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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
1 Iron Street, Boston, MA 02210
(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, 2015
Date of reporting period: February 28, 2015
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| Item 1. | Reports to Stockholders. |
Table of Contents
FEBRUARY 28, 2015
| 2015 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 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 |
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iSHARES® MSCI AUSTRIA CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -6.39%, net of fees, while the total return for the Index was -6.37%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(17.69)% | (17.69)% | (17.83)% | (17.69)% | (17.69)% | (17.83)% | ||||||||||||||||||||
| 5 Years |
0.09% | 0.05% | 0.19% | 0.43% | 0.25% | 0.97% | ||||||||||||||||||||
| 10 Years |
(1.24)% | (1.34)% | (1.52)% | (11.77)% | (12.58)% | (14.18)% | ||||||||||||||||||||
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 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 936.10 | $ | 2.30 | $ | 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 14 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, 2015
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, 2015, the total return for the Fund was 2.82%, net of fees, while the total return for the Index was 2.96%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
2.85% | 2.91% | 2.98% | 2.85% | 2.91% | 2.98% | ||||||||||||||||||||
| 5 Years |
10.49% | 10.39% | 12.15% | 64.71% | 63.89% | 77.42% | ||||||||||||||||||||
| 10 Years |
2.61% | 2.60% | 3.04% | 29.42% | 29.25% | 34.88% | ||||||||||||||||||||
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 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,028.20 | $ | 2.41 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| 6 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -20.66%, net of fees, while the total return for the Index was -20.19%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(23.74)% | (22.59)% | (23.25)% | (23.74)% | (22.59)% | (23.25)% | ||||||||||||||||||||
| 5 Years |
(5.21)% | (5.20)% | (4.64)% | (23.46)% | (23.44)% | (21.14)% | ||||||||||||||||||||
| Since Inception |
(3.87)% | (3.86)% | (3.34)% | (19.26)% | (19.18)% | (16.81)% | ||||||||||||||||||||
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 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 793.40 | $ | 3.02 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI FRANCE ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -2.90%, net of fees, while the total return for the Index was -2.80%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(6.26)% | (6.15)% | (6.25)% | (6.26)% | (6.15)% | (6.25)% | ||||||||||||||||||||
| 5 Years |
5.45% | 5.42% | 5.47% | 30.41% | 30.23% | 30.48% | ||||||||||||||||||||
| 10 Years |
3.54% | 3.48% | 3.65% | 41.56% | 40.80% | 43.16% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 971.00 | $ | 2.35 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| 8 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI ITALY CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -6.03%, net of fees, while the total return for the Index was -5.86%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(8.25)% | (8.47)% | (8.89)% | (8.25)% | (8.47)% | (8.89)% | ||||||||||||||||||||
| 5 Years |
0.09% | 0.06% | 0.18% | 0.44% | 0.30% | 0.88% | ||||||||||||||||||||
| 10 Years |
(2.34)% | (2.37)% | (2.40)% | (21.08)% | (21.32)% | (21.57)% | ||||||||||||||||||||
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.
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 939.70 | $ | 2.31 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI NETHERLANDS ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 4.62%, net of fees, while the total return for the Index was 3.39%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
1.79% | 1.79% | 0.81% | 1.79% | 1.79% | 0.81% | ||||||||||||||||||||
| 5 Years |
8.52% | 8.45% | 8.77% | 50.53% | 50.05% | 52.23% | ||||||||||||||||||||
| 10 Years |
5.55% | 5.50% | 5.94% | 71.56% | 70.74% | 78.02% | ||||||||||||||||||||
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 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,046.20 | $ | 2.44 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| 10 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SPAIN CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -11.04%, net of fees, while the total return for the Index was -10.70%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(8.23)% | (8.13)% | (7.54)% | (8.23)% | (8.13)% | (7.54)% | ||||||||||||||||||||
| 5 Years |
2.64% | 2.61% | 2.12% | 13.92% | 13.76% | 11.08% | ||||||||||||||||||||
| 10 Years |
4.19% | 4.18% | 4.02% | 50.82% | 50.58% | 48.28% | ||||||||||||||||||||
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.
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 889.60 | $ | 2.25 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SWEDEN ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 2.51%, net of fees, while the total return for the Index was 2.75%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(1.90)% | (1.54)% | (2.00)% | (1.90)% | (1.54)% | (2.00)% | ||||||||||||||||||||
| 5 Years |
11.47% | 11.52% | 11.41% | 72.11% | 72.48% | 71.65% | ||||||||||||||||||||
| 10 Years |
8.37% | 8.38% | 8.34% | 123.34% | 123.57% | 122.69% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,025.10 | $ | 2.41 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| 12 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SWITZERLAND CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -0.42%, net of fees, while the total return for the Index was -0.20%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(0.11)% | (0.36)% | 0.13% | (0.11)% | (0.36)% | 0.13% | ||||||||||||||||||||
| 5 Years |
11.30% | 11.19% | 11.12% | 70.80% | 69.99% | 69.40% | ||||||||||||||||||||
| 10 Years |
8.56% | 8.41% | 8.28% | 127.46% | 124.29% | 121.47% | ||||||||||||||||||||
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 14 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 995.80 | $ | 2.38 | $ | 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 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, 2014 and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI AUSTRIA CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRIA CAPPED ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI BELGIUM CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BELGIUM CAPPED ETF
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE ETF
February 28, 2015
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRANCE ETF
February 28, 2015
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRANCE ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ITALY CAPPED ETF
February 28, 2015
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ITALY CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI NETHERLANDS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SPAIN CAPPED ETF
February 28, 2015
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SWEDEN ETF
February 28, 2015
| 30 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SWITZERLAND CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SWITZERLAND CAPPED ETF
February 28, 2015
| 32 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2015
| iShares MSCI Austria Capped ETF |
iShares MSCI Belgium Capped ETF |
iShares MSCI Emerging Markets Eastern Europe ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 81,211,735 | $ | 159,644,409 | $ | 188,432,213 | ||||||
| Affiliated (Note 2) |
1,345,245 | 1,209,452 | 403,064 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 82,556,980 | $ | 160,853,861 | $ | 188,835,277 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 58,021,976 | $ | 161,437,619 | $ | 135,486,030 | ||||||
| Affiliated (Note 2) |
1,345,245 | 1,209,452 | 403,064 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
59,367,221 | 162,647,071 | 135,889,094 | |||||||||
| Foreign currency, at valueb |
33,367 | 60,613 | 12,473 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
565,738 | 1,792,225 | — | |||||||||
| Dividends and interest |
829,099 | 69,102 | 22,842 | |||||||||
| Capital shares sold |
— | 3,845 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
60,795,425 | 164,572,856 | 135,924,409 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
574,172 | 1,745,940 | — | |||||||||
| Collateral for securities on loan (Note 1) |
1,334,645 | 1,160,641 | 280,202 | |||||||||
| Investment advisory fees (Note 2) |
21,128 | 51,679 | 67,877 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
1,929,945 | 2,958,260 | 348,079 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 58,865,480 | $ | 161,614,596 | $ | 135,576,330 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 169,349,475 | $ | 208,950,653 | $ | 211,941,653 | ||||||
| Distributions in excess of net investment income |
(304,106 | ) | (684,723 | ) | (257,696 | ) | ||||||
| Accumulated net realized loss |
(86,818,388 | ) | (48,435,462 | ) | (23,159,316 | ) | ||||||
| Net unrealized appreciation (depreciation) |
(23,361,501 | ) | 1,784,128 | (52,948,311 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 58,865,480 | $ | 161,614,596 | $ | 135,576,330 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
3,600,000 | 9,280,000 | 7,700,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 16.35 | $ | 17.42 | $ | 17.61 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $1,270,137, $1,087,874 and $266,099, respectively. See Note 1. |
| b | Cost of foreign currency: $33,792, $62,380 and $13,026, respectively. |
| c | $0.001 par value, number of shares authorized: 100 million, 136.2 million and 200 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
33 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares MSCI |
iShares MSCI Italy Capped ETF |
iShares MSCI Netherlands ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 392,599,759 | $ | 1,058,107,597 | $ | 137,364,894 | ||||||
| Affiliated (Note 2) |
2,090,040 | 14,612,008 | 3,754,913 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 394,689,799 | $ | 1,072,719,605 | $ | 141,119,807 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 351,006,160 | $ | 914,813,663 | $ | 130,771,518 | ||||||
| Affiliated (Note 2) |
2,090,040 | 14,612,008 | 3,754,913 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
353,096,200 | 929,425,671 | 134,526,431 | |||||||||
| Foreign currency, at valueb |
140,202 | 13,513 | 160,332 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
433,690 | 21,269,391 | 485,935 | |||||||||
| Due from custodian (Note 4) |
— | — | 14,735 | |||||||||
| Dividends and interest |
354 | 16,551 | 153,478 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
353,670,446 | 950,725,126 | 135,340,911 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
453,321 | 21,465,525 | 585,429 | |||||||||
| Collateral for securities on loan (Note 1) |
1,982,249 | 14,227,844 | 3,681,141 | |||||||||
| Investment advisory fees (Note 2) |
122,368 | 320,089 | 46,918 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
2,557,938 | 36,013,458 | 4,313,488 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 351,112,508 | $ | 914,711,668 | $ | 131,027,423 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 442,409,798 | $ | 1,148,054,066 | $ | 180,099,006 | ||||||
| Undistributed (distributions in excess of) net investment income |
(351,390 | ) | (565,747 | ) | 100,053 | |||||||
| Accumulated net realized loss |
(49,352,338 | ) | (89,482,572 | ) | (42,573,327 | ) | ||||||
| Net unrealized depreciation |
(41,593,562 | ) | (143,294,079 | ) | (6,598,309 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 351,112,508 | $ | 914,711,668 | $ | 131,027,423 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
13,200,000 | 61,200,000 | 5,100,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 26.60 | $ | 14.95 | $ | 25.69 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $1,874,028, $13,163,014 and $3,501,235, respectively. See Note 1. |
| b | Cost of foreign currency: $140,165, $13,658 and $162,474, respectively. |
| c | $0.001 par value, number of shares authorized: 340.2 million, 295.4 million and 255 million, respectively. |
See notes to financial statements.
| 34 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares MSCI Capped ETF |
iShares MSCI Sweden ETF |
iShares MSCI Switzerland Capped ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 1,656,924,498 | $ | 369,986,874 | $ | 970,331,877 | ||||||
| Affiliated (Note 2) |
910,677 | 2,904,722 | 8,330,969 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 1,657,835,175 | $ | 372,891,596 | $ | 978,662,846 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 1,457,379,397 | $ | 377,439,902 | $ | 1,076,333,374 | ||||||
| Affiliated (Note 2) |
910,677 | 2,904,722 | 8,330,969 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
1,458,290,074 | 380,344,624 | 1,084,664,343 | |||||||||
| Foreign currency, at valueb |
1,260,200 | 38,570 | 866,886 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
46,882,289 | 1,291,832 | 2,527,054 | |||||||||
| Dividends |
390 | 516 | 3,778,026 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
1,506,432,953 | 381,675,542 | 1,091,836,309 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
48,570,624 | 1,184,460 | 3,534,914 | |||||||||
| Collateral for securities on loan (Note 1) |
— | 2,900,619 | 7,537,603 | |||||||||
| Investment advisory fees (Note 2) |
516,023 | 127,287 | 388,193 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
49,086,647 | 4,212,366 | 11,460,710 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,457,346,306 | $ | 377,463,176 | $ | 1,080,375,599 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 1,757,294,928 | $ | 413,144,952 | $ | 956,211,625 | ||||||
| Undistributed (distributions in excess of) net investment income (accumulated net investment loss) |
8,175,644 | (5,359,741 | ) | (1,439,399 | ) | |||||||
| Accumulated net realized gain (loss) |
(108,563,573 | ) | (37,773,625 | ) | 19,784,630 | |||||||
| Net unrealized appreciation (depreciation) |
(199,560,693 | ) | 7,451,590 | 105,818,743 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,457,346,306 | $ | 377,463,176 | $ | 1,080,375,599 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
41,550,000 | 10,875,000 | 32,250,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 35.07 | $ | 34.71 | $ | 33.50 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $2,762,288 and $7,162,459, respectively. See Note 1. |
| b | Cost of foreign currency: $1,275,715, $40,008 and $817,385, respectively. |
| c | $0.001 par value, number of shares authorized: 127.8 million, 63.6 million and 318.625 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
35 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI |
iShares MSCI Belgium Capped ETF |
iShares MSCI Eastern |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 85,093 | $ | 859,391 | $ | 1,956,549 | ||||||
| Interest — affiliated (Note 2) |
2 | 2 | 175 | |||||||||
| Securities lending income — affiliated (Note 2) |
27,400 | 27,988 | 8,967 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
112,495 | 887,381 | 1,965,691 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
140,784 | 329,699 | 541,420 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
140,784 | 329,699 | 541,420 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
(28,289 | ) | 557,682 | 1,424,271 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(2,364,081 | ) | (1,231,935 | ) | (6,886,890 | ) | ||||||
| In-kind redemptions — unaffiliated |
(110,792 | ) | 8,453,700 | (8,946,740 | ) | |||||||
| Foreign currency transactions |
(5,803 | ) | (24,982 | ) | (61,771 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(2,480,676 | ) | 7,196,783 | (15,895,401 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(1,747,030 | ) | (6,040,909 | ) | (30,144,576 | ) | ||||||
| Translation of assets and liabilities in foreign currencies |
(139,694 | ) | (8,070 | ) | 2,838 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(1,886,724 | ) | (6,048,979 | ) | (30,141,738 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(4,367,400 | ) | 1,147,804 | (46,037,139 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (4,395,689 | ) | $ | 1,705,486 | $ | (44,612,868 | ) | ||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $4,852, $151,663 and $252,316, respectively. |
See notes to financial statements.
| 36 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI |
iShares MSCI Capped ETF |
iShares MSCI Netherlands ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 2,756,854 | $ | 7,877,732 | $ | 479,805 | ||||||
| Interest — affiliated (Note 2) |
8 | 19 | 2 | |||||||||
| Securities lending income — affiliated (Note 2) |
14,867 | 105,328 | 64,954 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
2,771,729 | 7,983,079 | 544,761 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
687,143 | 2,519,789 | 350,423 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
687,143 | 2,519,789 | 350,423 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
2,084,586 | 5,463,290 | 194,338 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(4,159,987 | ) | (21,886,516 | ) | (889,023 | ) | ||||||
| In-kind redemptions — unaffiliated |
(1,243,041 | ) | 20,528,984 | 1,605,748 | ||||||||
| Foreign currency transactions |
(50,388 | ) | (213,374 | ) | (35,178 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(5,453,416 | ) | (1,570,906 | ) | 681,547 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
518,278 | (105,048,707 | ) | 3,640,444 | ||||||||
| Translation of assets and liabilities in foreign currencies |
5,097 | 30,640 | 1,392 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
523,375 | (105,018,067 | ) | 3,641,836 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(4,930,041 | ) | (106,588,973 | ) | 4,323,383 | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (2,845,455 | ) | $ | (101,125,683 | ) | $ | 4,517,721 | ||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $424,331, $1,337,882 and $76,045, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
37 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI Capped ETF |
iShares MSCI Sweden ETF |
iShares MSCI Switzerland Capped ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 38,314,966 | $ | — | $ | 1,661,354 | ||||||
| Interest — affiliated (Note 2) |
37 | 6 | 6 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 5,804 | 155,882 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
38,315,003 | 5,810 | 1,817,242 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
4,359,998 | 862,937 | 2,616,499 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
4,359,998 | 862,937 | 2,616,499 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
33,955,005 | (857,127 | ) | (799,257 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(32,690,928 | ) | (1,756,469 | ) | (790,386 | ) | ||||||
| In-kind redemptions — unaffiliated |
31,168,658 | 7,349,077 | 77,908,120 | |||||||||
| Foreign currency transactions |
(214,964 | ) | (36,983 | ) | (322,024 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(1,737,234 | ) | 5,555,625 | 76,795,710 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(295,589,058 | ) | 119,408 | (94,789,739 | ) | |||||||
| Translation of assets and liabilities in foreign currencies |
(1,086 | ) | 1,661 | (105,039 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(295,590,144 | ) | 121,069 | (94,894,778 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(297,327,378 | ) | 5,676,694 | (18,099,068 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (263,372,373 | ) | $ | 4,819,567 | $ | (18,898,325 | ) | ||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $892,505, $ — and $17,827, respectively. |
See notes to financial statements.
| 38 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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, 2015 |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | (28,289 | ) | $ | 2,320,187 | $ | 557,682 | $ | 1,594,797 | |||||||
| Net realized gain (loss) |
(2,480,676 | ) | (6,160,727 | ) | 7,196,783 | 3,217,627 | ||||||||||
| Net change in unrealized appreciation/depreciation |
(1,886,724 | ) | 7,652,437 | (6,048,979 | ) | 8,276,454 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(4,395,689 | ) | 3,811,897 | 1,705,486 | 13,088,878 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(275,789 | ) | (2,505,599 | ) | (616,358 | ) | (2,704,438 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(275,789 | ) | (2,505,599 | ) | (616,358 | ) | (2,704,438 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
6,397,107 | 99,089,245 | 43,600,334 | 110,895,731 | ||||||||||||
| Cost of shares redeemed |
(6,030,320 | ) | (119,448,599 | ) | (47,839,922 | ) | (27,730,866 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
366,787 | (20,359,354 | ) | (4,239,588 | ) | 83,164,865 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(4,304,691 | ) | (19,053,056 | ) | (3,150,460 | ) | 93,549,305 | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
63,170,171 | 82,223,227 | 164,765,056 | 71,215,751 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 58,865,480 | $ | 63,170,171 | $ | 161,614,596 | $ | 164,765,056 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Distributions in excess of net investment income included in net assets at end of period |
$ | (304,106 | ) | $ | (28 | ) | $ | (684,723 | ) | $ | (626,047 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
400,000 | 5,000,000 | 2,560,000 | 6,520,000 | ||||||||||||
| Shares redeemed |
(400,000 | ) | (6,000,000 | ) | (2,960,000 | ) | (1,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
— | (1,000,000 | ) | (400,000 | ) | 4,720,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
39 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Eastern Europe ETF |
iShares MSCI France ETF |
|||||||||||||||
| Six months ended |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,424,271 | $ | 3,916,949 | $ | 2,084,586 | $ | 10,478,223 | ||||||||
| Net realized gain (loss) |
(15,895,401 | ) | (3,626,850 | ) | (5,453,416 | ) | 47,950,371 | |||||||||
| Net change in unrealized appreciation/depreciation |
(30,141,738 | ) | (8,334,343 | ) | 523,375 | 9,095,863 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(44,612,868 | ) | (8,044,244 | ) | (2,845,455 | ) | 67,524,457 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(4,265,346 | ) | (1,868,858 | ) | (2,711,818 | ) | (10,305,702 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(4,265,346 | ) | (1,868,858 | ) | (2,711,818 | ) | (10,305,702 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
76,901,744 | 90,271,091 | 153,384,614 | 84,933,809 | ||||||||||||
| Cost of shares redeemed |
(43,013,187 | ) | (51,589,448 | ) | (78,637,653 | ) | (387,069,111 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
33,888,557 | 38,681,643 | 74,746,961 | (302,135,302 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(14,989,657 | ) | 28,768,541 | 69,189,688 | (244,916,547 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
150,565,987 | 121,797,446 | 281,922,820 | 526,839,367 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 135,576,330 | $ | 150,565,987 | $ | 351,112,508 | $ | 281,922,820 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (257,696 | ) | $ | 2,583,379 | $ | (351,390 | ) | $ | 275,842 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
3,850,000 | 3,600,000 | 6,000,000 | 3,000,000 | ||||||||||||
| Shares redeemed |
(2,750,000 | ) | (2,100,000 | ) | (3,000,000 | ) | (14,000,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
1,100,000 | 1,500,000 | 3,000,000 | (11,000,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 40 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Italy Capped ETF |
iShares MSCI Netherlands ETF |
|||||||||||||||
| Six months ended |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 5,463,290 | $ | 30,016,510 | $ | 194,338 | $ | 4,710,761 | ||||||||
| Net realized gain (loss) |
(1,570,906 | ) | 118,669,234 | 681,547 | 28,496,610 | |||||||||||
| Net change in unrealized appreciation/depreciation |
(105,018,067 | ) | (43,114,144 | ) | 3,641,836 | (1,266,653 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(101,125,683 | ) | 105,571,600 | 4,517,721 | 31,940,718 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(6,029,037 | ) | (31,039,889 | ) | (495,862 | ) | (5,077,158 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(6,029,037 | ) | (31,039,889 | ) | (495,862 | ) | (5,077,158 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
49,183,757 | 1,348,720,763 | 11,219,181 | 53,331,509 | ||||||||||||
| Cost of shares redeemed |
(584,177,621 | ) | (583,513,961 | ) | (49,305,121 | ) | (168,493,467 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(534,993,864 | ) | 765,206,802 | (38,085,940 | ) | (115,161,958 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(642,148,584 | ) | 839,738,513 | (34,064,081 | ) | (88,298,398 | ) | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
1,556,860,252 | 717,121,739 | 165,091,504 | 253,389,902 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 914,711,668 | $ | 1,556,860,252 | $ | 131,027,423 | $ | 165,091,504 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (565,747 | ) | $ | — | $ | 100,053 | $ | 401,577 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
3,450,000 | 79,050,000 | 450,000 | 2,200,000 | ||||||||||||
| Shares redeemed |
(39,450,000 | ) | (36,750,000 | ) | (2,050,000 | ) | (6,750,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(36,000,000 | ) | 42,300,000 | (1,600,000 | ) | (4,550,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
41 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Spain Capped ETF |
iShares MSCI Sweden ETF |
|||||||||||||||
| Six months ended |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | 33,955,005 | $ | 67,503,910 | $ | (857,127 | ) | $ | 14,699,921 | |||||||
| Net realized gain (loss) |
(1,737,234 | ) | 29,271,436 | 5,555,625 | 30,778,353 | |||||||||||
| Net change in unrealized appreciation/depreciation |
(295,590,144 | ) | 128,772,813 | 121,069 | 1,730,036 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(263,372,373 | ) | 225,548,159 | 4,819,567 | 47,208,310 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(48,806,974 | ) | (48,486,263 | ) | (2,547,778 | ) | (17,174,445 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(48,806,974 | ) | (48,486,263 | ) | (2,547,778 | ) | (17,174,445 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
81,232,222 | 2,068,530,441 | 47,666,335 | 101,532,730 | ||||||||||||
| Cost of shares redeemed |
(784,744,217 | ) | (190,332,570 | ) | (76,730,956 | ) | (161,316,482 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(703,511,995 | ) | 1,878,197,871 | (29,064,621 | ) | (59,783,752 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(1,015,691,342 | ) | 2,055,259,767 | (26,792,832 | ) | (29,749,887 | ) | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
2,473,037,648 | 417,777,881 | 404,256,008 | 434,005,895 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 1,457,346,306 | $ | 2,473,037,648 | $ | 377,463,176 | $ | 404,256,008 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 8,175,644 | $ | 23,027,613 | $ | (5,359,741 | ) | $ | (1,954,836 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
2,325,000 | 51,825,000 | 1,425,000 | 2,850,000 | ||||||||||||
| Shares redeemed |
(21,675,000 | ) | (4,650,000 | ) | (2,400,000 | ) | (4,575,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(19,350,000 | ) | 47,175,000 | (975,000 | ) | (1,725,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 42 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Switzerland Capped ETF |
||||||||
| Six months ended |
Year ended August 31, 2014 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$ | (799,257 | ) | $ | 25,455,124 | |||
| Net realized gain |
76,795,710 | 33,351,910 | ||||||
| Net change in unrealized appreciation/depreciation |
(94,894,778 | ) | 97,427,932 | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
(18,898,325 | ) | 156,234,966 | |||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
— | (26,005,188 | ) | |||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
— | (26,005,188 | ) | |||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
303,281,778 | 135,490,352 | ||||||
| Cost of shares redeemed |
(276,165,123 | ) | (96,423,300 | ) | ||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
27,116,655 | 39,067,052 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
8,218,330 | 169,296,830 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
1,072,157,269 | 902,860,439 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 1,080,375,599 | $ | 1,072,157,269 | ||||
|
|
|
|
|
|||||
| Distributions in excess of net investment income or accumulated net investment loss included in net assets at end of period |
$ | (1,439,399 | ) | $ | (640,142 | ) | ||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
9,125,000 | 4,000,000 | ||||||
| Shares redeemed |
(8,750,000 | ) | (2,875,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
375,000 | 1,125,000 | ||||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
43 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Austria Capped ETF | ||||||||||||||||||||||||
| Six months Feb. 28, 2015 |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 17.55 | $ | 17.87 | $ | 14.53 | $ | 18.76 | $ | 17.27 | $ | 20.21 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.01 | ) | 0.52 | 0.32 | 0.35 | 0.42 | 0.43 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
(1.12 | ) | (0.18 | ) | 3.36 | (4.09 | ) | 1.53 | (2.62 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(1.13 | ) | 0.34 | 3.68 | (3.74 | ) | 1.95 | (2.19 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.07 | ) | (0.66 | ) | (0.34 | ) | (0.49 | ) | (0.46 | ) | (0.75 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.07 | ) | (0.66 | ) | (0.34 | ) | (0.49 | ) | (0.46 | ) | (0.75 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 16.35 | $ | 17.55 | $ | 17.87 | $ | 14.53 | $ | 18.76 | $ | 17.27 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(6.39 | )%c | 1.56 | % | 25.49 | % | (19.81 | )% | 10.92 | % | (11.07 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 58,865 | $ | 63,170 | $ | 82,223 | $ | 53,757 | $ | 136,974 | $ | 110,520 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.52 | % | 0.52 | % | 0.54 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.10 | )% | 2.64 | % | 1.82 | % | 2.32 | % | 1.95 | % | 2.20 | % | ||||||||||||
| Portfolio turnover ratee |
9 | % | 30 | % | 26 | % | 13 | % | 12 | % | 11 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 44 | 2015 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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 17.02 | $ | 14.36 | $ | 11.97 | $ | 12.60 | $ | 11.78 | $ | 12.06 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.07 | 0.32 | 0.42 | 0.38 | 0.35 | 0.19 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.40 | 2.95 | 2.36 | (0.33 | ) | 0.80 | (0.27 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.47 | 3.27 | 2.78 | 0.05 | 1.15 | (0.08 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.07 | ) | (0.61 | ) | (0.39 | ) | (0.67 | ) | (0.33 | ) | (0.20 | ) | ||||||||||||
| Return of capital |
— | — | — | (0.01 | ) | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.07 | ) | (0.61 | ) | (0.39 | ) | (0.68 | ) | (0.33 | ) | (0.20 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 17.42 | $ | 17.02 | $ | 14.36 | $ | 11.97 | $ | 12.60 | $ | 11.78 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
2.82 | %c | 23.05 | % | 23.43 | % | 1.11 | % | 9.59 | % | (0.60 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 161,615 | $ | 164,765 | $ | 71,216 | $ | 25,386 | $ | 31,256 | $ | 58,896 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.50 | % | 0.53 | % | 0.52 | % | 0.54 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.82 | % | 1.90 | % | 3.01 | % | 3.35 | % | 2.56 | % | 1.55 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 13 | % | 24 | % | 19 | % | 12 | % | 17 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
45 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets Eastern Europe ETF | ||||||||||||||||||||||||
| Six months Feb. 28, 2015 |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Period from to Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 22.81 | $ | 23.88 | $ | 24.24 | $ | 29.28 | $ | 25.66 | $ | 24.65 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.17 | 0.67 | 0.73 | 1.01 | 0.67 | 0.26 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
(4.94 | ) | (1.41 | ) | (0.77 | ) | (4.92 | ) | 3.45 | 0.89 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(4.77 | ) | (0.74 | ) | (0.04 | ) | (3.91 | ) | 4.12 | 1.15 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.43 | ) | (0.33 | ) | (0.32 | ) | (1.13 | ) | (0.50 | ) | (0.13 | ) | ||||||||||||
| Net realized gain |
— | — | — | — | — | (0.01 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.43 | ) | (0.33 | ) | (0.32 | ) | (1.13 | ) | (0.50 | ) | (0.14 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 17.61 | $ | 22.81 | $ | 23.88 | $ | 24.24 | $ | 29.28 | $ | 25.66 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(20.66 | )%d | (3.21 | )% | (0.20 | )% | (13.14 | )% | 15.86 | % | 4.68 | %d | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 135,576 | $ | 150,566 | $ | 121,797 | $ | 20,602 | $ | 32,212 | $ | 12,832 | ||||||||||||
| Ratio of expenses to average net assetse |
0.68 | % | 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 | n/a | 0.68 | % | n/a | |||||||||||||||||
| Ratio of net investment income to average net assetse |
1.79 | % | 2.75 | % | 2.96 | % | 3.97 | % | 2.06 | % | 1.05 | % | ||||||||||||
| Portfolio turnover ratef |
6 | % | 8 | % | 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.
| 46 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI France ETF | ||||||||||||||||||||||||
| Six months Feb. 28, 2015 |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 27.64 | $ | 24.85 | $ | 20.70 | $ | 22.60 | $ | 21.03 | $ | 24.28 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.19 | 0.66 | 0.69 | 0.59 | 0.86 | 0.65 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(1.01 | ) | 2.86 | 4.14 | (1.80 | ) | 1.38 | (3.30 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.82 | ) | 3.52 | 4.83 | (1.21 | ) | 2.24 | (2.65 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.22 | ) | (0.73 | ) | (0.68 | ) | (0.69 | ) | (0.67 | ) | (0.60 | ) | ||||||||||||
| Return of capital |
— | — | — | (0.00 | )c | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.22 | ) | (0.73 | ) | (0.68 | ) | (0.69 | ) | (0.67 | ) | (0.60 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 26.60 | $ | 27.64 | $ | 24.85 | $ | 20.70 | $ | 22.60 | $ | 21.03 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(2.90 | )%d | 14.07 | % | 23.56 | % | (5.05 | )% | 10.24 | % | (10.98 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 351,113 | $ | 281,923 | $ | 526,839 | $ | 401,626 | $ | 357,137 | $ | 239,706 | ||||||||||||
| Ratio of expenses to average net assetse |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
1.47 | % | 2.36 | % | 2.94 | % | 2.91 | % | 3.38 | % | 2.71 | % | ||||||||||||
| Portfolio turnover ratef |
2 | % | 6 | % | 5 | % | 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 | 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 |
47 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Italy Capped ETF | ||||||||||||||||||||||||
| Six months Feb. 28, 2015 |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 16.02 | $ | 13.06 | $ | 11.78 | $ | 13.58 | $ | 15.00 | $ | 19.05 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.08 | 0.41 | 0.36 | 0.41 | 0.54 | 0.39 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(1.05 | ) | 2.89 | 1.23 | (1.79 | ) | (1.47 | ) | (3.99 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.97 | ) | 3.30 | 1.59 | (1.38 | ) | (0.93 | ) | (3.60 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.10 | ) | (0.34 | ) | (0.30 | ) | (0.42 | ) | (0.49 | ) | (0.44 | ) | ||||||||||||
| Return of capital |
— | — | (0.01 | ) | (0.00 | )c | — | (0.01 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.10 | ) | (0.34 | ) | (0.31 | ) | (0.42 | ) | (0.49 | ) | (0.45 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 14.95 | $ | 16.02 | $ | 13.06 | $ | 11.78 | $ | 13.58 | $ | 15.00 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(6.03 | )%d | 25.20 | % | 13.58 | % | (9.98 | )% | (6.80 | )% | (19.11 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 914,712 | $ | 1,556,860 | $ | 717,122 | $ | 196,212 | $ | 144,612 | $ | 76,500 | ||||||||||||
| Ratio of expenses to average net assetse |
0.48 | % | 0.48 | % | 0.50 | % | 0.53 | % | 0.51 | % | 0.54 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
1.05 | % | 2.49 | % | 2.78 | % | 3.41 | % | 3.15 | % | 2.17 | % | ||||||||||||
| Portfolio turnover ratef |
7 | % | 24 | % | 45 | % | 14 | % | 16 | % | 12 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Rounds to less than $0.01. |
| 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.
| 48 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Netherlands ETF | ||||||||||||||||||||||||
| Six months Feb. 28, 2015 |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 24.64 | $ | 22.52 | $ | 18.23 | $ | 18.45 | $ | 17.89 | $ | 18.52 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.03 | 0.45 | 0.44 | 0.39 | 0.48 | 0.45 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.10 | 2.22 | 4.19 | (0.08 | ) | 0.55 | (0.70 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.13 | 2.67 | 4.63 | 0.31 | 1.03 | (0.25 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.08 | ) | (0.55 | ) | (0.34 | ) | (0.53 | ) | (0.47 | ) | (0.38 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.08 | ) | (0.55 | ) | (0.34 | ) | (0.53 | ) | (0.47 | ) | (0.38 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 25.69 | $ | 24.64 | $ | 22.52 | $ | 18.23 | $ | 18.45 | $ | 17.89 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
4.62 | %c | 11.80 | % | 25.57 | % | 1.96 | % | 5.44 | % | (1.44 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 131,027 | $ | 165,092 | $ | 253,390 | $ | 78,397 | $ | 121,740 | $ | 147,611 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.50 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.27 | % | 1.78 | % | 2.09 | % | 2.21 | % | 2.26 | % | 2.31 | % | ||||||||||||
| Portfolio turnover ratee |
5 | % | 7 | % | 11 | % | 10 | % | 6 | % | 9 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
49 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Spain Capped ETF | ||||||||||||||||||||||||
| Six months Feb. 28, 2015 |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 40.61 | $ | 30.44 | $ | 26.28 | $ | 35.89 | $ | 37.02 | $ | 47.65 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.69 | 1.80 | 1.33 | 2.12 | 2.14 | 1.64 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(5.18 | ) | 9.53 | 4.07 | (8.93 | ) | (1.36 | ) | (10.01 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(4.49 | ) | 11.33 | 5.40 | (6.81 | ) | 0.78 | (8.37 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(1.05 | ) | (1.16 | ) | (1.24 | ) | (2.80 | ) | (1.91 | ) | (2.26 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(1.05 | ) | (1.16 | ) | (1.24 | ) | (2.80 | ) | (1.91 | ) | (2.26 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 35.07 | $ | 40.61 | $ | 30.44 | $ | 26.28 | $ | 35.89 | $ | 37.02 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(11.04 | )%c | 37.39 | % | 20.88 | % | (19.36 | )% | 1.78 | % | (17.91 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,457,346 | $ | 2,473,038 | $ | 417,778 | $ | 195,093 | $ | 180,360 | $ | 194,362 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.54 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
3.76 | % | 4.48 | % | 4.45 | % | 7.60 | % | 5.31 | % | 3.72 | % | ||||||||||||
| Portfolio turnover ratee |
6 | % | 15 | % | 24 | % | 17 | % | 14 | % | 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.
| 50 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Sweden ETF | ||||||||||||||||||||||||
| Six months Feb. 28, 2015 |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 34.11 | $ | 31.97 | $ | 27.32 | $ | 26.82 | $ | 24.46 | $ | 22.86 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.08 | ) | 1.04 | 0.97 | 0.83 | 1.18 | 0.48 | |||||||||||||||||
| Net realized and unrealized gainb |
0.91 | 2.33 | 4.70 | 0.58 | 2.22 | 1.73 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.83 | 3.37 | 5.67 | 1.41 | 3.40 | 2.21 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.23 | ) | (1.23 | ) | (1.02 | ) | (0.86 | ) | (1.04 | ) | (0.61 | ) | ||||||||||||
| Return of capital |
— | — | — | (0.05 | ) | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.23 | ) | (1.23 | ) | (1.02 | ) | (0.91 | ) | (1.04 | ) | (0.61 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 34.71 | $ | 34.11 | $ | 31.97 | $ | 27.32 | $ | 26.82 | $ | 24.46 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
2.51 | %c | 10.49 | % | 21.02 | % | 5.57 | % | 13.40 | % | 9.70 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 377,463 | $ | 404,256 | $ | 434,006 | $ | 370,832 | $ | 329,887 | $ | 249,491 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.51 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.48 | )% | 2.97 | % | 3.13 | % | 3.17 | % | 3.80 | % | 1.97 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 7 | % | 7 | % | 7 | % | 9 | % | 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 |
51 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Switzerland Capped ETF | ||||||||||||||||||||||||
| Six months Feb. 28, 2015 |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 33.64 | $ | 29.36 | $ | 23.85 | $ | 24.67 | $ | 21.64 | $ | 20.71 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.02 | ) | 0.80 | 0.67 | 0.63 | 0.59 | 0.39 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.12 | ) | 4.27 | 5.44 | (0.80 | ) | 2.97 | 0.90 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.14 | ) | 5.07 | 6.11 | (0.17 | ) | 3.56 | 1.29 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.79 | ) | (0.60 | ) | (0.65 | ) | (0.53 | ) | (0.36 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.79 | ) | (0.60 | ) | (0.65 | ) | (0.53 | ) | (0.36 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 33.50 | $ | 33.64 | $ | 29.36 | $ | 23.85 | $ | 24.67 | $ | 21.64 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(0.42 | )%c | 17.21 | % | 25.71 | % | (0.53 | )% | 16.30 | % | 6.35 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,080,376 | $ | 1,072,157 | $ | 902,860 | $ | 554,570 | $ | 524,159 | $ | 405,755 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.15 | )% | 2.41 | % | 2.38 | % | 2.73 | % | 2.35 | % | 1.80 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 5 | % | 13 | % | 8 | % | 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.
| 52 | 2015 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.
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. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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). |
| NOTES TO FINANCIAL STATEMENTS |
53 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 |
| • | 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.
| 54 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2015. 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 |
$ | 58,021,955 | $ | — | $ | 21 | $ | 58,021,976 | ||||||||
| Money Market Funds |
1,345,245 | — | — | 1,345,245 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 59,367,200 | $ | — | $ | 21 | $ | 59,367,221 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Belgium Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 161,437,619 | $ | — | $ | — | $ | 161,437,619 | ||||||||
| Money Market Funds |
1,209,452 | — | — | 1,209,452 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 162,647,071 | $ | — | $ | — | $ | 162,647,071 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Eastern Europe |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 130,553,019 | $ | — | $ | — | $ | 130,553,019 | ||||||||
| Preferred Stocks |
4,933,011 | — | — | 4,933,011 | ||||||||||||
| Money Market Funds |
403,064 | — | — | 403,064 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 135,889,094 | $ | — | $ | — | $ | 135,889,094 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI France |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 351,006,160 | $ | — | $ | — | $ | 351,006,160 | ||||||||
| Money Market Funds |
2,090,040 | — | — | 2,090,040 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 353,096,200 | $ | — | $ | — | $ | 353,096,200 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Italy Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 914,813,663 | $ | — | $ | — | $ | 914,813,663 | ||||||||
| Money Market Funds |
14,612,008 | — | — | 14,612,008 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 929,425,671 | $ | — | $ | — | $ | 929,425,671 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Netherlands |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 130,771,517 | $ | — | $ | 1 | $ | 130,771,518 | ||||||||
| Money Market Funds |
3,754,913 | — | — | 3,754,913 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 134,526,430 | $ | — | $ | 1 | $ | 134,526,431 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
55 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Spain Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,457,379,397 | $ | — | $ | — | $ | 1,457,379,397 | ||||||||
| Money Market Funds |
910,677 | — | — | 910,677 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,458,290,074 | $ | — | $ | — | $ | 1,458,290,074 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Sweden |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 377,439,902 | $ | — | $ | — | $ | 377,439,902 | ||||||||
| Money Market Funds |
2,904,722 | — | — | 2,904,722 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 380,344,624 | $ | — | $ | — | $ | 380,344,624 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Switzerland Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,076,333,374 | $ | — | $ | — | $ | 1,076,333,374 | ||||||||
| Money Market Funds |
8,330,969 | — | — | 8,330,969 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,084,664,343 | $ | — | $ | — | $ | 1,084,664,343 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income and capital gain distributions, if any, are 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, 2015 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
| 56 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, 2015, 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.
