 | ||
| MSCI Emerging Markets EMEA |
207 | |||
| MSCI World |
650 | |||
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Funds and BTC) and pursuant to a securities lending agreement, each Group 1 Fund will (i) receive for the remainder of that calendar year 75% of securities lending income and (ii) the amounts retained can never be less than 65% of the total of securities lending income plus the collateral investment fees. Each Group 2 Fund will (i) receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle date after January 1, 2015), each Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
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.
Cross trades for the six months ended February 28, 2014, if any, were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.
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.
| NOTES TO FINANCIAL STATEMENTS |
51 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Certain Funds, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the Fund’s underlying index.
Investments in issuers considered to be affiliates of the Funds (excluding money market funds) during the six months ended February 28, 2014, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:
| iShares ETF and Name of Affiliated Issuer |
Shares Held of Period |
Shares Purchased |
Shares Sold |
Shares Held at End of Period |
Value at of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| MSCI All Country World Minimum Volatility |
||||||||||||||||||||||||||||
| iShares India 50 ETF |
135,154 | 5,900 | (141,054 | ) | — | $ | — | $ | — | $ | (28,611 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| MSCI World |
||||||||||||||||||||||||||||
| BlackRock Inc. |
124 | 527 | (31 | ) | 620 | $ | 189,001 | $ | 729 | $ | 1,212 | |||||||||||||||||
| PNC Financial Services Group Inc. (The) |
436 | 1,853 | (109 | ) | 2,180 | 178,280 | 1,583 | 1,003 | ||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 367,281 | $ | 2,312 | $ | 2,215 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
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, 2014 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI All Country World Minimum Volatility |
$ | 135,070,274 | $ | 136,319,680 | ||||
| MSCI Emerging Markets EMEA |
572,852 | 535,949 | ||||||
| MSCI Frontier 100 |
244,997,578 | 29,056,143 | ||||||
| MSCI World |
2,948,093 | 1,790,696 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2014 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI All Country World Minimum Volatility |
$ | 75,142,920 | $ | 33,770,771 | ||||
| MSCI Emerging Markets EMEA |
5,229,082 | — | ||||||
| MSCI Frontier 100 |
1,597,481 | — | ||||||
| MSCI World |
111,115,950 | 6,776,669 | ||||||
| 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.
| 52 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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 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. | 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, 2013, the Funds’ fiscal year ended, the Funds had non-expiring capital loss carryforwards available to offset future realized capital gains as follows:
| iShares ETF | Non- Expiring |
|||
| MSCI All Country World Minimum Volatility |
$ | 1,844,397 | ||
| MSCI Emerging Markets EMEA |
55,073 | |||
| MSCI World |
18,886 | |||
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, 2014, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares ETF | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| MSCI All Country World Minimum Volatility |
$ | 1,025,786,235 | $ | 133,566,977 | $ | (21,583,310 | ) | $ | 111,983,667 | |||||||
| MSCI Emerging Markets EMEA |
10,709,686 | 651,889 | (1,480,474 | ) | (828,585 | ) | ||||||||||
| MSCI Frontier 100 |
500,224,360 | 64,791,787 | (19,660,213 | ) | 45,131,574 | |||||||||||
| MSCI World |
132,111,931 | 10,930,380 | (1,852,152 | ) | 9,078,228 | |||||||||||
| NOTES TO FINANCIAL STATEMENTS |
53 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.
| 6. | LINE OF CREDIT |
The iShares MSCI Frontier 100 ETF, along with certain other iShares funds, is a party to a $150 million credit agreement with State Street Bank and Trust Company, which expires October 29, 2014. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings. 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 securities of certain foreign markets.
For the six months ended February 28, 2014, the Fund’s maximum amount borrowed, the average borrowings and the weighted average interest rate under the credit agreement were $700,000, $38,674 and 1.17%, respectively.
| 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.
| 54 | 2014 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 ETF | 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 |
||||||||||||||||||||||||
| MSCIAll Country World Minimum Volatility |
$ | 0.731954 | $ | — | $ | 0.114863 | $ | 0.846817 | 86 | % | — | % | 14 | % | 100 | % | ||||||||||||||||
| MSCI Frontier 100 |
0.020099 | — | 0.046199 | 0.066298 | 30 | — | 70 | 100 | ||||||||||||||||||||||||
| MSCI World |
0.327634 | — | 0.056059 | 0.383693 | 85 | — | 15 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
55 |
Table of Contents
Notes:
| 56 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
57 |
Table of Contents
Notes:
| 58 | 2014 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.
©2014 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.
iS-SAR-811-0214
Table of Contents
FEBRUARY 28, 2014
| 2014 SEMI-ANNUAL REPORT (UNAUDITED) |
|
iShares, Inc.
| Ø | iShares MSCI Global Agriculture Producers ETF | VEGI | NYSE Arca |
| Ø | iShares MSCI Global Energy Producers ETF | FILL | NYSE Arca |
| Ø | iShares MSCI Global Gold Miners ETF | RING | NYSE Arca |
| Ø | iShares MSCI Global Metals & Mining Producers ETF | PICK | NYSE Arca |
| Ø | iShares MSCI Global Silver Miners ETF | SLVP | NYSE Arca |
Table of Contents
| 5 | ||||
| 10 | ||||
| 10 | ||||
| 11 | ||||
| 11 | ||||
| 14 | ||||
| 18 | ||||
| 19 | ||||
| 24 | ||||
| 25 | ||||
| 32 | ||||
| 37 | ||||
| 46 |
Table of Contents
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS ETF
Performance as of February 28, 2014
The iShares MSCI Global Agriculture Producers ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in the business of agriculture, as represented by the MSCI ACWI Select Agriculture Producers Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.43%, net of fees, while the total return for the Index was 7.71%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(3.44)% | (3.72)% | (3.06)% | (3.44)% | (3.72)% | (3.06)% | ||||||||||||||||||||
| Since Inception |
4.04% | 4.13% | 4.34% | 8.58% | 8.77% | 9.26% | ||||||||||||||||||||
The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,074.30 | $ | 1.95 | $ | 1,000.00 | $ | 1,022.90 | $ | 1.91 | 0.38% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 10 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
Performance as of February 28, 2014
The iShares MSCI Global Energy Producers ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in the business of energy exploration and production, as represented by the MSCI ACWI Select Energy Producers Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 7.49%, net of fees, while the total return for the Index was 7.48%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
8.91% | 9.35% | 8.73% | 8.91% | 9.35% | 8.73% | ||||||||||||||||||||
| Since Inception |
4.10% | 4.12% | 4.00% | 8.71% | 8.76% | 8.52% | ||||||||||||||||||||
The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,074.90 | $ | 2.01 | $ | 1,000.00 | $ | 1,022.90 | $ | 1.96 | 0.39% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 10 for more information. |
| * | Excludes money market funds. |
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL GOLD MINERS ETF
Performance as of February 28, 2014
The iShares MSCI Global Gold Miners ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in the business of gold mining, as represented by the MSCI ACWI Select Gold Miners Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was -4.91%, net of fees, while the total return for the Index was -4.89%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(30.85)% | (30.53)% | (30.84)% | (30.85)% | (30.53)% | (30.84)% | ||||||||||||||||||||
| Since Inception |
(31.91)% | (31.88)% | (31.79)% | (55.03)% | (54.99)% | (54.94)% | ||||||||||||||||||||
The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 950.90 | $ | 1.89 | $ | 1,000.00 | $ | 1,022.90 | $ | 1.96 | 0.39% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 10 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
Performance as of February 28, 2014
The iShares MSCI Global Metals & Mining Producers ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in mining, extraction or production of diversified metals, excluding gold and silver, as represented by the MSCI ACWI Select Metals & Mining Producers ex Gold & Silver Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 9.42%, net of fees, while the total return for the Index was 9.69%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(5.96)% | (4.38)% | (5.96)% | (5.96)% | (4.38)% | (5.96)% | ||||||||||||||||||||
| Since Inception |
(8.97)% | (8.61)% | (9.04)% | (17.75)% | (17.08)% | (17.91)% | ||||||||||||||||||||