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. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the schedules of investments. The value of any securities on loan as of February 28, 2015 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 or request additional collateral. 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 |
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iSHARES®, INC.
The following table is a summary of each Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| iShares ETF | Market Value of Securities on Loan |
Cash
Collateral Received a |
Net Amount |
|||||||||
| MSCI Austria Capped |
$ | 1,270,137 | $ | 1,270,137 | $ | — | ||||||
| MSCI Belgium Capped |
1,087,874 | 1,087,874 | — | |||||||||
| MSCI Emerging Markets Eastern Europe |
266,099 | 266,099 | — | |||||||||
| MSCI France |
1,874,028 | 1,874,028 | — | |||||||||
| MSCI Italy Capped |
13,163,014 | 13,163,014 | — | |||||||||
| MSCI Netherlands |
3,501,235 | 3,501,235 | — | |||||||||
| MSCI Sweden |
2,762,288 | 2,762,288 | — | |||||||||
| MSCI Switzerland Capped |
7,162,459 | 7,162,459 | — | |||||||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in each Fund’s statement of assets and liabilities. |
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, 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, 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, up to and including $72 billion | ||||
| 0.36 | Over $72 billion | ||||
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 | ||||
| 0.54 | Over $42 billion, up to and including $56 billion | ||||
| 0.47 | Over $56 billion, up to and including $70 billion | ||||
| 0.41 | Over $70 billion, up to and including $84 billion | ||||
| 0.35 | 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. 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% (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, each Fund retains 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees 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, each Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
Prior to January 1, 2015, each Fund retained 75% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, each Fund retained for the remainder of calendar year 2014, 80% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
| NOTES TO FINANCIAL STATEMENTS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For the six months ended February 28, 2015, each Fund paid to BTC the following amounts in total for securities lending agent services and 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, 2015, 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.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended February 28, 2015 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI Austria Capped |
$ | 5,121,549 | $ | 5,380,469 | ||||
| MSCI Belgium Capped |
4,266,201 | 5,225,704 | ||||||
| MSCI Emerging Markets Eastern Europe |
13,995,631 | 9,405,699 | ||||||
| MSCI France |
9,152,642 | 6,916,045 | ||||||
| MSCI Italy Capped |
74,682,767 | 79,327,806 | ||||||
| MSCI Netherlands |
7,408,286 | 6,865,376 | ||||||
| MSCI Spain Capped |
116,158,128 | 200,871,675 | ||||||
| MSCI Sweden |
4,379,578 | 7,552,834 | ||||||
| MSCI Switzerland Capped |
29,222,586 | 24,756,638 | ||||||
| 60 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
In-kind transactions (see Note 4) for the six months ended February 28, 2015 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI Austria Capped |
$ | 6,256,093 | $ | 5,936,700 | ||||
| MSCI Belgium Capped |
43,540,743 | 47,688,628 | ||||||
| MSCI Emerging Markets Eastern Europe |
68,260,291 | 41,729,224 | ||||||
| MSCI France |
149,633,402 | 77,848,698 | ||||||
| MSCI Italy Capped |
47,527,058 | 577,433,205 | ||||||
| MSCI Netherlands |
11,131,895 | 49,162,980 | ||||||
| MSCI Spain Capped |
76,974,435 | 741,792,540 | ||||||
| MSCI Sweden |
47,663,095 | 76,703,210 | ||||||
| MSCI Switzerland Capped |
298,205,172 | 271,921,685 | ||||||
| 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. Such variable charges, if any, are included in “Proceeds from shares sold” in the statements of changes in net assets.
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. | MARKET AND CREDIT RISK |
In the normal course of business, each Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks each Fund is exposed to include market risk and credit risk. Each Fund’s prospectus provides details of these and other types of risk.
BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
| NOTES TO FINANCIAL STATEMENTS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss each Fund may suffer through holding market positions in the face of market movements. Each Fund is exposed to market risk by virtue of its investment in equity instruments. The fair value of securities held by the Funds may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of each Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s schedule of investments.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.
Each Fund invests a substantial amount of its assets 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 issuers from countries with less developed markets.
Each Fund, except for the iShares MSCI Emerging Markets Eastern Europe ETF, invests all or substantially all of its assets in issuers located in a single country. When a fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in that country may have a significant impact on its investment performance.
The United States and the European Union, along with the regulatory bodies of a number of countries including Japan, Australia and Canada (collectively, “Sanctioning Bodies”), have imposed sectorial economic sanctions on certain Russian individuals and Russian corporate entities which include prohibitions on transacting in or dealing in new debt of longer than 30 or 90 days maturity or new equity of such issuers. Securities held by the iShares MSCI Emerging Markets Eastern Europe ETF issued prior to the date of the sanctions being imposed are not currently subject to any restrictions under the sanctions. However, compliance with each of these sanctions may impair the ability of a Fund to buy, sell, hold, receive or deliver the affected securities or other securities of such issuers. The Sanctioning Bodies 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. Current or future sanctions may result in Russia taking counter measures or retaliatory actions, which may further impair the value and liquidity of Russian securities. These retaliatory measures may include the immediate freeze of Russian assets held by a Fund.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of each Fund’s
| 62 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its statement of assets and liabilities.
| 6. | INCOME TAX INFORMATION |
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.
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, 2014, the Funds’ fiscal year end, the following 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 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||
| MSCI Austria Capped |
$ | 24,634,925 | $ | 9,795,917 | $ | 2,587,916 | $ | 7,102,366 | $ | 16,657,011 | $ | 13,826,937 | $ | 74,605,072 | ||||||||||||||
| MSCI Belgium Capped |
11,294,523 | — | 1,698,444 | 5,953,120 | 10,826,174 | 19,023,517 | 48,795,778 | |||||||||||||||||||||
| MSCI Emerging Markets Eastern Europe |
2,161,562 | — | — | — | — | 204,914 | 2,366,476 | |||||||||||||||||||||
| MSCI France |
14,539,484 | 158,472 | 335,795 | 3,408,374 | 7,008,530 | 2,858,814 | 28,309,469 | |||||||||||||||||||||
| MSCI Italy Capped |
33,168,667 | — | 472,268 | 2,743,650 | 18,169,627 | 9,459,662 | 64,013,874 | |||||||||||||||||||||
| MSCI Netherlands |
6,930,449 | 260,715 | 1,195,162 | 5,819,153 | 22,256,170 | 2,329,005 | 38,790,654 | |||||||||||||||||||||
| MSCI Spain Capped |
21,049,529 | — | — | 5,946,927 | 15,120,672 | 8,619,903 | 50,737,031 | |||||||||||||||||||||
| MSCI Sweden |
11,686,467 | — | 100,015 | 13,686,746 | 8,483,510 | 5,244,977 | 39,201,715 | |||||||||||||||||||||
| MSCI Switzerland Capped |
10,955,695 | — | — | 2,837,786 | 22,569,380 | 6,955,758 | 43,318,619 | |||||||||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
| NOTES TO FINANCIAL STATEMENTS |
63 |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2015, 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 |
$ | 87,496,908 | $ | 1,250,505 | $ | (29,380,192 | ) | $ | (28,129,687 | ) | ||||||
| MSCI Belgium Capped |
167,738,884 | 10,268,328 | (15,360,141 | ) | (5,091,813 | ) | ||||||||||
| MSCI Emerging Markets Eastern Europe |
191,600,794 | 502,390 | (56,214,090 | ) | (55,711,700 | ) | ||||||||||
| MSCI France |
401,100,964 | 9,589,650 | (57,594,414 | ) | (48,004,764 | ) | ||||||||||
| MSCI Italy Capped |
1,094,984,245 | 28,318,298 | (193,876,872 | ) | (165,558,574 | ) | ||||||||||
| MSCI Netherlands |
143,623,752 | 7,792,865 | (16,890,186 | ) | (9,097,321 | ) | ||||||||||
| MSCI Spain Capped |
1,711,599,026 | 26,919,597 | (280,228,549 | ) | (253,308,952 | ) | ||||||||||
| MSCI Sweden |
381,467,338 | 37,287,028 | (38,409,742 | ) | (1,122,714 | ) | ||||||||||
| MSCI Switzerland Capped |
991,828,937 | 151,539,488 | (58,704,082 | ) | 92,835,406 | |||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2015, 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.
| 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.
| 64 | 2015 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 estimates and are provided pursuant to regulatory requirements 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 |
$ | — | $ | — | $ | 0.072576 | $ | 0.072576 | — | % | — | % | 100 | % | 100 | % | ||||||||||||||||
| MSCI Emerging Markets Eastern Europe |
0.348737 | — | 0.084293 | 0.433030 | 81 | — | 19 | 100 | ||||||||||||||||||||||||
| MSCI France |
0.096802 | — | 0.121893 | 0.218695 | 44 | — | 56 | 100 | ||||||||||||||||||||||||
| MSCI Spain Capped |
0.970904 | — | 0.080404 | 1.051308 | 92 | — | 8 | 100 | ||||||||||||||||||||||||
| MSCI Sweden |
0.183709 | — | 0.047382 | 0.231091 | 79 | — | 21 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
65 |
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Notes:
| 66 | 2015 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 basis on the Funds’ website.
©2015 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-82-0215
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FEBRUARY 28, 2015
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2015 SEMI-ANNUAL REPORT (UNAUDITED)
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iShares, Inc.
| Ø | iShares MSCI EMU ETF | EZU | NYSE Arca |
| Ø | iShares MSCI Germany ETF | EWG | NYSE Arca |
| Ø | iShares MSCI Japan ETF | EWJ | NYSE Arca |
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Table of Contents
iSHARES® MSCI EMU ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -1.50%, net of fees, while the total return for the Index was -1.30%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(4.83)% | (4.82)% | (4.74)% | (4.83)% | (4.82)% | (4.74)% | ||||||||||||||||||||
| 5 Years |
6.17% | 6.16% | 6.25% | 34.87% | 34.84% | 35.41% | ||||||||||||||||||||
| 10 Years |
3.57% | 3.54% | 3.69% | 41.97% | 41.57% | 43.72% | ||||||||||||||||||||
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 8 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 985.00 | $ | 2.36 | $ | 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 8 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GERMANY ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 2.83%, net of fees, while the total return for the Index was 3.02%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(4.73)% | (4.48)% | (4.60)% | (4.73)% | (4.48)% | (4.60)% | ||||||||||||||||||||
| 5 Years |
10.49% | 10.50% | 10.61% | 64.69% | 64.76% | 65.57% | ||||||||||||||||||||
| 10 Years |
7.17% | 7.16% | 7.31% | 99.86% | 99.61% | 102.41% | ||||||||||||||||||||
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 8 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,028.30 | $ | 2.41 | $ | 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 8 for more information. |
| * | Excludes money market funds. |
| 6 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI JAPAN ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 4.85%, net of fees, while the total return for the Index was 5.16%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
8.41% | 7.82% | 8.94% | 8.41% | 7.82% | 8.94% | ||||||||||||||||||||
| 5 Years |
6.03% | 6.08% | 6.58% | 34.01% | 34.31% | 37.55% | ||||||||||||||||||||
| 10 Years |
2.63% | 2.65% | 3.17% | 29.69% | 29.84% | 36.57% | ||||||||||||||||||||
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 8 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,048.50 | $ | 2.44 | $ | 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 8 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
7 |
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, 2014 and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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.
| 8 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
9 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU ETF
February 28, 2015
| 10 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU ETF
February 28, 2015
| 12 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GERMANY ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| DAX Index | 94 | Mar. 2015 | Eurex | $ | 30,008,138 | $ | 3,579,133 | |||||||||||||
See notes to financial statements.
| 14 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| TOPIX Index | 403 | Mar. 2015 | Tokyo Stock | $ | 51,426,367 | $ | 2,858,986 | |||||||||||||
See notes to financial statements.
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2015
| iShares MSCI EMU ETF |
iShares MSCI Germany ETF |
iShares MSCI Japan ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 8,990,665,732 | $ | 5,770,056,264 | $ | 15,550,663,251 | ||||||
| Affiliated (Note 2) |
34,411,595 | 3,843,296 | 95,803,251 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 9,025,077,327 | $ | 5,773,899,560 | $ | 15,646,466,502 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 8,804,711,573 | $ | 5,922,630,016 | $ | 15,170,889,231 | ||||||
| Affiliated (Note 2) |
34,411,595 | 3,843,296 | 95,803,251 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
8,839,123,168 | 5,926,473,312 | 15,266,692,482 | |||||||||
| Foreign currency, at valueb |
2,423,204 | 12,603,144 | 34,551,388 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
46,383,970 | 9,340,471 | 8,876,916 | |||||||||
| Dividends and interest |
9,196,488 | 12,783,004 | 19,461,213 | |||||||||
| Capital shares sold |
— | 134,305 | 4,822,966 | |||||||||
| Futures variation margin |
— | 3,579,133 | 2,858,986 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
8,897,126,830 | 5,964,913,369 | 15,337,263,951 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
46,864,703 | 9,256,833 | 11,599,869 | |||||||||
| Due to broker for foreign currency pledged for futures, at valueb |
— | 1,202,358 | 800,880 | |||||||||
| Collateral for securities on loan (Note 1) |
27,016,505 | — | 89,236,766 | |||||||||
| Capital shares redeemed |
— | — | 720,761 | |||||||||
| Investment advisory fees (Note 2) |
3,000,748 | 2,030,115 | 5,247,941 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
76,881,956 | 12,489,306 | 107,606,217 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 8,820,244,874 | $ | 5,952,424,063 | $ | 15,229,657,734 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 9,355,380,142 | $ | 5,969,378,161 | $ | 16,320,675,963 | ||||||
| Undistributied (distributions in excess of) net investment income |
2,262,378 | 1,604,977 | (29,066,810 | ) | ||||||||
| Accumulated net realized loss |
(349,851,845 | ) | (172,005,167 | ) | (684,866,218 | ) | ||||||
| Net unrealized appreciation (depreciation) |
(187,545,801 | ) | 153,446,092 | (377,085,201 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 8,820,244,874 | $ | 5,952,424,063 | $ | 15,229,657,734 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
225,600,000 | 199,800,000 | 1,234,800,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 39.10 | $ | 29.79 | $ | 12.33 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $25,656,542, $ — and $84,834,753, respectively. See Note 1. |
| b | Cost of foreign currency including currency at broker, if any: $2,448,477, $11,504,878 and $33,961,686, respectively. |
| c | $0.001 par value, number of shares authorized: 1 billion, 382.2 million and 2.1246 billion, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
21 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI EMU ETF |
iShares MSCI Germany ETF |
iShares MSCI Japan ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 58,858,724 | $ | 13,279,850 | $ | 120,042,909 | ||||||
| Interest — affiliated (Note 2) |
98 | 32 | 223 | |||||||||
| Securities lending income — affiliated (Note 2) |
355,476 | 5,335 | 1,403,852 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
59,214,298 | 13,285,217 | 121,446,984 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
18,837,379 | 11,680,240 | 34,479,733 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
18,837,379 | 11,680,240 | 34,479,733 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
40,376,919 | 1,604,977 | 86,967,251 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(65,792,085 | ) | (24,617,282 | ) | (73,761,139 | ) | ||||||
| In-kind redemptions — unaffiliated |
84,918,291 | 74,591,012 | 410,267,168 | |||||||||
| Futures contracts |
— | 145,409 | 9,659,693 | |||||||||
| Foreign currency transactions |
(1,208,996 | ) | (1,839,955 | ) | (13,766,313 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain |
17,917,210 | 48,279,184 | 332,399,409 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(265,301,080 | ) | 115,221,941 | 221,455,033 | ||||||||
| Futures contracts |
— | 4,769,306 | 1,952,407 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(1,076,188 | ) | (1,981,327 | ) | 498,461 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(266,377,268 | ) | 118,009,920 | 223,905,901 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(248,460,058 | ) | 166,289,104 | 556,305,310 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (208,083,139 | ) | $ | 167,894,081 | $ | 643,272,561 | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $6,610,159, $2,152,750 and $13,298,606, respectively. |
See notes to financial statements.
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI EMU ETF |
iShares MSCI Germany ETF |
|||||||||||||||
| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 40,376,919 | $ | 255,301,280 | $ | 1,604,977 | $ | 109,217,597 | ||||||||
| Net realized gain |
17,917,210 | 272,213,942 | 48,279,184 | 503,529,812 | ||||||||||||
| Net change in unrealized appreciation/depreciation |
(266,377,268 | ) | 323,453,444 | 118,009,920 | 181,241,179 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(208,083,139 | ) | 850,968,666 | 167,894,081 | 793,988,588 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(52,659,271 | ) | (243,559,586 | ) | — | (111,913,888 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(52,659,271 | ) | (243,559,586 | ) | — | (111,913,888 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
2,360,512,261 | 6,832,263,291 | 1,534,872,499 | 1,689,588,472 | ||||||||||||
| Cost of shares redeemed |
(1,982,162,099 | ) | (2,277,014,968 | ) | (547,776,446 | ) | (2,230,103,855 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
378,350,162 | 4,555,248,323 | 987,096,053 | (540,515,383 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
117,607,752 | 5,162,657,403 | 1,154,990,134 | 141,559,317 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
8,702,637,122 | 3,539,979,719 | 4,797,433,929 | 4,655,874,612 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 8,820,244,874 | $ | 8,702,637,122 | $ | 5,952,424,063 | $ | 4,797,433,929 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 2,262,378 | $ | 14,544,730 | $ | 1,604,977 | $ | — | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
61,700,000 | 172,200,000 | 54,000,000 | 57,000,000 | ||||||||||||
| Shares redeemed |
(53,800,000 | ) | (56,700,000 | ) | (19,800,000 | ) | (73,200,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
7,900,000 | 115,500,000 | 34,200,000 | (16,200,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
23 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Japan ETF |
||||||||
| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 86,967,251 | $ | 177,693,682 | ||||
| Net realized gain |
332,399,409 | 136,968,307 | ||||||
| Net change in unrealized appreciation/depreciation |
223,905,901 | 665,594,417 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
643,272,561 | 980,256,406 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(87,384,550 | ) | (199,951,249 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(87,384,550 | ) | (199,951,249 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
3,348,421,793 | 5,400,567,672 | ||||||
| Cost of shares redeemed |
(3,403,840,773 | ) | (1,913,626,119 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets from capital share transactions |
(55,418,980 | ) | 3,486,941,553 | |||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
500,469,031 | 4,267,246,710 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
14,729,188,703 | 10,461,941,993 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 15,229,657,734 | $ | 14,729,188,703 | ||||
|
|
|
|
|
|||||
| Distributions in excess of net investment income included in net assets at end of period |
$ | (29,066,810 | ) | $ | (28,649,511 | ) | ||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
285,600,000 | 457,800,000 | ||||||
| Shares redeemed |
(295,800,000 | ) | (166,800,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in shares outstanding |
(10,200,000 | ) | 291,000,000 | |||||
|
|
|
|
|
|||||
See notes to financial statements.
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI EMU ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 39.98 | $ | 34.64 | $ | 29.09 | $ | 31.55 | $ | 30.75 | $ | 35.64 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.19 | 1.18 | 0.92 | 1.02 | 1.23 | 0.80 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.81 | ) | 5.10 | 5.55 | (2.38 | ) | 0.71 | (4.76 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.62 | ) | 6.28 | 6.47 | (1.36 | ) | 1.94 | (3.96 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.26 | ) | (0.94 | ) | (0.92 | ) | (1.10 | ) | (1.14 | ) | (0.93 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.26 | ) | (0.94 | ) | (0.92 | ) | (1.10 | ) | (1.14 | ) | (0.93 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 39.10 | $ | 39.98 | $ | 34.64 | $ | 29.09 | $ | 31.55 | $ | 30.75 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(1.50 | )%c | 18.02 | % | 22.43 | % | (3.99 | )% | 5.78 | % | (11.19 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 8,820,245 | $ | 8,702,637 | $ | 3,539,980 | $ | 794,226 | $ | 738,233 | $ | 823,972 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.50 | % | 0.53 | % | 0.52 | % | 0.54 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.04 | % | 2.89 | % | 2.74 | % | 3.55 | % | 3.38 | % | 2.29 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 7 | % | 5 | % | 7 | % | 8 | % | 5 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
25 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Germany ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 28.97 | $ | 25.61 | $ | 21.34 | $ | 21.02 | $ | 19.45 | $ | 20.86 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.01 | 0.59 | 0.46 | 0.56 | 0.86 | 0.38 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.81 | 3.40 | 4.24 | 0.34 | 1.38 | (1.49 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.82 | 3.99 | 4.70 | 0.90 | 2.24 | (1.11 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.63 | ) | (0.43 | ) | (0.58 | ) | (0.67 | ) | (0.30 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.63 | ) | (0.43 | ) | (0.58 | ) | (0.67 | ) | (0.30 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 29.79 | $ | 28.97 | $ | 25.61 | $ | 21.34 | $ | 21.02 | $ | 19.45 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
2.83 | %c | 15.41 | % | 22.11 | % | 4.55 | % | 10.84 | % | (5.35 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 5,952,424 | $ | 4,797,434 | $ | 4,655,875 | $ | 2,797,029 | $ | 2,768,171 | $ | 1,487,881 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.51 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.07 | % | 1.95 | % | 1.88 | % | 2.72 | % | 3.45 | % | 1.80 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 6 | % | 4 | % | 4 | % | 13 | % | 5 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Japan ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 11.83 | $ | 10.97 | $ | 9.02 | $ | 9.80 | $ | 9.43 | $ | 10.24 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.07 | 0.15 | 0.13 | 0.18 | 0.16 | 0.12 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.50 | 0.88 | 1.97 | (0.77 | ) | 0.37 | (0.77 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.57 | 1.03 | 2.10 | (0.59 | ) | 0.53 | (0.65 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.07 | ) | (0.17 | ) | (0.15 | ) | (0.19 | ) | (0.16 | ) | (0.16 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.07 | ) | (0.17 | ) | (0.15 | ) | (0.19 | ) | (0.16 | ) | (0.16 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 12.33 | $ | 11.83 | $ | 10.97 | $ | 9.02 | $ | 9.80 | $ | 9.43 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
4.85 | %c | 9.39 | % | 23.46 | % | (5.96 | )% | 5.54 | % | (6.41 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 15,229,658 | $ | 14,729,189 | $ | 10,461,942 | $ | 4,629,034 | $ | 7,194,509 | $ | 3,942,769 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.50 | % | 0.53 | % | 0.51 | % | 0.54 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.22 | % | 1.31 | % | 1.18 | % | 1.95 | % | 1.53 | % | 1.20 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 2 | % | 4 | % | 3 | % | 4 | % | 5 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
27 |
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 EMU |
Diversified | |
| MSCI Germany |
Non-diversified | |
| MSCI Japan |
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.
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. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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). |
| • | Futures contracts are valued at that day’s last reported settlement price on the exchange where the contract is traded. |
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 |
| • | 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.
| NOTES TO FINANCIAL STATEMENTS |
29 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2015. 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 EMU |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 8,620,366,378 | $ | — | $ | 7 | $ | 8,620,366,385 | ||||||||
| Preferred Stocks |
184,345,188 | — | — | 184,345,188 | ||||||||||||
| Money Market Funds |
34,411,595 | — | — | 34,411,595 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 8,839,123,161 | $ | — | $ | 7 | $ | 8,839,123,168 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Germany |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,516,408,014 | $ | — | $ | — | $ | 5,516,408,014 | ||||||||
| Preferred Stocks |
406,222,002 | — | — | 406,222,002 | ||||||||||||
| Money Market Funds |
3,843,296 | — | — | 3,843,296 | ||||||||||||
| Futures Contractsa |
3,579,133 | — | — | 3,579,133 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,930,052,445 | $ | — | $ | — | $ | 5,930,052,445 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Japan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 15,170,889,231 | $ | — | $ | — | $ | 15,170,889,231 | ||||||||
| Money Market Funds |
95,803,251 | — | — | 95,803,251 | ||||||||||||
| Futures Contractsa |
2,858,986 | — | — | 2,858,986 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 15,269,551,468 | $ | — | $ | — | $ | 15,269,551,468 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Shown at the unrealized appreciation (depreciation) on the contracts. |
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income and capital gain distributions, if any, are 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, 2015 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.
| 30 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of securities. Such fluctuations are reflected by the Funds as a component of realized and unrealized gains and losses from investments for financial reporting purposes.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, 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, 2015, 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.
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. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the schedules of investments. The value of any securities on loan as of February 28, 2015 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.
| NOTES TO FINANCIAL STATEMENTS |
31 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 or request additional collateral. 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.
The following table is a summary of each Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| iShares ETF | Market Value of Securities on Loan |
Cash Collateral Received a |
Net Amount |
|||||||||
| MSCI EMU |
$ | 25,656,542 | $ | 25,656,542 | $ | — | ||||||
| MSCI Japan |
84,834,753 | 84,834,753 | — | |||||||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in each Fund’s statement of assets and liabilities. |
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, 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 Funds, BFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | ||||
| 0.59 | % | First $7 billion | |||
| 0.54 | Over $7 billion, up to and including $11 billion | ||||
| 0.49 | Over $11 billion, up to and including $24 billion | ||||
| 0.44 | Over $24 billion, up to and including $48 billion | ||||
| 0.40 | Over $48 billion, up to and including $72 billion | ||||
| 0.36 | Over $72 billion | ||||
| 32 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), 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. 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% (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, each Fund retains 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees 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, each Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
Prior to January 1, 2015, each Fund retained 75% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, each Fund retained for the remainder of calendar year 2014, 80% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
For the six months ended February 28, 2015, 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 EMU |
$ | 112,236 | ||
| MSCI Germany |
2,244 | |||
| MSCI Japan |
430,764 | |||
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, 2015, 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.
| NOTES TO FINANCIAL STATEMENTS |
33 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, 2015 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI EMU |
$180,297,985 | $216,567,600 | ||||||
| MSCI Germany |
113,541,926 | 114,680,267 | ||||||
| MSCI Japan |
184,240,740 | 198,068,186 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2015 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI EMU |
$ | 2,338,483,468 | $ | 1,957,641,639 | ||||
| MSCI Germany |
1,527,306,824 | 544,806,278 | ||||||
| MSCI Japan |
3,253,266,016 | 3,320,146,713 | ||||||
| 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. Such variable charges, if any, are included in “Proceeds from shares sold” in the statements of changes in net assets.
| 5. | FUTURES CONTRACTS |
Each Fund may purchase or sell 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
| 34 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, 2015 and the related locations in the statements of assets and liabilities, presented by risk exposure category:
| Assets | ||||||||
| iShares MSCI Germany ETF |
iShares MSCI Japan ETF |
|||||||
| Equity contracts: |
||||||||
| Variation margin / Net assets consist of – net unrealized appreciation (depreciation)a |
$ | 3,579,133 | $ | 2,858,986 | ||||
|
|
|
|
|
|||||
| a | Represents cumulative appreciation of futures contracts as reported in the schedules of investments. |
The following table shows the realized and unrealized gains (losses) on futures contracts held by the Funds during the six months ended February 28, 2015 and the related locations in the statements of operations, presented by risk exposure category:
| Net Realized Gain (Loss) | ||||||||
| iShares MSCI Germany ETF |
iShares MSCI Japan ETF |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | 145,409 | $ | 9,659,693 | ||||
|
|
|
|
|
|||||
| Net Change in Unrealized Appreciation/Depreciation |
||||||||
| iShares MSCI Germany ETF |
iShares MSCI Japan ETF |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | 4,769,306 | $ | 1,952,407 | ||||
|
|
|
|
|
|||||
The following table shows the average quarter-end balances of open futures contracts for the six months ended February 28, 2015:
| iShares MSCI Germany ETF |
iShares MSCI Japan ETF |
|||||||
| Average value of contracts purchased |
$ | 26,893,401 | $ | 69,207,130 | ||||
| 6. | MARKET AND CREDIT RISK |
In the normal course of business, each Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks each Fund is exposed to include market risk and credit risk. Each Fund’s prospectus provides details of these and other types of risk.
| NOTES TO FINANCIAL STATEMENTS |
35 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss each Fund may suffer through holding market positions in the face of market movements. Each Fund is exposed to market risk by virtue of its investment in equity and financial derivative instruments. The fair value of securities held by the Funds may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of each Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s schedule of investments.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.
Each Fund invests a substantial amount of its assets 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 issuers from countries with less developed markets.
The iShares MSCI Germany ETF and iShares MSCI Japan ETF each invests all or substantially all of its assets in issuers located in a single country. When a fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in that country may have a significant impact on its investment performance.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of each Fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its statement of assets and liabilities.
| 7. | INCOME TAX INFORMATION |
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
| 36 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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.
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, 2014, the Funds’ fiscal year-end, the following 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 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||
| MSCI EMU |
$ | 53,431,438 | $ | — | $ | — | $ | 26,644,200 | $ | 68,035,542 | $ | 30,230,739 | $ | 178,341,919 | ||||||||||||||
| MSCI Germany |
21,864,809 | 4,227,713 | 3,394,735 | 27,790,050 | 28,490,949 | 32,215,954 | 117,984,210 | |||||||||||||||||||||
| MSCI Japan |
287,119,620 | 27,817,841 | 44,443,527 | 116,295,478 | 173,577,101 | 139,228,194 | 788,481,761 | |||||||||||||||||||||
| 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, 2015, 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 EMU |
$ | 9,201,827,822 | $ | 393,813,812 | $ | (756,518,466 | ) | $ | (362,704,654 | ) | ||||||
| MSCI Germany |
5,872,066,054 | 519,972,651 | (465,565,393 | ) | 54,407,258 | |||||||||||
| MSCI Japan |
15,847,691,926 | 1,084,841,905 | (1,665,841,349 | ) | (580,999,444 | ) | ||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2015, 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.
| 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 |
37 |
Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
Section 19(a) Notices
The amounts and sources of distributions reported are estimates and are provided pursuant to regulatory requirements 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 EMU |
$ | 0.191740 | $ | — | $ | 0.069986 | $ | 0.261726 | 73 | % | — | % | 27 | % | 100 | % | ||||||||||||||||
| MSCI Japan |
0.063000 | — | 0.003321 | 0.066321 | 95 | — | 5 | 100 | ||||||||||||||||||||||||
| 38 | 2015 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 basis on the Funds’ website.
©2015 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-81-0215
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Table of Contents
FEBRUARY 28, 2015
| 2015 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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Table of Contents
iSHARES® MSCI AUSTRALIA ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -9.93%, net of fees, while the total return for the Index was -9.73%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(0.15)% | (0.49)% | 0.23% | (0.15)% | (0.49)% | 0.23% | ||||||||||||||||||||
| 5 Years |
6.18% | 6.20% | 6.61% | 34.97% | 35.11% | 37.72% | ||||||||||||||||||||
| 10 Years |
7.76% | 7.74% | 7.78% | 111.16% | 110.83% | 111.55% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 900.70 | $ | 2.26 | $ | 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 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, 2015
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, 2015, the total return for the Fund was 0.05%, net of fees, while the total return for the Index was 0.35%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
11.21% | 11.46% | 11.67% | 11.21% | 11.46% | 11.67% | ||||||||||||||||||||
| 5 Years |
10.31% | 10.26% | 10.89% | 63.35% | 62.99% | 67.69% | ||||||||||||||||||||
| 10 Years |
9.29% | 9.29% | 9.86% | 143.11% | 143.22% | 156.17% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,000.50 | $ | 2.38 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| 6 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI JAPAN SMALL-CAP ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 0.52%, net of fees, while the total return for the Index was 0.64%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
8.97% | 7.90% | 9.31% | 8.97% | 7.90% | 9.31% | ||||||||||||||||||||
| 5 Years |
8.75% | 8.74% | 9.17% | 52.10% | 52.04% | 55.09% | ||||||||||||||||||||
| Since Inception |
4.09% | 4.07% | 4.46% | 33.43% | 33.21% | 36.86% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,005.20 | $ | 2.39 | $ | 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 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, 2015
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, 2015, the total return for the Fund was -13.93%, net of fees, while the total return for the Index was -13.82%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(8.41)% | (8.24)% | (8.38)% | (8.41)% | (8.24)% | (8.38)% | ||||||||||||||||||||
| 5 Years |
8.25% | 8.15% | 8.72% | 48.62% | 47.98% | 51.92% | ||||||||||||||||||||
| 10 Years |
10.16% | 9.96% | 10.69% | 163.14% | 158.51% | 176.02% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 860.70 | $ | 2.21 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| 8 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI PACIFIC EX JAPAN ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -7.10%, net of fees, while the total return for the Index was -6.90%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
2.97% | 2.80% | 3.42% | 2.97% | 2.80% | 3.42% | ||||||||||||||||||||
| 5 Years |
7.27% | 7.28% | 7.71% | 42.02% | 42.13% | 45.00% | ||||||||||||||||||||
| 10 Years |
8.26% | 8.24% | 8.43% | 121.10% | 120.73% | 124.74% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 929.00 | $ | 2.34 | $ | 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, 2015
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, 2015, the total return for the Fund was -6.52%, net of fees, while the total return for the Index was -6.53%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
4.12% | 4.61% | 4.39% | 4.12% | 4.61% | 4.39% | ||||||||||||||||||||
| 5 Years |
6.97% | 7.00% | 7.28% | 40.06% | 40.23% | 42.12% | ||||||||||||||||||||
| 10 Years |
9.78% | 9.74% | 9.99% | 154.22% | 153.20% | 159.03% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 934.80 | $ | 2.30 | $ | 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 14 for more information. |
| * | Excludes money market funds. |
| 10 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SOUTH KOREA CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -13.24%, net of fees, while the total return for the Index was -13.05%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(6.31)% | (6.16)% | (5.72)% | (6.31)% | (6.16)% | (5.72)% | ||||||||||||||||||||
| 5 Years |
5.71% | 5.55% | 6.40% | 31.97% | 31.00% | 36.37% | ||||||||||||||||||||
| 10 Years |
6.28% | 6.11% | 6.95% | 83.79% | 80.98% | 95.75% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 867.60 | $ | 2.87 | $ | 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, 2015
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, 2015, the total return for the Fund was -1.28%, net of fees, while the total return for the Index was -0.95%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
15.75% | 16.05% | 16.45% | 15.75% | 16.05% | 16.45% | ||||||||||||||||||||
| 5 Years |
8.82% | 8.88% | 9.29% | 52.62% | 53.02% | 55.93% | ||||||||||||||||||||
| 10 Years |
5.47% | 5.23% | 6.15% | 70.39% | 66.49% | 81.55% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 987.20 | $ | 3.05 | $ | 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI THAILAND CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -1.22%, net of fees, while the total return for the Index was -1.10%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
21.58% | 21.52% | 21.82% | 21.58% | 21.52% | 21.82% | ||||||||||||||||||||
| 5 Years |
17.28% | 17.20% | 17.78% | 121.87% | 121.14% | 126.61% | ||||||||||||||||||||
| Since Inception |
10.22% | 10.19% | 10.57% | 96.29% | 95.94% | 100.64% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 987.80 | $ | 3.06 | $ | 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, 2014 and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRALIA ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRALIA ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| ASX SPI 200 Index | 144 | Mar. 2015 | Sydney Futures | $ | 16,665,062 | $ | 712,996 | |||||||||||||
See notes to financial statements.
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI HONG KONG ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| Hang Seng Index | 37 | Mar. 2015 | Hong Kong Futures | $ | 5,914,409 | $ | 18,303 | |||||||||||||
See notes to financial statements.
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL-CAP ETF
February 28, 2015
| 30 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MALAYSIA ETF
February 28, 2015
| 32 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI PACIFIC EX JAPAN ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI PACIFIC EX JAPAN ETF
February 28, 2015
| 34 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI PACIFIC EX JAPAN ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| 36 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SINGAPORE ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| MSCI Singapore Index | 61 | Mar. 2015 | Singapore | $ | 3,426,513 | $ | (21,601) | |||||||||||||
See notes to financial statements.
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SOUTH KOREA CAPPED ETF
February 28, 2015
| 38 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA CAPPED ETF
February 28, 2015
| 40 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| 42 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TAIWAN ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TAIWAN ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| MSCI Taiwan Index | 75 | Mar. 2015 | Singapore | $ | 2,685,750 | $ | 3,521 | |||||||||||||
See notes to financial statements.
| 44 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI THAILAND CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND CAPPED ETF
February 28, 2015
| 46 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
47 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND CAPPED ETF
February 28, 2015
| 48 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2015
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Japan Small-Cap ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 1,768,818,669 | $ | 2,890,163,141 | $ | 108,405,238 | ||||||
| Affiliated (Note 2) |
723,309 | 103,971,038 | 3,394,001 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 1,769,541,978 | $ | 2,994,134,179 | $ | 111,799,239 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 1,683,859,887 | $ | 3,000,939,718 | $ | 111,613,263 | ||||||
| Affiliated (Note 2) |
723,309 | 103,971,038 | 3,394,001 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
1,684,583,196 | 3,104,910,756 | 115,007,264 | |||||||||
| Foreign currency, at valueb |
4,791,479 | 2,404,320 | 113,185 | |||||||||
| Foreign currency pledged to broker, at valueb |
— | 444,223 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
2,949,964 | 3,325,185 | — | |||||||||
| Due from custodian (Note 4) |
375,067 | — | — | |||||||||
| Dividends and interest |
12,131,272 | 362,238 | 288,765 | |||||||||
| Futures variation margin |
712,996 | 18,303 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
1,705,543,974 | 3,111,465,025 | 115,409,214 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
3,889,693 | 3,513,419 | — | |||||||||
| Due to broker for foreign currency pledged for futures, at valueb |
169,860 | — | — | |||||||||
| Collateral for securities on loan (Note 1) |
152,109 | 99,181,986 | 3,369,520 | |||||||||
| Investment advisory fees (Note 2) |
598,706 | 1,096,716 | 40,410 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
4,810,368 | 103,792,121 | 3,409,930 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,700,733,606 | $ | 3,007,672,904 | $ | 111,999,284 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 2,033,018,519 | $ | 3,263,476,072 | $ | 106,965,080 | ||||||
| Distributions in excess of net investment income |
(7,008,098 | ) | (32,516 | ) | (2,224,295 | ) | ||||||
| Undistributed net realized gain (accumulated net realized loss) |
(240,954,660 | ) | (366,565,401 | ) | 4,052,068 | |||||||
| Net unrealized appreciation (depreciation) |
(84,322,155 | ) | 110,794,749 | 3,206,431 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,700,733,606 | $ | 3,007,672,904 | $ | 111,999,284 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
71,800,000 | 138,600,000 | 2,000,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 23.69 | $ | 21.70 | $ | 56.00 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $144,849, $93,541,643 and $3,201,966, respectively. See Note 1. |
| b | Cost of foreign currency including currency pledged to broker, if any: $4,698,326, $2,848,658 and $113,709, respectively. |
| c | $0.001 par value, number of shares authorized: 627.8 million, 375 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares MSCI Malaysia ETF |
iShares MSCI Pacific ex Japan ETF |
iShares MSCI Singapore ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 193,552,941 | $ | 2,651,309,248 | $ | 806,451,937 | ||||||
| Affiliated (Note 2) |
841,909 | 37,292,231 | 37,579,591 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 194,394,850 | $ | 2,688,601,479 | $ | 844,031,528 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 442,939,411 | $ | 2,736,052,626 | $ | 799,151,704 | ||||||
| Affiliated (Note 2) |
841,909 | 37,292,231 | 37,579,591 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
443,781,320 | 2,773,344,857 | 836,731,295 | |||||||||
| Foreign currency, at valueb |
4,982,049 | 4,645,274 | 2,464,571 | |||||||||
| Foreign currency pledged to broker, at valueb |
— | — | 83,847 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
16,587 | 6,939,766 | 13,809,315 | |||||||||
| Dividends and interest |
1,301,344 | 12,632,465 | 756,167 | |||||||||
| Capital shares sold |
8,156,629 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
458,237,929 | 2,797,562,362 | 853,845,195 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
12,491,543 | 7,404,909 | 13,760,309 | |||||||||
| Collateral for securities on loan (Note 1) |
— | 36,528,593 | 37,033,571 | |||||||||
| Futures variation margin |
— | — | 21,601 | |||||||||
| Investment advisory fees (Note 2) |
165,915 | 1,011,992 | 299,881 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
12,657,458 | 44,945,494 | 51,115,362 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 445,580,471 | $ | 2,752,616,868 | $ | 802,729,833 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 140,999,766 | $ | 3,124,394,986 | $ | 1,034,882,676 | ||||||
| Undistributed (distributions in excess of) net investment income |
1,266,469 | (8,996,567 | ) | (13,864,501 | ) | |||||||
| Undistributed net realized gain (accumulated net realized loss) |
53,908,687 | (447,505,657 | ) | (210,927,604 | ) | |||||||
| Net unrealized appreciation (depreciation) |
249,405,549 | 84,724,106 | (7,360,738 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 445,580,471 | $ | 2,752,616,868 | $ | 802,729,833 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
32,775,000 | 59,400,000 | 62,700,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 13.60 | $ | 46.34 | $ | 12.80 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $34,455,235 and $35,006,414, respectively. See Note 1. |
| b | Cost of foreign currency including currency at broker, if any: $4,981,506, $4,664,758 and $2,586,812, respectively. |
| c | $0.001 par value, number of shares authorized: 300 million, 1 billion and 300 million, respectively. |
See notes to financial statements.
| 50 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares MSCI South Korea Capped ETF |
iShares MSCI ETF |
iShares MSCI Thailand Capped ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 2,419,899,547 | $ | 2,140,941,233 | $ | 511,392,113 | ||||||
| Affiliated (Note 2) |
245,354,067 | 177,761,721 | 26,854,428 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 2,665,253,614 | $ | 2,318,702,954 | $ | 538,246,541 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 3,971,849,927 | $ | 3,660,846,937 | $ | 464,805,210 | ||||||
| Affiliated (Note 2) |
245,354,067 | 177,761,721 | 26,854,428 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
4,217,203,994 | 3,838,608,658 | 491,659,638 | |||||||||
| Foreign currency, at valueb |
— | 22,297,724 | — | |||||||||
| Cash pledged to broker |
— | 113,000 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
11,897,926 | 11,261,602 | 2,058,988 | |||||||||
| Dividends and interest |
47,106,206 | 168,149 | 871,495 | |||||||||
| Capital shares sold |
17,195,726 | 59,746,135 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
4,293,403,852 | 3,932,195,268 | 494,590,121 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
25,422,970 | 69,843,535 | 1,674,763 | |||||||||
| Deposit for capital contribution |
— | 22,297,724 | — | |||||||||
| Collateral for securities on loan (Note 1) |
240,603,260 | 170,376,140 | 26,239,616 | |||||||||
| Foreign taxes (Note 1) |
14,803 | 26,944 | — | |||||||||
| Investment advisory fees (Note 2) |
1,942,030 | 1,696,174 | 224,891 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
267,983,063 | 264,240,517 | 28,139,270 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 4,025,420,789 | $ | 3,667,954,751 | $ | 466,450,851 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 3,596,735,346 | $ | 3,274,220,629 | $ | 531,154,289 | ||||||
| Undistributed (distributions in excess of) net investment income |
(76,755,487 | ) | (20,749,906 | ) | 568,392 | |||||||
| Accumulated net realized loss |
(1,046,500,297 | ) | (1,105,433,972 | ) | (18,689,852 | ) | ||||||
| Net unrealized appreciation (depreciation) |
1,551,941,227 | 1,519,918,000 | (46,581,978 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 4,025,420,789 | $ | 3,667,954,751 | $ | 466,450,851 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
70,700,000 | 230,400,000 | 5,700,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 56.94 | $ | 15.92 | $ | 81.83 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $229,324,187, $160,342,407 and $8,853,430, respectively. See Note 1. |
| b | Cost of foreign currency: $ —, $22,297,724 and $ —, respectively. |
| c | $0.001 par value, number of shares authorized: 200 million, 900 million and 200 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
51 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Japan Small-Cap ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 42,380,376 | $ | 26,768,416 | $ | 1,095,460 | ||||||
| Interest — unaffiliated |
2,441 | — | — | |||||||||
| Interest — affiliated (Note 2) |
33 | 68 | 2 | |||||||||
| Securities lending income — affiliated (Note 2) |
652 | 128,744 | 91,606 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
42,383,502 | 26,897,228 | 1,187,068 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
4,187,156 | 7,401,880 | 320,507 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
4,187,156 | 7,401,880 | 320,507 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
38,196,346 | 19,495,348 | 866,561 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(29,504,136 | ) | (15,453,248 | ) | 80,274 | |||||||
| In-kind redemptions — unaffiliated |
14,234,024 | 67,055,536 | 8,885,117 | |||||||||
| Futures contracts |
(1,838,785 | ) | (1,162,676 | ) | — | |||||||
| Foreign currency transactions |
(3,174,258 | ) | (10,381 | ) | (101,858 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(20,283,155 | ) | 50,429,231 | 8,863,533 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(239,428,411 | ) | (85,786,162 | ) | (12,990,976 | ) | ||||||
| Futures contracts |
260,184 | 294,323 | — | |||||||||
| Translation of assets and liabilities in foreign currencies |
(92,987 | ) | (342 | ) | 5,490 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(239,261,214 | ) | (85,492,181 | ) | (12,985,486 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(259,544,369 | ) | (35,062,950 | ) | (4,121,953 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (221,348,023 | ) | $ | (15,567,602 | ) | $ | (3,255,392 | ) | |||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $513,349, $ — and $119,035, respectively. |
See notes to financial statements.
| 52 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI Malaysia ETF |
iShares MSCI Pacific ex Japan ETF |
iShares MSCI Singapore ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 9,684,183 | $ | 52,844,274 | $ | 6,348,258 | ||||||
| Interest — affiliated (Note 2) |
8 | 78 | 22 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 111,830 | 188,524 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
9,684,191 | 52,956,182 | 6,536,804 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,510,577 | 7,120,920 | 2,090,949 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,510,577 | 7,120,920 | 2,090,949 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
8,173,614 | 45,835,262 | 4,445,855 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
79,060,414 | (35,734,570 | ) | (6,759,291 | ) | |||||||
| In-kind redemptions — unaffiliated |
— | 89,487,911 | 11,336,077 | |||||||||
| Futures contracts |
— | — | (225,127 | ) | ||||||||
| Foreign currency transactions |
(770,948 | ) | (3,038,238 | ) | (510,592 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain |
78,289,466 | 50,715,103 | 3,841,067 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(204,814,670 | ) | (359,196,337 | ) | (71,334,103 | ) | ||||||
| Futures contracts |
— | — | 21,125 | |||||||||
| Translation of assets and liabilities in foreign currencies |
8,829 | (55,478 | ) | (47,817 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(204,805,841 | ) | (359,251,815 | ) | (71,360,795 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(126,516,375 | ) | (308,536,712 | ) | (67,519,728 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (118,342,761 | ) | $ | (262,701,450 | ) | $ | (63,073,873 | ) | |||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $ —, $694,216 and $124,892, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
53 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI South Korea Capped ETF |
iShares MSCI ETF |
iShares MSCI Thailand Capped ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 46,534,200 | b | $ | 1,107,136 | $ | 3,130,942 | |||||
| Interest — unaffiliated |
460 | — | — | |||||||||
| Interest — affiliated (Note 2) |
279 | 450 | 17 | |||||||||
| Securities lending income — affiliated (Note 2) |
2,255,035 | 1,001,789 | c | 288,718 | ||||||||
|
|
|
|
|
|
|
|||||||
| 48,789,974 | 2,109,375 | 3,419,677 | ||||||||||
| Less: Other foreign taxes (Note 1) |
(11,741 | ) | (328,326 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
48,778,233 | 1,781,049 | 3,419,677 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
13,380,307 | 9,989,841 | 1,572,152 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
13,380,307 | 9,989,841 | 1,572,152 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
35,397,926 | (8,208,792 | ) | 1,847,525 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(139,088,521 | ) | (12,402,930 | ) | (5,233,482 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | — | 11,618,918 | |||||||||
| Futures contracts |
— | (1,060,662 | ) | — | ||||||||
| Foreign currency transactions |
113,607 | (61,800 | ) | (22,559 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(138,974,914 | ) | (13,525,392 | ) | 6,362,877 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(579,907,715 | ) | (10,080,719 | ) | (22,343,074 | ) | ||||||
| Futures contracts |
— | (275,704 | ) | — | ||||||||
| Translation of assets and liabilities in foreign currencies |
(481 | ) | (53,077 | ) | 4,491 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(579,908,196 | ) | (10,409,500 | ) | (22,338,583 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(718,883,110 | ) | (23,934,892 | ) | (15,975,706 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (683,485,184 | ) | $ | (32,143,684 | ) | $ | (14,128,181 | ) | |||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $13,003,834, $177,113 and $346,462, respectively. |
| b | Includes $13,878,067 related to a special distribution from Samsung Electronics Co. Ltd. |
| c | Net of foreign tax paid of $ —, $236,916 and $ —, respectively. |
See notes to financial statements.
| 54 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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, 2015 |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 38,196,346 | $ | 82,908,446 | $ | 19,495,348 | $ | 70,834,799 | ||||||||
| Net realized gain (loss) |
(20,283,155 | ) | 35,472,872 | 50,429,231 | 65,800,683 | |||||||||||
| Net change in unrealized appreciation/depreciation |
(239,261,214 | ) | 210,426,381 | (85,492,181 | ) | 218,838,568 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(221,348,023 | ) | 328,807,699 | (15,567,602 | ) | 355,474,050 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(50,068,366 | ) | (76,457,082 | ) | (25,717,600 | ) | (69,523,487 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(50,068,366 | ) | (76,457,082 | ) | (25,717,600 | ) | (69,523,487 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
138,753,152 | 364,472,393 | 353,497,324 | 1,440,373,193 | ||||||||||||
| Cost of shares redeemed |
(213,715,741 | ) | (486,559,346 | ) | (525,851,436 | ) | (629,867,957 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(74,962,589 | ) | (122,086,953 | ) | (172,354,112 | ) | 810,505,236 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(346,378,978 | ) | 130,263,664 | (213,639,314 | ) | 1,096,455,799 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
2,047,112,584 | 1,916,848,920 | 3,221,312,218 | 2,124,856,419 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 1,700,733,606 | $ | 2,047,112,584 | $ | 3,007,672,904 | $ | 3,221,312,218 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (7,008,098 | ) | $ | 4,863,922 | $ | (32,516 | ) | $ | 6,189,736 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
6,000,000 | 13,800,000 | 16,725,000 | 66,525,000 | ||||||||||||
| Shares redeemed |
(9,600,000 | ) | (19,600,000 | ) | (25,275,000 | ) | (31,725,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(3,600,000 | ) | (5,800,000 | ) | (8,550,000 | ) | 34,800,000 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
55 |
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 |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 866,561 | $ | 1,791,679 | $ | 8,173,614 | $ | 27,863,132 | ||||||||
| Net realized gain |
8,863,533 | 1,795,819 | 78,289,466 | 41,437,464 | ||||||||||||
| Net change in unrealized appreciation/depreciation |
(12,985,486 | ) | 15,636,594 | (204,805,841 | ) | 33,268,903 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(3,255,392 | ) | 19,224,092 | (118,342,761 | ) | 102,569,499 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(2,064,455 | ) | (2,956,269 | ) | (10,373,202 | ) | (26,722,876 | ) | ||||||||
| From net realized gain |
— | — | (1,987,267 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(2,064,455 | ) | (2,956,269 | ) | (12,360,469 | ) | (26,722,876 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
5,193,278 | 80,604,743 | 25,258,458 | 52,163,306 | ||||||||||||
| Cost of shares redeemed |
(57,710,852 | ) | (16,023,548 | ) | (235,435,656 | ) | (150,687,467 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(52,517,574 | ) | 64,581,195 | (210,177,198 | ) | (98,524,161 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(57,837,421 | ) | 80,849,018 | (340,880,428 | ) | (22,677,538 | ) | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
169,836,705 | 88,987,687 | 786,460,899 | 809,138,437 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 111,999,284 | $ | 169,836,705 | $ | 445,580,471 | $ | 786,460,899 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (2,224,295 | ) | $ | (1,026,401 | ) | $ | 1,266,469 | $ | 3,466,057 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
100,000 | 1,500,000 | 1,650,000 | 3,225,000 | ||||||||||||
| Shares redeemed |
(1,100,000 | ) | (300,000 | ) | (17,625,000 | ) | (9,900,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(1,000,000 | ) | 1,200,000 | (15,975,000 | ) | (6,675,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 56 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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 |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 45,835,262 | $ | 123,772,601 | $ | 4,445,855 | $ | 32,110,843 | ||||||||
| Net realized gain |
50,715,103 | 126,373,389 | 3,841,067 | 32,530,341 | ||||||||||||
| Net change in unrealized appreciation/depreciation |
(359,251,815 | ) | 262,536,520 | (71,360,795 | ) | 84,170,334 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(262,701,450 | ) | 512,682,510 | (63,073,873 | ) | 148,811,518 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(67,566,490 | ) | (118,670,244 | ) | (15,957,042 | ) | (36,850,739 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(67,566,490 | ) | (118,670,244 | ) | (15,957,042 | ) | (36,850,739 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
27,284,262 | 752,794,621 | 14,162,771 | 45,906,815 | ||||||||||||
| Cost of shares redeemed |
(416,447,774 | ) | (682,826,053 | ) | (116,856,965 | ) | (308,890,044 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(389,163,512 | ) | 69,968,568 | (102,694,194 | ) | (262,983,229 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(719,431,452 | ) | 463,980,834 | (181,725,109 | ) | (151,022,450 | ) | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
3,472,048,320 | 3,008,067,486 | 984,454,942 | 1,135,477,392 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 2,752,616,868 | $ | 3,472,048,320 | $ | 802,729,833 | $ | 984,454,942 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (8,996,567 | ) | $ | 12,734,661 | $ | (13,864,501 | ) | $ | (2,353,314 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
600,000 | 15,300,000 | 1,100,000 | 3,400,000 | ||||||||||||
| Shares redeemed |
(9,000,000 | ) | (15,000,000 | ) | (8,900,000 | ) | (23,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(8,400,000 | ) | 300,000 | (7,800,000 | ) | (20,400,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
57 |
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 |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | 35,397,926 | $ | 16,661,091 | $ | (8,208,792 | ) | $ | 57,916,427 | |||||||
| Net realized loss |
(138,974,914 | ) | (39,478,146 | ) | (13,525,392 | ) | (20,870,934 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
(579,908,196 | ) | 623,922,673 | (10,409,500 | ) | 581,209,729 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(683,485,184 | ) | 601,105,618 | (32,143,684 | ) | 618,255,222 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(50,182,957 | ) | (61,830,398 | ) | (61,969,914 | ) | (51,978,221 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(50,182,957 | ) | (61,830,398 | ) | (61,969,914 | ) | (51,978,221 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
324,302,030 | 1,151,119,199 | 475,707,515 | 299,500,305 | ||||||||||||
| Cost of shares redeemed |
(456,832,007 | ) | (175,291,957 | ) | (12,302,975 | ) | (209,110,415 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(132,529,977 | ) | 975,827,242 | 463,404,540 | 90,389,890 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(866,198,118 | ) | 1,515,102,462 | 369,290,942 | 656,666,891 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
4,891,618,907 | 3,376,516,445 | 3,298,663,809 | 2,641,996,918 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 4,025,420,789 | $ | 4,891,618,907 | $ | 3,667,954,751 | $ | 3,298,663,809 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (76,755,487 | ) | $ | (61,970,456 | ) | $ | (20,749,906 | ) | $ | 49,428,800 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
5,200,000 | 18,000,000 | 30,600,000 | 21,000,000 | ||||||||||||
| Shares redeemed |
(8,150,000 | ) | (2,900,000 | ) | (800,000 | ) | (14,600,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(2,950,000 | ) | 15,100,000 | 29,800,000 | 6,400,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 58 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Thailand Capped ETF |
||||||||
| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 1,847,525 | $ | 12,286,557 | ||||
| Net realized gain |
6,362,877 | 9,219,384 | ||||||
| Net change in unrealized appreciation/depreciation |
(22,338,583 | ) | 95,854,036 | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
(14,128,181 | ) | 117,359,977 | |||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(3,237,758 | ) | (12,909,951 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(3,237,758 | ) | (12,909,951 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
115,473,232 | 341,398,189 | ||||||
| Cost of shares redeemed |
(203,026,048 | ) | (416,351,403 | ) | ||||
|
|
|
|
|
|||||
| Net decrease in net assets from capital share transactions |
(87,552,816 | ) | (74,953,214 | ) | ||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN NET ASSETS |
(104,918,755 | ) | 29,496,812 | |||||
| NET ASSETS |
||||||||
| Beginning of period |
571,369,606 | 541,872,794 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 466,450,851 | $ | 571,369,606 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 568,392 | $ | 1,958,625 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
1,400,000 | 4,550,000 | ||||||
| Shares redeemed |
(2,550,000 | ) | (5,700,000 | ) | ||||
|
|
|
|
|
|||||
| Net decrease in shares outstanding |
(1,150,000 | ) | (1,150,000 | ) | ||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
59 |
Table of Contents
iSHARES® , INC.
(For a share outstanding throughout each period)
| iShares MSCI Australia ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 27.15 | $ | 23.61 | $ | 23.39 | $ | 24.18 | $ | 20.92 | $ | 20.33 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.52 | 1.10 | 1.02 | 1.04 | 0.99 | 0.72 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(3.28 | ) | 3.43 | 0.64 | (0.72 | ) | 3.33 | 0.69 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(2.76 | ) | 4.53 | 1.66 | 0.32 | 4.32 | 1.41 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.70 | ) | (0.99 | ) | (1.44 | ) | (1.11 | ) | (1.06 | ) | (0.82 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.70 | ) | (0.99 | ) | (1.44 | ) | (1.11 | ) | (1.06 | ) | (0.82 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 23.69 | $ | 27.15 | $ | 23.61 | $ | 23.39 | $ | 24.18 | $ | 20.92 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(9.93 | )%c | 19.76 | % | 7.06 | % | 1.84 | % | 20.54 | % | 6.86 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,700,734 | $ | 2,047,113 | $ | 1,916,849 | $ | 2,493,699 | $ | 3,090,425 | $ | 2,196,817 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
4.41 | % | 4.28 | % | 4.05 | % | 4.61 | % | 3.95 | % | 3.24 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 6 | % | 6 | % | 9 | % | 9 | % | 8 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 60 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Hong Kong ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 21.89 | $ | 18.91 | $ | 16.94 | $ | 17.59 | $ | 16.02 | $ | 14.39 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.13 | 0.66 | 0.48 | 0.54 | 0.42 | 0.42 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.14 | ) | 3.04 | 2.05 | (0.65 | ) | 1.56 | 1.69 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.01 | ) | 3.70 | 2.53 | (0.11 | ) | 1.98 | 2.11 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.18 | ) | (0.72 | ) | (0.56 | ) | (0.54 | ) | (0.41 | ) | (0.48 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.18 | ) | (0.72 | ) | (0.56 | ) | (0.54 | ) | (0.41 | ) | (0.48 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 21.70 | $ | 21.89 | $ | 18.91 | $ | 16.94 | $ | 17.59 | $ | 16.02 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
0.05 | %c | 19.87 | % | 15.04 | % | (0.33 | )% | 12.27 | % | 14.85 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,007,673 | $ | 3,221,312 | $ | 2,124,856 | $ | 1,865,974 | $ | 1,607,982 | $ | 1,976,317 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.27 | % | 3.24 | % | 2.47 | % | 3.26 | % | 2.25 | % | 2.67 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 6 | % | 12 | % | 11 | % | 15 | % | 5 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
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 Japan Small-Cap ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 56.61 | $ | 49.44 | $ | 42.82 | $ | 46.49 | $ | 40.74 | $ | 44.45 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.35 | 0.70 | 0.65 | 0.82 | 0.78 | 0.61 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.13 | ) | 7.61 | 6.97 | (3.25 | ) | 5.87 | (3.39 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.22 | 8.31 | 7.62 | (2.43 | ) | 6.65 | (2.78 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.83 | ) | (1.14 | ) | (1.00 | ) | (1.24 | ) | (0.90 | ) | (0.93 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.83 | ) | (1.14 | ) | (1.00 | ) | (1.24 | ) | (0.90 | ) | (0.93 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 56.00 | $ | 56.61 | $ | 49.44 | $ | 42.82 | $ | 46.49 | $ | 40.74 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
0.52 | %c | 16.94 | % | 18.07 | % | (5.18 | )% | 16.38 | % | (6.25 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 111,999 | $ | 169,837 | $ | 88,988 | $ | 42,817 | $ | 74,387 | $ | 36,664 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.50 | % | 0.53 | % | 0.51 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.31 | % | 1.31 | % | 1.36 | % | 1.84 | % | 1.72 | % | 1.46 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 14 | % | 17 | % | 7 | % | 10 | % | 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.
| 62 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Malaysia ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 16.13 | $ | 14.60 | $ | 14.52 | $ | 13.92 | $ | 12.98 | $ | 9.79 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.19 | 0.54 | 0.41 | 0.38 | 0.41 | 0.24 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(2.44 | ) | 1.51 | 0.04 | 0.76 | 0.92 | 3.20 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(2.25 | ) | 2.05 | 0.45 | 1.14 | 1.33 | 3.44 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.23 | ) | (0.52 | ) | (0.37 | ) | (0.52 | ) | (0.39 | ) | (0.25 | ) | ||||||||||||
| Net realized gain |
(0.05 | ) | — | — | — | — | — | |||||||||||||||||
| Return of capital |
— | — | — | (0.02 | ) | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.28 | ) | (0.52 | ) | (0.37 | ) | (0.54 | ) | (0.39 | ) | (0.25 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 13.60 | $ | 16.13 | $ | 14.60 | $ | 14.52 | $ | 13.92 | $ | 12.98 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(13.93 | )%c | 14.17 | % | 3.02 | % | 8.61 | % | 10.19 | % | 35.76 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 445,580 | $ | 786,461 | $ | 809,138 | $ | 936,692 | $ | 978,402 | $ | 794,142 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.61 | % | 3.48 | % | 2.71 | % | 2.73 | % | 2.84 | % | 2.17 | % | ||||||||||||
| Portfolio turnover ratee |
5 | % | 16 | % | 17 | % | 24 | % | 49 | % | 29 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | 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, 2015 and the years ended August 31, 2014, August 31, 2013, August 31, 2012, August 31, 2011, and August 31, 2010 were 3%, 10%, 8%, 14%, 14%, and 10%, respectively. See Note 4. |
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 Pacific ex Japan ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 51.21 | $ | 44.56 | $ | 43.21 | $ | 44.47 | $ | 39.25 | $ | 36.85 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.73 | 1.88 | 1.69 | 1.73 | 1.64 | 1.25 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(4.47 | ) | 6.51 | 1.71 | (1.14 | ) | 5.31 | 2.52 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(3.74 | ) | 8.39 | 3.40 | 0.59 | 6.95 | 3.77 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(1.13 | ) | (1.74 | ) | (2.05 | ) | (1.85 | ) | (1.73 | ) | (1.37 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(1.13 | ) | (1.74 | ) | (2.05 | ) | (1.85 | ) | (1.73 | ) | (1.37 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 46.34 | $ | 51.21 | $ | 44.56 | $ | 43.21 | $ | 44.47 | $ | 39.25 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(7.10 | )%c | 19.25 | % | 7.87 | % | 1.82 | % | 17.61 | % | 10.27 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,752,617 | $ | 3,472,048 | $ | 3,008,067 | $ | 3,188,582 | $ | 3,548,867 | $ | 3,438,149 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.49 | % | 0.49 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
3.17 | % | 3.90 | % | 3.59 | % | 4.16 | % | 3.53 | % | 3.09 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 8 | % | 8 | % | 7 | % | 10 | % | 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.
| 64 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Singapore ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 13.96 | $ | 12.49 | $ | 13.10 | $ | 13.05 | $ | 12.17 | $ | 10.25 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.07 | 0.40 | 0.44 | 0.41 | 0.45 | 0.32 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.98 | ) | 1.52 | (0.47 | ) | 0.11 | 0.92 | 1.97 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.91 | ) | 1.92 | (0.03 | ) | 0.52 | 1.37 | 2.29 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.25 | ) | (0.45 | ) | (0.58 | ) | (0.47 | ) | (0.49 | ) | (0.37 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.25 | ) | (0.45 | ) | (0.58 | ) | (0.47 | ) | (0.49 | ) | (0.37 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 12.80 | $ | 13.96 | $ | 12.49 | $ | 13.10 | $ | 13.05 | $ | 12.17 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(6.52 | )%c | 15.65 | % | (0.38 | )% | 4.67 | % | 11.27 | % | 22.68 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 802,730 | $ | 984,455 | $ | 1,135,477 | $ | 1,512,687 | $ | 1,713,199 | $ | 1,730,001 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.03 | % | 2.99 | % | 3.23 | % | 3.32 | % | 3.34 | % | 2.80 | % | ||||||||||||
| Portfolio turnover ratee |
6 | % | 4 | % | 10 | % | 3 | % | 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.
| FINANCIAL HIGHLIGHTS |
65 |
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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 66.42 | $ | 57.67 | $ | 55.97 | $ | 56.74 | $ | 47.76 | $ | 42.01 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.47 | b | 0.25 | 0.23 | 0.23 | 0.29 | 0.32 | |||||||||||||||||
| Net realized and unrealized gain (loss)c |
(9.29 | ) | 9.40 | 1.83 | (0.63 | ) | 9.19 | 5.82 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(8.82 | ) | 9.65 | 2.06 | (0.40 | ) | 9.48 | 6.14 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.66 | ) | (0.90 | ) | (0.36 | ) | (0.37 | ) | (0.43 | ) | (0.39 | ) | ||||||||||||
| Return of capital |
— | — | — | — | (0.07 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.66 | ) | (0.90 | ) | (0.36 | ) | (0.37 | ) | (0.50 | ) | (0.39 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 56.94 | $ | 66.42 | $ | 57.67 | $ | 55.97 | $ | 56.74 | $ | 47.76 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(13.24 | )%d | 16.83 | % | 3.65 | % | (0.62 | )% | 19.76 | % | 14.65 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 4,025,421 | $ | 4,891,619 | $ | 3,376,516 | $ | 2,669,551 | $ | 4,071,225 | $ | 3,255,168 | ||||||||||||
| Ratio of expenses to average net assetse |
0.62 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
1.63 | %b | 0.39 | % | 0.40 | % | 0.42 | % | 0.49 | % | 0.67 | % | ||||||||||||
| Portfolio turnover ratef |
12 | % | 13 | % | 13 | % | 12 | % | 18 | % | 14 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | Includes a special distribution from Samsung Electronics Co. Ltd., which represented $0.18 per share and 0.64% of average net assets, annualized. |
| 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, 2015 and the years ended August 31, 2014, August 31, 2013, August 31, 2012, August 31, 2011, and August 31, 2010 were 5%, 10%, 11%, 8%, 6%, and 6%, respectively. See Note 4. |
See notes to financial statements.
| 66 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Taiwan ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 16.44 | $ | 13.60 | $ | 12.58 | $ | 13.78 | $ | 12.19 | $ | 10.94 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.04 | ) | 0.29 | 0.24 | 0.28 | 0.39 | 0.23 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.19 | ) | 2.81 | 1.05 | (1.01 | ) | 1.49 | 1.23 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.23 | ) | 3.10 | 1.29 | (0.73 | ) | 1.88 | 1.46 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.29 | ) | (0.26 | ) | (0.27 | ) | (0.47 | ) | (0.29 | ) | (0.21 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.29 | ) | (0.26 | ) | (0.27 | ) | (0.47 | ) | (0.29 | ) | (0.21 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 15.92 | $ | 16.44 | $ | 13.60 | $ | 12.58 | $ | 13.78 | $ | 12.19 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(1.28 | )%c | 23.24 | % | 10.30 | % | (4.80 | )% | 15.24 | % | 13.30 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,667,955 | $ | 3,298,664 | $ | 2,641,997 | $ | 2,247,128 | $ | 2,857,512 | $ | 2,721,439 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.62 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.51 | )% | 1.98 | % | 1.80 | % | 2.25 | % | 2.64 | % | 1.90 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 11 | % | 21 | % | 22 | % | 23 | % | 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 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, 2015 and the years ended August 31, 2014, August 31, 2013, August 31, 2012, August 31, 2011, and August 31, 2010 were 2%, 4%, 6%, 7%, 8%, and 4%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
67 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Thailand Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 83.41 | $ | 67.73 | $ | 70.53 | $ | 66.27 | $ | 55.06 | $ | 36.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.29 | 1.67 | 1.84 | 1.76 | 1.65 | 1.44 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(1.35 | ) | 15.84 | (2.75 | ) | 4.37 | 11.10 | 17.95 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(1.06 | ) | 17.51 | (0.91 | ) | 6.13 | 12.75 | 19.39 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.52 | ) | (1.83 | ) | (1.89 | ) | (1.87 | ) | (1.54 | ) | (1.20 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.52 | ) | (1.83 | ) | (1.89 | ) | (1.87 | ) | (1.54 | ) | (1.20 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 81.83 | $ | 83.41 | $ | 67.73 | $ | 70.53 | $ | 66.27 | $ | 55.06 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(1.22 | )%c | 26.18 | % | (1.65 | )% | 9.57 | % | 23.33 | % | 53.19 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 466,451 | $ | 571,370 | $ | 541,873 | $ | 595,968 | $ | 632,840 | $ | 520,304 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.62 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.72 | % | 2.24 | % | 2.22 | % | 2.66 | % | 2.56 | % | 3.22 | % | ||||||||||||
| Portfolio turnover ratee |
6 | % | 9 | % | 24 | % | 12 | % | 22 | % | 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.
| 68 | 2015 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.
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. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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. |
| NOTES TO FINANCIAL STATEMENTS |
69 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® , INC.
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
| • | 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 |
| • | 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.
| 70 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2015. 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 |
$ | 1,683,859,887 | $ | — | $ | — | $ | 1,683,859,887 | ||||||||
| Money Market Funds |
723,309 | — | — | 723,309 | ||||||||||||
| Futures Contractsa |
712,996 | — | — | 712,996 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,685,296,192 | $ | — | $ | — | $ | 1,685,296,192 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Hong Kong |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,000,939,718 | $ | — | $ | — | $ | 3,000,939,718 | ||||||||
| Money Market Funds |
103,971,038 | — | — | 103,971,038 | ||||||||||||
| Futures Contractsa |
18,303 | — | — | 18,303 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,104,929,059 | $ | — | $ | — | $ | 3,104,929,059 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Japan Small-Cap |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 111,548,082 | $ | 65,181 | $ | — | $ | 111,613,263 | ||||||||
| Money Market Funds |
3,394,001 | — | — | 3,394,001 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 114,942,083 | $ | 65,181 | $ | — | $ | 115,007,264 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Malaysia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 442,735,088 | $ | — | $ | — | $ | 442,735,088 | ||||||||
| Rights |
204,323 | — | — | 204,323 | ||||||||||||
| Money Market Funds |
841,909 | — | — | 841,909 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 443,781,320 | $ | — | $ | — | $ | 443,781,320 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Pacific ex Japan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,736,052,626 | $ | — | $ | — | $ | 2,736,052,626 | ||||||||
| Money Market Funds |
37,292,231 | — | — | 37,292,231 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,773,344,857 | $ | — | $ | — | $ | 2,773,344,857 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Singapore |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 799,151,704 | $ | — | $ | — | $ | 799,151,704 | ||||||||
| Money Market Funds |
37,579,591 | — | — | 37,579,591 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 836,731,295 | $ | — | $ | — | $ | 836,731,295 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Liabilities: |
||||||||||||||||
| Futures Contractsa |
$ | (21,601 | ) | $ | — | $ | — | $ | (21,601 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
71 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI South Korea Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,876,590,248 | $ | — | $ | — | $ | 3,876,590,248 | ||||||||
| Preferred Stocks |
94,480,226 | — | — | 94,480,226 | ||||||||||||
| Rights |
779,453 | — | — | 779,453 | ||||||||||||
| Money Market Funds |
245,354,067 | — | — | 245,354,067 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 4,217,203,994 | $ | — | $ | — | $ | 4,217,203,994 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Taiwan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,660,846,935 | $ | — | $ | 2 | $ | 3,660,846,937 | ||||||||
| Money Market Funds |
177,761,721 | — | — | 177,761,721 | ||||||||||||
| Futures Contractsa |
3,521 | — | — | 3,521 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,838,612,177 | $ | — | $ | 2 | $ | 3,838,612,179 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Thailand Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 464,799,479 | $ | — | $ | — | $ | 464,799,479 | ||||||||
| Rights |
— | 5,731 | — | 5,731 | ||||||||||||
| Warrants |
0 | b | 0 | b | — | 0 | b | |||||||||
| Money Market Funds |
26,854,428 | — | — | 26,854,428 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 491,653,907 | $ | 5,731 | $ | — | $ | 491,659,638 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Shown at the 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 and capital gain distributions, if any, are 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, 2015 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.
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iSHARES®, INC.
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, 2015, 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.
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. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the schedules of investments. The value of any securities on loan as of February 28, 2015 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 or request additional collateral. 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
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iSHARES®, INC.
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.
The following table is a summary of each Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| iShares ETF |
Market Value of Securities on Loan |
Cash
Collateral Received a |
Net Amount |
|||||||||
| MSCI Australia |
$ | 144,849 | $ | 144,849 | $ | — | ||||||
| MSCI Hong Kong |
93,541,643 | 93,541,643 | — | |||||||||
| MSCI Japan Small-Cap |
3,201,966 | 3,201,966 | — | |||||||||
| MSCI Pacific ex Japan |
34,455,235 | 34,455,235 | — | |||||||||
| MSCI Singapore |
35,006,414 | 35,006,414 | ||||||||||
| MSCI South Korea Capped |
229,324,187 | 229,324,187 | — | |||||||||
| MSCI Taiwan |
160,342,407 | 160,342,407 | — | |||||||||
| MSCI Thailand Capped |
8,853,430 | 8,853,430 | — | |||||||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in each Fund’s statement of assets and liabilities. |
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, 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
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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, up to and including $72 billion | ||||
| 0.36 | Over $72 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. |
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 | ||||
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. 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% (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, each Fund retains 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the
| NOTES TO FINANCIAL STATEMENTS |
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iSHARES®, INC.
business day following the date that the aggregate securities lending income plus the collateral investment fees 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, each Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
Prior to January 1, 2015, each Fund retained 75% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, each Fund retained for the remainder of calendar year 2014, 80% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
For the six months ended February 28, 2015, each Fund paid to BTC the following amounts in total for securities lending agent services and collateral investment fees:
For the six months ended February 28, 2015, BTC, the Funds’ securities lending agent, has agreed to voluntarily reimburse the iShares MSCI Taiwan ETF in the amount of $54,126, related to the foreign tax on the securities lending income. Such reimbursement is included in the “Securities lending income – affiliated” in the Fund’s statement of operations.
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.
Cross trades for the six months ended February 28, 2015, 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.
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iSHARES®, INC.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended February 28, 2015 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI Australia |
$ | 60,843,799 | $ | 72,977,578 | ||||
| MSCI Hong Kong |
61,277,924 | 69,607,302 | ||||||
| MSCI Japan Small-Cap |
4,168,798 | 6,419,746 | ||||||
| MSCI Malaysia |
33,858,910 | 248,662,130 | ||||||
| MSCI Pacific ex Japan |
99,562,599 | 119,055,045 | ||||||
| MSCI Singapore |
51,829,484 | 50,096,301 | ||||||
| MSCI South Korea Capped |
519,367,457 | 710,950,567 | ||||||
| MSCI Taiwan |
506,582,396 | 82,333,922 | ||||||
| MSCI Thailand Capped |
32,076,310 | 32,689,176 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2015 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales | ||||||
| MSCI Australia |
$ | 138,005,949 | $ | 211,920,067 | ||||
| MSCI Hong Kong |
324,471,284 | 483,741,023 | ||||||
| MSCI Japan Small-Cap |
5,099,294 | 56,589,209 | ||||||
| MSCI Pacific ex Japan |
26,634,367 | 406,044,676 | ||||||
| MSCI Singapore |
13,725,563 | 111,942,044 | ||||||
| MSCI Thailand Capped |
114,575,079 | 202,049,127 | ||||||
| 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. Such variable charges, if any, are included in “Proceeds from shares sold” in the statements of changes in net assets.
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, statement of assets and liabilities.
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iSHARES®, INC.
| 5. | FUTURES CONTRACTS |
Each Fund may purchase or sell 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, 2015 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 appreciationa |
$ | 712,996 | $ | 18,303 | $ | 3,521 | ||||||
|
|
|
|
|
|
|
|||||||
| 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 depreciationb |
$ | 21,601 | ||
|
|
|
|||
| b | 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 Funds during the six months ended February 28, 2015 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 |
$ | (1,838,785) | $ | (1,162,676 | ) | $ | (225,127) | $ | (1,060,662 | ) | ||||||
|
|
|
|
|
|
|
|
|
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iSHARES®, INC.
| 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 |
$ | 260,184 | $ | 294,323 | $ | 21,125 | $ | (275,704 | ) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
The following table shows the average quarter-end balances of open futures contracts for the six months ended February 28, 2015:
| iShares MSCI Australia ETF |
iShares MSCI Hong Kong ETF |
iShares MSCI Singapore ETF |
iShares MSCI Taiwan ETF |
|||||||||||||
| Average value of contracts purchased |
$ | 18,276,031 | $ | 15,131,637 | $ | 5,922,186 | $ | 14,884,850 | ||||||||
| 6. | MARKET AND CREDIT RISK |
In the normal course of business, each Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks each Fund is exposed to include market risk and credit risk. Each Fund’s prospectus provides details of these and other types of risk.
BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss each Fund may suffer through holding market positions in the face of market movements. Each Fund is exposed to market risk by virtue of its investment in equity and financial derivative instruments. The fair value of securities held by the Funds may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of each Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s schedule of investments.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.
Each Fund invests a substantial amount of its assets 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 issuers from countries with less developed markets.
| NOTES TO FINANCIAL STATEMENTS |
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iSHARES®, INC.
Each Fund, except the iShares MSCI Pacific ex Japan ETF, invests all or substantially all of its assets in issuers located in a single country. When a fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in that country may have a significant impact on its investment performance.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of each Fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its statement of assets and liabilities.
| 7. | INCOME TAX INFORMATION |
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.