The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,094.20 | $ | 2.03 | $ | 1,000.00 | $ | 1,022.90 | $ | 1.96 | 0.39% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 10 for more information. |
| * | Excludes money market funds. |
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL SILVER MINERS ETF
Performance as of February 28, 2014
The iShares MSCI Global Silver Miners ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in the business of silver mining, as represented by the MSCI ACWI Select Silver Miners Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was -4.59%, net of fees, while the total return for the Index was -4.52%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(25.98)% | (25.81)% | (26.13)% | (25.98)% | (25.81)% | (26.13)% | ||||||||||||||||||||
| Since Inception |
(25.23)% | (25.03)% | (25.13)% | (45.36)% | (45.07)% | (45.28)% | ||||||||||||||||||||
The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Beginning (9/1/13) |
Ending (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 954.10 | $ | 1.89 | $ | 1,000.00 | $ | 1,022.90 | $ | 1.96 | 0.39% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 10 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS ETF
February 28, 2014
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
February 28, 2014
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
February 28, 2014
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL GOLD MINERS ETF
February 28, 2014
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2014
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2014
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2014
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL SILVER MINERS ETF
February 28, 2014
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Global Agriculture Producers ETF |
iShares MSCI Global Energy Producers ETF |
iShares MSCI Global Gold |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 39,182,331 | $ | 4,889,553 | $ | 68,163,732 | ||||||
| Affiliated (Note 2) |
1,282,758 | 12,976 | 306,996 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 40,465,089 | $ | 4,902,529 | $ | 68,470,728 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 37,703,117 | $ | 5,084,978 | $ | 57,012,613 | ||||||
| Affiliated (Note 2) |
1,275,811 | 12,976 | 306,996 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
38,978,928 | 5,097,954 | 57,319,609 | |||||||||
| Foreign currency, at valueb |
32,912 | 5,787 | 19,956 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
1,097,389 | — | 493,676 | |||||||||
| Dividends and interest |
49,869 | 22,625 | 29,460 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
40,159,098 | 5,126,366 | 57,862,701 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
1,115,591 | — | 505,107 | |||||||||
| Collateral for securities on loan (Note 1) |
1,003,345 | 12,231 | 286,600 | |||||||||
| Investment advisory fees (Note 2) |
10,996 | 1,482 | 16,183 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
2,129,932 | 13,713 | 807,890 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 38,029,166 | $ | 5,112,653 | $ | 57,054,811 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 39,249,417 | $ | 5,040,238 | $ | 76,338,403 | ||||||
| Undistributed net investment income |
127,195 | 17,201 | 33,054 | |||||||||
| Undistributed net realized gain (accumulated net realized loss) |
136,966 | (140,262 | ) | (8,165,755 | ) | |||||||
| Net unrealized appreciation (depreciation) |
(1,484,412 | ) | 195,476 | (11,150,891 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 38,029,166 | $ | 5,112,653 | $ | 57,054,811 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
1,450,000 | 200,000 | 5,200,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 26.23 | $ | 25.56 | $ | 10.97 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $923,198, $11,368 and $263,842, respectively. See Note 1. |
| b | Cost of foreign currency: $32,454, $5,733 and $19,691, 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 |
25 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2014
| iShares MSCI Global Metals & Mining Producers ETF |
iShares MSCI Global Silver |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 134,336,330 | $ | 10,933,553 | ||||
| Affiliated (Note 2) |
1,926,989 | 210,941 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 136,263,319 | $ | 11,144,494 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 136,176,288 | $ | 10,485,592 | ||||
| Affiliated (Note 2) |
1,926,989 | 210,941 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
138,103,277 | 10,696,533 | ||||||
| Foreign currency, at valueb |
53,919 | 6,574 | ||||||
| Receivables: |
||||||||
| Investment securities sold |
— | 361,819 | ||||||
| Dividends and interest |
123,552 | 5,059 | ||||||
|
|
|
|
|
|||||
| Total Assets |
138,280,748 | 11,069,985 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
— | 360,919 | ||||||
| Collateral for securities on loan (Note 1) |
1,837,160 | 210,690 | ||||||
| Investment advisory fees (Note 2) |
40,570 | 3,016 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
1,877,730 | 574,625 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 136,403,018 | $ | 10,495,360 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 132,013,936 | $ | 11,761,991 | ||||
| Distributions in excess of net investment income |
(342,875 | ) | (63,041 | ) | ||||
| Undistributed net realized gain (accumulated net realized loss) |
2,891,827 | (755,598 | ) | |||||
| Net unrealized appreciation (depreciation) |
1,840,130 | (447,992 | ) | |||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 136,403,018 | $ | 10,495,360 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
7,050,000 | 800,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 19.35 | $ | 13.12 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $1,723,472 and $199,451, respectively. See Note 1. |
| b | Cost of foreign currency: $53,069 and $6,610, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to financial statements.
| 26 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Global Agriculture Producers ETF |
iShares MSCI Global Energy Producers ETF |
iShares MSCI Global Gold |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 454,482 | $ | 64,750 | $ | 264,170 | ||||||
| Dividends — affiliated (Note 2) |
1,113 | — | — | |||||||||
| Interest — affiliated (Note 2) |
7 | 1 | 5 | |||||||||
| Securities lending income — affiliated (Note 2) |
5,199 | 140 | 9,117 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
460,801 | 64,891 | 273,292 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
78,690 | 9,760 | 78,413 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
78,690 | 9,760 | 78,413 | |||||||||
| Less investment advisory fees waived (Note 2) |
(1,289 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
77,401 | 9,760 | 78,413 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
383,400 | 55,131 | 194,879 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(484,368 | ) | (90,370 | ) | (4,032,577 | ) | ||||||
| Investments — affiliated (Note 2) |
(3,608 | ) | — | — | ||||||||
| In-kind redemptions — unaffiliated |
790,947 | — | — | |||||||||
| In-kind redemptions — affiliated (Note 2) |
583 | — | — | |||||||||
| Foreign currency transactions |
(3,193 | ) | 321 | (141 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
300,361 | (90,049 | ) | (4,032,718 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
1,893,655 | 395,625 | 4,521,981 | |||||||||
| Translation of assets and liabilities in foreign currencies |
2,259 | 260 | 909 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
1,895,914 | 395,885 | 4,522,890 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
2,196,275 | 305,836 | 490,172 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 2,579,675 | $ | 360,967 | $ | 685,051 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $32,560, $3,997 and $31,032, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
27 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2014
| iShares MSCI Global Metals & Mining Producers ETF |
iShares MSCI Global Silver |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 2,068,075 | $ | 43,816 | ||||
| Interest — affiliated (Note 2) |
26 | 1 | ||||||
| Securities lending income — affiliated (Note 2) |
33,713 | 1,770 | ||||||
|
|
|
|
|
|||||
| Total investment income |
2,101,814 | 45,587 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
343,231 | 14,353 | ||||||
|
|
|
|
|
|||||
| Total expenses |
343,231 | 14,353 | ||||||
|
|
|
|
|
|||||
| Net investment income |
1,758,583 | 31,234 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(4,602,881 | ) | (451,120 | ) | ||||
| In-kind redemptions — unaffiliated |
10,731,513 | — | ||||||
| Foreign currency transactions |
(14,278 | ) | 475 | |||||
|
|
|
|
|
|||||
| Net realized gain (loss) |
6,114,354 | (450,645 | ) | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
16,613,369 | 614,515 | ||||||
| Translation of assets and liabilities in foreign currencies |
6,426 | (210 | ) | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
16,619,795 | 614,305 | ||||||
|
|
|
|
|
|||||
| Net realized and unrealized gain |
22,734,149 | 163,660 | ||||||
|
|
|
|
|
|||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 24,492,732 | $ | 194,894 | ||||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $118,400 and $3,779, respectively. |
See notes to financial statements.