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, 2014, the Funds’ fiscal year-end, the following 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 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||
| MSCI Australia |
$ | 88,822,192 | $ | 7,066 | $ | 529,868 | $ | 24,006,125 | $ | 23,348,244 | $ | 12,127,364 | $ | 148,840,859 | ||||||||||||||
| MSCI Hong Kong |
179,303,227 | 2,899,247 | 3,185,408 | 29,235,556 | 114,836,904 | 34,565,959 | 364,026,301 | |||||||||||||||||||||
| MSCI Japan Small-Cap |
860,844 | — | — | 131,718 | 541,322 | 203,697 | 1,737,581 | |||||||||||||||||||||
| MSCI Pacific ex Japan |
185,280,633 | — | — | 66,207,828 | 104,799,503 | 36,600,987 | 392,888,951 | |||||||||||||||||||||
| MSCI Singapore |
35,336,542 | — | 807,115 | 15,680,510 | 132,420,824 | 11,588,528 | 195,833,519 | |||||||||||||||||||||
| MSCI South Korea Capped |
13,366,759 | — | — | 60,990,953 | 226,591,665 | 78,503,704 | 379,453,081 | |||||||||||||||||||||
| MSCI Taiwan |
48,030,508 | 64,999,586 | 16,734,578 | 343,375,145 | 363,052,013 | 19,669,958 | 855,861,788 | |||||||||||||||||||||
| MSCI Thailand Capped |
2,056,947 | — | — | 555,444 | 2,321,428 | 1,304,910 | 6,238,729 | |||||||||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
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iSHARES®, INC.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 28, 2015, 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 |
$ | 1,835,269,509 | $ | 143,616,057 | $ | (294,302,370 | ) | $ | (150,686,313 | ) | ||||||
| MSCI Hong Kong |
3,029,060,649 | 272,299,437 | (196,449,330 | ) | 75,850,107 | |||||||||||
| MSCI Japan Small-Cap |
115,395,374 | 12,104,097 | (12,492,207 | ) | (388,110 | ) | ||||||||||
| MSCI Malaysia |
218,775,600 | 256,045,795 | (31,040,075 | ) | 225,005,720 | |||||||||||
| MSCI Pacific ex Japan |
2,782,169,231 | 314,086,018 | (322,910,392 | ) | (8,824,374 | ) | ||||||||||
| MSCI Singapore |
861,623,870 | 64,980,097 | (89,872,672 | ) | (24,892,575 | ) | ||||||||||
| MSCI South Korea Capped |
3,280,545,003 | 1,604,145,663 | (667,486,672 | ) | 936,658,991 | |||||||||||
| MSCI Taiwan |
2,545,972,343 | 1,556,063,969 | (263,427,654 | ) | 1,292,636,315 | |||||||||||
| MSCI Thailand Capped |
551,568,413 | 23,372,614 | (83,281,389 | ) | (59,908,775 | ) | ||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2015, 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.
| 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 |
81 |
Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
Section 19(a) Notices
The amounts and sources of distributions reported are estimates and are provided pursuant to regulatory requirements 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 |
$ | 0.651135 | $ | — | $ | 0.046196 | $ | 0.697331 | 93 | % | — | % | 7 | % | 100 | % | ||||||||||||||||
| MSCI Malaysia |
0.219523 | 0.044834 | 0.014503 | 0.278860 | 79 | 16 | 5 | 100 | ||||||||||||||||||||||||
| MSCI Pacific ex Japan |
1.059845 | — | 0.071922 | 1.131767 | 94 | — | 6 | 100 | ||||||||||||||||||||||||
| MSCI Singapore |
0.062221 | — | 0.185175 | 0.247396 | 25 | — | 75 | 100 | ||||||||||||||||||||||||
| MSCI South Korea Capped |
0.477105 | — | 0.186252 | 0.663357 | 72 | — | 28 | 100 | ||||||||||||||||||||||||
| MSCI Taiwan |
0.264670 | — | 0.026542 | 0.291212 | 91 | — | 9 | 100 | ||||||||||||||||||||||||
| MSCI Thailand Capped |
0.498010 | — | 0.024209 | 0.522219 | 95 | — | 5 | 100 | ||||||||||||||||||||||||
| 82 | 2015 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 basis on the Funds’ website.
©2015 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-83-0215
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Table of Contents
FEBRUARY 28, 2015
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2015 SEMI-ANNUAL REPORT (UNAUDITED)
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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 Russia Capped ETF | ERUS | 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 |
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Table of Contents
iSHARES® MSCI BRAZIL CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -33.49%, net of fees, while the total return for the Index was -33.36%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(11.29)% | (10.89)% | (10.73)% | (11.29)% | (10.89)% | (10.73)% | ||||||||||||||||||||
| 5 Years |
(9.72)% | (9.61)% | (9.22)% | (40.02)% | (39.65)% | (38.34)% | ||||||||||||||||||||
| 10 Years |
6.58% | 6.64% | 7.39% | 89.13% | 90.16% | 104.07% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 665.10 | $ | 2.52 | $ | 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 15 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, 2015
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, 2015, the total return for the Fund was -13.64%, net of fees, while the total return for the Index was -13.54%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(1.72)% | (1.86)% | (1.54)% | (1.72)% | (1.86)% | (1.54)% | ||||||||||||||||||||
| 5 Years |
3.82% | 3.74% | 4.05% | 20.64% | 20.13% | 21.96% | ||||||||||||||||||||
| 10 Years |
6.63% | 6.60% | 6.89% | 90.08% | 89.56% | 94.77% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 863.60 | $ | 2.22 | $ | 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 15 for more information. |
| * | Excludes money market funds. |
| 6 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI CHILE CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -5.35%, net of fees, while the total return for the Index was -5.07%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(5.37)% | (4.37)% | (5.00)% | (5.37)% | (4.37)% | (5.00)% | ||||||||||||||||||||
| 5 Years |
(4.82)% | (4.81)% | (3.90)% | (21.88)% | (21.83)% | (18.06)% | ||||||||||||||||||||
| Since Inception |
(1.03)% | (0.97)% | (0.40)% | (7.30)% | (6.89)% | (2.85)% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 946.50 | $ | 2.94 | $ | 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 15 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, 2015
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, 2015, the total return for the Fund was -42.78%, net of fees, while the total return for the Index was -42.73%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(28.40)% | (27.82)% | (27.06)% | (28.40)% | (27.82)% | (27.06)% | ||||||||||||||||||||
| Since Inception |
(22.00)% | (21.55)% | (21.36)% | (34.47)% | (33.83)% | (33.54)% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 572.20 | $ | 2.38 | $ | 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 15 for more information. |
| * | Excludes money market funds. |
| 8 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI ISRAEL CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -5.28%, net of fees, while the total return for the Index was -5.01%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(3.87)% | (4.39)% | (3.23)% | (3.87)% | (4.39)% | (3.23)% | ||||||||||||||||||||
| 5 Years |
(0.28)% | (0.51)% | (0.03)% | (1.40)% | (2.52)% | (0.13)% | ||||||||||||||||||||
| Since Inception |
1.67% | 1.74% | 2.13% | 12.16% | 12.74% | 15.72% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 947.20 | $ | 2.99 | $ | 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 15 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, 2015
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, 2015, the total return for the Fund was -15.04%, net of fees, while the total return for the Index was -14.88%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
0.79% | 1.03% | 1.21% | 0.79% | 1.03% | 1.21% | ||||||||||||||||||||
| 5 Years |
5.73% | 5.78% | 5.63% | 32.11% | 32.46% | 31.50% | ||||||||||||||||||||
| 10 Years |
10.06% | 10.01% | 9.70% | 160.74% | 159.56% | 152.39% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 849.60 | $ | 2.20 | $ | 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 15 for more information. |
| * | Excludes money market funds. |
| 10 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI RUSSIA CAPPED ETF
Performance as of February 28, 2015
The iShares MSCI Russia Capped ETF (the “Fund”) seeks to track the investment results of an index composed of Russian equities, as represented by the MSCI Russia 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, 2015, the total return for the Fund was -22.16%, net of fees, while the total return for the Index was -21.94%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(24.19)% | (21.97)% | (23.96)% | (24.19)% | (21.97)% | (23.96)% | ||||||||||||||||||||
| Since Inception |
(10.72)% | (10.62)% | (10.23)% | (38.62)% | (38.33)% | (37.20)% | ||||||||||||||||||||
The inception date of the Fund was 11/9/10. The first day of secondary market trading was 11/10/10.
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 778.40 | $ | 2.73 | $ | 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 15 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SOUTH AFRICA ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -1.94%, net of fees, while the total return for the Index was -1.64%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
12.03% | 12.59% | 12.72% | 12.03% | 12.59% | 12.72% | ||||||||||||||||||||
| 5 Years |
7.79% | 7.93% | 8.46% | 45.48% | 46.44% | 50.10% | ||||||||||||||||||||
| 10 Years |
8.56% | 8.56% | 9.50% | 127.27% | 127.31% | 147.88% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 980.60 | $ | 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 15 for more information. |
| * | Excludes money market funds. |
| 12 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI TURKEY ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -11.02%, net of fees, while the total return for the Index was -10.83%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
17.57% | 18.01% | 18.04% | 17.57% | 18.01% | 18.04% | ||||||||||||||||||||
| 5 Years |
1.88% | 1.90% | 2.35% | 9.77% | 9.86% | 12.30% | ||||||||||||||||||||
| Since Inception |
1.73% | 1.73% | 2.16% | 12.62% | 12.60% | 15.98% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 889.80 | $ | 2.91 | $ | 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 15 for more information. |
| * | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
13 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI USA ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 6.06%, net of fees, while the total return for the Index was 6.12%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
15.11% | 14.99% | 15.29% | 15.11% | 14.99% | 15.29% | ||||||||||||||||||||
| Since Inception |
15.38% | 15.38% | 15.59% | 99.37% | 99.37% | 101.05% | ||||||||||||||||||||
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 15 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,060.60 | $ | 0.77 | $ | 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 15 for more information. |
| * | Excludes money market funds. |
| 14 | 2015 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, 2014 and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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 |
15 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI BRAZIL CAPPED ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRAZIL CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRAZIL CAPPED ETF
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CANADA ETF
February 28, 2015
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CANADA ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| S&P/TSX 60 Index | 39 | Mar. 2015 | Montreal | $ | 5,553,982 | $ | 573,217 | |||||||||||||
See notes to financial statements.
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI CHILE CAPPED ETF
February 28, 2015
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CHILE CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI COLOMBIA CAPPED ETF
February 28, 2015
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI COLOMBIA CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ISRAEL CAPPED ETF
February 28, 2015
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ISRAEL CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI MEXICO CAPPED ETF
February 28, 2015
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MEXICO CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MEXICO CAPPED ETF
February 28, 2015
| 30 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI RUSSIA CAPPED ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SOUTH AFRICA ETF
February 28, 2015
| 32 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH AFRICA ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| 34 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TURKEY ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TURKEY ETF
February 28, 2015
| 36 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2015
| 38 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2015
| 40 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2015
| 42 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2015
| 44 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2015
| iShares Capped ETF |
iShares MSCI |
iShares MSCI Chile Capped ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 2,935,224,634 | $ | 2,934,940,975 | $ | 185,653,494 | ||||||
| Affiliated (Note 2) |
797,245 | 43,426,192 | 423,207 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 2,936,021,879 | $ | 2,978,367,167 | $ | 186,076,701 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 3,537,030,242 | $ | 2,490,150,990 | $ | 225,883,751 | ||||||
| Affiliated (Note 2) |
797,245 | 43,426,192 | 423,207 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
3,537,827,487 | 2,533,577,182 | 226,306,958 | |||||||||
| Foreign currency, at valueb |
15,120,593 | 6,592,396 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
7,270,956 | 18,617,956 | 1,665,884 | |||||||||
| Dividends |
16,189,249 | 3,079,965 | — | |||||||||
| Futures variation margin |
— | 573,217 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
3,576,408,285 | 2,562,440,716 | 227,972,842 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
17,822,633 | 21,571,414 | 1,627,762 | |||||||||
| Due to broker for foreign currency pledged for futures, at valueb |
— | 231,377 | — | |||||||||
| Collateral for securities on loan (Note 1) |
— | 42,881,919 | — | |||||||||
| Capital shares redeemed |
— | 328,473 | — | |||||||||
| Investment advisory fees (Note 2) |
1,676,757 | 934,566 | 108,391 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
19,499,390 | 65,947,749 | 1,736,153 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 3,556,908,895 | $ | 2,496,492,967 | $ | 226,236,689 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 5,139,596,809 | $ | 3,261,873,097 | $ | 356,018,846 | ||||||
| Undistributed (distributions in excess of) net investment income |
16,508,774 | (5,071,119 | ) | 154,973 | ||||||||
| Accumulated net realized loss |
(2,200,195,117 | ) | (316,103,306 | ) | (170,167,387 | ) | ||||||
| Net unrealized appreciation (depreciation) |
600,998,429 | (444,205,705 | ) | 40,230,257 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 3,556,908,895 | $ | 2,496,492,967 | $ | 226,236,689 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
100,950,000 | 89,000,000 | 5,500,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 35.23 | $ | 28.05 | $ | 41.13 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $40,773,170 and $ —, respectively. See Note 1. |
| b | Cost of foreign currency including currency at broker, if any: $15,116,941, $6,329,926 and $ —, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 340.2 million and 200 million, respectively. |
See notes to financial statements.
| 46 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares Capped ETF |
iShares MSCI Israel Capped ETF |
iShares MSCI Mexico Capped ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 21,666,841 | $ | 136,486,330 | $ | 2,321,525,094 | ||||||
| Affiliated (Note 2) |
22,282 | 3,926,325 | 88,877,876 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 21,689,123 | $ | 140,412,655 | $ | 2,410,402,970 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 15,237,522 | $ | 113,858,678 | $ | 1,946,515,909 | ||||||
| Affiliated (Note 2) |
22,282 | 3,926,325 | 88,877,876 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
15,259,804 | 117,785,003 | 2,035,393,785 | |||||||||
| Foreign currency, at valueb |
2,985 | 53,311 | 3,189,012 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
2,677,524 | 1,201,022 | 107,520,264 | |||||||||
| Due from custodian (Note 4) |
— | — | 306,446 | |||||||||
| Dividends and interest |
4,848 | 179,306 | 637,062 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
17,945,161 | 119,218,642 | 2,147,046,569 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
2,689,801 | 1,125,244 | 107,109,008 | |||||||||
| Collateral for securities on loan (Note 1) |
2,660 | 3,917,973 | 88,249,382 | |||||||||
| Investment advisory fees (Note 2) |
7,253 | 54,096 | 719,220 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
2,699,714 | 5,097,313 | 196,077,610 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 15,245,447 | $ | 114,121,329 | $ | 1,950,968,959 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 23,930,945 | $ | 173,831,222 | $ | 2,635,691,454 | ||||||
| Undistributed (distributions in excess of) net investment income |
(4,056 | ) | 591,234 | (5,849,184 | ) | |||||||
| Accumulated net realized loss |
(2,251,140 | ) | (37,665,531 | ) | (303,773,578 | ) | ||||||
| Net unrealized depreciation |
(6,430,302 | ) | (22,635,596 | ) | (375,099,733 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 15,245,447 | $ | 114,121,329 | $ | 1,950,968,959 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
950,000 | 2,400,000 | 32,400,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 16.05 | $ | 47.55 | $ | 60.22 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $2,540, $3,739,025 and $82,515,442, respectively. See Note 1. |
| b | Cost of foreign currency: $3,276, $54,989 and $3,196,972, respectively. |
| c | $0.001 par value, number of shares authorized: 25 million, 500 million and 255 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
47 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares Capped ETF |
iShares MSCI South Africa ETF |
iShares MSCI Turkey ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 399,069,129 | $ | 551,070,173 | $ | 696,689,543 | ||||||
| Affiliated (Note 2) |
365,828 | 938,629 | 34,358,955 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 399,434,957 | $ | 552,008,802 | $ | 731,048,498 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 272,070,371 | $ | 499,765,317 | $ | 540,377,663 | ||||||
| Affiliated (Note 2) |
365,828 | 938,629 | 34,358,955 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
272,436,199 | 500,703,946 | 574,736,618 | |||||||||
| Foreign currency, at valueb |
— | 471,262 | 98,253 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
6,359,749 | 2,954,382 | — | |||||||||
| Dividends |
53,936 | 53,432 | 91,183 | |||||||||
| Capital shares sold |
— | — | 694 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
278,849,884 | 504,183,022 | 574,926,748 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
5,975,412 | 3,039,026 | — | |||||||||
| Collateral for securities on loan (Note 1) |
— | 898,997 | 34,213,930 | |||||||||
| Investment advisory fees (Note 2) |
123,694 | 239,863 | 265,237 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
6,099,106 | 4,177,886 | 34,479,167 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 272,750,778 | $ | 500,005,136 | $ | 540,447,581 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 436,503,519 | $ | 636,850,534 | $ | 753,514,156 | ||||||
| Distributions in excess of net investment income |
(156,511 | ) | (511,026 | ) | (493,070 | ) | ||||||
| Accumulated net realized loss |
(36,588,488 | ) | (85,026,249 | ) | (56,250,403 | ) | ||||||
| Net unrealized depreciation |
(127,007,742 | ) | (51,308,123 | ) | (156,323,102 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 272,750,778 | $ | 500,005,136 | $ | 540,447,581 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
20,200,000 | 7,300,000 | 10,900,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 13.50 | $ | 68.49 | $ | 49.58 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $848,168 and $32,035,901, respectively. See Note 1. |
| b | Cost of foreign currency: $ —, $474,392 and $109,401, respectively. |
| c | $0.001 par value, number of shares authorized: 1 billion, 400 million and 200 million, respectively. |
See notes to financial statements.
| 48 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares MSCI USA ETF |
||||
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 45,316,337 | ||
| Affiliated (Note 2) |
815,575 | |||
|
|
|
|||
| Total cost of investments |
$ | 46,131,912 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 49,465,430 | ||
| Affiliated (Note 2) |
846,961 | |||
|
|
|
|||
| Total fair value of investments |
50,312,391 | |||
| Receivables: |
||||
| Investment securities sold |
119,475 | |||
| Dividends and interest |
105,305 | |||
|
|
|
|||
| Total Assets |
50,537,171 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
189,179 | |||
| Collateral for securities on loan (Note 1) |
531,562 | |||
| Investment advisory fees (Note 2) |
5,893 | |||
|
|
|
|||
| Total Liabilities |
726,634 | |||
|
|
|
|||
| NET ASSETS |
$ | 49,810,537 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 43,042,363 | ||
| Undistributed net investment income |
178,713 | |||
| Undistributed net realized gain |
2,408,982 | |||
| Net unrealized appreciation |
4,180,479 | |||
|
|
|
|||
| NET ASSETS |
$ | 49,810,537 | ||
|
|
|
|||
| Shares outstandingb |
1,100,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 45.28 | ||
|
|
|
|||
| a | Securities on loan with a value of $520,355. See Note 1. |
| b | $0.001 par value, number of shares authorized: 500 million. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares Capped ETF |
iShares MSCI Canada ETF |
iShares MSCI Chile Capped ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 79,134,409 | $ | 34,674,432 | $ | 1,470,278 | ||||||
| Interest — affiliated (Note 2) |
90 | 36 | 22 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 34,757 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
79,134,499 | 34,709,225 | 1,470,300 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
13,867,297 | 7,034,572 | 935,384 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
13,867,297 | 7,034,572 | 935,384 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
65,267,202 | 27,674,653 | 534,916 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(391,156,332 | ) | (66,054,849 | ) | (18,873,608 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | 96,737,881 | — | |||||||||
| Futures contracts |
— | 282,321 | — | |||||||||
| Foreign currency transactions |
(3,542,963 | ) | (251,940 | ) | (6,599 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(394,699,295 | ) | 30,713,413 | (18,880,207 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(1,680,211,262 | ) | (553,653,691 | ) | (4,719,464 | ) | ||||||
| Futures contracts |
— | (319,873 | ) | — | ||||||||
| Translation of assets and liabilities in foreign currencies |
58,793 | 140,476 | 175 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(1,680,152,469 | ) | (553,833,088 | ) | (4,719,289 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(2,074,851,764 | ) | (523,119,675 | ) | (23,599,496 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (2,009,584,562 | ) | $ | (495,445,022 | ) | $ | (23,064,580 | ) | |||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $6,398,065, $6,224,058 and $375,348, respectively. |
See notes to financial statements.
| 50 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares Capped ETF |
iShares Capped ETF |
iShares Capped ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 166,692 | $ | 2,110,140 | $ | 13,511,396 | ||||||
| Interest — affiliated (Note 2) |
2 | 2 | 28 | |||||||||
| Securities lending income — affiliated (Note 2) |
464 | 23,107 | 455,370 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
167,158 | 2,133,249 | 13,966,794 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
57,104 | 370,776 | 6,208,859 | |||||||||
| Commitment fees (Note 8) |
30 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
57,134 | 370,776 | 6,208,859 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
110,024 | 1,762,473 | 7,757,935 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(2,068,826 | ) | (3,306,839 | ) | (40,853,698 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | 206,938 | (40,277,879 | ) | ||||||||
| Foreign currency transactions |
(24,585 | ) | (27,842 | ) | (600,560 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(2,093,411 | ) | (3,127,743 | ) | (81,732,137 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(8,893,869 | ) | (5,745,554 | ) | (424,814,902 | ) | ||||||
| Translation of assets and liabilities in foreign currencies |
(944 | ) | (5,862 | ) | (92,572 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(8,894,813 | ) | (5,751,416 | ) | (424,907,474 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(10,988,224 | ) | (8,879,159 | ) | (506,639,611 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (10,878,200 | ) | $ | (7,116,686 | ) | $ | (498,881,676 | ) | |||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $4,334, $424,509 and $192,285, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
51 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares Capped ETF |
iShares Africa ETF |
iShares MSCI Turkey ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 2,809,939 | $ | 5,479,181 | $ | 445,217 | ||||||
| Interest — affiliated (Note 2) |
562 | 3 | 6 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 7,920 | 567,479 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
2,810,501 | 5,487,104 | 1,012,702 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
777,167 | 1,453,680 | 1,505,772 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
777,167 | 1,453,680 | 1,505,772 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
2,033,334 | 4,033,424 | (493,070 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(5,147,754 | ) | (13,042,533 | ) | (4,920,474 | ) | ||||||
| In-kind redemptions — unaffiliated |
(441,278 | ) | 9,951,574 | 5,301,698 | ||||||||
| Foreign currency transactions |
(130,464 | ) | (148,019 | ) | (29,342 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(5,719,496 | ) | (3,238,978 | ) | 351,882 | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(57,534,947 | ) | (24,027,596 | ) | (72,871,137 | ) | ||||||
| Translation of assets and liabilities in foreign currencies |
(1,741 | ) | (8,326 | ) | (5,494 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(57,536,688 | ) | (24,035,922 | ) | (72,876,631 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(63,256,184 | ) | (27,274,900 | ) | (72,524,749 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (61,222,850 | ) | $ | (23,241,476 | ) | $ | (73,017,819 | ) | |||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $302,779, $885,221 and $74,457, respectively. |
See notes to financial statements.
| 52 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares USA ETF |
||||
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 570,130 | ||
| Dividends — affiliated (Note 2) |
2,201 | |||
| Interest — affiliated (Note 2) |
2 | |||
| Securities lending income — affiliated (Note 2) |
1,932 | |||
|
|
|
|||
| Total investment income |
574,265 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
40,692 | |||
|
|
|
|||
| Total expenses |
40,692 | |||
|
|
|
|||
| Net investment income |
533,573 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(118,646 | ) | ||
| Investments — affiliated (Note 2) |
390 | |||
| In-kind redemptions — unaffiliated |
2,771,829 | |||
| In-kind redemptions — affiliated (Note 2) |
14,774 | |||
|
|
|
|||
| Net realized gain |
2,668,347 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
375,127 | |||
|
|
|
|||
| Net realized and unrealized gain |
3,043,474 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 3,577,047 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $60. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
53 |
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, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 65,267,202 | $ | 158,393,234 | $ | 27,674,653 | $ | 66,432,321 | ||||||||
| Net realized gain (loss) |
(394,699,295 | ) | (24,456,910 | ) | 30,713,413 | 6,264,667 | ||||||||||
| Net change in unrealized appreciation/depreciation |
(1,680,152,469 | ) | 1,185,606,681 | (553,833,088 | ) | 621,918,423 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(2,009,584,562 | ) | 1,319,543,005 | (495,445,022 | ) | 694,615,411 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(45,472,254 | ) | (151,885,117 | ) | (36,394,890 | ) | (71,105,660 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(45,472,254 | ) | (151,885,117 | ) | (36,394,890 | ) | (71,105,660 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
1,599,836,734 | 2,103,462,834 | 188,209,487 | 537,013,459 | ||||||||||||
| Cost of shares redeemed |
(1,437,556,358 | ) | (2,805,065,721 | ) | (946,782,838 | ) | (801,840,234 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
162,280,376 | (701,602,887 | ) | (758,573,351 | ) | (264,826,775 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(1,892,776,440 | ) | 466,055,001 | (1,290,413,263 | ) | 358,682,976 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
5,449,685,335 | 4,983,630,334 | 3,786,906,230 | 3,428,223,254 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 3,556,908,895 | $ | 5,449,685,335 | $ | 2,496,492,967 | $ | 3,786,906,230 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 16,508,774 | $ | (3,286,174 | ) | $ | (5,071,119 | ) | $ | 3,649,118 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
36,000,000 | 45,450,000 | 6,100,000 | 17,400,000 | ||||||||||||
| Shares redeemed |
(36,700,000 | ) | (61,000,000 | ) | (32,100,000 | ) | (27,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease in shares outstanding |
(700,000 | ) | (15,550,000 | ) | (26,000,000 | ) | (10,400,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 54 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 534,916 | $ | 5,077,041 | $ | 110,024 | $ | 537,807 | ||||||||
| Net realized loss |
(18,880,207 | ) | (41,001,966 | ) | (2,093,411 | ) | (126,286 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
(4,719,289 | ) | (2,259,337 | ) | (8,894,813 | ) | 2,091,159 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(23,064,580 | ) | (38,184,262 | ) | (10,878,200 | ) | 2,502,680 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(401,526 | ) | (4,758,168 | ) | (114,080 | ) | (523,757 | ) | ||||||||
| From net realized gain |
— | — | — | (24,565 | ) | |||||||||||
| Return of capital |
— | — | — | (10,400 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(401,526 | ) | (4,758,168 | ) | (114,080 | ) | (558,722 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
71,965,297 | 306,288,062 | 842,055 | 5,263,753 | ||||||||||||
| Cost of shares redeemed |
(174,761,955 | ) | (275,735,795 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(102,796,658 | ) | 30,552,267 | 842,055 | 5,263,753 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(126,262,764 | ) | (12,390,163 | ) | (10,150,225 | ) | 7,207,711 | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
352,499,453 | 364,889,616 | 25,395,672 | 18,187,961 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 226,236,689 | $ | 352,499,453 | $ | 15,245,447 | $ | 25,395,672 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 154,973 | $ | 21,583 | $ | (4,056 | ) | $ | — | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,700,000 | 6,450,000 | 50,000 | 200,000 | ||||||||||||
| Shares redeemed |
(4,300,000 | ) | (6,000,000 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(2,600,000 | ) | 450,000 | 50,000 | 200,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
55 |
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, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,762,473 | $ | 1,855,705 | $ | 7,757,935 | $ | 43,179,073 | ||||||||
| Net realized gain (loss) |
(3,127,743 | ) | 10,422,925 | (81,732,137 | ) | (49,805,879 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
(5,751,416 | ) | 4,245,175 | (424,907,474 | ) | 416,649,115 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(7,116,686 | ) | 16,523,805 | (498,881,676 | ) | 410,022,309 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(1,141,753 | ) | (2,015,418 | ) | (19,398,319 | ) | (41,504,491 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(1,141,753 | ) | (2,015,418 | ) | (19,398,319 | ) | (41,504,491 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
14,908,298 | 124,975,600 | 427,292,875 | 2,034,431,562 | ||||||||||||
| Cost of shares redeemed |
(14,173,838 | ) | (88,548,464 | ) | (1,233,196,013 | ) | (1,344,849,484 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
734,460 | 36,427,136 | (805,903,138 | ) | 689,582,078 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(7,523,979 | ) | 50,935,523 | (1,324,183,133 | ) | 1,058,099,896 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
121,645,308 | 70,709,785 | 3,275,152,092 | 2,217,052,196 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 114,121,329 | $ | 121,645,308 | $ | 1,950,968,959 | $ | 3,275,152,092 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 591,234 | $ | (29,486 | ) | $ | (5,849,184 | ) | $ | 5,791,200 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
300,000 | 2,500,000 | 6,800,000 | 31,000,000 | ||||||||||||
| Shares redeemed |
(300,000 | ) | (1,750,000 | ) | (20,200,000 | ) | (21,000,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
— | 750,000 | (13,400,000 | ) | 10,000,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 56 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Russia Capped ETF |
iShares MSCI South Africa ETF |
|||||||||||||||
| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 2,033,334 | $ | 9,621,213 | $ | 4,033,424 | $ | 13,130,204 | ||||||||
| Net realized gain (loss) |
(5,719,496 | ) | (22,363,897 | ) | (3,238,978 | ) | 38,061,399 | |||||||||
| Net change in unrealized appreciation/depreciation |
(57,536,688 | ) | (21,103,770 | ) | (24,035,922 | ) | 57,102,013 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(61,222,850 | ) | (33,846,454 | ) | (23,241,476 | ) | 108,293,616 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(9,840,701 | ) | (2,160,831 | ) | (5,380,757 | ) | (12,294,677 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(9,840,701 | ) | (2,160,831 | ) | (5,380,757 | ) | (12,294,677 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
59,657,410 | 333,077,754 | 121,555,085 | 281,249,453 | ||||||||||||
| Cost of shares redeemed |
(5,618,368 | ) | (317,805,980 | ) | (180,323,354 | ) | (337,422,079 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
54,039,042 | 15,271,774 | (58,768,269 | ) | (56,172,626 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(17,024,509 | ) | (20,735,511 | ) | (87,390,502 | ) | 39,826,313 | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
289,775,287 | 310,510,798 | 587,395,638 | 547,569,325 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 272,750,778 | $ | 289,775,287 | $ | 500,005,136 | $ | 587,395,638 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (156,511 | ) | $ | 7,650,856 | $ | (511,026 | ) | $ | 836,307 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
4,800,000 | 16,800,000 | 1,800,000 | 4,300,000 | ||||||||||||
| Shares redeemed |
(400,000 | ) | (16,650,000 | ) | (2,800,000 | ) | (5,300,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
4,400,000 | 150,000 | (1,000,000 | ) | (1,000,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
57 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Turkey ETF |
iShares MSCI USA ETF |
|||||||||||||||
| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | (493,070 | ) | $ | 8,452,557 | $ | 533,573 | $ | 2,391,477 | |||||||
| Net realized gain |
351,882 | 4,401,805 | 2,668,347 | 56,924,794 | ||||||||||||
| Net change in unrealized appreciation/depreciation |
(72,876,631 | ) | 93,555,911 | 375,127 | (29,707,398 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(73,017,819 | ) | 106,410,273 | 3,577,047 | 29,608,873 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
— | (8,703,391 | ) | (488,843 | ) | (2,876,350 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
— | (8,703,391 | ) | (488,843 | ) | (2,876,350 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
197,037,653 | 364,224,026 | 16,944,592 | 48,587,993 | ||||||||||||
| Cost of shares redeemed |
(98,939,089 | ) | (382,640,118 | ) | (17,613,751 | ) | (207,759,194 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
98,098,564 | (18,416,092 | ) | (669,159 | ) | (159,171,201 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
25,080,745 | 79,290,790 | 2,419,045 | (132,438,678 | ) | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
515,366,836 | 436,076,046 | 47,391,492 | 179,830,170 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 540,447,581 | $ | 515,366,836 | $ | 49,810,537 | $ | 47,391,492 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (493,070 | ) | $ | — | $ | 178,713 | $ | 133,983 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
3,550,000 | 7,500,000 | 400,000 | 1,250,000 | ||||||||||||
| Shares redeemed |
(1,900,000 | ) | (7,150,000 | ) | (400,000 | ) | (5,250,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
1,650,000 | 350,000 | — | (4,000,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 58 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Brazil Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 53.61 | $ | 42.52 | $ | 52.61 | $ | 65.00 | $ | 68.07 | $ | 58.26 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.58 | 1.56 | 1.59 | 1.73 | 2.24 | 1.56 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(18.54 | ) | 11.08 | (10.32 | ) | (12.64 | ) | (1.69 | ) | 10.83 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(17.96 | ) | 12.64 | (8.73 | ) | (10.91 | ) | 0.55 | 12.39 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.42 | ) | (1.55 | ) | (1.36 | ) | (0.56 | ) | (3.62 | ) | (2.58 | ) | ||||||||||||
| Return of capital |
— | — | — | (0.92 | ) | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.42 | ) | (1.55 | ) | (1.36 | ) | (1.48 | ) | (3.62 | ) | (2.58 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 35.23 | $ | 53.61 | $ | 42.52 | $ | 52.61 | $ | 65.00 | $ | 68.07 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(33.49 | )%c | 30.33 | % | (16.85 | )% | (16.79 | )% | 0.36 | % | 21.12 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,556,909 | $ | 5,449,685 | $ | 4,983,630 | $ | 7,370,617 | $ | 11,332,121 | $ | 9,240,453 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.61 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.89 | % | 3.37 | % | 3.02 | % | 2.92 | % | 3.08 | % | 2.24 | % | ||||||||||||
| Portfolio turnover ratee |
38 | % | 54 | % | 56 | % | 7 | % | 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 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, 2015, the years ended August 31, 2014, August 31, 2013, August 31, 2012, August 31, 2011 and August 31, 2010 were 8%, 11%, 20%, 6%, 11% and 13%, respectively. See Note 4. |
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 Canada ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 32.93 | $ | 27.34 | $ | 27.52 | $ | 29.89 | $ | 26.10 | $ | 23.70 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.28 | 0.59 | 0.60 | 0.53 | 0.53 | 0.43 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(4.78 | ) | 5.62 | (0.10 | ) | (2.33 | ) | 3.78 | 2.39 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(4.50 | ) | 6.21 | 0.50 | (1.80 | ) | 4.31 | 2.82 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.38 | ) | (0.62 | ) | (0.68 | ) | (0.57 | ) | (0.52 | ) | (0.42 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.38 | ) | (0.62 | ) | (0.68 | ) | (0.57 | ) | (0.52 | ) | (0.42 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 28.05 | $ | 32.93 | $ | 27.34 | $ | 27.52 | $ | 29.89 | $ | 26.10 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(13.64 | )%c | 23.00 | % | 1.84 | % | (5.87 | )% | 16.50 | % | 11.91 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,496,493 | $ | 3,786,906 | $ | 3,428,223 | $ | 4,254,544 | $ | 5,092,547 | $ | 3,447,242 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.90 | % | 1.97 | % | 2.12 | % | 1.94 | % | 1.70 | % | 1.63 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 6 | % | 7 | % | 5 | % | 8 | % | 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 | 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Chile Capped ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 43.52 | $ | 47.70 | $ | 60.31 | $ | 67.11 | $ | 67.37 | $ | 44.61 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.07 | 0.69 | 0.68 | 0.97 | 0.95 | 0.59 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(2.40 | ) | (4.18 | ) | (12.58 | ) | (6.80 | ) | (0.23 | ) | 22.86 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(2.33 | ) | (3.49 | ) | (11.90 | ) | (5.83 | ) | 0.72 | 23.45 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.06 | ) | (0.69 | ) | (0.68 | ) | (0.92 | ) | (0.98 | ) | (0.66 | ) | ||||||||||||
| Return of capital |
— | — | (0.03 | ) | (0.05 | ) | (0.00 | )c | (0.03 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.06 | ) | (0.69 | ) | (0.71 | ) | (0.97 | ) | (0.98 | ) | (0.69 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 41.13 | $ | 43.52 | $ | 47.70 | $ | 60.31 | $ | 67.11 | $ | 67.37 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(5.35 | )%d | (7.40 | )% | (19.87 | )% | (8.68 | )% | 0.93 | % | 52.88 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 226,237 | $ | 352,499 | $ | 364,890 | $ | 548,797 | $ | 708,018 | $ | 670,350 | ||||||||||||
| Ratio of expenses to average net assetse |
0.61 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
0.35 | % | 1.49 | % | 1.12 | % | 1.55 | % | 1.30 | % | 1.05 | % | ||||||||||||
| Portfolio turnover ratef |
26 | % | 91 | % | 34 | % | 48 | % | 38 | % | 42 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | 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, 2015, the years ended August 31, 2014, August 31, 2013, August 31, 2012, August 31, 2011, and August 31, 2010 were 2%, 11%, 16%, 20%, 12%, and 9%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
61 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Colombia Capped ETF | ||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Period from to |
||||||||||
| Net asset value, beginning of period |
$ | 28.22 | $ | 25.98 | $ | 25.28 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.12 | 0.67 | 0.03 | |||||||||
| Net realized and unrealized gain (loss)c |
(12.16 | ) | 2.24 | 0.67 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
(12.04 | ) | 2.91 | 0.70 | ||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.13 | ) | (0.63 | ) | — | |||||||
| Net realized gain |
— | (0.03 | ) | — | ||||||||
| Return of capital |
— | (0.01 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.13 | ) | (0.67 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 16.05 | $ | 28.22 | $ | 25.98 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
(42.78 | )%d | 11.44 | % | 2.77 | %d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 15,245 | $ | 25,396 | $ | 18,188 | ||||||
| Ratio of expenses to average net assetse |
0.61 | % | 0.61 | % | 0.61 | % | ||||||
| Ratio of net investment income to average net assetse |
1.18 | % | 2.54 | % | 0.61 | % | ||||||
| Portfolio turnover ratef |
39 | % | 34 | % | 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 cash transactions, the portfolio turnover rates for the six months ended February 28, 2015, the year ended August 31, 2014 and for the period ended August 31, 2013 were 22%, 33% and 2%, respectively. See Note 4. |
See notes to financial statements.
| 62 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 50.69 | $ | 42.85 | $ | 37.25 | $ | 45.89 | $ | 49.41 | $ | 46.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.70 | 0.87 | 0.95 | 1.12 | 1.39 | 1.40 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(3.38 | ) | 7.95 | 5.68 | (8.66 | ) | (3.18 | ) | 2.63 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(2.68 | ) | 8.82 | 6.63 | (7.54 | ) | (1.79 | ) | 4.03 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.46 | ) | (0.98 | ) | (1.03 | ) | (1.07 | ) | (1.73 | ) | (1.49 | ) | ||||||||||||
| Return of capital |
— | — | — | (0.03 | ) | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.46 | ) | (0.98 | ) | (1.03 | ) | (1.10 | ) | (1.73 | ) | (1.49 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 47.55 | $ | 50.69 | $ | 42.85 | $ | 37.25 | $ | 45.89 | $ | 49.41 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(5.28 | )%c | 20.67 | % | 17.82 | % | (16.52 | )% | (4.26 | )% | 8.57 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 114,121 | $ | 121,645 | $ | 70,710 | $ | 68,912 | $ | 78,018 | $ | 128,473 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.62 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.93 | % | 1.74 | % | 2.20 | % | 2.75 | % | 2.49 | % | 2.64 | % | ||||||||||||
| Portfolio turnover ratee |
6 | % | 15 | % | 14 | % | 20 | % | 17 | % | 21 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
63 |
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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 71.51 | $ | 61.93 | $ | 60.96 | $ | 58.39 | $ | 48.17 | $ | 42.59 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.19 | 1.06 | 0.75 | 0.73 | 0.80 | 0.72 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(10.97 | ) | 9.61 | 0.85 | 2.76 | 10.15 | 5.61 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(10.78 | ) | 10.67 | 1.60 | 3.49 | 10.95 | 6.33 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.51 | ) | (1.09 | ) | (0.63 | ) | (0.92 | ) | (0.73 | ) | (0.75 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.51 | ) | (1.09 | ) | (0.63 | ) | (0.92 | ) | (0.73 | ) | (0.75 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 60.22 | $ | 71.51 | $ | 61.93 | $ | 60.96 | $ | 58.39 | $ | 48.17 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(15.04 | )%c | 17.42 | % | 2.53 | % | 6.13 | % | 22.67 | % | 14.83 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,950,969 | $ | 3,275,152 | $ | 2,217,052 | $ | 1,182,700 | $ | 1,243,731 | $ | 1,450,039 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.48 | % | 0.48 | % | 0.50 | % | 0.53 | % | 0.52 | % | 0.53 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.60 | % | 1.61 | % | 1.09 | % | 1.26 | % | 1.35 | % | 1.46 | % | ||||||||||||
| Portfolio turnover ratee |
7 | % | 19 | % | 32 | % | 10 | % | 5 | % | 11 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 64 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Russia Capped ETF | ||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Period from to Aug. 31, 2011 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 18.34 | $ | 19.84 | $ | 21.15 | $ | 25.13 | $ | 25.00 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.12 | 0.63 | 0.62 | 0.50 | 0.45 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
(4.36 | ) | (2.00 | ) | (1.35 | ) | (4.00 | ) | 0.03 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
(4.24 | ) | (1.37 | ) | (0.73 | ) | (3.50 | ) | 0.48 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.60 | ) | (0.13 | ) | (0.58 | ) | (0.48 | ) | (0.35 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.60 | ) | (0.13 | ) | (0.58 | ) | (0.48 | ) | (0.35 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 13.50 | $ | 18.34 | $ | 19.84 | $ | 21.15 | $ | 25.13 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
(22.16 | )%d | (7.00 | )% | (3.40 | )% | (13.75 | )% | 1.76 | %d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 272,751 | $ | 289,775 | $ | 310,511 | $ | 147,026 | $ | 111,835 | ||||||||||
| Ratio of expenses to average net assetse |
0.62 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.58 | % | ||||||||||
| Ratio of net investment income to average net assetse |
1.61 | % | 3.14 | % | 2.87 | % | 2.22 | % | 1.99 | % | ||||||||||
| Portfolio turnover ratef |
5 | % | 15 | % | 14 | % | 16 | % | 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 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 South Africa ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 70.77 | $ | 58.88 | $ | 64.65 | $ | 69.06 | $ | 58.74 | $ | 51.99 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.57 | 1.57 | 1.32 | 2.10 | 1.65 | 1.18 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(2.05 | ) | 11.86 | (5.31 | ) | (4.41 | ) | 11.08 | 6.92 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(1.48 | ) | 13.43 | (3.99 | ) | (2.31 | ) | 12.73 | 8.10 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.80 | ) | (1.54 | ) | (1.78 | ) | (2.10 | ) | (2.41 | ) | (1.35 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.80 | ) | (1.54 | ) | (1.78 | ) | (2.10 | ) | (2.41 | ) | (1.35 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 68.49 | $ | 70.77 | $ | 58.88 | $ | 64.65 | $ | 69.06 | $ | 58.74 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(1.94 | )%c | 23.13 | % | (6.35 | )% | (3.17 | )% | 21.58 | % | 15.80 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 500,005 | $ | 587,396 | $ | 547,569 | $ | 471,922 | $ | 504,102 | $ | 505,191 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.62 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.71 | % | 2.40 | % | 2.08 | % | 3.26 | % | 2.38 | % | 2.09 | % | ||||||||||||
| Portfolio turnover ratee |
4 | % | 6 | % | 5 | % | 4 | % | 4 | % | 5 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 66 | 2015 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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 55.72 | $ | 49.00 | $ | 56.13 | $ | 47.73 | $ | 60.81 | $ | 48.01 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.05 | ) | 0.85 | 1.07 | 0.86 | 0.84 | 1.00 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
(6.09 | ) | 6.75 | (7.08 | ) | 8.70 | (12.59 | ) | 13.02 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(6.14 | ) | 7.60 | (6.01 | ) | 9.56 | (11.75 | ) | 14.02 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.88 | ) | (1.12 | ) | (1.16 | ) | (1.33 | ) | (1.22 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.88 | ) | (1.12 | ) | (1.16 | ) | (1.33 | ) | (1.22 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 49.58 | $ | 55.72 | $ | 49.00 | $ | 56.13 | $ | 47.73 | $ | 60.81 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(11.02 | )%c | 15.52 | % | (11.05 | )% | 20.37 | % | (19.74 | )% | 29.55 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 540,448 | $ | 515,367 | $ | 436,076 | $ | 561,284 | $ | 448,677 | $ | 601,988 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.62 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.59 | % | 0.61 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.20 | )% | 1.64 | % | 1.67 | % | 1.75 | % | 1.30 | % | 1.81 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 8 | % | 9 | % | 9 | % | 12 | % | 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 |
67 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI USA ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Year ended Aug. 31, 2011 |
Period from to |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 43.08 | $ | 35.26 | $ | 30.31 | $ | 26.17 | $ | 22.44 | $ | 24.83 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.42 | 0.71 | 0.69 | 0.59 | 0.51 | 0.17 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
2.17 | 8.01 | 4.96 | 3.94 | 3.73 | (2.49 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.59 | 8.72 | 5.65 | 4.53 | 4.24 | (2.32 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.39 | ) | (0.90 | ) | (0.70 | ) | (0.39 | ) | (0.51 | ) | (0.07 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.39 | ) | (0.90 | ) | (0.70 | ) | (0.39 | ) | (0.51 | ) | (0.07 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 45.28 | $ | 43.08 | $ | 35.26 | $ | 30.31 | $ | 26.17 | $ | 22.44 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
6.06 | %d | 24.98 | % | 18.85 | % | 17.44 | % | 18.89 | % | (9.37 | )%d | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 49,811 | $ | 47,391 | $ | 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 | % | 0.15 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
1.97 | % | 1.82 | % | 2.10 | % | 2.04 | % | 1.90 | % | 2.21 | % | ||||||||||||
| Portfolio turnover ratef |
3 | % | 6 | % | 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.
| 68 | 2015 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.
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.
FUND REORGANIZATION
On January 26, 2015, the iShares MSCI Russia Capped ETF, a series of iShares, Inc. (the “Successor Fund”), acquired all the net assets of the iShares MSCI Russia Capped ETF, which operated as a series of iShares MSCI Russia Capped ETF, Inc. (the “Predecessor Fund”), pursuant to a plan of reorganization approved by the shareholders of the Predecessor Fund on January 16, 2015 (the “Reorganization”). The U.S. Securities and Exchange Commission (“SEC”) staff expressed the view that, as a result of the Predecessor Fund being a series of iShares MSCI Russia Capped ETF Inc., the Predecessor Fund was not covered by the iShares exemptive relief that permits various iShares funds to operate as exchange-traded funds. The purpose of the Reorganization was to address the SEC staff’s concerns on a going forward basis. The Successor Fund has the same investment objective, investment strategy, index methodology, risks, policies and expenses as the Predecessor Fund.
Each shareholder of the Predecessor Fund received shares of the Successor Fund in an amount equal to the aggregate net asset value of such shareholder’s Predecessor Fund shares, as determined before market open of business on January 26, 2015. The Reorganization was accomplished by a tax-free exchange of 19,900,000 shares of the Successor Fund for 19,900,000 shares of the Predecessor Fund at a conversion rate of 1.0.
The Predecessor Fund’s fair value and cost of investments prior to the Reorganization was $245,761,700 and $398,080,360, respectively. Prior to the Reorganization, the Successor Fund had not yet commenced operations and had no assets or liabilities. As a result of the Reorganization, the Successor Fund assumed the performance and accounting history of the Predecessor Fund. The aggregate net assets of the Successor Fund immediately after the Reorganization amounted to $246,588,913.
Since this was a non-taxable merger, for financial reporting purposes, assets received and shares issued by the Successor Fund were recorded at fair value; however, the cost basis of the investments received from the Predecessor Fund was carried forward. The Successor Fund retained, without limitation, all the loss carryforwards of the Predecessor Fund.
| NOTES TO FINANCIAL STATEMENTS |
69 |
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. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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). |
| • | 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
| 70 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to 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, 2015. 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 |
$ | 2,148,114,872 | $ | — | $ | — | $ | 2,148,114,872 | ||||||||
| Preferred Stocks |
1,388,661,489 | — | — | 1,388,661,489 | ||||||||||||
| Rights |
253,881 | — | — | 253,881 | ||||||||||||
| Money Market Funds |
797,245 | — | — | 797,245 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,537,827,487 | $ | — | $ | — | $ | 3,537,827,487 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Canada |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,490,150,990 | $ | — | $ | — | $ | 2,490,150,990 | ||||||||
| Money Market Funds |
43,426,192 | — | — | 43,426,192 | ||||||||||||
| Futures Contractsa |
573,217 | — | — | 573,217 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,534,150,399 | $ | — | $ | — | $ | 2,534,150,399 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
71 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares ETF and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| MSCI Chile Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 211,246,046 | $ | — | $ | — | $ | 211,246,046 | ||||||||
| Preferred Stocks |
14,637,705 | — | — | 14,637,705 | ||||||||||||
| Money Market Funds |
423,207 | — | — | 423,207 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 226,306,958 | $ | — | $ | — | $ | 226,306,958 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Colombia Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 11,623,227 | $ | — | $ | — | $ | 11,623,227 | ||||||||
| Preferred Stocks |
3,614,295 | — | — | 3,614,295 | ||||||||||||
| Money Market Funds |
22,282 | — | — | 22,282 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 15,259,804 | $ | — | $ | — | $ | 15,259,804 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Israel Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 113,858,678 | $ | — | $ | — | $ | 113,858,678 | ||||||||
| Money Market Funds |
3,926,325 | — | — | 3,926,325 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 117,785,003 | $ | — | $ | — | $ | 117,785,003 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Mexico Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,946,515,879 | $ | — | $ | 30 | $ | 1,946,515,909 | ||||||||
| Money Market Funds |
88,877,876 | — | — | 88,877,876 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,035,393,755 | $ | — | $ | 30 | $ | 2,035,393,785 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Russia Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 255,130,198 | $ | — | $ | — | $ | 255,130,198 | ||||||||
| Preferred Stocks |
16,940,173 | — | — | 16,940,173 | ||||||||||||
| Money Market Funds |
365,828 | — | — | 365,828 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 272,436,199 | $ | — | $ | — | $ | 272,436,199 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI South Africa |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 499,763,064 | $ | — | $ | 2,253 | $ | 499,765,317 | ||||||||
| Money Market Funds |
938,629 | — | — | 938,629 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 500,701,693 | $ | — | $ | 2,253 | $ | 500,703,946 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 72 | 2015 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 Turkey |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 540,332,166 | $ | — | $ | — | $ | 540,332,166 | ||||||||
| Rights |
45,497 | — | — | 45,497 | ||||||||||||
| Money Market Funds |
34,358,955 | — | — | 34,358,955 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 574,736,618 | $ | — | $ | — | $ | 574,736,618 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI USA |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 49,711,144 | $ | — | $ | — | $ | 49,711,144 | ||||||||
| Money Market Funds |
601,247 | — | — | 601,247 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 50,312,391 | $ | — | $ | — | $ | 50,312,391 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Shown at the unrealized appreciation (depreciation) on the contracts. |
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income and capital gain distributions, if any, are 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, 2015 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, 2015, if any, are disclosed in the Funds’ statements of assets and liabilities.
| NOTES TO FINANCIAL STATEMENTS |
73 |
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.
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. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the schedules of investments. The value of any securities on loan as of February 28, 2015 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 or request additional collateral. 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.
| 74 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table is a summary of each Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| iShares ETF | Market Value of Securities on Loan |
Cash
Collateral Received a |
Net Amount |
|||||||||
| MSCI Canada |
$ | 40,773,170 | $ | 40,773,170 | $ | — | ||||||
| MSCI Colombia Capped |
2,540 | 2,540 | — | |||||||||
| MSCI Israel Capped |
3,739,025 | 3,739,025 | — | |||||||||
| MSCI Mexico Capped |
82,515,442 | 82,515,442 | — | |||||||||
| MSCI South Africa |
848,168 | 848,168 | — | |||||||||
| MSCI Turkey |
32,035,901 | 32,035,901 | — | |||||||||
| MSCI USA |
520,355 | 520,355 | — | |||||||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in each Fund’s statement of assets and liabilities. |
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, 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 Brazil Capped, iShares MSCI Chile Capped, iShares MSCI Israel Capped, iShares MSCI Russia 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 |
75 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, up to and including $72 billion | ||||
| 0.36 | Over $72 billion | ||||
For its investment advisory services to each of the following Funds, 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 SEC 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. 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% (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, the iShares MSCI USA ETF (the “Group 1 Fund”), retains 71.5% of securities lending income and the amount retained can never be less than 65% of the total of securities lending income plus the collateral investment fees.
Pursuant to a securities lending agreement, the iShares MSCI Brazil Capped, iShares MSCI Canada, iShares MSCI Chile Capped, iShares MSCI Colombia Capped, iShares MSCI Israel Capped, iShares MSCI Mexico Capped, iShares Russia Capped, iShares MSCI South Africa and iShares MSCI Turkey ETFs (the “Group 2 Funds”), retain 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees 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, the Group 1 Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 75% of securities lending income and the amount retained can never be less than 65% of the total of securities lending income plus the collateral investment fees. Each Group 2 Fund will receive for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Prior to January 1, 2015, the Group 1 Fund retained 70% of securities lending income and each Group 2 Fund retained 75% of securities lending income, and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, the Group 1 Fund retained for the remainder of calendar year 2014, 75% of securities lending income and each Group 2 Fund retained 80% of securities lending income, and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
For the six months ended February 28, 2015, 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 |
$ | 16,165 | ||
| MSCI Colombia Capped |
132 | |||
| MSCI Israel Capped |
6,908 | |||
| MSCI Mexico Capped |
161,659 | |||
| MSCI South Africa |
2,640 | |||
| MSCI Turkey |
176,811 | |||
| MSCI USA |
898 | |||
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, 2015, 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, 2015, 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 USA |
||||||||||||||||||||||||||||
| BlackRock Inc. |
338 | 126 | (131 | ) | 333 | $ | 123,683 | $ | 814 | $ | 8,621 | |||||||||||||||||
| PNC Financial Services Group Inc. (The) |
1,343 | 512 | (528 | ) | 1,327 | 122,031 | 1,387 | 6,543 | ||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 245,714 | $ | 2,201 | $ | 15,164 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| NOTES TO FINANCIAL STATEMENTS |
77 |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, 2015 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI Brazil Capped |
$ | 1,933,945,161 | $ | 1,759,202,665 | ||||
| MSCI Canada |
81,209,962 | 79,335,399 | ||||||
| MSCI Chile Capped |
78,692,656 | 180,881,189 | ||||||
| MSCI Colombia Capped |
8,500,796 | 7,378,129 | ||||||
| MSCI Israel Capped |
9,217,700 | 7,409,954 | ||||||
| MSCI Mexico Capped |
181,405,944 | 183,502,820 | ||||||
| MSCI Russia Capped |
22,398,192 | 11,806,854 | ||||||
| MSCI South Africa |
17,203,909 | 17,332,752 | ||||||
| MSCI Turkey |
3,973,470 | 4,246,354 | ||||||
| MSCI USA |
1,666,983 | 1,639,771 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2015 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI Canada |
$ | 186,571,377 | $ | 937,774,062 | ||||
| MSCI Colombia Capped |
180,777 | — | ||||||
| MSCI Israel Capped |
13,719,198 | 14,133,006 | ||||||
| MSCI Mexico Capped |
414,691,476 | 1,229,164,236 | ||||||
| MSCI Russia Capped |
40,827,221 | 5,575,026 | ||||||
| MSCI South Africa |
121,343,305 | 179,663,219 | ||||||
| MSCI Turkey |
196,812,861 | 98,639,695 | ||||||
| MSCI USA |
16,888,707 | 17,506,459 | ||||||
| 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. Such variable charges, if any, are included in “Proceeds from shares sold” in the statements of changes in net assets.
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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. | FUTURES CONTRACTS |
Each Fund may purchase or sell 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, 2015 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 appreciationa |
$ | 573,217 | ||
|
|
|
|||
| a | Represents cumulative appreciation of futures contracts as reported in the schedule of investments. |
The following table shows the realized and unrealized gains (losses) on futures contracts held by the iShares MSCI Canada ETF during the six months ended February 28, 2015 and the related locations in the statements of operations, presented by risk exposure category:
|
Net Realized Gain (Loss) |
Net Change in Unrealized |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | 282,321 | $ | (319,873 | ) | |||
|
|
|
|
|
|||||
The following table shows the average quarter-end balances of open futures contracts held by the iShares MSCI Canada ETF for the six months ended February 28, 2015:
| Average value of contracts purchased |
$ | 12,516,448 | ||
|
|
|
|||
| NOTES TO FINANCIAL STATEMENTS |
79 |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 6. | MARKET AND CREDIT RISK |
In the normal course of business, each Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks each Fund is exposed to include market risk and credit risk. Each Fund’s prospectus provides details of these and other types of risk.
BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss each Fund may suffer through holding market positions in the face of market movements. Each Fund is exposed to market risk by virtue of its investment in equity and financial derivative instruments. The fair value of securities held by the Funds may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of each Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s schedule of investments.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.
Each Fund, except for the iShares MSCI USA ETF, invests a substantial amount of its assets 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 issuers from countries with less developed markets.
Each Fund, except for the iShares MSCI USA ETF, invests all or substantially all of its assets in issuers located in a single country other than the U.S. When a fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in that country may have a significant impact on its investment performance.
The United States and the European Union, along with the regulatory bodies of a number of countries including Japan, Australia and Canada (collectively, “Sanctioning Bodies”), have imposed sectorial economic sanctions on certain Russian individuals and Russian corporate entities which include prohibitions on transacting in or dealing in new debt of longer than 30 or 90 days maturity or new equity of such issuers. Securities held by the iShares MSCI Russia Capped ETF issued prior to the date of the sanctions being imposed are not currently subject to any restrictions under the sanctions. However, compliance with each of these sanctions may impair the ability of a Fund to buy, sell, hold, receive or deliver the affected securities or other securities of such issuers. The Sanctioning Bodies 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. Current or future sanctions may result in Russia taking counter measures or
| 80 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
retaliatory actions, which may further impair the value and liquidity of Russian securities. These retaliatory measures may include the immediate freeze of Russian assets held by a Fund.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of each Fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its statement of assets and liabilities.
| 7. | INCOME TAX INFORMATION |
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.
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, 2014, the Funds’ fiscal year-end, the following 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 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||
| MSCI Brazil Capped |
$ | 989,412,231 | $ | — | $ | — | $ | — | $ | 198,226,310 | $ | — | $ | 1,187,638,541 | ||||||||||||||
| MSCI Canada |
142,622,027 | 5,363,291 | 5,107,471 | 27,886,883 | 68,928,677 | 14,903,919 | 264,812,268 | |||||||||||||||||||||
| MSCI Chile Capped |
65,990,195 | — | — | 1,886,881 | 11,712,090 | 976,991 | 80,566,157 | |||||||||||||||||||||
| MSCI Israel Capped |
13,480,809 | — | — | 784,479 | 10,801,191 | 7,130,249 | 32,196,728 | |||||||||||||||||||||
| MSCI Mexico Capped |
42,455,837 | — | 853,150 | 8,973,988 | 2,789,471 | 22,863,665 | 77,936,111 | |||||||||||||||||||||
| MSCI Russia Capped |
8,260,181 | — | — | — | — | — | 8,260,181 | |||||||||||||||||||||
| MSCI South Africa |
27,277,976 | 1,607,845 | 972,024 | 15,339,464 | 14,856,365 | 6,137,142 | 66,190,816 | |||||||||||||||||||||
| MSCI Turkey |
21,835,364 | — | — | 720,636 | 5,982,737 | 3,859,184 | 32,397,921 | |||||||||||||||||||||
| MSCI USA |
56,840 | — | — | — | — | — | 56,840 | |||||||||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
| NOTES TO FINANCIAL STATEMENTS |
81 |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 28, 2015, 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 |
$ | 3,513,297,498 | $ | 1,001,876,563 | $ | (977,346,574 | ) | $ | 24,529,989 | |||||||
| MSCI Canada |
3,032,764,554 | 292,820,133 | (792,007,505 | ) | (499,187,372 | ) | ||||||||||
| MSCI Chile Capped |
232,435,848 | 45,590,198 | (51,719,088 | ) | (6,128,890 | ) | ||||||||||
| MSCI Colombia Capped |
21,806,513 | — | (6,546,709 | ) | (6,546,709 | ) | ||||||||||
| MSCI Israel Capped |
141,691,054 | 5,331,932 | (29,237,983 | ) | (23,906,051 | ) | ||||||||||
| MSCI Mexico Capped |
2,495,863,135 | 18,874,138 | (479,343,488 | ) | (460,469,350 | ) | ||||||||||
| MSCI Russia Capped |
410,009,295 | 3,117,712 | (140,690,808 | ) | (137,573,096 | ) | ||||||||||
| MSCI South Africa |
561,930,473 | 53,740,184 | (114,966,711 | ) | (61,226,527 | ) | ||||||||||
| MSCI Turkey |
747,286,636 | 2,791,161 | (175,341,179 | ) | (172,550,018 | ) | ||||||||||
| MSCI USA |
46,265,642 | 5,242,495 | (1,195,746 | ) | 4,046,749 | |||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2015, 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.
| 8. | LINE OF CREDIT |
The iShares MSCI Colombia Capped ETF, along with certain other iShares funds, are parties to a $150 million credit agreement with State Street Bank and Trust Company, which expires on October 28, 2015. 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, 2015.
| 9. | 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.
| 82 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory Contract
iSHARES®, INC.
iShares MSCI Russia Capped ETF
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required to consider and approve the proposed Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) on behalf of the Fund. The Independent Directors requested, and BFA provided, such information as the Independent Directors, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed Advisory Contract.
At a meeting held on May 15-16, 2014, the Board, including a majority of the Independent Directors, approved the establishment of the Fund as a new series of iShares, Inc. and the proposed Advisory Contract for the Fund. The Board, including the Independent Directors, reviewed the information provided by management in response to requests for information. The Board also considered information previously provided by BFA, BlackRock Institutional Trust Company, N.A. (“BTC”), and BlackRock, Inc. (“BlackRock”), as applicable, at prior Board meetings. At a meeting held on August 14, 2014, the Board approved a plan of reorganization pursuant to which iShares MSCI Russia Capped ETF (the “Predecessor Fund”), the sole series of iShares MSCI Russia Capped ETF, Inc., would be reorganized with the Fund, which would carry on the Predecessor Fund’s business as an exchange traded fund. The Fund has the same investment objective, investment strategy, risks and policies, operating expenses, investment adviser, portfolio managers and directors as the Predecessor Fund. The Independent Directors were advised by their independent counsel throughout the process.
In approving the Advisory Contract for the Fund, the Board, including the Independent Directors, considered that the Fund had not yet commenced operations, but that it would be appropriate to review information concerning the Predecessor Fund. Accordingly, references in the following discussion to the Fund and Advisory Contract include the Predecessor Fund and its Advisory Contract, respectively, to the extent the context requires. The Board, including the Independent Directors, considered the following factors, no one of which was controlling, and reached the following conclusions:
Expenses and Performance of the Fund — The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of the Fund in comparison with the same information for other exchange traded funds (including funds sponsored by an “at cost” service provider) and, in the limited instances where no comparable ETFs existed and the comparison group would not otherwise be reasonable in Lipper’s judgment, pure index institutional mutual funds, objectively selected by Lipper as comprising the Fund’s applicable peer group pursuant to Lipper’s proprietary ETF methodology (the “Lipper Group”). The Board noted that, prior to 2014, Lipper had used a different methodology to determine the Fund’s Lipper group, which included mutual funds, closed-end funds, exchange traded funds, and/or funds with differing investment objective classifications, investment focuses and other characteristics (e.g. actively managed funds and funds sponsored by “at cost” service providers), as applicable. The Board further noted that, after consideration by the 15(c) Committee, the Board determined to use instead Lipper’s proprietary ETF methodology to determine the Fund’s Lipper Group. This determination was based on, among other considerations, the increased number and types of ETFs available for comparative purposes than was the case in prior years. The Board was provided with a detailed description of Lipper’s proprietary ETF methodology used by Lipper to determine the applicable Lipper Group and to prepare this information. At the Board’s request, Lipper provided, and the Board considered, information on the impact to the iShares funds’ comparative fee rankings that were attributable to the change from a pure index group methodology to Lipper’s proprietary ETF methodology. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information provided in Lipper’s report may or may not provide meaningful direct comparisons to the Fund in all instances.
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
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Board Review and Approval of Investment Advisory Contract (Continued)
iSHARES®, INC.
The Board also noted that the investment advisory fee rate and overall expenses for the Fund were lower than the median of the investment advisory fee rates and overall expenses of the funds in its Lipper Group.
In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of the Fund for the one-, three-, five-, ten-year, and since inception periods, as applicable, and the “last quarter” period ended December 31, 2013, and a comparison of the Fund’s performance to its performance benchmark index for the same periods. To the extent that any of the comparison funds included in the Lipper Group track the same index as the Fund, Lipper also provided, and the Board reviewed, a comparison of the Fund’s performance to that of such relevant comparison funds for the same periods. The Board noted that the Fund generally performed in line with its respective performance benchmark index over the relevant periods. In considering this information, the Board noted that the Lipper Group may include funds that are not exchange traded funds or index funds, and that may have different investment objectives and/or benchmarks from the Fund. In addition, the Board noted that the Fund seeks to track its own benchmark index and that, during the prior year, the Board received periodic reports on the Fund’s performance in comparison with its relevant benchmark index. Such periodic comparative performance information, including detailed information on certain specific iShares funds requested by the Board, was also considered.
Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the Advisory Contract.
Nature, Extent and Quality of Services Provided by BFA — Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to shareholder servicing and support, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract as compared to the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to supporting the Fund and its shareholders. The Board acknowledged that resources to support the iShares funds and their shareholders have been added or enhanced in recent years, including in such areas as investor education, product management, customized portfolio consulting support, capital markets support, and proprietary risk and performance analytics tools. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, and matters related to BFA’s portfolio compliance policies and procedures. The Board noted that the Fund had met its investment objective consistently since its inception date.
Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided by BFA to the Fund supported the Fund Board’s approval of the Advisory Contract.
Costs of Services Provided to the Fund and Profits Realized by BFA and Affiliates — The Board reviewed information about the profitability to BlackRock of the Fund based on the fees payable to BFA and its affiliates (including advisory fees), and all other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s profitability methodology for the iShares funds, noting that a committee of Independent Directors (the “15(c) Committee”) had focused on the methodology and proposed presentation during its meetings during 2014. The Board discussed the sources of direct and ancillary revenue with management, including the revenues to BTC from securities lending by the Fund.
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Board Review and Approval of Investment Advisory Contract (Continued)
iSHARES®, INC.
The Board also discussed BFA’s profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below). Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors considered.
Economies of Scale — The Board reviewed information regarding potential economies of scale or other efficiencies that may result from increases in the Fund’s assets, noting that the issue of economies of scale had been focused on extensively by the 15(c) Committee during its meetings and addressed by management. The Board and the 15(c) Committee reviewed information provided by BFA regarding scale benefits shared with the iShares funds through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board and the 15(c) Committee received information regarding BlackRock’s historical profitability, including BFA’s and its affiliates’ costs in providing services. The cost information distinguished between fixed and variable costs, and explained how the level of fixed and variable costs, as well as the nature of such costs, may impact the existence or size of scale benefits. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board noted that it would continue to monitor the sharing of economies of scale to determine the appropriateness of adding new or revised breakpoints in the future. Based on this review, as well as the other factors considered at the meeting, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fee rate reflects appropriate sharing of potential economies of scale with the Fund’s shareholders and supported the Board’s approval of the Advisory Contract.
Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates — The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end and closed-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, separately managed accounts, and institutional separate accounts (together, the “Other Accounts”), and acknowledged BFA’s assertion that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do manage Other Accounts with a substantially similar investment objective and strategy as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts (particularly institutional clients) generally differ from the Fund, including in terms of the different, generally more extensive services provided to the Fund, as well as other significant differences in the approach of BFA and its affiliates to the Fund, on one hand, and Other Accounts, on the other. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded exchange traded fund, as compared to the Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for the Other Accounts that are institutional clients of BFA (or its affiliates) and concluded that the differences appeared to be consistent with the factors discussed.
Other Benefits to BFA and/or its Affiliates — The Board reviewed the “fallout” benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s profitability methodology), and payment of advisory fees and/or administration fees to BFA and BTC (or their affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
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Board Review and Approval of Investment Advisory Contract (Continued)
iSHARES®, INC.
and/or administration services. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates, are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund’s shareholders and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the Advisory Contract.
Based on the considerations described above, the Board determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that it is in the best interest of the Fund and its shareholders to approve the Advisory Contract.
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Supplemental Information (Unaudited)
iSHARES®, INC.
Shareholder Meeting Results
A special meeting of shareholders of the iShares MSCI Russia Capped ETF was held on January 16, 2015. Shareholders were asked to approve an agreement and plan of reorganization for the Fund, which was the sole series of iShares MSCI Russia Capped ETF, Inc., that would result in the Fund becoming a new series of iShares, Inc.
The shareholders approved the proposal and the results of the shareholder vote were as follows:
| Votes For |
Votes Against |
Votes Abstaining |
||||||
| 8,260,542 | 29,095 | 103,757 | ||||||
Section 19(a) Notices
The amounts and sources of distributions reported are estimates and are provided pursuant to regulatory requirements 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 |
$ | 0.375306 | $ | — | $ | 0.043022 | $ | 0.418328 | 90 | % | — | % | 10 | % | 100 | % | ||||||||||||||||
| MSCI Canada |
0.272687 | — | 0.112037 | 0.384724 | 71 | — | 29 | 100 | ||||||||||||||||||||||||
| MSCI Chile Capped |
0.041806 | — | 0.015148 | 0.056954 | 73 | — | 27 | 100 | ||||||||||||||||||||||||
| MSCI Colombia Capped |
0.122755 | — | 0.004001 | 0.126756 | 97 | — | 3 | 100 | ||||||||||||||||||||||||
| MSCI Israel Capped |
0.346906 | — | 0.109795 | 0.456701 | 76 | — | 24 | 100 | ||||||||||||||||||||||||
| MSCI Mexico Capped |
0.423904 | — | 0.087925 | 0.511829 | 83 | — | 17 | 100 | ||||||||||||||||||||||||
| MSCI Russia Capped |
0.527547 | — | 0.076177 | 0.603724 | 87 | — | 13 | 100 | ||||||||||||||||||||||||
| MSCI South Africa |
0.751421 | — | 0.051677 | 0.803098 | 94 | — | 6 | 100 | ||||||||||||||||||||||||
| MSCI USA |
0.376053 | — | 0.017505 | 0.393558 | 96 | — | 4 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
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Notes:
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Notes:
| NOTES |
89 |
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Notes:
| 90 | 2015 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 basis on the Funds’ website.
©2015 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-84-0215
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Table of Contents
FEBRUARY 28, 2015
| 2015 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 |
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Table of Contents
iSHARES® MSCI BRIC ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -8.13%, net of fees, while the total return for the Index was -7.99%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
8.14% | 9.28% | 8.68% | 8.14% | 9.28% | 8.68% | ||||||||||||||||||||
| 5 Years |
(0.55)% | (0.52)% | 0.35% | (2.74)% | (2.58)% | 1.75% | ||||||||||||||||||||
| Since Inception |
(3.69)% | (3.67)% | (3.26)% | (23.98)% | (23.88)% | (21.47)% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 918.70 | $ | 3.28 | $ | 1,000.00 | $ | 1,021.40 | $ | 3.46 | 0.69% | ||||||||||||||
| 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, 2015
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, 2015, the total return for the Fund was -1.60%, net of fees, while the total return for the Index was -1.49%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
11.29% | 12.39% | 11.86% | 11.29% | 12.39% | 11.86% | ||||||||||||||||||||
| Since Inception |
5.29% | 5.57% | 5.64% | 17.09% | 18.02% | 18.28% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 984.00 | $ | 2.41 | $ | 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -10.55%, net of fees, while the total return for the Index was -10.17%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(0.44)% | (0.38)% | 0.35% | (0.44)% | (0.38)% | 0.35% | ||||||||||||||||||||
| Since Inception |
2.80% | 2.73% | 3.60% | 8.82% | 8.58% | 11.43% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 894.50 | $ | 3.19 | $ | 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 |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS ENERGY CAPPED ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -26.24%, net of fees, while the total return for the Index was -26.01%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(14.60)% | (14.70)% | (13.92)% | (14.60)% | (14.70)% | (13.92)% | ||||||||||||||||||||
| Since Inception |
(14.92)% | (14.97)% | (14.40)% | (38.99)% | (39.09)% | (37.87)% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 737.60 | $ | 2.93 | $ | 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. |
| 8 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -5.12%, net of fees, while the total return for the Index was -4.84%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
5.58% | 5.41% | 6.52% | 5.58% | 5.41% | 6.52% | ||||||||||||||||||||
| Since Inception |
2.69% | 2.52% | 3.39% | 8.44% | 7.89% | 10.76% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 948.80 | $ | 2.37 | $ | 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, 2015
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, 2015, the total return for the Fund was -4.97%, net of fees, while the total return for the Index was -4.87%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
7.70% | 8.87% | 7.86% | 7.70% | 8.87% | 7.86% | ||||||||||||||||||||
| Since Inception |
7.89% | 8.01% | 8.13% | 29.14% | 29.60% | 30.12% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 950.30 | $ | 1.21 | $ | 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -6.73%, net of fees, while the total return for the Index was -6.75%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
2.23% | 3.60% | 3.36% | 2.23% | 3.60% | 3.36% | ||||||||||||||||||||
| Since Inception |
1.01% | 1.20% | 1.70% | 3.61% | 4.32% | 6.15% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 932.70 | $ | 3.26 | $ | 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 |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS VALUE ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -11.97%, net of fees, while the total return for the Index was -11.77%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
2.83% | 4.73% | 3.41% | 2.83% | 4.73% | 3.41% | ||||||||||||||||||||
| Since Inception |
(3.31)% | (2.75)% | (2.88)% | (9.78)% | (8.18)% | (8.56)% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 880.30 | $ | 2.28 | $ | 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 | 2015 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, 2014 and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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, 2015
| 14 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2015
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2015
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2015
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2015
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY ETF
February 28, 2015
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ENERGY CAPPED ETF
February 28, 2015
| 30 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ENERGY CAPPED ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2015
| 32 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2015
| 34 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2015
| 36 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH ETF
February 28, 2015
| 38 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2015
| 40 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2015
| 42 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| 44 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| 46 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
47 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| 48 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
49 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| 50 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
51 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| 52 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
53 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL-CAP ETF
February 28, 2015
| 54 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
55 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2015
| 56 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
57 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2015
| 58 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
59 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2015
| 60 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2015
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
61 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE ETF
February 28, 2015
| 62 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited)
iSHARES® , INC.