| 28 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Global Agriculture Producers ETF |
iShares MSCI Global Energy Producers ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 383,400 | $ | 391,116 | $ | 55,131 | $ | 125,538 | ||||||||
| Net realized gain (loss) |
300,361 | (138,365 | ) | (90,049 | ) | (25,626 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
1,895,914 | (3,296,695 | ) | 395,885 | 135,914 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
2,579,675 | (3,043,944 | ) | 360,967 | 235,826 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(372,944 | ) | (289,367 | ) | (59,652 | ) | (125,608 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(372,944 | ) | (289,367 | ) | (59,652 | ) | (125,608 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
5,267,408 | 29,084,665 | — | — | ||||||||||||
| Cost of shares redeemed |
(5,160,937 | ) | — | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
106,471 | 29,084,665 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
2,313,202 | 25,751,354 | 301,315 | 110,218 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
35,715,964 | 9,964,610 | 4,811,338 | 4,701,120 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 38,029,166 | $ | 35,715,964 | $ | 5,112,653 | $ | 4,811,338 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 127,195 | $ | 116,739 | $ | 17,201 | $ | 21,722 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
200,000 | 1,050,000 | — | — | ||||||||||||
| Shares redeemed |
(200,000 | ) | — | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
— | 1,050,000 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
29 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Global Gold Miners ETF |
iShares MSCI Global Metals & Mining Producers ETF |
|||||||||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 194,879 | $ | 443,449 | $ | 1,758,583 | $ | 5,685,352 | ||||||||
| Net realized gain (loss) |
(4,032,718 | ) | (3,263,008 | ) | 6,114,354 | 2,266,989 | ||||||||||
| Net change in unrealized appreciation/depreciation |
4,522,890 | (11,579,719 | ) | 16,619,795 | (14,102,532 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
685,051 | (14,399,278 | ) | 24,492,732 | (6,150,191 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(210,580 | ) | (426,169 | ) | (3,199,452 | ) | (4,641,648 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(210,580 | ) | (426,169 | ) | (3,199,452 | ) | (4,641,648 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
18,295,321 | 33,445,251 | 11,921,973 | 172,833,069 | ||||||||||||
| Cost of shares redeemed |
— | (12,419,198 | ) | (119,620,295 | ) | (62,756,852 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
18,295,321 | 21,026,053 | (107,698,322 | ) | 110,076,217 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
18,769,792 | 6,200,606 | (86,405,042 | ) | 99,284,378 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
38,285,019 | 32,084,413 | 222,808,060 | 123,523,682 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 57,054,811 | $ | 38,285,019 | $ | 136,403,018 | $ | 222,808,060 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 33,054 | $ | 48,755 | $ | (342,875 | ) | $ | 1,097,994 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,900,000 | 2,450,000 | 600,000 | 8,950,000 | ||||||||||||
| Shares redeemed |
— | (750,000 | ) | (5,850,000 | ) | (3,150,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
1,900,000 | 1,700,000 | (5,250,000 | ) | 5,800,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 30 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Global Silver Miners ETF |
||||||||
| Six months ended February 28, 2014 (Unaudited) |
Year ended August 31, 2013 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 31,234 | $ | 32,646 | ||||
| Net realized loss |
(450,645 | ) | (219,152 | ) | ||||
| Net change in unrealized appreciation/depreciation |
614,305 | (720,832 | ) | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
194,894 | (907,338 | ) | |||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(87,359 | ) | (44,671 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(87,359 | ) | (44,671 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
3,428,923 | 5,816,496 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
3,428,923 | 5,816,496 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
3,536,458 | 4,864,487 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
6,958,902 | 2,094,415 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 10,495,360 | $ | 6,958,902 | ||||
|
|
|
|
|
|||||
| Distributions in excess of net investment income included in net assets at end of period |
$ | (63,041 | ) | $ | (6,916 | ) | ||
|
|
|
|
|
|||||
| SHARES ISSUED |
||||||||
| Shares sold |
300,000 | 400,000 | ||||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
300,000 | 400,000 | ||||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
31 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Global Agriculture Producers ETF |
| Six months ended |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 24.63 | $ | 24.91 | $ | 24.88 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.25 | 0.50 | 0.28 | |||||||||
| Net realized and unrealized gain (loss)c |
1.58 | (0.46 | ) | (0.05 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
1.83 | 0.04 | 0.23 | |||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.23 | ) | (0.32 | ) | (0.20 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.23 | ) | (0.32 | ) | (0.20 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 26.23 | $ | 24.63 | $ | 24.91 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
7.43 | %d | 0.10 | % | 0.97 | %d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 38,029 | $ | 35,716 | $ | 9,965 | ||||||
| Ratio of expenses to average net assetse |
0.38 | % | 0.38 | % | 0.38 | % | ||||||
| Ratio of expenses to average net assets prior to waived feese |
0.39 | % | 0.39 | % | 0.39 | % | ||||||
| Ratio of net investment income to average net assetse |
1.90 | % | 1.87 | % | 1.93 | % | ||||||
| Portfolio turnover ratef |
8 | % | 6 | % | 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 six months ended February 28, 2014, the year ended August 31, 2013 and the period ended August 31, 2012 were 8%, 6% and 6%, respectively. See Note 4. |
See notes to financial statements.
| 32 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Global Energy Producers ETF |
| Six months ended |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 24.06 | $ | 23.51 | $ | 24.79 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.28 | 0.63 | 0.43 | |||||||||
| Net realized and unrealized gain (loss)c |
1.52 | 0.55 | (1.39 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
1.80 | 1.18 | (0.96 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.30 | ) | (0.63 | ) | (0.32 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.30 | ) | (0.63 | ) | (0.32 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 25.56 | $ | 24.06 | $ | 23.51 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
7.49 | %d | 5.10 | % | (3.77 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 5,113 | $ | 4,811 | $ | 4,701 | ||||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | 0.39 | % | ||||||
| Ratio of net investment income to average net assetse |
2.20 | % | 2.61 | % | 3.16 | % | ||||||
| Portfolio turnover ratef |
6 | % | 6 | % | 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 six months ended February 28, 2014, the year ended August 31, 2013 and the period ended August 31, 2012 were 6%, 6% and 5%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
33 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Global Gold Miners ETF |
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Period from Jan. 31, 2012a to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 11.60 | $ | 20.05 | $ | 25.00 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.05 | 0.21 | 0.15 | |||||||||
| Net realized and unrealized gain (loss)c |
(0.63 | ) | (8.47 | ) | (5.02 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
(0.58 | ) | (8.26 | ) | (4.87 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.05 | ) | (0.19 | ) | (0.08 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.05 | ) | (0.19 | ) | (0.08 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 10.97 | $ | 11.60 | $ | 20.05 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
(4.91 | )%d | (41.28 | )% | (19.45 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 57,055 | $ | 38,285 | $ | 32,084 | ||||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | 0.39 | % | ||||||
| Ratio of net investment income to average net assetse |
0.97 | % | 1.37 | % | 1.25 | % | ||||||
| Portfolio turnover ratef |
7 | % | 19 | % | 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.
| 34 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Global Metals & Mining Producers ETF |
| Six months ended |
Year ended Aug. 31, 2013 |
Period from Jan. 31, 2012a to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 18.11 | $ | 19.00 | $ | 24.76 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.19 | 0.50 | 0.37 | |||||||||
| Net realized and unrealized gain (loss)c |
1.50 | (1.00 | ) | (6.00 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
1.69 | (0.50 | ) | (5.63 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.45 | ) | (0.39 | ) | (0.13 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.45 | ) | (0.39 | ) | (0.13 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 19.35 | $ | 18.11 | $ | 19.00 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
9.42 | %d | (2.68 | )% | (22.76 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 136,403 | $ | 222,808 | $ | 123,524 | ||||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | 0.39 | % | ||||||
| Ratio of net investment income to average net assetse |
2.00 | % | 2.51 | % | 2.98 | % | ||||||
| Portfolio turnover ratef |
12 | % | 11 | % | 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 six months ended February 28, 2014, the year ended August 31, 2013 and the period ended August 31, 2012 were 11%, 7% and 1%, 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 Silver Miners ETF |
| Six months ended Feb. 28, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
||||||||||
| Net asset value, beginning of period |
$ | 13.92 | $ | 20.94 | $ | 24.87 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.05 | 0.16 | 0.11 | |||||||||
| Net realized and unrealized gain (loss)c |
(0.73 | ) | (6.90 | ) | (3.90 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
(0.68 | ) | (6.74 | ) | (3.79 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.12 | ) | (0.28 | ) | (0.14 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.12 | ) | (0.28 | ) | (0.14 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 13.12 | $ | 13.92 | $ | 20.94 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
(4.59 | )%d | (32.49 | )% | (15.18 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 10,495 | $ | 6,959 | $ | 2,094 | ||||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | 0.39 | % | ||||||
| Ratio of net investment income to average net assetse |
0.85 | % | 1.03 | % | 0.86 | % | ||||||
| Portfolio turnover ratef |
8 | % | 13 | % | 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.
| 36 | 2014 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 ETF |
Diversification Classification |
|||
| MSCI Global Agriculture Producers |
Non-diversified | |||
| MSCI Global Energy Producers |
Non-diversified | |||
| MSCI Global Gold Miners |
Non-diversified | |||
| MSCI Global Metals & Mining Producers |
Non-diversified | |||
| MSCI Global Silver Miners |
Non-diversified | |||
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.
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.
Each Fund invests in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
The United States and the European Union have imposed economic sanctions on certain Russian individuals and a financial institution. The United States or the European Union could also institute broader sanctions on Russia. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities, impairing the ability of the Funds to buy, sell, receive or deliver those securities. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian securities.
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
| NOTES TO FINANCIAL STATEMENTS |
37 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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 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, reviews of 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
| 38 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
transparency of the instrument and is not necessarily an indication of the risk associated with investing in the 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 Global Valuation Committee’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 Funds’ investments according to the fair value hierarchy as of February 28, 2014. The breakdown of each Fund’s investments into major categories is disclosed in its respective schedule of investments.
| iShares ETF and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Global Agriculture Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 37,396,103 | $ | — | $ | 0 | a | $ | 37,396,103 | |||||||
| Investment Companies |
239,871 | — | — | 239,871 | ||||||||||||
| Preferred Stocks |
303,907 | — | — | 303,907 | ||||||||||||
| Rights |
— | 3,107 | — | 3,107 | ||||||||||||
| Money Market Funds |
1,035,940 | — | — | 1,035,940 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 38,975,821 | $ | 3,107 | $ | 0 | a | $ | 38,978,928 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Global Energy Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,027,685 | $ | — | $ | — | $ | 5,027,685 | ||||||||
| Preferred Stocks |
57,293 | — | — | 57,293 | ||||||||||||
| Warrants |
— | 0 | a | — | 0 | a | ||||||||||
| Money Market Funds |
12,976 | — | — | 12,976 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,097,954 | $ | 0 | a | $ | — | $ | 5,097,954 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Global Gold Miners |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 57,012,613 | $ | — | $ | — | $ | 57,012,613 | ||||||||
| Money Market Funds |
306,996 | — | — | 306,996 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 57,319,609 | $ | — | $ | — | $ | 57,319,609 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
39 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Global Metals & Mining Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 130,502,969 | $ | 39,442 | $ | 39 | $ | 130,542,450 | ||||||||
| Preferred Stocks |
5,633,838 | — | — | 5,633,838 | ||||||||||||
| Money Market Funds |
1,926,989 | — | — | 1,926,989 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 138,063,796 | $ | 39,442 | $ | 39 | $ | 138,103,277 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Global Silver Miners |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 10,485,592 | $ | — | $ | — | $ | 10,485,592 | ||||||||
| Money Market Funds |
210,941 | — | — | 210,941 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 10,696,533 | $ | — | $ | — | $ | 10,696,533 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 28, 2014 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, 2014, if any, are disclosed in the Funds’ statements of assets and liabilities.
| 40 | 2014 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.
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. 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 BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the statements of assets and liabilities. Income earned by the Funds from securities lending is disclosed in the statements of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. Each Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, a Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and a Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
| NOTES TO FINANCIAL STATEMENTS |
41 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2014, the following Funds had securities on loan with a market value as disclosed in the Funds’ statements of assets and liabilities:
| iShares ETF | Market Value of Securities on Loan |
|||
| MSCI Global Agriculture Producers |
$ | 923,198 | ||
| MSCI Global Energy Producers |
11,368 | |||
| MSCI Global Gold Miners |
263,842 | |||
| MSCI Global Metals & Mining Producers |
1,723,472 | |||
| MSCI Global Silver Miners |
199,451 | |||
As of February 28, 2014, the value of the related collateral, as disclosed in the Funds’ schedules of investments, exceeded the market value of the securities on loan.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by 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 Metals & Mining Producers ETFs 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 Metals & Mining Producers ETF did not hold any iShares funds during the six months ended February 28, 2014.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014, each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Funds retain a portion of securities lending income and remit a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) each Fund retains 75% of securities lending income (commencing January 1, 2015 the amount each Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, each Fund retained 65% of securities lending income and paid no collateral investment fees.
| 42 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For the six months ended February 28, 2014, each Fund paid to BTC the following amounts in total for securities lending agent services and collateral investment fees:
| iShares ETF | Fees Paid to BTC |
|||
| MSCI Global Agriculture Producers |
$ | 2,611 | ||
| MSCI Global Energy Producers |
67 | |||
| MSCI Global Gold Miners |
4,623 | |||
| MSCI Global Metals & Mining Producers |
16,599 | |||
| MSCI Global Silver Miners |
895 | |||
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Funds and BTC) and pursuant to a securities lending agreement, (i) each Fund will receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle Date after January 1, 2015, each Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
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 Metals & Mining Producers ETFs, in order to improve their portfolio liquidity and their ability to track their respective underlying index, may invest in shares of other iShares funds that invest in securities in each Fund’s respective underlying index.