February 28, 2015
| iShares MSCI BRIC ETF |
iShares MSCI Emerging Markets Asia ETF |
iShares MSCI Emerging Markets Consumer Discretionary ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 296,067,370 | $ | 125,820,363 | $ | 5,120,544 | ||||||
| Affiliated (Note 2) |
10,258,879 | 6,581,182 | 78,046 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 306,326,249 | $ | 132,401,545 | $ | 5,198,590 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 292,824,778 | $ | 132,874,200 | $ | 5,442,140 | ||||||
| Affiliated (Note 2) |
10,258,879 | 6,581,182 | 78,046 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
303,083,657 | 139,455,382 | 5,520,186 | |||||||||
| Foreign currency, at valueb |
374,185 | 96,498 | 7,262 | |||||||||
| Cash |
129,624 | 107,469 | 314 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
973,474 | 700,119 | 80,711 | |||||||||
| Dividends and interest |
281,395 | 321,468 | 17,182 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
304,842,335 | 140,680,936 | 5,625,655 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
955,704 | 733,277 | 81,793 | |||||||||
| Collateral for securities on loan (Note 1) |
10,258,879 | 6,581,182 | 78,046 | |||||||||
| Foreign taxes (Note 1) |
— | 87 | — | |||||||||
| Investment advisory fees (Note 2) |
151,729 | 49,473 | 2,846 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
11,366,312 | 7,364,019 | 162,685 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 293,476,023 | $ | 133,316,917 | $ | 5,462,970 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 493,146,689 | $ | 137,084,633 | $ | 6,088,418 | ||||||
| Distributions in excess of net investment income |
(429,001 | ) | (36,160 | ) | (35 | ) | ||||||
| Accumulated net realized loss |
(195,977,506 | ) | (10,785,728 | ) | (946,646 | ) | ||||||
| Net unrealized appreciation (depreciation) |
(3,264,159 | ) | 7,054,172 | 321,233 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 293,476,023 | $ | 133,316,917 | $ | 5,462,970 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
7,900,000 | 2,200,000 | 100,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 37.15 | $ | 60.60 | $ | 54.63 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $9,590,341, $6,180,768 and $72,459, respectively. See Note 1. |
| b | Cost of foreign currency: $382,439, $96,261 and $7,515, 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 |
63 |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares MSCI Emerging Markets Energy Capped ETF |
iShares MSCI Emerging Markets Growth ETF |
iShares MSCI Emerging Markets Minimum Volatility ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 4,045,772 | $ | 5,011,607 | $ | 2,068,442,853 | ||||||
| Affiliated (Note 2) |
64,908 | 97,221 | 76,022,372 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 4,110,680 | $ | 5,108,828 | $ | 2,144,465,225 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 2,875,370 | $ | 5,540,814 | $ | 2,119,331,380 | ||||||
| Affiliated (Note 2) |
64,908 | 97,221 | 76,022,372 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
2,940,278 | 5,638,035 | 2,195,353,752 | |||||||||
| Foreign currency, at valueb |
884 | 7,549 | 4,506,141 | |||||||||
| Cash |
— | 3,620 | 146,528 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
56,029 | 31,846 | 6,063,092 | |||||||||
| Due from custodian (Note 4) |
— | — | 186,332 | |||||||||
| Dividends and interest |
3,748 | 10,080 | 4,123,547 | |||||||||
| Capital shares sold |
— | — | 6,574,801 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
3,000,939 | 5,691,130 | 2,216,954,193 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
53,085 | 31,374 | 12,829,230 | |||||||||
| Deposit for capital contribution |
— | — | 3,134,832 | |||||||||
| Collateral for securities on loan (Note 1) |
62,614 | 97,221 | 71,051,730 | |||||||||
| Investment advisory fees (Note 2) |
1,506 | 2,065 | 400,510 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
117,205 | 130,660 | 87,416,302 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,883,734 | $ | 5,560,470 | $ | 2,129,537,891 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 5,227,225 | $ | 5,931,623 | $ | 2,229,826,049 | ||||||
| Undistributed (distributions in excess of) net investment income |
(2,990 | ) | 1,037 | 466,532 | ||||||||
| Accumulated net realized loss |
(1,170,047 | ) | (901,083 | ) | (151,617,310 | ) | ||||||
| Net unrealized appreciation (depreciation) |
(1,170,454 | ) | 528,893 | 50,862,620 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,883,734 | $ | 5,560,470 | $ | 2,129,537,891 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
100,000 | 100,000 | 36,400,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 28.84 | $ | 55.60 | $ | 58.50 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $58,314, $91,181 and $66,544,140, respectively. See Note 1. |
| b | Cost of foreign currency: $916, $7,798 and $4,508,808, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| 64 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares MSCI Emerging Markets Small-Cap ETF |
iShares MSCI Emerging Markets Value ETF |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 67,869,127 | $ | 23,395,258 | ||||
| Affiliated (Note 2) |
6,501,959 | 478,389 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 74,371,086 | $ | 23,873,647 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 67,783,911 | $ | 21,697,430 | ||||
| Affiliated (Note 2) |
6,501,959 | 478,389 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
74,285,870 | 22,175,819 | ||||||
| Foreign currency, at valueb |
66,813 | 23,468 | ||||||
| Cash |
140,702 | 10,081 | ||||||
| Receivables: |
||||||||
| Investment securities sold |
662,981 | 33,282 | ||||||
| Dividends and interest |
76,874 | 56,085 | ||||||
|
|
|
|
|
|||||
| Total Assets |
75,233,240 | 22,298,735 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
661,136 | 35,673 | ||||||
| Collateral for securities on loan (Note 1) |
6,501,959 | 478,389 | ||||||
| Foreign taxes (Note 1) |
20 | — | ||||||
| Investment advisory fees (Note 2) |
34,519 | 8,110 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
7,197,634 | 522,172 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 68,035,606 | $ | 21,776,563 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 76,659,948 | $ | 24,845,732 | ||||
| Distributions in excess of net investment income |
(339,835 | ) | (24,567 | ) | ||||
| Accumulated net realized loss |
(8,198,619 | ) | (1,345,480 | ) | ||||
| Net unrealized depreciation |
(85,888 | ) | (1,699,122 | ) | ||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 68,035,606 | $ | 21,776,563 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
1,450,000 | 500,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 46.92 | $ | 43.55 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $5,859,857 and $443,949, respectively. See Note 1. |
| b | Cost of foreign currency: $66,817 and $24,122, 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 |
65 |
Table of Contents
Consolidated Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI BRIC ETF |
iShares MSCI Emerging Markets Asia ETF |
iShares MSCI Emerging Markets Consumer Discretionary ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 2,782,022 | $ | 583,233 | $ | 40,174 | ||||||
| Interest — unaffiliated |
— | 3 | — | |||||||||
| Interest — affiliated (Note 2) |
82 | 12 | — | |||||||||
| Securities lending income — affiliated (Note 2) |
130,854 | 38,072 | 559 | |||||||||
|
|
|
|
|
|
|
|||||||
| 2,912,958 | 621,320 | 40,733 | ||||||||||
| Less: Other foreign taxes (Note 1) |
— | (2,002 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
2,912,958 | 619,318 | 40,733 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,118,436 | 353,966 | 18,451 | |||||||||
| Mauritius income taxes (Note 1) |
19,363 | — | — | |||||||||
| Commitment fees (Note 7) |
1,618 | 211 | 8 | |||||||||
| Interest expense (Note 7) |
234 | — | 17 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,139,651 | 354,177 | 18,476 | |||||||||
| Less investment advisory fees waived (Note 2) |
— | (98,902 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
1,139,651 | 255,275 | 18,476 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
1,773,307 | 364,043 | 22,257 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(7,563,553 | ) | (342,197 | ) | (42,833 | ) | ||||||
| In-kind redemptions — unaffiliated |
1,805,265 | — | — | |||||||||
| Foreign currency transactions |
(112,806 | ) | (13,906 | ) | (1,382 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(5,871,094 | ) | (356,103 | ) | (44,215 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(30,086,923 | ) | 722,283 | (626,637 | ) | |||||||
| Translation of assets and liabilities in foreign currencies |
(25,492 | ) | (92 | ) | (333 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(30,112,415 | ) | 722,191 | (626,970 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(35,983,509 | ) | 366,088 | (671,185 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (34,210,202 | ) | $ | 730,131 | $ | (648,928 | ) | ||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $218,290, $97,950 and $7,404, respectively. |
See notes to consolidated financial statements.
| 66 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI Emerging Markets Energy Capped ETF |
iShares MSCI Emerging Markets Growth ETF |
iShares MSCI Emerging Markets Minimum Volatility ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 19,664 | $ | 35,165 | $ | 15,836,812 | ||||||
| Interest — unaffiliated |
— | — | 163 | |||||||||
| Interest — affiliated (Note 2) |
— | — | 238 | |||||||||
| Securities lending income — affiliated (Note 2) |
493 | 1,391 | 1,173,059 | |||||||||
|
|
|
|
|
|
|
|||||||
| 20,157 | 36,556 | 17,010,272 | ||||||||||
| Less: Other foreign taxes (Note 1) |
— | — | (7,573 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
20,157 | 36,556 | 17,002,699 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
9,281 | 18,541 | 6,895,767 | |||||||||
| Mauritius income taxes (Note 1) |
— | — | 5,052 | |||||||||
| Commitment fees (Note 7) |
6 | 10 | 1,095 | |||||||||
| Interest expense (Note 7) |
— | — | 3,155 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
9,287 | 18,551 | 6,905,069 | |||||||||
| Less investment advisory fees waived (Note 2) |
— | (5,181 | ) | (4,361,568 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
9,287 | 13,370 | 2,543,501 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
10,870 | 23,186 | 14,459,198 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(72,965 | ) | (146,391 | ) | (19,839,205 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | — | 7,795,576 | |||||||||
| Foreign currency transactions |
(332 | ) | (975 | ) | (630,085 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(73,297 | ) | (147,366 | ) | (12,673,714 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(804,157 | ) | (183,285 | ) | (115,197,060 | ) | ||||||
| Translation of assets and liabilities in foreign currencies |
(12 | ) | (242 | ) | (36,058 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(804,169 | ) | (183,527 | ) | (115,233,118 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(877,466 | ) | (330,893 | ) | (127,906,832 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (866,596 | ) | $ | (307,707 | ) | $ | (113,447,634 | ) | |||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $2,760, $3,901 and $1,641,991, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
67 |
Table of Contents
Consolidated Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI Emerging Markets Small-Cap ETF |
iShares MSCI Emerging Markets Value ETF |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 288,953 | $ | 208,683 | ||||
| Interest — unaffiliated |
2 | 2 | ||||||
| Interest — affiliated (Note 2) |
4 | 1 | ||||||
| Securities lending income — affiliated (Note 2) |
52,887 | 2,580 | ||||||
|
|
|
|
|
|||||
| 341,846 | 211,266 | |||||||
| Less: Other foreign taxes (Note 1) |
(619 | ) | (645 | ) | ||||
|
|
|
|
|
|||||
| Total investment income |
341,227 | 210,621 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
156,563 | 75,615 | ||||||
| Commitment fees (Note 7) |
75 | 41 | ||||||
| Interest expense (Note 7) |
135 | 34 | ||||||
|
|
|
|
|
|||||
| Total expenses |
156,773 | 75,690 | ||||||
| Less investment advisory fees waived (Note 2) |
— | (21,128 | ) | |||||
|
|
|
|
|
|||||
| Net expenses |
156,773 | 54,562 | ||||||
|
|
|
|
|
|||||
| Net investment income |
184,454 | 156,059 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(13,390 | ) | (111,272 | ) | ||||
| Foreign currency transactions |
(8,837 | ) | (5,666 | ) | ||||
|
|
|
|
|
|||||
| Net realized loss |
(22,227 | ) | (116,938 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
(2,428,488 | ) | (3,067,635 | ) | ||||
| Translation of assets and liabilities in foreign currencies |
(832 | ) | (1,080 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
(2,429,320 | ) | (3,068,715 | ) | ||||
|
|
|
|
|
|||||
| Net realized and unrealized loss |
(2,451,547 | ) | (3,185,653 | ) | ||||
|
|
|
|
|
|||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (2,267,093 | ) | $ | (3,029,594 | ) | ||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $27,852 and $28,595, respectively. |
See notes to consolidated financial statements.
| 68 | 2015 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, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,773,307 | $ | 10,441,817 | $ | 364,043 | $ | 1,029,865 | ||||||||
| Net realized loss |
(5,871,094 | ) | (15,454,106 | ) | (356,103 | ) | (135,653 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
(30,112,415 | ) | 84,789,618 | 722,191 | 7,842,979 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(34,210,202 | ) | 79,777,329 | 730,131 | 8,737,191 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(4,958,330 | ) | (7,905,401 | ) | (833,965 | ) | (898,216 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(4,958,330 | ) | (7,905,401 | ) | (833,965 | ) | (898,216 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
64,282 | 38,350,012 | 52,714,515 | 59,268,915 | ||||||||||||
| Cost of shares redeemed |
(78,584,226 | ) | (173,918,382 | ) | — | (17,742,448 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(78,519,944 | ) | (135,568,370 | ) | 52,714,515 | 41,526,467 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(117,688,476 | ) | (63,696,442 | ) | 52,610,681 | 49,365,442 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
411,164,499 | 474,860,941 | 80,706,236 | 31,340,794 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 293,476,023 | $ | 411,164,499 | $ | 133,316,917 | $ | 80,706,236 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (429,001 | ) | $ | 2,756,022 | $ | (36,160 | ) | $ | 433,762 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
— | 950,000 | 900,000 | 1,000,000 | ||||||||||||
| Shares redeemed |
(2,100,000 | ) | (4,750,000 | ) | — | (300,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(2,100,000 | ) | (3,800,000 | ) | 900,000 | 700,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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 Consumer Discretionary ETF |
iShares MSCI Emerging Markets Energy Capped ETF |
|||||||||||||||
| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 22,257 | $ | 40,952 | $ | 10,870 | $ | 52,396 | ||||||||
| Net realized loss |
(44,215 | ) | (88,056 | ) | (73,297 | ) | (93,856 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
(626,970 | ) | 897,935 | (804,169 | ) | 249,936 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(648,928 | ) | 850,831 | (866,596 | ) | 208,476 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(34,054 | ) | (29,115 | ) | (33,981 | ) | (34,812 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(34,054 | ) | (29,115 | ) | (33,981 | ) | (34,812 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
— | 2,816,123 | 1,805,531 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
— | 2,816,123 | 1,805,531 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(682,982 | ) | 3,637,839 | 904,954 | 173,664 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
6,145,952 | 2,508,113 | 1,978,780 | 1,805,116 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 5,462,970 | $ | 6,145,952 | $ | 2,883,734 | $ | 1,978,780 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (35 | ) | $ | 11,762 | $ | (2,990 | ) | $ | 20,121 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED |
||||||||||||||||
| Shares sold |
— | 50,000 | 50,000 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
— | 50,000 | 50,000 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to consolidated financial statements.
| 70 | 2015 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, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 23,186 | $ | 81,041 | $ | 14,459,198 | $ | 57,548,609 | ||||||||
| Net realized loss |
(147,366 | ) | (106,978 | ) | (12,673,714 | ) | (80,037,690 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
(183,527 | ) | 992,519 | (115,233,118 | ) | 311,606,077 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(307,707 | ) | 966,582 | (113,447,634 | ) | 289,116,996 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(49,536 | ) | (75,147 | ) | (28,501,574 | ) | (58,169,702 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(49,536 | ) | (75,147 | ) | (28,501,574 | ) | (58,169,702 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
— | — | 378,070,274 | 323,291,843 | ||||||||||||
| Cost of shares redeemed |
— | — | (186,946,485 | ) | (929,603,299 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
— | — | 191,123,789 | (606,311,456 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(357,243 | ) | 891,435 | 49,174,581 | (375,364,162 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
5,917,713 | 5,026,278 | 2,080,363,310 | 2,455,727,472 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 5,560,470 | $ | 5,917,713 | $ | 2,129,537,891 | $ | 2,080,363,310 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 1,037 | $ | 27,387 | $ | 466,532 | $ | 14,508,908 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
— | — | 6,400,000 | 5,300,000 | ||||||||||||
| Shares redeemed |
— | — | (3,300,000 | ) | (16,200,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
— | — | 3,100,000 | (10,900,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
71 |
Table of Contents
Consolidated Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Small-Cap ETF |
iShares MSCI Emerging Markets Value ETF |
|||||||||||||||
| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 184,454 | $ | 706,744 | $ | 156,059 | $ | 533,777 | ||||||||
| Net realized gain (loss) |
(22,227 | ) | 338,522 | (116,938 | ) | (258,642 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
(2,429,320 | ) | 5,681,431 | (3,068,715 | ) | 2,860,897 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(2,267,093 | ) | 6,726,697 | (3,029,594 | ) | 3,136,032 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(786,482 | ) | (736,376 | ) | (379,744 | ) | (388,580 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(786,482 | ) | (736,376 | ) | (379,744 | ) | (388,580 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
27,423,296 | 7,031,811 | — | 11,651,839 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
27,423,296 | 7,031,811 | — | 11,651,839 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
24,369,721 | 13,022,132 | (3,409,338 | ) | 14,399,291 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
43,665,885 | 30,643,753 | 25,185,901 | 10,786,610 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 68,035,606 | $ | 43,665,885 | $ | 21,776,563 | $ | 25,185,901 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (339,835 | ) | $ | 262,193 | $ | (24,567 | ) | $ | 199,118 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED |
||||||||||||||||
| Shares sold |
600,000 | 150,000 | — | 250,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
600,000 | 150,000 | — | 250,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to consolidated financial statements.
| 72 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI BRIC ETF | ||||||||||||||||||||||||
| Six months (Unaudited) |
Year ended (Consolidated) |
Year ended (Consolidated) |
Year ended (Consolidated) |
Year ended (Consolidated) |
Year ended Aug. 31, 2010 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 41.12 | $ | 34.41 | $ | 35.68 | $ | 42.25 | $ | 42.94 | $ | 37.57 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.20 | 0.89 | 0.84 | 0.98 | 0.89 | 0.66 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(3.59 | ) | 6.53 | (1.25 | ) | (6.62 | ) | (0.58 | ) | 5.35 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(3.39 | ) | 7.42 | (0.41 | ) | (5.64 | ) | 0.31 | 6.01 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.58 | ) | (0.71 | ) | (0.86 | ) | (0.93 | ) | (1.00 | ) | (0.64 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.58 | ) | (0.71 | ) | (0.86 | ) | (0.93 | ) | (1.00 | ) | (0.64 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 37.15 | $ | 41.12 | $ | 34.41 | $ | 35.68 | $ | 42.25 | $ | 42.94 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(8.13 | )%c | 21.73 | % | (1.17 | )% | (13.33 | )% | 0.49 | % | 15.95 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 293,476 | $ | 411,164 | $ | 474,861 | $ | 685,149 | $ | 866,194 | $ | 946,814 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.69 | % | 0.68 | % | 0.67 | % | 0.69 | % | 0.67 | % | 0.69 | % | ||||||||||||
| Ratio of expenses to average net assets prior to waived feesd |
n/a | n/a | n/a | n/a | 0.67 | % | n/a | |||||||||||||||||
| Ratio of net investment income to average net assetsd |
1.08 | % | 2.38 | % | 2.18 | % | 2.55 | % | 1.86 | % | 1.52 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 10 | % | 10 | % | 32 | % | 13 | % | 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 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, 2015, the years ended August 31, 2014, August 31, 2013, August 31, 2012, August 31, 2011 and August 31, 2010 were 3%, 6%, 9%, 20%, 10% and 8%, 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 Asia ETF |
||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 62.08 | $ | 52.23 | $ | 50.18 | $ | 54.71 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.20 | 1.36 | 1.15 | 0.87 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(1.22 | ) | 9.75 | 1.82 | (4.99 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
(1.02 | ) | 11.11 | 2.97 | (4.12 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.46 | ) | (1.26 | ) | (0.92 | ) | (0.41 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.46 | ) | (1.26 | ) | (0.92 | ) | (0.41 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 60.60 | $ | 62.08 | $ | 52.23 | $ | 50.18 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
(1.60 | )%d | 21.54 | %e | 5.88 | % | (7.52 | )%d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 133,317 | $ | 80,706 | $ | 31,341 | $ | 20,071 | ||||||||
| Ratio of expenses to average net assetsf |
0.49 | % | 0.49 | % | 0.49 | % | 0.49 | % | ||||||||
| Ratio of expenses to average net assets prior to waived feesf |
0.68 | % | 0.68 | % | 0.68 | % | 0.68 | % | ||||||||
| Ratio of net investment income to average net assetsf |
0.70 | % | 2.36 | % | 2.09 | % | 3.05 | % | ||||||||
| Portfolio turnover rateg |
3 | % | 33 | % | 174 | % | 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 | Includes payment from an affiliate. Not including these proceeds, the Fund’s total return would have been 21.46%. |
| 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012, were 3%, 33%, 21% and 3%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 74 | 2015 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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 61.46 | $ | 50.16 | $ | 48.48 | $ | 51.54 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.22 | 0.44 | 0.39 | 0.26 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(6.71 | ) | 11.15 | 1.90 | (3.19 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
(6.49 | ) | 11.59 | 2.29 | (2.93 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.34 | ) | (0.29 | ) | (0.61 | ) | (0.13 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.34 | ) | (0.29 | ) | (0.61 | ) | (0.13 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 54.63 | $ | 61.46 | $ | 50.16 | $ | 48.48 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
(10.55 | )%d | 23.16 | % | 4.73 | % | (5.68 | )%d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 5,463 | $ | 6,146 | $ | 2,508 | $ | 2,424 | ||||||||
| Ratio of expenses to average net assetse |
0.68 | % | 0.67 | % | 0.67 | % | 0.68 | % | ||||||||
| Ratio of net investment income to average net assetse |
0.82 | % | 0.79 | % | 0.76 | % | 0.94 | % | ||||||||
| Portfolio turnover ratef |
4 | % | 10 | % | 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 4%, 10%, 10%, and 5%, 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 Energy Capped ETF | ||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 39.58 | $ | 36.10 | $ | 40.16 | $ | 51.12 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.12 | 1.05 | 1.04 | 1.05 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(10.52 | ) | 3.13 | (4.16 | ) | (11.14 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
(10.40 | ) | 4.18 | (3.12 | ) | (10.09 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.34 | ) | (0.70 | ) | (0.94 | ) | (0.84 | ) | ||||||||
| Return of capital |
— | — | — | (0.03 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.34 | ) | (0.70 | ) | (0.94 | ) | (0.87 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 28.84 | $ | 39.58 | $ | 36.10 | $ | 40.16 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
(26.24 | )%d | 11.65 | % | (7.73 | )% | (19.71 | )%d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,884 | $ | 1,979 | $ | 1,805 | $ | 2,008 | ||||||||
| Ratio of expenses to average net assetse |
0.68 | % | 0.67 | % | 0.67 | % | 0.68 | % | ||||||||
| Ratio of net investment income to average net assetse |
0.80 | % | 2.79 | % | 2.56 | % | 4.23 | % | ||||||||
| Portfolio turnover ratef |
5 | % | 15 | % | 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 5%, 15%, 7% and 3%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 76 | 2015 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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 59.18 | $ | 50.26 | $ | 50.60 | $ | 54.24 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.23 | 0.81 | 0.85 | 0.66 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(3.31 | ) | 8.86 | 0.13 | (3.87 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
(3.08 | ) | 9.67 | 0.98 | (3.21 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.50 | ) | (0.75 | ) | (1.32 | ) | (0.43 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.50 | ) | (0.75 | ) | (1.32 | ) | (0.43 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 55.60 | $ | 59.18 | $ | 50.26 | $ | 50.60 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
(5.12 | )%d | 19.36 | % | 1.76 | % | (5.90 | )%d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 5,560 | $ | 5,918 | $ | 5,026 | $ | 10,121 | ||||||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | 0.49 | % | 0.49 | % | ||||||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | 0.68 | % | 0.68 | % | ||||||||
| Ratio of net investment income to average net assetse |
0.85 | % | 1.47 | % | 1.59 | % | 2.27 | % | ||||||||
| Portfolio turnover ratef |
15 | % | 26 | % | 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 15%, 26%, 28% and 12%, 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 Minimum Volatility ETF | ||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 62.47 | $ | 55.56 | $ | 55.32 | $ | 49.30 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.42 | 1.51 | 1.85 | 1.93 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(3.57 | ) | 6.94 | (0.60 | ) | 5.41 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
(3.15 | ) | 8.45 | 1.25 | 7.34 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.82 | ) | (1.54 | ) | (1.01 | ) | (1.32 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.82 | ) | (1.54 | ) | (1.01 | ) | (1.32 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 58.50 | $ | 62.47 | $ | 55.56 | $ | 55.32 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
(4.97 | )%d | 15.44 | % | 2.22 | % | 15.16 | %d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,129,538 | $ | 2,080,363 | $ | 2,455,727 | $ | 387,227 | ||||||||
| Ratio of expenses to average net assetse |
0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % | ||||||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.67 | % | 0.67 | % | 0.69 | % | ||||||||
| Ratio of net investment income to average net assetse |
1.43 | % | 2.58 | % | 3.13 | % | 4.08 | % | ||||||||
| Portfolio turnover ratef |
17 | % | 34 | % | 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 ended February 28, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 12%, 26%, 23% and 16%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 78 | 2015 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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Year ended Aug. 31, 2012 |
Period from to Aug. 31, 2011 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 51.37 | $ | 43.78 | $ | 43.44 | $ | 49.60 | $ | 50.54 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.19 | 0.93 | 1.07 | 0.50 | 0.07 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
(3.71 | ) | 7.67 | 1.13 | (5.52 | ) | (1.01 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
(3.52 | ) | 8.60 | 2.20 | (5.02 | ) | (0.94 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.93 | ) | (1.01 | ) | (1.86 | ) | (1.14 | ) | – | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.93 | ) | (1.01 | ) | (1.86 | ) | (1.14 | ) | – | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 46.92 | $ | 51.37 | $ | 43.78 | $ | 43.44 | $ | 49.60 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
(6.73 | )%d | 19.92 | %e | 4.85 | % | (9.98 | )% | (1.86 | )%d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 68,036 | $ | 43,666 | $ | 30,644 | $ | 8,689 | $ | 69,443 | ||||||||||
| Ratio of expenses to average net assetsf |
0.68 | % | 0.67 | % | 0.67 | % | 0.69 | % | 0.69 | % | ||||||||||
| Ratio of net investment income to average net assetsf |
0.80 | % | 1.93 | % | 2.26 | % | 1.13 | % | 3.33 | % | ||||||||||
| Portfolio turnover rateg |
10 | % | 20 | % | 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. Not including these proceeds, the Fund’s total return would have been 19.73%. |
| 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, 2015, the years ended August 31, 2014, August 31, 2013, August 31, 2012 and the period ended August 31, 2011 were 10%, 20%, 21%, 17% and 2%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
79 |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets Value ETF |
||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 50.37 | $ | 43.15 | $ | 45.30 | $ | 52.58 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.31 | 1.36 | 1.34 | 1.00 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(6.37 | ) | 6.83 | (2.11 | ) | (7.54 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
(6.06 | ) | 8.19 | (0.77 | ) | (6.54 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.76 | ) | (0.97 | ) | (1.38 | ) | (0.74 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.76 | ) | (0.97 | ) | (1.38 | ) | (0.74 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 43.55 | $ | 50.37 | $ | 43.15 | $ | 45.30 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
(11.97 | )%d | 19.20 | % | (1.83 | )% | (12.41 | )%d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 21,777 | $ | 25,186 | $ | 10,787 | $ | 9,061 | ||||||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | 0.49 | % | 0.49 | % | ||||||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | 0.68 | % | 0.68 | % | ||||||||
| Ratio of net investment income to average net assetse |
1.40 | % | 2.94 | % | 2.84 | % | 3.73 | % | ||||||||
| Portfolio turnover ratef |
14 | % | 25 | % | 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 14%, 25%, 26% and 12%, respectively. See Note 4. |
See notes to consolidated financial statements.
| 80 | 2015 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. Intercompany accounts and transactions, if any, have been eliminated.
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. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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
| 81 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 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. |
| 82 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. 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, 2015. 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 |
$ | 267,733,042 | $ | 860,132 | $ | — | $ | 268,593,174 | ||||||||
| Preferred Stocks |
24,226,499 | — | — | 24,226,499 | ||||||||||||
| Rights |
5,105 | — | — | 5,105 | ||||||||||||
| Money Market Funds |
10,258,879 | — | — | 10,258,879 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 302,223,525 | $ | 860,132 | $ | — | $ | 303,083,657 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Asia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 131,274,377 | $ | 200,352 | $ | — | $ | 131,474,729 | ||||||||
| Preferred Stocks |
1,391,124 | — | — | 1,391,124 | ||||||||||||
| Rights |
8,347 | — | — | 8,347 | ||||||||||||
| Money Market Funds |
6,581,182 | — | — | 6,581,182 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 139,255,030 | $ | 200,352 | $ | — | $ | 139,455,382 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Consumer Discretionary |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,305,461 | $ | — | $ | — | $ | 5,305,461 | ||||||||
| Preferred Stocks |
136,679 | — | — | 136,679 | ||||||||||||
| Money Market Funds |
78,046 | — | — | 78,046 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,520,186 | $ | — | $ | — | $ | 5,520,186 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Energy Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,701,430 | $ | — | $ | — | $ | 2,701,430 | ||||||||
| Preferred Stocks |
173,940 | — | — | 173,940 | ||||||||||||
| Money Market Funds |
64,908 | — | — | 64,908 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,940,278 | $ | — | $ | — | $ | 2,940,278 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Growth |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,340,083 | $ | 12,666 | $ | — | $ | 5,352,749 | ||||||||
| Preferred Stocks |
187,598 | — | — | 187,598 | ||||||||||||
| Rights |
467 | — | — | 467 | ||||||||||||
| Money Market Funds |
97,221 | — | — | 97,221 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,625,369 | $ | 12,666 | $ | — | $ | 5,638,035 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 83 |
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 Minimum Volatility |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,077,535,122 | $ | — | $ | — | $ | 2,077,535,122 | ||||||||
| Preferred Stocks |
41,796,258 | — | — | 41,796,258 | ||||||||||||
| Money Market Funds |
76,022,372 | — | — | 76,022,372 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,195,353,752 | $ | — | $ | — | $ | 2,195,353,752 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Small-Cap |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 67,294,633 | $ | 157,507 | $ | 4,004 | $ | 67,456,144 | ||||||||
| Preferred Stocks |
319,528 | — | — | 319,528 | ||||||||||||
| Rights |
537 | 5,975 | — | 6,512 | ||||||||||||
| Warrants |
1,727 | 0 | a | — | 1,727 | |||||||||||
| Money Market Funds |
6,501,959 | — | — | 6,501,959 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 74,118,384 | $ | 163,482 | $ | 4,004 | $ | 74,285,870 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Value |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 20,427,402 | $ | — | $ | 15 | $ | 20,427,417 | ||||||||
| Preferred Stocks |
1,269,296 | — | — | 1,269,296 | ||||||||||||
| Rights |
717 | — | — | 717 | ||||||||||||
| Money Market Funds |
478,389 | — | — | 478,389 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 22,175,804 | $ | — | $ | 15 | $ | 22,175,819 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
The iShares MSCI Emerging Markets Small-Cap ETF had transfers from Level 2 to Level 1 during the six months ended February 28, 2015 in the amount of $547,036, resulting from the resumption of trading after temporary suspensions.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income and capital gain distributions, if any, are 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, 2015 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.
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iSHARES®, INC.
Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of securities. Such fluctuations are reflected by the Funds as a component of realized and unrealized gains and losses from investments for financial reporting purposes.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, 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 or deferred as of February 28, 2015, 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”) between India and Mauritius. In order to be eligible to claim benefits under the DTAA, each Subsidiary must, on an annual basis, satisfy certain tests and conditions, including the establishment and maintenance of valid tax residence in Mauritius and related requirements. Each Fund has obtained a tax residence certificate from the Mauritian Revenue Authorities.
Based upon current interpretation and practice of the current tax laws in India and Mauritius and the DTAA, 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. Any dividends paid by a Subsidiary to its Fund are not subject to tax in Mauritius. Further, each Subsidiary is also exempt from tax in Mauritius on any gains from the sale of securities.
However, there can be no assurance that any future changes to the India-Mauritius treaty will not adversely affect the tax position of the Funds’ investments in India. If the DTAA is interpreted, amended, terminated, renegotiated, or possibly overridden by the General Anti-Avoidance Rules provisions (which are due to take effect April 1, 2017, the details of which are pending further authoritative guidance), in a manner that would adversely affect the tax position in India of each Fund, such an interpretation, amendment, or override renegotiation may cause the Funds to incur capital gains tax in India.
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.
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
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iSHARES®, INC.
any additional required collateral is delivered to the Funds on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the consolidated schedules of investments. The value of any securities on loan as of February 28, 2015 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 or request additional collateral. 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.
The following table is a summary of each Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| iShares ETF | Market Value of Securities on Loan |
Cash
Collateral Received a |
Net Amount |
|||||||||
| MSCI BRIC |
$ | 9,590,341 | $ | 9,590,341 | $ | — | ||||||
| MSCI Emerging Markets Asia |
6,180,768 | 6,180,768 | — | |||||||||
| MSCI Emerging Markets Consumer Discretionary |
72,459 | 72,459 | — | |||||||||
| MSCI Emerging Markets Energy Capped |
58,314 | 58,314 | — | |||||||||
| MSCI Emerging Markets Growth |
91,181 | 91,181 | — | |||||||||
| MSCI Emerging Markets Minimum Volatility |
66,544,140 | 66,544,140 | — | |||||||||
| MSCI Emerging Markets Small-Cap |
5,859,857 | 5,859,857 | — | |||||||||
| MSCI Emerging Markets Value |
443,949 | 443,949 | — | |||||||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in each Fund’s consolidated statement of assets and liabilities. |
| 86 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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iSHARES®, INC.
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, 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 | ||||
| 0.54 | Over $42 billion, up to and including $56 billion | ||||
| 0.47 | Over $56 billion, up to and including $70 billion | ||||
| 0.41 | Over $70 billion, up to and including $84 billion | ||||
| 0.35 | Over $84 billion | ||||
The total of the investment advisory fee and any other fund expenses is a fund’s total annual operating expense. For the iShares MSCI Emerging Markets Minimum Volatility ETF, BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through December 31, 2015 in order to limit total annual operating expenses to 0.25% of average daily net assets.
For its investment advisory services to each of the iShares MSCI Emerging Markets Asia, iShares MSCI Emerging Markets Growth and iShares MSCI Emerging Markets Value ETFs, BFA is entitled to an annual investment advisory fee of 0.68% based on the average daily net assets of each Fund. BFA has contractually agreed to waive a portion of its investment advisory fees for each Fund through December 31, 2015 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
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iSHARES®, INC.
securities lending agent, BTC bears all operational costs directly related to securities lending. 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% (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, each Fund retains 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees 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, each Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
Prior to January 1, 2015, each Fund retained 75% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, each Fund retained for the remainder of calendar year 2014, 80% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
For the six months ended February 28, 2015, each Fund paid to BTC the following amounts in total for securities lending agent services and 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, 2015, 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 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.
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iSHARES®, INC.
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, 2015 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI BRIC |
$ | 10,709,232 | $ | 47,356,021 | ||||
| MSCI Emerging Markets Asia |
50,573,870 | 2,792,612 | ||||||
| MSCI Emerging Markets Consumer Discretionary |
206,763 | 222,365 | ||||||
| MSCI Emerging Markets Energy Capped |
802,657 | 129,596 | ||||||
| MSCI Emerging Markets Growth |
828,446 | 854,972 | ||||||
| MSCI Emerging Markets Minimum Volatility |
449,828,296 | 355,409,599 | ||||||
| MSCI Emerging Markets Small-Cap |
31,513,642 | 4,735,144 | ||||||
| MSCI Emerging Markets Value |
3,084,132 | 3,310,511 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2015 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales | ||||||
| MSCI BRIC |
$ | — | $ | 44,911,846 | ||||
| MSCI Emerging Markets Asia |
4,267,388 | — | ||||||
| MSCI Emerging Markets Energy Capped |
1,103,340 | — | ||||||
| MSCI Emerging Markets Minimum Volatility |
165,978,918 | 83,239,261 | ||||||
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the consolidated statements of changes in net assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities 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. Such variable charges, if any, are included in “Proceeds from shares sold” in the consolidated statements of changes in net assets.
From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the consolidated statements of assets and liabilities.
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iSHARES®, INC.
| 5. | MARKET AND CREDIT RISK |
In the normal course of business, each Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks each Fund is exposed to include market risk and credit risk. Each Fund’s prospectus provides details of these and other types of risk.
BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss each Fund may suffer through holding market positions in the face of market movements. Each Fund is exposed to market risk by virtue of its investment in equity instruments. The fair value of securities held by the Funds may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of each Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s consolidated schedule of investments.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its consolidated schedule of investments.
Each Fund invests a substantial amount of its assets 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 issuers from countries with less developed markets.
The iShares MSCI Emerging Markets Consumer Discretionary ETF and iShares MSCI Emerging Markets Energy Capped ETF each invests substantially all of its assets in securities within a single or limited number of market sectors. When a fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions affecting those market sectors may have a significant impact on its investment performance.
The United States and the European Union, along with the regulatory bodies of a number of countries including Japan, Australia and Canada (collectively, “Sanctioning Bodies”), have imposed sectorial economic sanctions on certain Russian individuals and Russian corporate entities which include prohibitions on transacting in or dealing in new debt of longer than 30 or 90 days maturity or new equity of such issuers. Securities held by the iShares MSCI BRIC ETF, iShares MSCI Emerging Markets Energy Capped ETF, iShares MSCI Emerging Markets Growth ETF, iShares MSCI Emerging Markets Minimum Volatility ETF, iShares MSCI Emerging Markets Small-Cap ETF and iShares MSCI Emerging Markets Value ETF issued prior to the date of the sanctions being imposed are not currently subject to any restrictions under the sanctions. However, compliance with each of these sanctions may impair the ability of a Fund to buy, sell, hold, receive or deliver the affected securities or other securities of such issuers. The Sanctioning Bodies could also institute broader sanctions on Russia. These sanctions, or even the threat of
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Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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. Current or future sanctions may result in Russia taking counter measures or retaliatory actions, which may further impair the value and liquidity of Russian securities. These retaliatory measures may include the immediate freeze of Russian assets held by a Fund.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of each Fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its consolidated statement of assets and liabilities.
| 6. | INCOME TAX INFORMATION |
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.
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, 2014, the Funds’ fiscal year-end, the following 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 |
$ | 141,120,103 | $ | 1,540,740 | $ | 11,268,086 | $ | 7,760,558 | $ | 161,689,487 | ||||||||||
| MSCI Emerging Markets Asia |
9,289,694 | — | — | — | 9,289,694 | |||||||||||||||
| MSCI Emerging Markets Consumer Discretionary |
811,736 | — | — | — | 811,736 | |||||||||||||||
| MSCI Emerging Markets Energy Capped |
996,570 | — | — | — | 996,570 | |||||||||||||||
| MSCI Emerging Markets Growth |
627,663 | — | — | — | 627,663 | |||||||||||||||
| MSCI Emerging Markets Minimum Volatility |
15,978,688 | — | — | — | 15,978,688 | |||||||||||||||
| MSCI Emerging Markets Small-Cap |
8,080,278 | — | — | — | 8,080,278 | |||||||||||||||
| MSCI Emerging Markets Value |
511,452 | — | — | — | 511,452 | |||||||||||||||
| a | Must be utilized prior to losses subject to expiration. |
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iSHARES®, INC.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 28, 2015, 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 |
$ | 318,315,268 | $ | 57,702,439 | $ | (72,934,050 | ) | $ | (15,231,611 | ) | ||||||
| MSCI Emerging Markets Asia |
133,630,661 | 12,554,684 | (6,729,963 | ) | 5,824,721 | |||||||||||
| MSCI Emerging Markets Consumer Discretionary |
5,205,126 | 985,333 | (670,273 | ) | 315,060 | |||||||||||
| MSCI Emerging Markets Energy Capped |
4,129,379 | 27,390 | (1,216,491 | ) | (1,189,101 | ) | ||||||||||
| MSCI Emerging Markets Growth |
5,133,474 | 1,020,846 | (516,285 | ) | 504,561 | |||||||||||
| MSCI Emerging Markets Minimum Volatility |
2,172,567,759 | 198,834,313 | (176,048,320 | ) | 22,785,993 | |||||||||||
| MSCI Emerging Markets Small-Cap |
74,844,160 | 6,484,031 | (7,042,321 | ) | (558,290 | ) | ||||||||||
| MSCI Emerging Markets Value |
24,449,585 | 1,639,300 | (3,913,066 | ) | (2,273,766 | ) | ||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2015, 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.
| 7. | 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 28, 2015. 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, 2015, the maximum amounts borrowed, the average borrowings and the weighted average interest rates, if any, under the credit agreement were as follows:
| iShares ETF | Maximum Amount Borrowed |
Average Borrowings |
Weighted Average Interest Rates |
|||||||||
| MSCI BRIC |
$ | 1,035,600 | $ | 40,051 | 1.16 | % | ||||||
| MSCI Emerging Markets Consumer Discretionary |
75,500 | 2,920 | 1.16 | |||||||||
| MSCI Emerging Markets Minimum Volatility |
11,704,000 | 541,039 | 1.16 | |||||||||
| MSCI Emerging Markets Small-Cap |
600,000 | 23,204 | 1.16 | |||||||||
| MSCI Emerging Markets Value |
150,000 | 5,801 | 1.16 | |||||||||
| 92 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The iShares MSCI Emerging Markets Asia ETF, the iShares MSCI Emerging Markets Energy Capped ETF, and the iShares MSCI Emerging Markets Growth ETF did not borrow under the credit agreement during the six months ended February 28, 2015.
| 8. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the consolidated financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the consolidated financial statements.
| 93 |
Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
Section 19(a) Notices
The amounts and sources of distributions reported are estimates and are provided pursuant to regulatory requirements 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 |
$ | 0.530924 | $ | — | $ | 0.045626 | $ | 0.576550 | 92 | % | — | % | 8 | % | 100 | % | ||||||||||||||||
| MSCI Emerging Markets Asia |
0.386083 | — | 0.077231 | 0.463314 | 83 | — | 17 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Consumer Discretionary |
0.230353 | — | 0.110187 | 0.340540 | 68 | — | 32 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Energy Capped |
0.289606 | — | 0.050204 | 0.339810 | 85 | — | 15 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Growth |
0.474443 | — | 0.020917 | 0.495360 | 96 | — | 4 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Minimum Volatility |
0.720185 | — | 0.101186 | 0.821371 | 88 | — | 12 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Small-Cap |
0.885678 | — | 0.039595 | 0.925273 | 96 | — | 4 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Value |
0.669960 | — | 0.089528 | 0.759488 | 88 | — | 12 | 100 | ||||||||||||||||||||||||
| 94 | 2015 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 basis on the Funds’ website.
©2015 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-810-0215
|
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Table of Contents
FEBRUARY 28, 2015
| 2015 SEMI-ANNUAL REPORT (UNAUDITED) |
|
iShares, Inc.
| Ø | iShares Currency Hedged MSCI Emerging Markets ETF | HEEM | NYSE Arca |
| Ø | iShares MSCI Emerging Markets ETF | EEM | NYSE Arca |
Table of Contents
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| 7 | ||||
| 7 | ||||
| 8 | ||||
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| 10 | ||||
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| 45 | ||||
| 48 |
Table of Contents
iSHARES® CURRENCY HEDGED MSCI EMERGING MARKETS ETF
Performance as of February 28, 2015
The iShares Currency Hedged MSCI Emerging Markets ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities while mitigating exposure to fluctuations between the value of the component currencies and the U.S. dollar, as represented by the MSCI Emerging Markets 100% Hedged to USD Index (the “Index”).
The Index applies a one-month forward rate to the total value of the non-U.S. dollar denominated securities included in the Index to effectively create a “hedge” against fluctuations in the relative value of the component currencies in relation to the U.S. dollar. In order to replicate the “hedging” component of the Index, the Fund enters into foreign currency forward contracts designed to offset the Fund’s exposure to the component currencies.