Investments in issuers considered to be affiliates of the Funds (excluding money market funds) during the six months ended February 28, 2014, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:
| iShares ETF and Name of Affiliated Issuer |
Shares Held at Beginning of Period |
Shares Purchased |
Shares Sold |
Shares Held at End of Period |
Value at End of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| MSCI Global Agriculture Producers |
||||||||||||||||||||||||||||
| iShares India 50 ETF |
12,191 | 1,680 | (3,478 | ) | 10,393 | $ | 239,871 | $ | 1,113 | $ | (3,025 | ) | ||||||||||||||||
|
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Certain directors and officers of the Company are also officers of BTC and/or BFA.
| NOTES TO FINANCIAL STATEMENTS |
43 |
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, 2014 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI Global Agriculture Producers |
$ | 3,279,946 | $ | 3,214,121 | ||||
| MSCI Global Energy Producers |
319,276 | 318,543 | ||||||
| MSCI Global Gold Miners |
3,091,050 | 3,062,872 | ||||||
| MSCI Global Metals & Mining Producers |
22,089,202 | 40,376,511 | ||||||
| MSCI Global Silver Miners |
617,364 | 661,511 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2014 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI Global Agriculture Producers |
$ | 4,883,483 | $ | 4,799,069 | ||||
| MSCI Global Gold Miners |
18,264,470 | — | ||||||
| MSCI Global Metals & Mining Producers |
9,909,083 | 99,794,832 | ||||||
| MSCI Global Silver Miners |
3,424,941 | — | ||||||
| 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 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. | 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.
| 44 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of August 31, 2013, the Funds’ fiscal year-end, the Funds had non-expiring capital loss carryforwards available to offset future realized capital gains as follows:
| iShares ETF | Non- Expiring |
|||
| MSCI Global Agriculture Producers |
$ | 18,538 | ||
| MSCI Global Gold Miners |
319,826 | |||
| MSCI Global Metals & Mining Producers |
115,703 | |||
| MSCI 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.
As of February 28, 2014, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares ETF | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| MSCI Global Agriculture Producers |
$ | 40,540,589 | $ | 1,728,839 | $ | (3,290,500 | ) | $ | (1,561,661 | ) | ||||||
| MSCI Global Energy Producers |
4,912,435 | 560,269 | (374,750 | ) | 185,519 | |||||||||||
| MSCI Global Gold Miners |
70,753,892 | 1,823,715 | (15,257,998 | ) | (13,434,283 | ) | ||||||||||
| MSCI Global Metals & Mining Producers |
138,070,275 | 11,176,132 | (11,143,130 | ) | 33,002 | |||||||||||
| MSCI Global Silver Miners |
11,391,978 | 648,557 | (1,344,002 | ) | (695,445 | ) | ||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.
| 6. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| NOTES TO FINANCIAL STATEMENTS |
45 |
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 ETF | 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 |
||||||||||||||||||||||||
| MSCI Global Agriculture Producers |
$ | 0.161025 | $ | — | $ | 0.072065 | $ | 0.233090 | 69 | % | — | % | 31 | % | 100 | % | ||||||||||||||||
| MSCI Global Energy Producers |
0.289725 | — | 0.008535 | 0.298260 | 97 | — | 3 | 100 | ||||||||||||||||||||||||
| MSCI Global Gold Miners |
0.047322 | — | 0.001650 | 0.048972 | 97 | — | 3 | 100 | ||||||||||||||||||||||||
| MSCI Global Metals & Mining Producers |
0.393917 | — | 0.059906 | 0.453823 | 87 | — | 13 | 100 | ||||||||||||||||||||||||
| MSCI Global Silver Miners |
0.093748 | — | 0.031051 | 0.124799 | 75 | — | 25 | 100 | ||||||||||||||||||||||||
| 46 | 2014 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.
©2014 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.
iS-SAR-812-0214
Table of Contents
FEBRUARY 28, 2014
|
2014 SEMI-ANNUAL REPORT (UNAUDITED)
|
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iShares, Inc.
| Ø | iShares Core MSCI Emerging Markets ETF | IEMG | NYSE Arca |
Table of Contents
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| 6 | ||||
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| 39 | ||||
| 48 |
Table of Contents
iSHARES® CORE MSCI EMERGING MARKETS ETF
Performance as of February 28, 2014
The iShares Core MSCI Emerging Markets ETF (the “Fund”) seeks to track the investment results of an index composed of large-, mid- and small-capitalization emerging market equties, as represented by the MSCI Emerging Markets Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 5.28%, net of fees, while the total return for the Index was 5.33%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(5.40)% | (5.86)% | (5.45)% | (5.40)% | (5.86)% | (5.45)% | ||||||||||||||||||||
| Since Inception |
(0.56)% | (0.96)% | (0.58)% | (0.77)% | (1.31)% | (0.80)% | ||||||||||||||||||||
The inception date of the Fund was 10/18/12. The first day of secondary market trading was 10/22/12.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 6 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,052.80 | $ | 0.76 | $ | 1,000.00 | $ | 1,024.10 | $ | 0.75 | 0.15% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 6 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEW |
5 |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
7 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
13 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
21 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
23 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 24 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
25 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 26 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
27 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 28 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
29 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 30 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
31 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 32 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
33 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| 34 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statement of Assets and Liabilities (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2014
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 3,692,689,303 | ||
| Affiliated (Note 2) |
83,673,051 | |||
|
|
|
|||
| Total cost of investments |
$ | 3,776,362,354 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 3,600,237,980 | ||
| Affiliated (Note 2) |
83,673,051 | |||
|
|
|
|||
| Total fair value of investments |
3,683,911,031 | |||
| Foreign currency, at valueb |
2,126,967 | |||
| Cash |
294,736 | |||
| Cash pledged to broker |
1,330,144 | |||
| Receivables: |
||||
| Investment securities sold |
21,629,282 | |||
| Dividends and interest |
6,306,764 | |||
|
|
|
|||
| Total Assets |
3,715,598,924 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
16,646,919 | |||
| Collateral for securities on loan (Note 1) |
74,917,917 | |||
| Futures variation margin |
560,995 | |||
| Foreign taxes (Note 1) |
830 | |||
| Investment advisory fees (Note 2) |
483,109 | |||
|
|
|
|||
| Total Liabilities |
92,609,770 | |||
|
|
|
|||
| NET ASSETS |
$ | 3,622,989,154 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 3,745,479,795 | ||
| Undistributed net investment income |
1,386,147 | |||
| Accumulated net realized loss |
(30,806,490 | ) | ||
| Net unrealized depreciation |
(93,070,298 | ) | ||
|
|
|
|||
| NET ASSETS |
$ | 3,622,989,154 | ||
|
|
|
|||
| Shares outstandingc |
76,000,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 47.67 | ||
|
|
|
|||
| a | Securities on loan with a value of $69,570,995. See Note 1. |
| b | Cost of foreign currency: $2,121,175. |
| c | $0.001 par value, number of shares authorized: 250 million. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
35 |
Table of Contents
Consolidated Statement of Operations (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
Six months ended February 28, 2014
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 22,376,409 | ||
| Interest — unaffiliated |
85 | |||
| Interest — affiliated (Note 2) |
1,158 | |||
| Securities lending income — affiliated (Note 2) |
567,043 | |||
|
|
|
|||
| 22,944,695 | ||||
| Less: Other foreign taxes (Note 1) |
(84,014 | ) | ||
|
|
|
|||
| Total investment income |
22,860,681 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
2,567,814 | |||
| Mauritius income taxes (Note 1) |
34,378 | |||
| Commitment fees (Note 7) |
2,628 | |||
| Interest expense (Note 7) |
1,497 | |||
|
|
|
|||
| Total expenses |
2,606,317 | |||
| Less investment advisory fees waived (Note 2) |
(501,946 | ) | ||
|
|
|
|||
| Net expenses |
2,104,371 | |||
|
|
|
|||
| Net investment income |
20,756,310 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(21,568,491 | ) | ||
| Futures contracts |
706,353 | |||
| Foreign currency transactions |
(475,881 | ) | ||
|
|
|
|||
| Net realized loss |
(21,338,019 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
58,099,408 | |||
| Futures contracts |
(330,601 | ) | ||
| Translation of assets and liabilities in foreign currencies |
14,377 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
57,783,184 | |||
|
|
|
|||
| Net realized and unrealized gain |
36,445,165 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 57,201,475 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $2,820,004. |
See notes to consolidated financial statements.
| 36 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Changes in Net Assets
iSHARES® CORE MSCI EMERGING MARKETS ETF
| Six months ended February 28, 2014 (Unaudited) |
Period from to |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 20,756,310 | $ | 24,214,512 | ||||
| Net realized loss |
(21,338,019 | ) | (9,822,479 | ) | ||||
| Net change in unrealized appreciation/depreciation |
57,783,184 | (150,853,482 | ) | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
57,201,475 | (136,461,449 | ) | |||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(28,516,745 | ) | (14,713,922 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(28,516,745 | ) | (14,713,922 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
1,729,339,015 | 2,016,140,780 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
1,729,339,015 | 2,016,140,780 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
1,758,023,745 | 1,864,965,409 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
1,864,965,409 | — | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 3,622,989,154 | $ | 1,864,965,409 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 1,386,147 | $ | 9,146,582 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED |
||||||||
| Shares sold |
35,200,000 | 40,800,000 | ||||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
35,200,000 | 40,800,000 | ||||||
|
|
|
|
|
|||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
37 |
Table of Contents
Consolidated Financial Highlights
iSHARES® CORE MSCI EMERGING MARKETS ETF
(For a share outstanding throughout each period)
| Six months ended Feb. 28, 2014 (Unaudited) |
Period from to Aug. 31, 2013 |
|||||||
| Net asset value, beginning of period |
$ | 45.71 | $ | 49.06 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.35 | 1.33 | ||||||
| Net realized and unrealized gain (loss)c |
2.07 | (4.14 | ) | |||||
|
|
|
|
|
|||||
| Total from investment operations |
2.42 | (2.81 | ) | |||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.46 | ) | (0.54 | ) | ||||
|
|
|
|
|
|||||
| Total distributions |
(0.46 | ) | (0.54 | ) | ||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 47.67 | $ | 45.71 | ||||
|
|
|
|
|
|||||
| Total return |
5.28 | %d | (5.75 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 3,622,989 | $ | 1,864,965 | ||||
| Ratio of expenses to average net assetse |
0.15 | % | 0.05 | % | ||||
| Ratio of expenses to average net assets prior to waived feese |
0.18 | % | 0.18 | % | ||||
| Ratio of net investment income to average net assetse |
1.45 | % | 3.17 | % | ||||
| Portfolio turnover ratef |
4 | % | 15 | % | ||||
| 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, 2014 and the period ended August 31, 2013 were 4% and 15%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 38 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated 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 consolidated financial statements relate only to the following fund (the “Fund”):
| iShares Core ETF | Diversification Classification | |
| MSCI Emerging Markets |
Diversified |
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.
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 Fund invests in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
The United States and the European Union have imposed economic sanctions on certain Russian individuals and a financial institution. The United States or the European Union could also institute broader sanctions on Russia. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities, impairing the ability of the Fund to buy, sell, receive or deliver those securities. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian securities.
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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
39 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
| 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 and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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 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, reviews of 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
| 40 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 is not necessarily an indication of the risk associated with investing in the 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 Global Valuation Committee’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, 2014. 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 |
$ | 3,413,671,365 | $ | 860,936 | $ | 0 | a | $ | 3,414,532,301 | |||||||
| Preferred Stocks |
185,615,631 | — | — | 185,615,631 | ||||||||||||
| Rights |
45,496 | 34,585 | — | 80,081 | ||||||||||||
| Warrants |
9,967 | — | — | 9,967 | ||||||||||||
| Money Market Funds |
83,673,051 | — | — | 83,673,051 | ||||||||||||
| Liabilities: |
||||||||||||||||
| Futures Contractsb |
(560,995 | ) | — | — | (560,995 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,682,454,515 | $ | 895,521 | $ | 0 | a | $ | 3,683,350,036 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 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, 2014 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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
41 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 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, 2014, 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
| 42 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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.
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. 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 BlackRock Fund Advisors (“BFA”), the Fund’s investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the consolidated statement of assets and liabilities. Income earned by the Fund from securities lending is disclosed in the consolidated statement of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. The Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
As of February 28, 2014, the Fund had securities on loan with a market value of $69,570,995 as disclosed in the Fund’s consolidated statement of assets and liabilities. The value of the related collateral, as disclosed in the Fund’s consolidated schedule of investments, exceeded the value of the securities on loan at period end.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of the Fund’s assets. BFA is a California corporation indirectly owned by 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
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
43 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 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 $501,946.
BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through December 31, 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, 2014.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014 the Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees the Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Fund retains a portion of securities lending income and remits a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) the Fund retains 75% of securities lending income (commencing January 1, 2015 the amount the Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, the Fund retained 65% of securities lending income and paid no collateral investment fees.
For the six months ended February 28, 2014, the Fund paid to BTC securities lending agent services and collateral investment fees in the amount of $258,047.
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Fund and BTC) and pursuant to a securities lending agreement, (i) the Fund will receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle Date after January 1, 2015, the Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
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.
| 44 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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, 2014, were $1,396,185,399 and $108,583,675, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 28, 2014, were $422,113,394 and $ —, 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 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. | 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, 2014, the cost of investments for federal income tax purposes was $3,779,621,623. Net unrealized depreciation was $95,710,592, of which $205,056,749 represented gross unrealized appreciation on securities and $300,767,341 represented gross unrealized depreciation on securities.