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. The Fund currently seeks to achieve its investment objective by investing a substantial portion of its assets in one underlying fund, the iShares MSCI Emerging Markets ETF. For the period from September 23, 2014 (inception date of the Fund) through February 28, 2015, the total return for the Fund was 2.08%, net of fees, while the total return for the Index was 1.69%.
| Cumulative Total Returns | ||||||||||||
| NAV | MARKET | INDEX | ||||||||||
| Since Inception |
2.08% | 2.20% | 1.69% | |||||||||
The inception date of the Fund was 9/23/14. The first day of secondary market trading was 9/25/14.
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 7 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/23/14) a |
Ending Account Value (2/28/15) |
Expenses Paid During Period b,c |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period b,c |
Annualized Expense Ratio b |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,020.80 | $ | 0.17 | $ | 1,000.00 | $ | 1,024.60 | $ | 0.20 | 0.04% | ||||||||||||||
| a | The beginning of the period (commencement of operations) is September 23, 2014. |
| b | Annualized expense ratio and expenses paid during the period do not include fees and expenses of the underlying fund in which the Fund invests. |
| c | 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 (158 days for actual and 181 days for hypothetical expenses) and divided by the number of days in the year (365 days). See “Shareholder Expenses” on page 7 for more information. |
| 1 | Reflects the portfolio allocation and ten largest countries of the iShares MSCI Emerging Markets ETF, the underlying fund in which the Fund invests. |
| 2 | Excludes money market funds. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -8.61%, 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 |
4.49% | 5.47% | 5.01% | 4.49% | 5.47% | 5.01% | ||||||||||||||||||||
| 5 Years |
2.81% | 2.86% | 3.64% | 14.85% | 15.12% | 19.55% | ||||||||||||||||||||
| 10 Years |
7.08% | 7.09% | 7.89% | 98.15% | 98.34% | 113.72% | ||||||||||||||||||||
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 7 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 913.90 | $ | 3.23 | $ | 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 7 for more information. |
| * | Excludes money market funds. |
| 6 | 2015 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, 2014 (or commencement of operations, as applicable) and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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 |
7 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® CURRENCY HEDGED MSCI EMERGING MARKETS ETF
February 28, 2015
| 8 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® CURRENCY HEDGED MSCI EMERGING MARKETS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
9 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| 10 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
11 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| 12 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| 14 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| MSCI Emerging Markets E-Mini | 2,805 | Mar. 2015 | NYSE Liffe | $ | 139,113,975 | $ | 7,157,688 | |||||||||||||
See notes to financial statements.
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2015
| iShares Currency Hedged MSCI Emerging Markets ETF |
iShares MSCI Emerging |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | — | $ | 31,709,828,440 | ||||
| Affiliated (Note 2) |
39,036,660 | 1,176,551,836 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 39,036,660 | $ | 32,886,380,276 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | — | $ | 32,176,782,707 | ||||
| Affiliated (Note 2) |
39,139,458 | 1,176,551,836 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
39,139,458 | 33,353,334,543 | ||||||
| Foreign currency, at valueb |
— | 25,302,700 | ||||||
| Cash |
— | 40,333,238 | ||||||
| Cash pledged to broker |
— | 5,198,010 | ||||||
| Receivables: |
||||||||
| Investment securities sold |
— | 137,665,944 | ||||||
| Dividends and interest |
15,719 | 72,923,621 | ||||||
| Unrealized appreciation on forward currency contracts (Note 1) |
413,938 | — | ||||||
|
|
|
|
|
|||||
| Total Assets |
39,569,115 | 33,634,758,056 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
146,577 | 143,983,220 | ||||||
| Collateral for securities on loan (Note 1) |
— | 1,143,232,478 | ||||||
| Futures variation margin |
— | 121,184 | ||||||
| Foreign taxes (Note 1) |
— | 59,717 | ||||||
| Unrealized depreciation on forward currency contracts (Note 1) |
304,309 | — | ||||||
| Investment advisory fees (Note 2) |
857 | 16,859,287 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
451,743 | 1,304,255,886 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 39,117,372 | $ | 32,330,502,170 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 38,715,588 | $ | 40,522,361,568 | ||||
| Distributions in excess of net investment income |
(26,322 | ) | (90,255,758 | ) | ||||
| Undistributed net realized gain (accumulated net realized loss) |
257,420 | (8,574,709,007 | ) | |||||
| Net unrealized appreciation |
170,686 | 473,105,367 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 39,117,372 | $ | 32,330,502,170 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
1,600,000 | 795,150,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 24.45 | $ | 40.66 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $ — and $1,073,579,143, respectively. See Note 1. |
| b | Cost of foreign currency: $ — and $25,597,876, respectively. |
| c | $0.001 par value, number of shares authorized: 250 million and 2 billion, respectively. |
See notes to financial statements.
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares Currency Hedged MSCI Emerging Markets ETFa |
iShares MSCI Emerging |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliatedb |
$ | — | $ | 282,694,069 | ||||
| Dividends — affiliated (Note 2) |
47,158 | — | ||||||
| Interest — unaffiliated |
— | 574 | ||||||
| Interest — affiliated (Note 2) |
— | 6,136 | ||||||
| Securities lending income — affiliated (Note 2)c |
— | 11,822,910 | ||||||
|
|
|
|
|
|||||
| 47,158 | 294,523,689 | |||||||
| Less: Other foreign taxes (Note 1) |
— | (499,082 | ) | |||||
|
|
|
|
|
|||||
| Total investment income |
47,158 | 294,024,607 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
30,097 | 119,767,378 | ||||||
| Mauritius income taxes (Note 1) |
— | 846,395 | ||||||
| Commitment fees (Note 9) |
— | 69,630 | ||||||
|
|
|
|
|
|||||
| Total expenses |
30,097 | 120,683,403 | ||||||
| Less investment advisory fees waived (Note 2) |
(28,695 | ) | — | |||||
|
|
|
|
|
|||||
| Net expenses |
1,402 | 120,683,403 | ||||||
|
|
|
|
|
|||||
| Net investment income |
45,756 | 173,341,204 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
— | (1,169,050,543 | ) | |||||
| In-kind redemptions — unaffiliated |
— | 519,518,526 | ||||||
| Futures contracts |
— | (12,798,226 | ) | |||||
| Foreign currency transactions |
257,420 | (12,127,072 | ) | |||||
|
|
|
|
|
|||||
| Net realized gain (loss) |
257,420 | (674,457,315 | ) | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
102,798 | (3,446,791,958 | ) | |||||
| Forward currency contracts |
109,629 | — | ||||||
| Futures contracts |
— | 858,162 | ||||||
| Translation of assets and liabilities in foreign currencies |
(41,741 | ) | (1,032,976 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
170,686 | (3,446,966,772 | ) | |||||
|
|
|
|
|
|||||
| Net realized and unrealized gain (loss) |
428,106 | (4,121,424,087 | ) | |||||
|
|
|
|
|
|||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 473,862 | $ | (3,948,082,883 | ) | |||
|
|
|
|
|
|||||
| a | For the period from September 23, 2014 (commencement of operations) to February 28, 2015. |
| b | Net of foreign withholding tax of $ — and $34,673,070, respectively. |
| c | Net of securities lending income tax paid of $ — and $446,840, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
27 |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares Currency Hedged MSCI Emerging Markets ETF |
iShares MSCI Emerging Markets ETF (Consolidated) |
|||||||||||
| Period from to |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||
| OPERATIONS: |
||||||||||||
| Net investment income |
$ | 45,756 | $ | 173,341,204 | $ | 758,783,170 | ||||||
| Net realized gain (loss) |
257,420 | (674,457,315 | ) | (970,499,346 | ) | |||||||
| Net change in unrealized appreciation/depreciation |
170,686 | (3,446,966,772 | ) | 6,267,266,623 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in net assets resulting from operations |
473,862 | (3,948,082,883 | ) | 6,055,550,447 | ||||||||
|
|
|
|
|
|
|
|||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||
| From net investment income |
(72,078 | ) | (437,459,921 | ) | (673,353,625 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions to shareholders |
(72,078 | ) | (437,459,921 | ) | (673,353,625 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||
| Proceeds from shares sold |
38,715,588 | 290,876,114 | 16,425,662,994 | |||||||||
| Cost of shares redeemed |
— | (7,911,231,783 | ) | (12,275,651,505 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in net assets from capital share transactions |
38,715,588 | (7,620,355,669 | ) | 4,150,011,489 | ||||||||
|
|
|
|
|
|
|
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
39,117,372 | (12,005,898,473 | ) | 9,532,208,311 | ||||||||
| NET ASSETS |
||||||||||||
| Beginning of period |
— | 44,336,400,643 | 34,804,192,332 | |||||||||
|
|
|
|
|
|
|
|||||||
| End of period |
$ | 39,117,372 | $ | 32,330,502,170 | $ | 44,336,400,643 | ||||||
|
|
|
|
|
|
|
|||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (26,322 | ) | $ | (90,255,758 | ) | $ | 173,862,959 | ||||
|
|
|
|
|
|
|
|||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||
| Shares sold |
1,600,000 | 6,750,000 | 388,800,000 | |||||||||
| Shares redeemed |
— | (194,400,000 | ) | (311,400,000 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in shares outstanding |
1,600,000 | (187,650,000 | ) | 77,400,000 | ||||||||
|
|
|
|
|
|
|
|||||||
| a | Commencement of operations. |
See notes to financial statements.
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares Currency Hedged MSCI Emerging Markets ETF
| Period from Sep. 23, 2014a to Feb. 28, 2015 |
||||
| Net asset value, beginning of period |
$ | 24.44 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.12 | |||
| Net realized and unrealized gainc |
0.37 | |||
|
|
|
|||
| Total from investment operations |
0.49 | |||
|
|
|
|||
| Less distributions from: |
||||
| Net investment income |
(0.48 | ) | ||
|
|
|
|||
| Total distributions |
(0.48 | ) | ||
|
|
|
|||
| Net asset value, end of period |
$ | 24.45 | ||
|
|
|
|||
| Total return |
2.08 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 39,117 | ||
| Ratio of expenses to average net assetse,f |
0.04 | % | ||
| Ratio of expenses to average net assets prior to waived feese,f |
0.78 | % | ||
| Ratio of net investment income to average net assetse,f |
1.19 | % | ||
| Portfolio turnover rateg,h |
0 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | The Fund indirectly bears its proportionate share of fees and expenses incurred by the underlying fund in which the Fund is invested. This ratio does not include these indirect fees and expenses. |
| f | Annualized for periods of less than one year. |
| g | Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
| h | Portfolio turnover rate excludes the portfolio activity of the underlying fund in which the Fund is invested. See page 30 for the portfolio turnover rates of the underlying fund. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
29 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Emerging Markets ETF | ||||||||||||||||||||||||
| Six months ended Feb. 28, 2015 (Consolidated) (Unaudited) |
Year ended Aug. 31, 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 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 45.11 | $ | 38.44 | $ | 39.22 | $ | 42.71 | $ | 40.19 | $ | 35.48 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.20 | 0.83 | 0.75 | 0.86 | 0.81 | 0.58 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(4.11 | ) | 6.55 | (0.76 | ) | (3.53 | ) | 2.56 | 4.73 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(3.91 | ) | 7.38 | (0.01 | ) | (2.67 | ) | 3.37 | 5.31 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.54 | ) | (0.71 | ) | (0.77 | ) | (0.82 | ) | (0.85 | ) | (0.60 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.54 | ) | (0.71 | ) | (0.77 | ) | (0.82 | ) | (0.85 | ) | (0.60 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 40.66 | $ | 45.11 | $ | 38.44 | $ | 39.22 | $ | 42.71 | $ | 40.19 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(8.61 | )%c | 19.34 | % | (0.08 | )% | (6.18 | )% | 8.23 | % | 14.97 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 32,330,502 | $ | 44,336,401 | $ | 34,804,192 | $ | 34,256,628 | $ | 33,496,549 | $ | 39,766,955 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.68 | % | 0.67 | % | 0.67 | % | 0.68 | % | 0.67 | % | 0.68 | % | ||||||||||||
| Ratio of expenses to average net assets prior to waived feesd |
0.68 | % | 0.68 | % | 0.67 | % | 0.69 | % | 0.67 | % | 0.68 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.98 | % | 1.98 | % | 1.78 | % | 2.13 | % | 1.76 | % | 1.45 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 22 | % | 24 | % | 15 | % | 17 | % | 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 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, 2015 and the years ended August 31, 2014, August 31, 2013, August 31, 2012 and August 31, 2011 were 3%, 7%, 9%, 10% and 15%, respectively. See Note 4. |
See notes to financial statements.
| 30 | 2015 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 |
|||
| Currency Hedged MSCI Emerging Marketsa |
Non-diversified | |||
| MSCI Emerging Markets |
Diversified | |||
| a | The Fund commenced operations on September 23, 2014. |
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. Currently the iShares Currency Hedged MSCI Emerging Markets ETF seeks to achieve its investment objective by investing a substantial portion of its assets in the iShares MSCI Emerging Markets ETF. The financial statements and schedule of investments for the iShares MSCI Emerging Markets ETF are included in this report and should be read in conjunction with the financial statements of the iShares Currency Hedged MSCI Emerging Markets ETF.
The iShares MSCI Emerging Markets ETF 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. Intercompany accounts and transactions, if any, have been eliminated.
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. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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
| NOTES TO FINANCIAL STATEMENTS |
31 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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). |
| • | Futures contracts are valued at that day’s last reported settlement price on the exchange where the contract is traded. |
| • | Forward currency contracts are valued based on that day’s prevailing forward exchange rate for the underlying currencies. |
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; |
| 32 | 2015 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, 2015. 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 | |||||||||||||
| Currency Hedged MSCI Emerging Markets |
||||||||||||||||
| Assets: |
||||||||||||||||
| Exchange-Traded Funds |
$ | 39,061,423 | $ | — | $ | — | $ | 39,061,423 | ||||||||
| Money Market Funds |
78,035 | — | — | 78,035 | ||||||||||||
| Forward Currency Contractsa |
— | 413,938 | — | 413,938 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 39,139,458 | $ | 413,938 | $ | — | $ | 39,553,396 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Liabilities: |
||||||||||||||||
| Forward Currency Contractsa |
$ | — | $ | (304,309 | ) | $ | — | $ | (304,309 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 30,694,741,064 | $ | 35,436,974 | $ | 12,585 | $ | 30,730,190,623 | ||||||||
| Preferred Stocks |
1,445,460,290 | — | — | 1,445,460,290 | ||||||||||||
| Rights |
1,131,794 | — | — | 1,131,794 | ||||||||||||
| Money Market Funds |
1,176,551,836 | — | — | 1,176,551,836 | ||||||||||||
| Futures Contractsa |
7,157,688 | — | — | 7,157,688 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 33,325,042,672 | $ | 35,436,974 | $ | 12,585 | $ | 33,360,492,231 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Shown at the unrealized appreciation (depreciation) on the contracts. |
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income and capital gain distributions, if any, are 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, 2015 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
| NOTES TO FINANCIAL STATEMENTS |
33 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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. Each Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for federal income tax purposes. The iShares Currency Hedged MSCI Emerging Markets ETF has elected to treat realized gains (losses) from certain foreign currency contracts as capital gain (loss) for federal income tax 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, 2015, if any, are disclosed in the Funds’ statements of assets and liabilities.
The iShares MSCI Emerging Markets ETF conducts its investment activities in India through the Subsidiary and expects to obtain benefits under the Double Tax Avoidance Agreement (“DTAA”) between India and Mauritius. In order to be eligible to claim benefits under the DTAA, the Subsidiary must, on an annual basis, satisfy certain tests and conditions, including the establishment and maintenance of valid tax residence in Mauritius and related requirements. The Fund has obtained a tax residence certificate from the Mauritian Revenue Authorities.
Based upon current interpretation and practice of the current tax laws in India and Mauritius and the DTAA, 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. Any dividends paid by the Subsidiary to the Fund are not subject to tax in Mauritius. Further, the Subsidiary is also exempt from tax in Mauritius on any gains from the sale of securities.
However, there can be no assurance that any future changes to the India-Mauritius treaty will not adversely affect the tax position of the Fund’s investments in India. If the DTAA is interpreted, amended, terminated, renegotiated, or possibly overridden by the General Anti-Avoidance Rules provisions (which are due to take effect April 1, 2017, the details of which are pending further authoritative guidance), in a manner that would adversely affect the tax position in India of the Fund, such an interpretation, amendment, or override renegotiation may cause the Fund to incur capital gains tax in India.
| 34 | 2015 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.
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. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the schedules of investments. The value of any securities on loan as of February 28, 2015 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 or request additional collateral. 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.
The following table is a summary of each Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| iShares ETF | Market Value of Securities on Loan |
Cash Collateral Received a |
Net Amount |
|||||||||
| MSCI Emerging Markets |
$ | 1,073,579,143 | $ | 1,073,579,143 | $ | — | ||||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in each Fund’s statement of assets and liabilities. |
| NOTES TO FINANCIAL STATEMENTS |
35 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, 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.
With respect to the iShares MSCI Emerging Markets ETF, the Subsidiary has entered into a separate contract with BFA under which BFA provides investment advisory services to the Subsidiary but does not receive separate compensation from the Subsidiary for providing it with such services. The Subsidiary has also entered into separate arrangements that provide for the provision of other services to the Subsidiary (including administrative, custody, transfer agency and other services), and BFA pays the costs and expenses related to the provision of those services.
For its investment advisory services to the iShares Currency Hedged MSCI Emerging Markets ETF, BFA is entitled to an annual investment advisory fee of 0.78% based on the average daily net assets of the Fund. In addition, the Fund indirectly pays its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses”). BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through December 31, 2020 in an amount equal to the acquired fund fees and expenses attributable to the Fund’s investments in the iShares MSCI Emerging Markets ETF (“EEM”) (and those assets used to hedge the securities in EEM against the U.S. dollar) such that the investment advisory fee on such assets is equal to the investment advisory fee of EEM plus 0.03%.
For its investment advisory services to EEM, 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 | ||||
| 0.54 | Over $42 billion, up to and including $56 billion | ||||
| 0.47 | Over $56 billion, up to and including $70 billion | ||||
| 0.41 | Over $70 billion, up to and including $84 billion | ||||
| 0.35 | Over $84 billion | ||||
BFA has contractually agreed to waive a portion of its investment advisory fees for EEM through December 31, 2015 in an amount equal to the acquired fund fees and expenses attributable to the Fund’s investments in other iShares funds, if any.
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. 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,
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iSHARES®, INC.
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% (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, each Fund retains 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees 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, each Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
Prior to January 1, 2015, each Fund retained 75% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, each Fund retained for the remainder of calendar year 2014, 80% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
For the six months ended February 28, 2015, the iShares MSCI Emerging Markets ETF paid to BTC securities lending agent services and collateral investment fees in the amount of $8,714,344.
For the six months ended February 28, 2015, BTC, the Funds’ securities lending agent, has agreed to voluntarily reimburse the iShares MSCI Emerging Markets ETF in the amount of $102,952, related to the foreign tax on the securities lending income. Such reimbursement is included in “Securities lending income — affiliated” in the Fund’s consolidated 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.
Cross trades for the six months ended February 28, 2015, 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.
Each 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.
| NOTES TO FINANCIAL STATEMENTS |
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iSHARES®, INC.
Investments in issuers considered to be affiliates of the Funds (excluding money market funds) during the six months ended February 28, 2015, 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) |
|||||||||||||||||||||
| Currency Hedged MSCI Emerging Markets |
||||||||||||||||||||||||||||
| iShares MSCI Emerging Markets ETF |
— | 959,976 | — | 959,976 | $ | 39,061,423 | $ | 47,158 | $ | — | ||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
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, 2015 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| Currency Hedged MSCI Emerging Markets |
$ | 238,869 | $ | — | ||||
| MSCI Emerging Markets |
1,135,026,908 | 5,449,058,186 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2015 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| Currency Hedged MSCI Emerging Markets |
$ | 38,719,756 | $ | — | ||||
| MSCI Emerging Markets |
130,341,577 | 3,691,755,388 | ||||||
| 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. Such variable charges, if any, are included in “Proceeds from shares sold” in the statements of changes in net assets.
| 5. | FUTURES CONTRACTS |
Each Fund may purchase or sell 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
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 Emerging Markets ETF as of February 28, 2015 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 appreciationa |
$ | 7,157,688 | ||
| 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 iShares MSCI Emerging Markets ETF during the six months ended February 28, 2015 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 |
$ | (12,798,226 | ) | $ | 858,162 | |||
|
|
|
|
|
|||||
The following table shows the average quarter-end balances of open futures contracts held by the iShares MSCI Emerging Markets ETF for the six months ended February 28, 2015:
| Average value of contracts purchased |
$ | 138,721,017 |
| 6. | FORWARD CURRENCY CONTRACTS |
The iShares Currency Hedged MSCI Emerging Markets ETF may enter into forward currency contracts for the purpose of hedging against the effects of foreign currencies on the value of the Fund’s assets that are denominated in a non-U.S. currency. A forward currency contract is an obligation to purchase or sell a currency against another currency at a specified future date at an agreed upon price and quantity. Forward currency contracts are traded over-the-counter (“OTC”) and not on an organized exchange. The contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation or depreciation. When the contract is closed, a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed is recorded. Losses may arise if there are unfavorable movements in the value of a foreign currency relative to the U.S. dollar or if the counterparties do not meet the terms of the agreement. The Fund’s use of forward currency contracts also involves the risks of imperfect correlation between the value of its currency positions and its other investments or the Fund failing to close out its position due to an illiquid market.
| NOTES TO FINANCIAL STATEMENTS |
39 |
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iSHARES®, INC.
The following table shows the value of forward currency contracts held by the iShares Currency Hedged MSCI Emerging Markets ETF as of February 28, 2015 and the related locations in the statement of assets and liabilities, presented by risk exposure category:
| Assets | ||||
| Forward currency contracts: |
||||
| Unrealized appreciation on forward currency contracts/Net assets consist of – net unrealized appreciation |
$ | 413,938 | ||
|
|
|
|||
| Liabilities | ||||
| Forward currency contracts: |
||||
| Unrealized depreciation on forward currency contracts/Net assets consist of –net unrealized depreciation |
$ | 304,309 | ||
|
|
|
|||
The following table shows the realized and unrealized gains (losses) on forward currency contracts held by the iShares Currency Hedged MSCI Emerging Markets ETF during the six months ended February 28, 2015 and the related locations in the statement of operations, presented by risk exposure category:
| Net Realized Gain (Loss) |
Net Change in Unrealized Appreciation/Depreciation |
|||||||
| Forward currency contracts: |
||||||||
| Foreign currency transactions/Forward currency contracts |
$ | 257,420 | $ | 109,629 | ||||
|
|
|
|
|
|||||
The following table shows the average quarter-end balances of outstanding forward currency contracts for the six months ended February 28, 2015:
|
iShares Currency Hedged MSCI Emerging Markets ETF |
||||
| Average amounts purchased in U.S. dollars |
$ | 18,446,586 | ||
| Average amounts sold in U.S. dollars |
$ | 40,232,457 | ||
The iShares Currency Hedged MSCI Emerging Markets ETF’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund. In order to better define its contractual rights and to secure rights that will help the Fund to mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs OTC derivatives and foreign exchange contracts and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy or insolvency.
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The collateral requirements under an ISDA Master Agreement are typically calculated by netting the mark-to-market amount for each transaction under such agreement, and comparing that amount to the value of any collateral currently pledged by the parties. Forward currency contracts held by the Fund generally do not require collateral. To the extent amounts due to the Fund from the counterparty are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.
For financial reporting purposes, the Fund does not offset financial assets and financial liabilities that are subject to netting arrangements in the statements of assets and liabilities.
The following table presents the exposure of the open forward currency contracts held by the iShares Currency Hedged MSCI Emerging Markets ETF that are subject to potential offset on the statement of assets and liabilities as of February 28, 2015:
| Derivative Assets Subject to Offsetting |
Derivatives Available for Offset |
Net Amount of Derivative Assets |
||||||||||
| Forward currency contracts |
$ | 413,938 | $ | (161,456 | ) | $ | 252,482 | |||||
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|
|
|
|
|
|||||||
| Derivative Liabilities |
Derivatives Available |
Net Amount of |
||||||||||
| Forward currency contracts |
$ | 304,309 | $ | (161,456 | ) | $ | 142,853 | |||||
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| 7. | MARKET AND CREDIT RISK |
In the normal course of business, each Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks each Fund is exposed to include market risk and credit risk. Each Fund’s prospectus provides details of these and other types of risk.
BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss each Fund may suffer through holding market positions in the face of market movements. Each Fund is exposed to market risk by virtue of its direct or indirect investment in equity and financial derivative instruments. The fair value of securities held by the Funds may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of each Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s schedule of investments.
| NOTES TO FINANCIAL STATEMENTS |
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iSHARES®, INC.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.
Each Fund invests a substantial amount of its assets, with the iShares Currency Hedged MSCI Emerging Markets ETF investing indirectly, 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 issuers from countries with less developed markets.
The United States and the European Union, along with the regulatory bodies of a number of countries including Japan, Australia and Canada (collectively, “Sanctioning Bodies”), have imposed sectorial economic sanctions on certain Russian individuals and Russian corporate entities which include prohibitions on transacting in or dealing in new debt of longer than 30 or 90 days maturity or new equity of such issuers. Securities held by the iShares MSCI Emerging Markets ETF issued prior to the date of the sanctions being imposed are not currently subject to any restrictions under the sanctions. However, compliance with each of these sanctions may impair the ability of a Fund to buy, sell, hold, receive or deliver the affected securities or other securities of such issuers. The Sanctioning Bodies 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. Current or future sanctions may result in Russia taking counter measures or retaliatory actions, which may further impair the value and liquidity of Russian securities. These retaliatory measures may include the immediate freeze of Russian assets held by a Fund.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of each Fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its statement of assets and liabilities.
| 8. | INCOME TAX INFORMATION |
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.
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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, 2014, the Funds’ fiscal year-end, the following Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| iShares ETF | Non- Expiring a |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||
| MSCI Emerging Markets |
$ | 3,444,042,588 | $ | 29,973,301 | $ | 13,844,901 | $ | 228,196,854 | $ | 1,201,366,175 | $ | 873,167,649 | $ | 5,790,591,468 | ||||||||||||||
| 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, 2015, 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) |
||||||||||||
| Currency Hedged MSCI Emerging Markets |
$ | 39,036,660 | $ | 102,798 | $ | — | $ | 102,798 | ||||||||
| MSCI Emerging Markets |
34,103,717,143 | 5,745,707,966 | (6,496,090,566 | ) | (750,382,600 | ) | ||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2015, 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.
| 9. | LINE OF CREDIT |
The iShares MSCI Emerging Markets 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 28, 2015. 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 iShares MSCI Emerging Markets ETF did not borrow under the credit agreement during the six months ended February 28, 2015.
| NOTES TO FINANCIAL STATEMENTS |
43 |
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iSHARES®, INC.
| 10. | 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 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. 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 “Sixth Circuit”). Oral argument of the Plaintiff’s appeal was heard by the Sixth Circuit on July 30, 2014. On September 30, 2014, the Sixth Circuit affirmed the dismissal of the lawsuit. On December 29, 2014, the Plaintiffs filed a petition for a writ of certiorari asking the U.S. Supreme Court to hear their appeal of the Sixth Circuit’s ruling.
| 11. | 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.
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Table of Contents
Board Review and Approval of Investment Advisory
Contract
iSHARES®, INC.
iShares Currency Hedged MSCI Emerging Markets ETF
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required to consider and approve the proposed Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) on behalf of the Fund. The Independent Directors requested, and BFA provided, such information as the Independent Directors, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed Advisory Contract.
At a meeting held on March 18-19, 2014, the Board, including all of the Independent Directors, approved the selection of BFA as investment adviser and approved the proposed Advisory Contract for the Fund, based on its review of qualitative and quantitative information provided by BFA. The Board also considered information previously provided by BFA, BlackRock Institutional Trust Company, N.A. (“BTC”), and BlackRock, Inc. (“BlackRock”), as applicable, at prior Board meetings. The Independent Directors were advised by their independent counsel throughout the process.
In selecting BFA and approving the Advisory Contract for the Fund, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
Expenses of the Fund — The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including any proposed advisory fees, waivers/reimbursements, and gross and net total expenses of the Fund in comparison with the same information for other registered investment companies objectively selected by Lipper as comprising the Fund’s applicable peer group pursuant to Lipper’s proprietary methodology, and any registered funds that would otherwise have been excluded from Lipper’s comparison group because of the size, sponsor, inception date, or other differentiating factors included in Lipper’s proprietary selection methodology, but that were nonetheless included at the request of BFA (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track an index similar to that tracked by the Fund, the Lipper Group included, in part, mutual funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by an “at cost” service provider), as applicable. In support of its review of the statistical information, the Board was provided with a general description of the methodology used by Lipper to determine the applicable Lipper Group and to prepare this information. The Board also received a detailed explanation from BFA regarding its rationale for including funds that had been excluded from Lipper’s consideration due to Lipper’s methodology parameters, as well as information showing the effect of including these additional funds in the analysis. The Board further noted that due to the limitations in identifying comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Fund.
The Board also noted that the proposed investment advisory fee rate and overall expenses for the Fund compared favorably to the investment advisory fee rates and overall expenses of the funds in the Lipper Group.
Based on this review, the other factors considered at the meeting, and their general knowledge of fund pricing, the Board concluded that the proposed investment advisory fees and expense levels of the Fund supported the Board’s approval of the Advisory Contract.
Nature, Extent and Quality of Services to be Provided by BFA — The Board reviewed the scope of services to be provided by BFA under the Advisory Contract. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to supporting iShares funds and their shareholders. The Board noted that BFA is an indirect wholly-owned subsidiary of BlackRock. The Board acknowledged that additional resources to support iShares funds and their shareholders have been added
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
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Board Review and Approval of Investment Advisory
Contract (Continued)
iSHARES®, INC.
or enhanced since BlackRock’s acquisition of BFA in December 2009, including in such areas as risk management, investor education, product management, customized portfolio consulting support, and capital markets support. The Board considered representations by BFA, BTC, and BlackRock that the scope and quality of services to be provided to the Fund would be similar to the scope and quality of services provided to other iShares funds. The Board also considered BFA’s compliance program and its compliance record with respect to other iShares funds. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons who will be responsible for the day-to-day management of the Fund. In addition to the above considerations, the Board reviewed and considered BFA’s investment and risk management processes and strategies, and matters related to BFA’s portfolio compliance policies and procedures.
Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BFA to the Fund under the Advisory Contract supported the Board’s approval of the Advisory Contract.
Costs of Services to be Provided to the Fund and Profits to be Realized by BFA and Affiliates — The Board did not consider the profitability of the Fund to BFA based on the fees payable under the Advisory Contract or revenue to be received by BFA or its affiliates in connection with services to be provided to the Fund since the proposed relationship had not yet commenced. The Board noted that it expects to receive profitability information from BFA on at least an annual basis following the Fund’s launch and will thus be in a position to evaluate whether, following the expiration of the Advisory Contract’s initial two-year term, any adjustments in the Fund’s fees would be appropriate.
Economies of Scale — The Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Fund’s assets. The Board noted that the Advisory Contract for the Fund did not provide for any breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board noted that should material economies of scale exist in the future, a breakpoint structure for the Fund may be appropriate. The Board noted that it would continue to monitor the sharing of economies of scale to determine the appropriateness of adding breakpoints in the future.
Based on this review, as well as the other factors considered at the meeting, the Board, recognizing its responsibility to consider this issue at least annually following an initial two-year period, concluded that the investment advisory fee rate incorporates potential economies of scale and supported the Board’s approval of the Advisory Contract.
Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates — The Board considered certain information received at previous meetings regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end and closed-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds and institutional separate accounts (together, the “Other Accounts”). The Board noted that BFA and its affiliates do not manage Other Accounts that track the same underlying index as the Fund. The Board further noted that BFA previously provided the Board with detailed information regarding how Other Accounts (particularly institutional clients) generally differ from the iShares funds, including in terms of the different, generally more extensive, services provided to the iShares funds, as well as other significant differences in the approach of BFA and its affiliates to the iShares funds, on one hand, and Other Accounts, on the other. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks of managing and providing other services to the Fund, as a publicly traded exchange traded fund, as compared to Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board also considered the
| 46 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Continued)
iSHARES®, INC.
“all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses to be borne by BFA under this arrangement. The Board noted that the investment advisory fee rates under the Advisory Contract for investment companies, including the Fund, were generally higher than the investment advisory/management fee rates for the Other Accounts that are institutional clients of BFA (or its affiliates) and concluded that the differences appeared to be consistent with the factors discussed. The Board considered the proposed investment advisory fee rate for the Fund in relation to that of iShares MSCI Emerging Markets ETF. The Board noted that the Fund’s proposed investment advisory fee rate is higher than that of iShares MSCI Emerging Markets ETF, which invests in similar underlying securities but unlike the Fund, is not currency rate hedged, and concluded that the Fund’s higher relative fee is appropriate.
Other Benefits to BFA and/or its Affiliates — Except as noted below, the Board did not consider ancillary revenue to be received by BFA and/or its affiliates in connection with the services to be provided to the Fund by BFA since the proposed relationship had not yet commenced. However, the Board noted that BFA generally would not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board considered the potential payment of advisory fees and/or administration fees to BFA and BTC (or their affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services and/or administration services. The Board also considered the potential for revenue to BTC, the Fund’s securities lending agent, and its affiliates, in the event of any lending of the Fund’s securities. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates, will be reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that the existence of any such ancillary benefits would not alter the Board’s conclusion with respect to the appropriateness of approving the Advisory Contract.
Based on the considerations described above, the Board determined that the investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services to be rendered and that could not have been the product of arm’s-length bargaining and concluded that it is in the best interest of the Fund and its shareholders to approve the Advisory Contract.
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
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Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
Section 19(a) Notices
The amounts and sources of distributions reported are estimates and are provided pursuant to regulatory requirements 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 |
||||||||||||||||||||||||
| Currency Hedged MSCI Emerging Markets |
$ | 0.312356 | $ | — | $ | 0.168164 | $ | 0.480520 | 65 | % | — | % | 35 | % | 100 | % | ||||||||||||||||
| MSCI Emerging Markets |
0.449492 | — | 0.085529 | 0.535021 | 84 | — | 16 | 100 | ||||||||||||||||||||||||
| 48 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes:
| NOTES |
49 |
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Notes:
| 50 | 2015 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 basis on the Funds’ website.
©2015 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-85-0215
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Table of Contents
FEBRUARY 28, 2015
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2015 SEMI-ANNUAL REPORT (UNAUDITED)
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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 Emerging Markets Horizon ETF | EMHZ | BATS |
| Ø | iShares MSCI Frontier 100 ETF | FM | NYSE Arca |
| Ø | iShares MSCI World ETF | URTH | NYSE Arca |
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Table of Contents
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 6.17%, net of fees, while the total return for the Index was 6.10%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
15.12% | 15.52% | 14.97% | 15.12% | 15.52% | 14.97% | ||||||||||||||||||||
| Since Inception |
13.72% | 13.77% | 13.43% | 54.16% | 54.39% | 52.88% | ||||||||||||||||||||
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 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,061.70 | $ | 1.02 | $ | 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 10 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, 2015
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, 2015, the total return for the Fund was -12.09%, net of fees, while the total return for the Index was -11.78%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(6.80)% | (5.94)% | (6.47)% | (6.80)% | (5.94)% | (6.47)% | ||||||||||||||||||||
| Since Inception |
(1.55)% | (1.35)% | (1.09)% | (4.75)% | (4.13)% | (3.35)% | ||||||||||||||||||||
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 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 879.10 | $ | 2.28 | $ | 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 10 for more information. |
| * | Excludes money market funds. |
| 6 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS HORIZON ETF
Performance as of February 28, 2015
The iShares MSCI Emerging Markets Horizon ETF (the “Fund”) seeks to track the investment results of an index that takes the smallest 25% of countries by market capitalization from the universe of an index of emerging markets countries, and then excludes Brazil, China, India, and Russia, as represented by the MSCI Emerging Markets Horizon 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 period from October 14, 2014 (inception date of the Fund) through February 28, 2015, the total return for the Fund was -5.05%, net of fees, while the total return for the Index was -4.81%.
| Cumulative Total Returns | ||||||||||||
| NAV | MARKET | INDEX | ||||||||||
| Since Inception |
(5.05)% | (4.14)% | (4.81)% | |||||||||
The inception date of the Fund was 10/14/14. The first day of secondary market trading was 10/16/14.