Management has analyzed tax laws and regulations and their application to the Fund as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s consolidated financial statements.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
45 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
| 6. | 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, 2014 and the related locations in the consolidated statement of assets and liabilities, presented by risk exposure category:
| Liabilities | ||||
| Equity contracts: |
||||
| Variation margin/Net assets consist of – net unrealized appreciation (depreciation)a |
$ | (560,995 | ) | |
|
|
|
|||
| a | Represents cumulative depreciation of futures contracts as reported in the consolidated 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, 2014 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 |
$ | 706,353 | $ | (330,601 | ) | |||
|
|
|
|
|
|||||
For the six months ended February 28, 2014, the average quarter-end number of contracts and notional value of open futures contracts for the Fund were 243 and $11,674,388, respectively.
| 7. | LINE OF CREDIT |
The Fund, along with certain other iShares funds, is a party to a $150 million credit agreement with State Street Bank and Trust Company, which expires October 29, 2014. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings. 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 securities of certain foreign markets.
| 46 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
For the six months ended February 28, 2014, the Fund’s maximum amount borrowed, the average borrowings and the weighted average interest rate under the credit agreement were $4,000,000, $254,144 and 1.17%, respectively.
| 8. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Fund through the date the consolidated financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the consolidated financial statements.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
47 |
Table of Contents
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 |
|||||||||||||||||||||||
| $ | 0.330625 | $ | — | $ | 0.130811 | $ | 0.461436 | 72 | % | — | % | 28 | % | 100 | % | |||||||||||||||
| 48 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
49 |
Table of Contents
Notes:
| 50 | 2014 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.
©2014 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.
iS-SAR-813-0214
Table of Contents
FEBRUARY 28, 2014
|
2014 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares MSCI Germany ETF | EWG | NYSE Arca |
Table of Contents
| 5 | ||||
| 6 | ||||
| 6 | ||||
| 7 | ||||
| 10 | ||||
| 13 | ||||
| 14 |
Table of Contents
iSHARES® MSCI GERMANY ETF
Performance as of February 28, 2014
The iShares MSCI Germany ETF (the “Fund”) seeks to track the investment results of an index composed of German equities, as represented by the MSCI Germany Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month reporting period ended February 28, 2014, the total return for the Fund was 24.56%, net of fees, while the total return for the Index was 24.86%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
31.41% | 30.93% | 31.63% | 31.41% | 30.93% | 31.63% | ||||||||||||||||||||
| 5 Years |
21.52% | 21.50% | 21.66% | 165.00% | 164.76% | 166.56% | ||||||||||||||||||||
| 10 Years |
9.27% | 9.16% | 9.41% | 142.61% | 140.24% | 145.82% | ||||||||||||||||||||
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.
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 6 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Beginning Account Value (9/1/13) |
Ending Account Value (2/28/14) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,245.60 | $ | 2.73 | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | 0.49% | ||||||||||||||
| 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). See “Shareholder Expenses” on page 6 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEW |
5 |
Table of Contents
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment management fees. Without such waiver, performance would have been lower.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The 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 a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not have traded in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary trading, 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 at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. 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.
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 expense example, which is based on an investment of $1,000 invested on September 1, 2013 and held through February 28, 2014, 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.
Actual Expenses — The table provides information about actual account values and actual expenses. To estimate the expenses that you paid on your account 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 for your Fund under the heading entitled “Expenses Paid During Period.”
Hypothetical Example for Comparison Purposes — The table also 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. 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 hypothetical examples are 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.
| 6 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GERMANY ETF
February 28, 2014
| SCHEDULE OF INVESTMENTS |
7 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
February 28, 2014
| 8 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
February 28, 2014
| SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Statement of Assets and Liabilities (Unaudited)
iSHARES® MSCI GERMANY ETF
February 28, 2014
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 5,328,421,573 | ||
| Affiliated (Note 2) |
41,765,875 | |||
|
|
|
|||
| Total cost of investments |
$ | 5,370,187,448 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 6,314,379,679 | ||
| Affiliated (Note 2) |
41,765,875 | |||
|
|
|
|||
| Total fair value of investments |
6,356,145,554 | |||
| Foreign currency, at valueb |
16,919,993 | |||
| Foreign currency pledged to broker, at valueb |
1,325,260 | |||
| Receivables: |
||||
| Investment securities sold |
8,890,819 | |||
| Dividends and interest |
13,236,808 | |||
| Futures variation margin |
1,338,703 | |||
|
|
|
|||
| Total Assets |
6,397,857,137 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
8,885,636 | |||
| Collateral for securities on loan (Note 1) |
40,804,621 | |||
| Investment advisory fees (Note 2) |
2,275,770 | |||
|
|
|
|||
| Total Liabilities |
51,966,027 | |||
|
|
|
|||
| NET ASSETS |
$ | 6,345,891,110 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 5,518,466,012 | ||
| Undistributed net investment income |
1,670,426 | |||
| Accumulated net realized loss |
(162,287,663 | ) | ||
| Net unrealized appreciation |
988,042,335 | |||
|
|
|
|||
| NET ASSETS |
$ | 6,345,891,110 | ||
|
|
|
|||
| Shares outstandingc |
198,900,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 31.90 | ||
|
|
|
|||
| a | Securities on loan with a value of $38,850,407. See Note 1. |
| b | Cost of foreign currency including currency pledged to broker: $18,063,331. |
| c | $0.001 par value, number of shares authorized: 382.2 million. |
See notes to financial statements.
| 10 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statement of Operations (Unaudited)
iSHARES® MSCI GERMANY ETF
Six months ended February 28, 2014
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 15,105,286 | ||
| Interest — affiliated (Note 2) |
243 | |||
| Securities lending income — affiliated (Note 2) |
218,161 | |||
|
|
|
|||
| Total investment income |
15,323,690 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
13,653,264 | |||
|
|
|
|||
| Total expenses |
13,653,264 | |||
|
|
|
|||
| Net investment income |
1,670,426 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(2,990,933 | ) | ||
| In-kind redemptions — unaffiliated |
40,253,873 | |||
| Futures contracts |
2,820,287 | |||
| Foreign currency transactions |
439,612 | |||
|
|
|
|||
| Net realized gain |
40,522,839 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
1,131,305,751 | |||
| Futures contracts |
1,722,152 | |||
| Translation of assets and liabilities in foreign currencies |
819,439 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
1,133,847,342 | |||
|
|
|
|||
| Net realized and unrealized gain |
1,174,370,181 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 1,176,040,607 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $2,450,003. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
11 |
Table of Contents
Statements of Changes in Net Assets
iSHARES® MSCI GERMANY ETF
|
Six months (Unaudited) |
Year ended August 31, 2013 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 1,670,426 | $ | 69,681,145 | ||||
| Net realized gain |
40,522,839 | 181,952,897 | ||||||
| Net change in unrealized appreciation/depreciation |
1,133,847,342 | 397,729,283 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
1,176,040,607 | 649,363,325 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
— | (70,323,492 | ) | |||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
— | (70,323,492 | ) | |||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
658,459,125 | 2,897,813,848 | ||||||
| Cost of shares redeemed |
(144,483,234 | ) | (1,618,008,137 | ) | ||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
513,975,891 | 1,279,805,711 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
1,690,016,498 | 1,858,845,544 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
4,655,874,612 | 2,797,029,068 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 6,345,891,110 | $ | 4,655,874,612 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 1,670,426 | $ | — | ||||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
21,900,000 | 116,100,000 | ||||||
| Shares redeemed |
(4,800,000 | ) | (65,400,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
17,100,000 | 50,700,000 | ||||||
|
|
|
|
|
|||||
See notes to financial statements.
| 12 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI GERMANY ETF
(For a share outstanding throughout each period)
| Six months ended Feb. 28, 2014 (Unaudited) |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 25.61 | $ | 21.34 | $ | 21.02 | $ | 19.45 | $ | 20.86 | $ | 27.55 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.01 | 0.46 | 0.56 | 0.86 | 0.38 | 0.58 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
6.28 | 4.24 | 0.34 | 1.38 | (1.49 | ) | (6.65 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
6.29 | 4.70 | 0.90 | 2.24 | (1.11 | ) | (6.07 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.43 | ) | (0.58 | ) | (0.67 | ) | (0.30 | ) | (0.62 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.43 | ) | (0.58 | ) | (0.67 | ) | (0.30 | ) | (0.62 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 31.90 | $ | 25.61 | $ | 21.34 | $ | 21.02 | $ | 19.45 | $ | 20.86 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
24.56 | %c | 22.11 | % | 4.55 | % | 10.84 | % | (5.35 | )% | (21.62 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 6,345,891 | $ | 4,655,875 | $ | 2,797,029 | $ | 2,768,171 | $ | 1,487,881 | $ | 619,638 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.51 | % | 0.53 | % | 0.51 | % | 0.53 | % | 0.55 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.06 | % | 1.88 | % | 2.72 | % | 3.45 | % | 1.80 | % | 3.18 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 4 | % | 4 | % | 13 | % | 5 | % | 15 | % | ||||||||||||
| 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 |
13 |
Table of Contents
Notes to Financial Statements (Unaudited)
iSHARES® MSCI GERMANY 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 ETF | Diversification Classification | |
| MSCI Germany |
Non-diversified |
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.
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 Fund invests in securities of non-U.S. issuers that trade in non-U.S. markets. This involves 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. These risks are heightened for investments in emerging market and frontier market countries.
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 and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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
| 14 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
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 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, reviews of 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 is not necessarily an indication of the risk associated with investing in the 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 Global Valuation Committee’s assumptions used in determining the fair value of investments. |
| NOTES TO FINANCIAL STATEMENTS |
15 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
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, 2014, 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, 2014 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 foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable as of February 28, 2014, 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
| 16 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
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.
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. 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 BlackRock Fund Advisors (“BFA”), the Fund’s investment adviser, or its affiliates.
As of February 28, 2014, 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, 2014 and the value of the related collateral are disclosed in the statement of assets and liabilities. Income earned by the Fund from securities lending is disclosed in the statement of operations.
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, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. The Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (“MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
As of February 28, 2014, the Fund had securities on loan with a market value of $38,850,407 as disclosed in the Fund’s statement of assets and liabilities. The value of the related collateral, as disclosed in the Fund’s schedule of investments, exceeded the value of the securities on loan at period end.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of the Fund’s assets. BFA is a California corporation indirectly owned by 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.
| NOTES TO FINANCIAL STATEMENTS |
17 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
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”), an affiliate of BFA, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Effective January 1, 2014, the Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BFA, however, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees the Fund bears to an annual rate of 0.04% until December 31, 2014 and 0.05% thereafter (the “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. The Fund retains a portion of securities lending income and remits a remaining portion to BTC as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2014, (i) the Fund retains 75% of securities lending income (commencing January 1, 2015 the amount the Fund will retain is expected to change to 70% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees. Prior to January 1, 2014, the Fund retained 65% of securities lending income and paid no collateral investment fees.
For the six months ended February 28, 2014, the Fund paid to BTC securities lending agent services and collateral investment fees in the amount of $109,253.
In addition, commencing the business day following a “Hurdle Date” (the date that the aggregate securities lending income generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 or lesser amount as may be agreed to by the Fund and BTC) and pursuant to a securities lending agreement, (i) the Fund will receive for the remainder of that calendar year 80% of securities lending income (for any Hurdle Date after January 1, 2015, the Fund will retain 75% of securities lending income) and (ii) these amounts can never be less than 65% of the total of securities lending income plus the collateral investment fees.
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.
| 18 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended February 28, 2014, were $150,275,054 and $143,885,747, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 28, 2014, were $655,862,379 and $143,705,697, 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 statement 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 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. | 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, 2013 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 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | ||||||||||||||||||||
| $13,389,269 | $ | 4,227,713 | $ | 3,394,735 | $ | 27,790,050 | $ | 28,490,949 | $ | 32,215,954 | $ | 109,508,670 | ||||||||||||||
| 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, 2014, the cost of investments for federal income tax purposes was $5,441,828,701. Net unrealized appreciation was $914,316,853, of which $1,154,281,020 represented gross unrealized appreciation on securities and $239,964,167 represented gross unrealized depreciation on securities.
| NOTES TO FINANCIAL STATEMENTS |
19 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
Management has analyzed tax laws and regulations and their application to the Fund as of February 28, 2014, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.
| 6. | 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, 2014 and the related locations in the statement of assets and liabilities, presented by risk exposure category:
| Assets | ||||
| Equity contracts: |
||||
| Variation margin/Net assets consist of – net unrealized appreciation (depreciation)a |
$ | 1,338,703 | ||
|
|
|
|||
| 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, 2014 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 |
$ | 2,820,287 | $ | 1,722,152 | ||||
|
|
|
|
|
|||||
For the six months ended February 28, 2014, the average quarter-end number of contracts and notional value of open futures contracts for Fund were 86 and $26,152, 818, respectively.
| 7. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| 20 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
21 |
Table of Contents
Notes:
| 22 | 2014 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
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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.
©2014 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.
iS-SAR-816-0214
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.
Item 6. Investments.
(a) Schedules of investments are included as part of the reports to shareholders filed under Item 1 of this Form.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the Registrant.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.
Item 11. Controls and Procedures.
| (a) | The President (the Registrant’s Principal Executive Officer) and Chief Financial Officer (the Registrant’s Principal Financial Officer) have concluded that, based on their evaluation as of a date within 90 days of the filing date of this report, the disclosure controls and procedures of the Registrant (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are reasonably designed to achieve the purposes described in Section 4(a) of the attached certification. |
| (b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a) (1) Not applicable to this semi-annual filing.
(a) (2) Section 302 Certifications are attached.
(a) (3) Not applicable to the Registrant.
(b) Section 906 Certifications are attached.
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
iShares, Inc.
| By: | /s/ Manish Mehta | |
| Manish Mehta, President (Principal Executive Officer) | ||
| Date: | April 21, 2014 |
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/ Manish Mehta | |
| Manish Mehta, President (Principal Executive Officer) | ||
| Date: | April 21, 2014 | |
| By: | /s/ Jack Gee | |
| Jack Gee, Treasurer and Chief Financial Officer (Principal Financial Officer) | ||
| Date: | April 21, 2014 | |