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 (10/14/14) a |
Ending Account Value (2/28/15) |
Expenses Paid During Period b |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period b |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 949.50 | $ | 1.83 | $ | 1,000.00 | $ | 1,022.30 | $ | 2.51 | 0.50% | ||||||||||||||
| a | The beginning of the period (commencement of operations) is October 14, 2014. |
| b | 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 (137 days for actual and 181 days for hypothetical expenses) 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 FRONTIER 100 ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -11.27%, net of fees, while the total return for the Index was -10.48%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(0.32)% | (0.55)% | 0.93% | (0.32)% | (0.55)% | 0.93% | ||||||||||||||||||||
| Since Inception |
13.79% | 14.27% | 14.64% | 37.50% | 38.95% | 40.08% | ||||||||||||||||||||
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 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 887.30 | $ | 3.70 | $ | 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 10 for more information. |
| * | Excludes money market funds. |
| 8 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI WORLD ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 2.13%, net of fees, while the total return for the Index was 2.14%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
7.83% | 7.87% | 7.87% | 7.83% | 7.87% | 7.87% | ||||||||||||||||||||
| Since Inception |
15.47% | 15.57% | 15.37% | 57.01% | 57.44% | 56.67% | ||||||||||||||||||||
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 10 for more information.
| Shareholder Expenses | ||||||||||||||||||||||||||
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||
| Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,021.30 | $ | 1.20 | $ | 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 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, 2014 (or commencement of operations, as applicable) and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2015
| 12 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2015
| 14 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS EMEA ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EMEA ETF
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EMEA ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS HORIZON ETF
February 28, 2015
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS HORIZON ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS HORIZON ETF
February 28, 2015
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS HORIZON ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI FRONTIER 100 ETF
February 28, 2015
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRONTIER 100 ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRONTIER 100 ETF
February 28, 2015
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 28, 2015
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| 30 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| 32 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| 34 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| 36 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| 38 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| 40 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD ETF
February 28, 2015
| 42 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2015
| iShares MSCI All Country World Minimum Volatility ETF |
iShares MSCI Emerging |
iShares MSCI Emerging Markets Horizon ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 1,574,655,968 | $ | 10,264,213 | $ | 2,431,479 | ||||||
| Affiliated (Note 2) |
42,289,604 | 23,332 | 1,588 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 1,616,945,572 | $ | 10,287,545 | $ | 2,433,067 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 1,813,484,283 | $ | 8,913,636 | $ | 2,304,486 | ||||||
| Affiliated (Note 2) |
42,289,604 | 23,332 | 1,588 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
1,855,773,887 | 8,936,968 | 2,306,074 | |||||||||
| Foreign currency, at valueb |
1,334,389 | 8,330 | 1,604 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
6,051,178 | 35,846 | 11,193 | |||||||||
| Dividends and interest |
3,881,973 | 1,564 | 1,669 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
1,867,041,427 | 8,982,708 | 2,320,540 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
6,855,994 | 39,256 | 12,462 | |||||||||
| Collateral for securities on loan (Note 1) |
39,206,312 | 18,056 | — | |||||||||
| Investment advisory fees (Note 2) |
272,547 | 3,347 | 882 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
46,334,853 | 60,659 | 13,344 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,820,706,574 | $ | 8,922,049 | $ | 2,307,196 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 1,577,877,673 | $ | 10,937,826 | $ | 2,439,470 | ||||||
| Undistributed net investment income |
3,172,382 | 2,804 | 845 | |||||||||
| Undistributed net realized gain (accumulated net realized loss) |
865,474 | (667,666 | ) | (6,108 | ) | |||||||
| Net unrealized appreciation (depreciation) |
238,791,045 | (1,350,915 | ) | (127,011 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 1,820,706,574 | $ | 8,922,049 | $ | 2,307,196 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
25,400,000 | 200,000 | 100,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 71.68 | $ | 44.61 | $ | 23.07 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $37,043,331, $15,102 and $ —, respectively. See Note 1. |
| b | Cost of foreign currency: $1,350,419, $8,647 and $1,635, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 25 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
43 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| 100 ETF |
iShares MSCI World ETF |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 595,706,580 | $ | 214,165,411 | ||||
| Affiliated (Note 2) |
3,829,274 | 3,920,669 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 599,535,854 | $ | 218,086,080 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 578,121,178 | $ | 228,815,941 | ||||
| Affiliated (Note 2) |
3,829,274 | 4,018,248 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
581,950,452 | 232,834,189 | ||||||
| Foreign currency, at valueb |
52,866 | 150,457 | ||||||
| Cash |
274,320 | — | ||||||
| Receivables: |
||||||||
| Investment securities sold |
2,152,275 | 771,955 | ||||||
| Due from custodian (Note 4) |
— | 654,162 | ||||||
| Dividends and interest |
237,197 | 421,581 | ||||||
|
|
|
|
|
|||||
| Total Assets |
584,667,110 | 234,832,344 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
— | 1,875,065 | ||||||
| Collateral for securities on loan (Note 1) |
— | 2,891,067 | ||||||
| Deferred foreign capital gains taxes (Note 1) |
3,869,573 | — | ||||||
| Investment advisory fees (Note 2) |
346,726 | 36,572 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
4,216,299 | 4,802,704 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 580,450,811 | $ | 230,029,640 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 624,428,631 | $ | 214,155,800 | ||||
| Undistributed (distributions in excess) of net investment income |
(1,376,022 | ) | 541,983 | |||||
| Undistributed net realized gain (accumulated net realized loss) |
(22,551,331 | ) | 589,607 | |||||
| Net unrealized appreciation (depreciation) |
(20,050,467 | ) | 14,742,250 | |||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 580,450,811 | $ | 230,029,640 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
19,150,000 | 3,100,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 30.31 | $ | 74.20 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $ — and $2,762,425, respectively. See Note 1. |
| b | Cost of foreign currency: $53,531 and $152,241, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to financial statements.
| 44 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI All Country World Minimum Volatility ETF |
iShares MSCI Emerging |
iShares MSCI Emerging Markets Horizon ETFa |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliatedb |
$ | 14,708,606 | $ | 107,928 | $ | 13,858 | ||||||
| Interest — unaffiliated |
4 | — | — | |||||||||
| Interest — affiliated (Note 2) |
121 | — | — | |||||||||
| Securities lending income — affiliated (Note 2) |
272,663 | 1,140 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| 14,981,394 | 109,068 | 13,858 | ||||||||||
| Less: Other foreign taxes (Note 1) |
(1,205 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
14,980,189 | 109,068 | 13,858 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
2,421,396 | 31,323 | 4,437 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
2,421,396 | 31,323 | 4,437 | |||||||||
| Less investment advisory fees waived (Note 2) |
(958,490 | ) | (8,752 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
1,462,906 | 22,571 | 4,437 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
13,517,283 | 86,497 | 9,421 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
1,353,719 | (195,528 | ) | (6,465 | ) | |||||||
| In-kind redemptions — unaffiliated |
20,490,008 | — | — | |||||||||
| Foreign currency transactions |
(324,446 | ) | (1,853 | ) | 357 | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
21,519,281 | (197,381 | ) | (6,108 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
63,462,731 | (1,158,670 | ) | (126,993 | ) | |||||||
| Translation of assets and liabilities in foreign currencies |
(13,525 | ) | (208 | ) | (18 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
63,449,206 | (1,158,878 | ) | (127,011 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
84,968,487 | (1,356,259 | ) | (133,119 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 98,485,770 | $ | (1,269,762 | ) | $ | (123,698 | ) | ||||
|
|
|
|
|
|
|
|||||||
| a | For the period from October 14, 2014 (commencement of operations) to February 28, 2015. |
| b | Net of foreign withholding tax of $593,483, $12,801 and $521, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
45 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| 100 ETF |
iShares MSCI World ETF |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 3,960,648 | $ | 1,876,637 | ||||
| Dividends — affiliated (Note 2) |
— | 4,221 | ||||||
| Interest — unaffiliated |
3,618 | — | ||||||
| Interest — affiliated (Note 2) |
55 | 5 | ||||||
| Securities lending income — affiliated (Note 2) |
— | 7,345 | ||||||
|
|
|
|
|
|||||
| Total investment income |
3,964,321 | 1,888,208 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
2,576,823 | 221,988 | ||||||
| Commitment fees (Note 7) |
1,512 | — | ||||||
| Interest expense (Note 7) |
451 | — | ||||||
|
|
|
|
|
|||||
| Total expenses |
2,578,786 | 221,988 | ||||||
|
|
|
|
|
|||||
| Net investment income |
1,385,535 | 1,666,220 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliatedb |
6,536,831 | (153,094 | ) | |||||
| In-kind redemptions — unaffiliated |
6,500,423 | 1,273,522 | ||||||
| In-kind redemptions — affiliated (Note 2) |
— | 4,808 | ||||||
| Foreign currency transactions |
(1,009,603 | ) | (35,282 | ) | ||||
|
|
|
|
|
|||||
| Net realized gain |
12,027,651 | 1,089,954 | ||||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
|
Investmentsc |
(100,478,778 | ) | 1,518,019 | |||||
| Translation of assets and liabilities in foreign currencies |
(4,735 | ) | (3,231 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
(100,483,513 | ) | 1,514,788 | |||||
|
|
|
|
|
|||||
| Net realized and unrealized gain (loss) |
(88,455,862 | ) | 2,604,742 | |||||
|
|
|
|
|
|||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (87,070,327 | ) | $ | 4,270,962 | |||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $472,691 and $58,218, respectively. |
| b | Net of foreign capital gains taxes of $942,711 and $ —, respectively. |
| c | Net of deferred foreign capital gains taxes of $2,455,770 and $ —, respectively. |
See notes to financial statements.
| 46 | 2015 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, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 13,517,283 | $ | 30,124,824 | $ | 86,497 | $ | 234,643 | ||||||||
| Net realized gain (loss) |
21,519,281 | 15,721,199 | (197,381 | ) | (328,838 | ) | ||||||||||
| Net change in unrealized appreciation/depreciation |
63,449,206 | 127,042,867 | (1,158,878 | ) | 562,912 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
98,485,770 | 172,888,890 | (1,269,762 | ) | 468,717 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(16,328,988 | ) | (29,115,840 | ) | (167,765 | ) | (158,907 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(16,328,988 | ) | (29,115,840 | ) | (167,765 | ) | (158,907 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
525,164,176 | 261,249,242 | — | 5,251,709 | ||||||||||||
| Cost of shares redeemed |
(69,626,848 | ) | (129,769,428 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
455,537,328 | 131,479,814 | — | 5,251,709 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
537,694,110 | 275,252,864 | (1,437,527 | ) | 5,561,519 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
1,283,012,464 | 1,007,759,600 | 10,359,576 | 4,798,057 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 1,820,706,574 | $ | 1,283,012,464 | $ | 8,922,049 | $ | 10,359,576 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 3,172,382 | $ | 5,984,087 | $ | 2,804 | $ | 84,072 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
7,600,000 | 4,000,000 | — | 100,000 | ||||||||||||
| Shares redeemed |
(1,000,000 | ) | (2,000,000 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
6,600,000 | 2,000,000 | — | 100,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
47 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Horizon ETF |
iShares MSCI Frontier 100 ETF |
|||||||||||
| Period from to |
Six months February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||
| OPERATIONS: |
||||||||||||
| Net investment income |
$ | 9,421 | $ | 1,385,535 | $ | 17,022,836 | ||||||
| Net realized gain (loss) |
(6,108 | ) | 12,027,651 | 20,048,604 | ||||||||
| Net change in unrealized appreciation/depreciation |
(127,011 | ) | (100,483,513 | ) | 81,912,759 | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in net assets resulting from operations |
(123,698 | ) | (87,070,327 | ) | 118,984,199 | |||||||
|
|
|
|
|
|
|
|||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||
| From net investment income |
(8,576 | ) | (2,591,702 | ) | (15,334,501 | ) | ||||||
| From net realized gain |
— | (47,428,853 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total distributions to shareholders |
(8,576 | ) | (50,020,555 | ) | (15,334,501 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||
| Proceeds from shares sold |
2,439,470 | 76,869,619 | 581,098,884 | |||||||||
| Cost of shares redeemed |
— | (158,676,689 | ) | (165,483,378 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in net assets from capital share transactions |
2,439,470 | (81,807,070 | ) | 415,615,506 | ||||||||
|
|
|
|
|
|
|
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
2,307,196 | (218,897,952 | ) | 519,265,204 | ||||||||
| NET ASSETS |
||||||||||||
| Beginning of period |
— | 799,348,763 | 280,083,559 | |||||||||
|
|
|
|
|
|
|
|||||||
| End of period |
$ | 2,307,196 | $ | 580,450,811 | $ | 799,348,763 | ||||||
|
|
|
|
|
|
|
|||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 845 | $ | (1,376,022 | ) | $ | (169,855 | ) | ||||
|
|
|
|
|
|
|
|||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||
| Shares sold |
100,000 | 2,500,000 | 16,150,000 | |||||||||
| Shares redeemed |
— | (4,500,000 | ) | (4,300,000 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in shares outstanding |
100,000 | (2,000,000 | ) | 11,850,000 | ||||||||
|
|
|
|
|
|
|
|||||||
| a | Commencement of operations. |
See notes to financial statements.
| 48 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI World ETF |
||||||||
| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 1,666,220 | $ | 3,214,395 | ||||
| Net realized gain |
1,089,954 | 3,038,160 | ||||||
| Net change in unrealized appreciation/depreciation |
1,514,788 | 13,581,244 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
4,270,962 | 19,833,799 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(1,692,658 | ) | (2,735,328 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(1,692,658 | ) | (2,735,328 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
66,065,774 | 148,427,324 | ||||||
| Cost of shares redeemed |
(7,342,851 | ) | (21,501,639 | ) | ||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
58,722,923 | 126,925,685 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
61,301,227 | 144,024,156 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
168,728,413 | 24,704,257 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 230,029,640 | $ | 168,728,413 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 541,983 | $ | 568,421 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
900,000 | 2,200,000 | ||||||
| Shares redeemed |
(100,000 | ) | (300,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
800,000 | 1,900,000 | ||||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 68.25 | $ | 59.99 | $ | 55.65 | $ | 50.02 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.63 | 1.72 | 1.68 | 1.49 | ||||||||||||
| Net realized and unrealized gainc |
3.54 | 8.18 | 4.20 | 4.67 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
4.17 | 9.90 | 5.88 | 6.16 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.74 | ) | (1.64 | ) | (1.54 | ) | (0.53 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.74 | ) | (1.64 | ) | (1.54 | ) | (0.53 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 71.68 | $ | 68.25 | $ | 59.99 | $ | 55.65 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
6.17 | %d | 16.70 | % | 10.69 | % | 12.41 | %d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,820,707 | $ | 1,283,012 | $ | 1,007,760 | $ | 578,776 | ||||||||
| Ratio of expenses to average net assetse |
0.20 | % | 0.20 | % | 0.20 | % | 0.23 | % | ||||||||
| Ratio of expenses to average net assets prior to waived feese |
0.33 | % | 0.33 | % | 0.34 | % | 0.34 | % | ||||||||
| Ratio of net investment income to average net assetse |
1.85 | % | 2.67 | % | 2.83 | % | 3.17 | % | ||||||||
| Portfolio turnover ratef |
9 | % | 24 | % | 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 9%, 23%, 13% and 22%, respectively. See Note 4. |
See notes to financial statements.
| 50 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
|
iShares MSCI Emerging Markets EMEA ETF | ||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 51.80 | $ | 47.98 | $ | 51.72 | $ | 51.16 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.43 | 1.23 | 1.26 | 1.43 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(6.78 | ) | 3.38 | (3.22 | ) | 0.02 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
(6.35 | ) | 4.61 | (1.96 | ) | 1.45 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.84 | ) | (0.79 | ) | (1.78 | ) | (0.89 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.84 | ) | (0.79 | ) | (1.78 | ) | (0.89 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 44.61 | $ | 51.80 | $ | 47.98 | $ | 51.72 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
(12.09 | )%d | 9.61 | % | (3.95 | )% | 2.91 | %d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 8,922 | $ | 10,360 | $ | 4,798 | $ | 10,343 | ||||||||
| Ratio of expenses to average net assetse |
0.49 | % | 0.49 | % | 0.49 | % | 0.49 | % | ||||||||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | 0.68 | % | 0.68 | % | 0.68 | % | ||||||||
| Ratio of net investment income to average net assetse |
1.88 | % | 2.39 | % | 2.39 | % | 4.46 | % | ||||||||
| Portfolio turnover ratef |
5 | % | 18 | % | 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.
| FINANCIAL HIGHLIGHTS |
51 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
|
iShares MSCI Emerging Markets Horizon ETF |
| Period from to (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 24.39 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.09 | |||
| Net realized and unrealized lossc |
(1.32 | ) | ||
|
|
|
|||
| Total from investment operations |
(1.23 | ) | ||
|
|
|
|||
| Less distributions from: |
||||
| Net investment income |
(0.09 | ) | ||
|
|
|
|||
| Total distributions |
(0.09 | ) | ||
|
|
|
|||
| Net asset value, end of period |
$ | 23.07 | ||
|
|
|
|||
| Total return |
(5.05 | )%d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 2,307 | ||
| Ratio of expenses to average net assetse |
0.50 | % | ||
| Ratio of net investment income to average net assetse |
1.06 | % | ||
| Portfolio turnover ratef |
3 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rate for the period ended February 28, 2015 was 3%. See Note 4. |
See notes to financial statements.
| 52 | 2015 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, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Period from Sep. 12, 2012a to Aug. 31, 2013 |
||||||||||
| Net asset value, beginning of period |
$ | 37.79 | $ | 30.12 | $ | 25.25 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.07 | 1.09 | 0.67 | |||||||||
| Net realized and unrealized gain (loss)c |
(4.57 | ) | 7.47 | 4.51 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
(4.50 | ) | 8.56 | 5.18 | ||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.16 | ) | (0.89 | ) | (0.28 | ) | ||||||
| Net realized gain |
(2.82 | ) | — | — | ||||||||
| Return of capital |
— | — | (0.03 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(2.98 | ) | (0.89 | ) | (0.31 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 30.31 | $ | 37.79 | $ | 30.12 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
(11.27 | )%d | 28.56 | % | 20.54 | %d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 580,451 | $ | 799,349 | $ | 280,084 | ||||||
| Ratio of expenses to average net assetse |
0.79 | % | 0.79 | % | 0.79 | % | ||||||
| Ratio of net investment income to average net assetse |
0.42 | % | 3.07 | % | 2.32 | % | ||||||
| Portfolio turnover ratef |
30 | % | 61 | % | 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, 2015, the year ended August 31, 2014 and the period ended August 31, 2013 were 27%, 42% and 10%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
53 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI World ETF | ||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to Aug. 31, 2012 |
|||||||||||||
| Net asset value, beginning of period |
$ | 73.36 | $ | 61.76 | $ | 53.45 | $ | 50.32 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.64 | 1.81 | 1.40 | 0.98 | ||||||||||||
| Net realized and unrealized gainc |
0.88 | 11.16 | 8.03 | 2.89 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total from investment operations |
1.52 | 12.97 | 9.43 | 3.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.68 | ) | (1.37 | ) | (1.12 | ) | (0.74 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions |
(0.68 | ) | (1.37 | ) | (1.12 | ) | (0.74 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net asset value, end of period |
$ | 74.20 | $ | 73.36 | $ | 61.76 | $ | 53.45 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total return |
2.13 | %d | 21.07 | % | 17.84 | % | 7.76 | %d | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 230,030 | $ | 168,728 | $ | 24,704 | $ | 10,689 | ||||||||
| Ratio of expenses to average net assetse |
0.24 | % | 0.24 | % | 0.24 | % | 0.24 | % | ||||||||
| Ratio of net investment income to average net assetse |
1.80 | % | 2.57 | % | 2.34 | % | 2.91 | % | ||||||||
| Portfolio turnover ratef |
2 | % | 5 | % | 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.
| 54 | 2015 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 |
Diversified | |
| MSCI Emerging Markets EMEA |
Non-diversified | |
| MSCI Emerging Markets Horizona |
Non-diversified | |
| MSCI Frontier 100 |
Non-diversified | |
| MSCI World |
Diversified |
| a | The Fund commenced operations on October 14, 2014. |
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.
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. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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. |
| NOTES TO FINANCIAL STATEMENTS |
55 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| • | 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 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.
| 56 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2015. 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 |
$ | 1,811,195,517 | $ | — | $ | — | $ | 1,811,195,517 | ||||||||
| Preferred Stocks |
2,288,766 | — | — | 2,288,766 | ||||||||||||
| Money Market Funds |
42,289,604 | — | — | 42,289,604 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,855,773,887 | $ | — | $ | — | $ | 1,855,773,887 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets EMEA |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 8,800,917 | $ | — | $ | 17 | $ | 8,800,934 | ||||||||
| Preferred Stocks |
112,702 | — | — | 112,702 | ||||||||||||
| Money Market Funds |
23,332 | — | — | 23,332 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 8,936,951 | $ | — | $ | 17 | $ | 8,936,968 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Emerging Markets Horizon |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,284,403 | $ | — | $ | — | $ | 2,284,403 | ||||||||
| Preferred Stocks |
20,083 | — | — | 20,083 | ||||||||||||
| Money Market Funds |
1,588 | — | — | 1,588 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,306,074 | $ | — | $ | — | $ | 2,306,074 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Frontier 100 |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 578,121,098 | $ | 79 | $ | — | $ | 578,121,177 | ||||||||
| Convertible Bonds |
— | — | 0 | a | 0 | a | ||||||||||
| Rights |
— | 1 | — | 1 | ||||||||||||
| Money Market Funds |
3,829,274 | — | — | 3,829,274 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 581,950,372 | $ | 80 | $ | 0 | a | $ | 581,950,452 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI World |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 228,954,208 | $ | — | $ | — | $ | 228,954,208 | ||||||||
| Preferred Stocks |
517,887 | — | — | 517,887 | ||||||||||||
| Money Market Funds |
3,362,094 | — | — | 3,362,094 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 232,834,189 | $ | — | $ | — | $ | 232,834,189 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
| NOTES TO FINANCIAL STATEMENTS |
57 |
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 and capital gain distributions, if any, are 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, 2015 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, 2015, 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.
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. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the
| 58 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the schedules of investments. The value of any securities on loan as of February 28, 2015 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 or request additional collateral. 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.
The following table is a summary of each Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| iShares ETF | Market Value of Securities on Loan |
Cash Collateral Received a |
Net Amount |
|||||||||
| MSCI All Country World Minimum Volatility |
$ | 37,043,331 | $ | 37,043,331 | $ | — | ||||||
| MSCI Emerging Markets EMEA |
15,102 | 15,102 | — | |||||||||
| MSCI World |
2,762,425 | 2,762,425 | — | |||||||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in each Fund’s statement of assets and liabilities. |
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statements and disclosures.
| NOTES TO FINANCIAL STATEMENTS |
59 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 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 | ||||
| 0.350 | % | First $30 billion | |||
| 0.320 | Over $30 billion, up to and including $60 billion | ||||
| 0.280 | Over $60 billion, up to and including $90 billion | ||||
| 0.252 | Over $90 billion | ||||
In addition, the iShares MSCI All Country World Minimum Volatility ETF indirectly pays its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses”). The total of the investment advisory fee and acquired fund fees and expenses is a fund’s total annual operating expense. BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through December 31, 2015 in an amount equal to the acquired fund fees and expenses attributable to the Fund’s investments in other iShares funds, if any. Effective September 12, 2014, BFA has contractually agreed to waive an additional portion of its investment advisory fees for the Fund through December 31, 2015 in order to limit total annual operating expenses to 0.20% of average daily net assets.
For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee based on the average daily net assets of each Fund as follows:
| iShares ETF | Investment Advisory Fee |
|||
| MSCI Emerging Markets EMEA |
0.68 | % | ||
| MSCI Emerging Markets Horizon |
0.50 | |||
| 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, 2015 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. 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% (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.
| 60 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Pursuant to a securities lending agreement, each Fund retains 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees 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, each Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
Prior to January 1, 2015 each Fund retained 75% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, each Fund retained for the remainder of calendar year 2014, 80% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
For the six months ended February 28, 2015, 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 |
$ | 81,681 | ||
| MSCI Emerging Markets EMEA |
377 | |||
| MSCI World |
2,552 | |||
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, 2015, 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 Funds, in order to improve their portfolio liquidity and their ability to track their respective underlying index, may invest in shares of other iShares funds that invest in securities in each Fund’s respective underlying index.
| NOTES TO FINANCIAL STATEMENTS |
61 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Investments in issuers considered to be affiliates of the Funds (excluding money market funds) during the six months ended February 28, 2015, 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 of Period |
Value at End of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| MSCI World |
||||||||||||||||||||||||||||
| BlackRock Inc. |
690 | 270 | (30 | ) | 930 | $ | 345,421 | $ | 1,448 | $ | 2,695 | |||||||||||||||||
| PNC Financial Services Group Inc. (The) |
2,507 | 981 | (109 | ) | 3,379 | 310,733 | 2,773 | 2,113 | ||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 656,154 | $ | 4,221 | $ | 4,808 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
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, 2015 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI All Country World Minimum Volatility |
$ | 256,705,952 | $ | 138,868,066 | ||||
| MSCI Emerging Markets EMEA |
450,246 | 525,205 | ||||||
| MSCI Emerging Markets Horizon |
899,199 | 60,990 | ||||||
| MSCI Frontier 100 |
195,996,441 | 309,456,663 | ||||||
| MSCI World |
3,917,955 | 2,999,935 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2015 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales | ||||||
| MSCI All Country World Minimum Volatility |
$ | 402,399,547 | $ | 68,824,687 | ||||
| MSCI Emerging Markets Horizon |
1,599,734 | — | ||||||
| MSCI Frontier 100 |
5,021,622 | 24,993,944 | ||||||
| MSCI World |
65,166,951 | 7,218,455 | ||||||
| 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
| 62 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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. Such variable charges, if any, are included in “Proceeds from shares sold” in the statements of changes in net assets.
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. | MARKET AND CREDIT RISK |
In the normal course of business, each Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks each Fund is exposed to include market risk and credit risk. Each Fund’s prospectus provides details of these and other types of risk.
BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss each Fund may suffer through holding market positions in the face of market movements. Each Fund is exposed to market risk by virtue of its investment in equity instruments. The fair value of securities held by the Funds may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of each Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s schedule of investments.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.
Each Fund invests a substantial amount of its assets 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 issuers from countries with less developed markets.
The United States and the European Union, along with the regulatory bodies of a number of countries including Japan, Australia and Canada (collectively, “Sanctioning Bodies”), have imposed sectorial economic sanctions on certain Russian individuals and Russian corporate entities which include prohibitions on transacting in or dealing in new debt of longer than 30 or 90 days maturity or new equity of such issuers. Securities held by the iShares MSCI All Country World Minimum Volatility ETF and iShares MSCI Emerging Markets EMEA ETF issued prior to the date of the sanctions being imposed are not currently subject to
| NOTES TO FINANCIAL STATEMENTS |
63 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
any restrictions under the sanctions. However, compliance with each of these sanctions may impair the ability of a Fund to buy, sell, hold, receive or deliver the affected securities or other securities of such issuers. The Sanctioning Bodies 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. Current or future sanctions may result in Russia taking counter measures or retaliatory actions, which may further impair the value and liquidity of Russian securities. These retaliatory measures may include the immediate freeze of Russian assets held by a Fund.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of each Fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its statement of assets and liabilities.
| 6. | INCOME TAX INFORMATION |
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.
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, 2014, the Funds’ fiscal year-end, the following 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 |
$ | 5,163,254 | ||
| MSCI Emerging Markets EMEA |
138,849 | |||
| MSCI World |
82,372 | |||
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.
| 64 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2015, 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 |
$ | 1,622,467,166 | $ | 257,681,080 | $ | (24,374,359 | ) | $ | 233,306,721 | |||||||
| MSCI Emerging Markets EMEA |
10,307,957 | 933,193 | (2,304,182 | ) | (1,370,989 | ) | ||||||||||
| MSCI Emerging Markets Horizon |
2,433,067 | 78,405 | (205,398 | ) | (126,993 | ) | ||||||||||
| MSCI Frontier 100 |
611,521,503 | 51,716,110 | (81,287,161 | ) | (29,571,051 | ) | ||||||||||
| MSCI World |
218,254,111 | 22,563,838 | (7,983,760 | ) | 14,580,078 | |||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2015, 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.
| 7. | 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 28, 2015. 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, 2015, the Fund’s maximum amount borrowed, the average borrowings and the weighted average interest rate under the credit agreement were $2,000,000, $77,348 and 1.16%, 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 |
65 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract
iSHARES® , INC.
iShares MSCI Emerging Markets Horizon ETF
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required to consider and approve the proposed Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) on behalf of the Fund. The Independent Directors requested, and BFA provided, such information as the Independent Directors, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed Advisory Contract.
At a meeting held on September 10-11, 2014, the Board, including all of the Independent Directors, approved the selection of BFA as investment adviser and approved the proposed Advisory Contract for the Fund, based on its review of qualitative and quantitative information provided by BFA. The Board also considered information previously provided by BFA, BlackRock Institutional Trust Company, N.A. (“BTC”), and BlackRock, Inc. (“BlackRock”), as applicable, at prior Board meetings. The Independent Trustees were advised by their independent counsel throughout the process, including about the legal standards applicable to their review.
In selecting BFA and approving the Advisory Contract for the Fund, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
Expenses of the Fund — The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of the Fund in comparison with the same information for other exchange traded funds (including a fund sponsored by an “at cost” service provider) (the “Lipper Group”). The Board was provided with a detailed description of Lipper’s proprietary ETF methodology used by Lipper to determine the applicable Lipper Group and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information provided in Lipper’s report may or may not provide meaningful direct comparisons to the Fund in all instances.
The Board also noted that the proposed investment advisory fee rate and overall expenses for the Fund were lower than the median of the investment advisory fee rates and overall expenses of the funds in the Lipper Group.
Based on this review, the other factors considered at the meeting, and their general knowledge of fund pricing, the Board concluded that the proposed investment advisory fee and expense levels of the Fund supported the Board’s approval of the Advisory Contract.
Nature, Extent and Quality of Services to be Provided by BFA — The Board reviewed the scope of services to be provided by BFA under the Advisory Contract. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to supporting iShares funds and their shareholders. The Board acknowledged that resources to support the iShares funds and their shareholders have been added or enhanced in recent years, including in such areas as investor education, product management, customized portfolio consulting support, capital markets support, and proprietary risk and performance analytics tools. The Board considered representations by BFA, BTC, and BlackRock that the scope and quality of services to be provided to the Fund would be similar to the scope and quality of services provided to other iShares funds. The Board also considered BFA’s compliance program and its compliance record with respect to other iShares funds. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the
| 66 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Continued)
iSHARES®, INC.
background and experience of the persons who will be responsible for the day-to-day management of the Fund, as well as the resources that will be available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies provided throughout the previous year, and matters related to BFA’s portfolio compliance policies and procedures.
Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BFA to the Fund under the Advisory Contract supported the Board’s approval of the Advisory Contract.
Costs of Services to be Provided to the Fund and Profits to be Realized by BFA and Affiliates — The Board did not consider the profitability of the Fund to BFA based on the fees payable under the Advisory Contract or revenue to be received by BFA or its affiliates in connection with services to be provided to the Fund since the proposed relationship had not yet commenced. The Board noted that it expects to receive profitability information from BFA on at least an annual basis following the Fund’s launch and will thus be in a position to evaluate whether, following the expiration of the Advisory Contract’s initial two-year term, any adjustments in the Fund’s fees would be appropriate.
Economies of Scale — The Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Fund’s assets. The Board noted that the Advisory Contract for the Fund did not provide for any breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board noted that should material economies of scale exist in the future, a breakpoint structure for the Fund may be appropriate, and that it would continue to monitor the sharing of economies of scale to determine the appropriateness of adding breakpoints in the future.
Based on this review, as well as the other factors considered at the meeting, the Board, recognizing its responsibility to consider this issue at least annually following an initial two-year period, concluded that the investment advisory fee rate incorporates potential economies of scale and supported the Board’s approval of the Advisory Contract.
Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates — The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end and closed-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, separately managed accounts, and institutional separate accounts (together, the “Other Accounts”), and acknowledged BFA’s assertion that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts that track the same underlying index that serves as the underlying index for the Fund. The Board further noted that BFA previously provided the Board with detailed information regarding how the Other Accounts (particularly institutional clients) generally differ from the iShares Funds, including in terms of the different, generally more extensive services to be provided to the iShares funds, as well as other significant differences in the approach of BFA and its affiliates to the iShares funds, on one hand, and Other Accounts, on the other. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded exchange traded fund, as compared to the Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund expenses to be borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for the Other Accounts that are institutional clients of BFA (or its affiliates) and concluded that the differences appeared to be consistent with the factors discussed.
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
67 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Continued)
iSHARES®, INC.
Other Benefits to BFA and/or its Affiliates — Except as noted below, the Board did not consider the “fallout” benefits or ancillary revenue to be received by BFA and/or its affiliates in connection with the services to be provided to the Fund by BFA since the proposed relationship had not yet commenced. However, the Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board considered the potential payment of advisory fees and/or administration fees to BFA and BTC (or their affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services and/or administration services. The Board also considered the potential for revenue to BTC, the Fund’s securities lending agent, and its affiliates in the event of any loaning of portfolio securities of the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates, will be reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that the existence of any such ancillary benefits would not alter the Board’s conclusion with respect to the appropriateness of approving the Advisory Contract.
Based on the considerations described above, the Board determined that the investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services to be rendered and that could not have been the product of arm’s-length bargaining and concluded that it is in the best interest of the Fund and its shareholders to approve the Advisory Contract.
| 68 | 2015 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 estimates and are provided pursuant to regulatory requirements 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 All Country World Minimum Volatility |
$ | 0.643163 | $ | — | $ | 0.092377 | $ | 0.735540 | 87 | % | — | % | 13 | % | 100 | % | ||||||||||||||||
| MSCI Emerging Markets EMEA |
0.782420 | — | 0.056405 | 0.838825 | 93 | — | 7 | 100 | ||||||||||||||||||||||||
| MSCI Emerging Markets Horizon |
0.064904 | — | 0.020856 | 0.085760 | 76 | — | 24 | 100 | ||||||||||||||||||||||||
| MSCI Frontier 100 |
0.125389 | 2.823146 | 0.028879 | 2.977414 | 4 | 95 | 1 | 100 | ||||||||||||||||||||||||
| MSCI World |
0.654846 | — | 0.022217 | 0.677063 | 97 | — | 3 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
69 |
Table of Contents
Notes:
| 70 | 2015 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 basis on the Funds’ website.
©2015 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-811-0215
|
|
Table of Contents
FEBRUARY 28, 2015
| 2015 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
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| 10 | ||||
| 10 | ||||
| 11 | ||||
| 11 | ||||
| 14 | ||||
| 18 | ||||
| 19 | ||||
| 23 | ||||
| 24 | ||||
| 31 | ||||
| 36 | ||||
| 47 |
Table of Contents
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was 1.59%, net of fees, while the total return for the Index was 1.50%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
6.90% | 6.23% | 6.77% | 6.90% | 6.23% | 6.77% | ||||||||||||||||||||
| Since Inception |
4.96% | 4.80% | 5.12% | 16.07% | 15.54% | 16.65% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 1,015.90 | $ | 1.90 | $ | 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, 2015
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, 2015, the total return for the Fund was -22.40%, net of fees, while the total return for the Index was -22.49%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(13.78)% | (13.34)% | (13.74)% | (13.78)% | (13.34)% | (13.74)% | ||||||||||||||||||||
| Since Inception |
(2.08)% | (1.90)% | (2.12)% | (6.26)% | (5.75)% | (6.38)% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 776.00 | $ | 1.72 | $ | 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL GOLD MINERS ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -22.13%, net of fees, while the total return for the Index was -22.09%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(19.75)% | (19.64)% | (19.64)% | (19.75)% | (19.64)% | (19.64)% | ||||||||||||||||||||
| Since Inception |
(28.18)% | (28.12)% | (28.07)% | (63.91)% | (63.83)% | (63.79)% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 778.70 | $ | 1.72 | $ | 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, 2015
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, 2015, the total return for the Fund was -19.46%, net of fees, while the total return for the Index was -19.34%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(15.11)% | (15.36)% | (14.94)% | (15.11)% | (15.36)% | (14.94)% | ||||||||||||||||||||
| Since Inception |
(11.01)% | (10.86)% | (10.99)% | (30.18)% | (29.81)% | (30.17)% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 805.40 | $ | 1.75 | $ | 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL SILVER MINERS ETF
Performance as of February 28, 2015
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, 2015, the total return for the Fund was -25.05%, net of fees, while the total return for the Index was -25.14%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
(27.33)% | (27.57)% | (27.28)% | (27.33)% | (27.57)% | (27.28)% | ||||||||||||||||||||
| Since Inception |
(25.92)% | (25.87)% | (25.83)% | (60.30)% | (60.22)% | (60.20)% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 749.50 | $ | 1.69 | $ | 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, 2014 and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS ETF
February 28, 2015
| 12 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
February 28, 2015
| 14 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL GOLD MINERS ETF
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2015
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL METALS & MINING PRODUCERS ETF
February 28, 2015
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL SILVER MINERS ETF
February 28, 2015
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 28, 2015
| iShares MSCI Global Agriculture Producers ETF |
iShares MSCI Global Energy Producers ETF |
iShares MSCI Global Gold Miners ETF |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 41,039,479 | $ | 28,956,557 | $ | 78,454,539 | ||||||
| Affiliated (Note 2) |
774,565 | 202,082 | 408,873 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 41,814,044 | $ | 29,158,639 | $ | 78,863,412 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 40,775,268 | $ | 27,896,552 | $ | 63,314,326 | ||||||
| Affiliated (Note 2) |
860,934 | 202,082 | 408,873 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
41,636,202 | 28,098,634 | 63,723,199 | |||||||||
| Foreign currency, at valueb |
62,874 | 14,583 | 11,710 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
399,625 | 3,972 | 1,267,786 | |||||||||
| Due from custodian (Note 4) |
— | 44,546 | — | |||||||||
| Dividends and interest |
69,352 | 122,637 | 40,202 | |||||||||
| Capital shares sold |
— | 43,509 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
42,168,053 | 28,327,881 | 65,042,897 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
413,054 | 71,763 | 1,301,534 | |||||||||
| Collateral for securities on loan (Note 1) |
500,954 | 181,506 | 379,709 | |||||||||
| Investment advisory fees (Note 2) |
12,018 | 6,924 | 18,883 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
926,026 | 260,193 | 1,700,126 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 41,242,027 | $ | 28,067,688 | $ | 63,342,771 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 41,533,745 | $ | 29,235,829 | $ | 96,073,459 | ||||||
| Undistributed net investment income |
121,171 | 113,866 | 39,710 | |||||||||
| Accumulated net realized loss |
(232,029 | ) | (221,361 | ) | (17,630,010 | ) | ||||||
| Net unrealized depreciation |
(180,860 | ) | (1,060,646 | ) | (15,140,388 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 41,242,027 | $ | 28,067,688 | $ | 63,342,771 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
1,500,000 | 1,300,000 | 7,250,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 27.49 | $ | 21.59 | $ | 8.74 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $468,059, $170,649 and $351,351, respectively. See Note 1. |
| b | Cost of foreign currency: $63,927, $15,203 and $11,718, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to financial statements.
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 28, 2015
| iShares MSCI Global Metals & Mining Producers ETF |
iShares MSCI Global Silver Miners ETF |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 220,979,409 | $ | 17,834,350 | ||||
| Affiliated (Note 2) |
5,646,869 | 929,866 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 226,626,278 | $ | 18,764,216 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 195,444,179 | $ | 14,952,255 | ||||
| Affiliated (Note 2) |
5,646,869 | 929,866 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
201,091,048 | 15,882,121 | ||||||
| Foreign currency, at valueb |
103,556 | 4,226 | ||||||
| Cash |
1,599 | — | ||||||
| Receivables: |
||||||||
| Investment securities sold |
305,243 | 360,232 | ||||||
| Dividends and interest |
127,570 | 10,648 | ||||||
| Capital shares sold |
711,745 | — | ||||||
|
|
|
|
|
|||||
| Total Assets |
202,340,761 | 16,257,227 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
491,582 | 380,688 | ||||||
| Collateral for securities on loan (Note 1) |
5,540,546 | 927,533 | ||||||
| Capital shares redeemed |
417,243 | — | ||||||
| Investment advisory fees (Note 2) |
54,187 | 4,543 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
6,503,558 | 1,312,764 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 195,837,203 | $ | 14,944,463 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 230,986,575 | $ | 20,456,708 | ||||
| Distributions in excess of net investment income |
(236,550 | ) | (268,555 | ) | ||||
| Accumulated net realized loss |
(9,373,750 | ) | (2,361,420 | ) | ||||
| Net unrealized depreciation |
(25,539,072 | ) | (2,882,270 | ) | ||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 195,837,203 | $ | 14,944,463 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
12,250,000 | 1,600,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 15.99 | $ | 9.34 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $5,237,446 and $878,081, respectively. See Note 1. |
| b | Cost of foreign currency: $104,546 and $4,391, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
25 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI Global Agriculture Producers ETF |
iShares MSCI Global Energy Producers ETF |
iShares MSCI Global Gold Miners ETF |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 398,291 | $ | 206,713 | $ | 268,181 | ||||||
| Dividends — affiliated (Note 2) |
440 | — | — | |||||||||
| Interest — affiliated (Note 2) |
2 | — | 1 | |||||||||
| Securities lending income — affiliated (Note 2) |
11,159 | 345 | 9,284 | |||||||||
|
|
|
|
|
|
|
|||||||
| 409,892 | 207,058 | 277,466 | ||||||||||
| Less: Other foreign taxes (Note 1) |
(4 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
409,888 | 207,058 | 277,466 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
84,778 | 22,722 | 107,371 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
84,778 | 22,722 | 107,371 | |||||||||
| Less investment advisory fees waived (Note 2) |
(1,611 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
83,167 | 22,722 | 107,371 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
326,721 | 184,336 | 170,095 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(86,962 | ) | (71,785 | ) | (4,341,119 | ) | ||||||
| Investments — affiliated (Note 2) |
1,895 | — | — | |||||||||
| In-kind redemptions — unaffiliated |
803,956 | — | 581,507 | |||||||||
| In-kind redemptions — affiliated (Note 2) |
15,865 | — | — | |||||||||
| Foreign currency transactions |
(10,316 | ) | (2,104 | ) | (3,593 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
724,438 | (73,889 | ) | (3,763,205 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(452,568 | ) | (1,709,232 | ) | (11,258,628 | ) | ||||||
| Translation of assets and liabilities in foreign currencies |
(2,499 | ) | (570 | ) | (537 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(455,067 | ) | (1,709,802 | ) | (11,259,165 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
269,371 | (1,783,691 | ) | (15,022,370 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 596,092 | $ | (1,599,355 | ) | $ | (14,852,275 | ) | ||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $25,455, $10,920 and $40,406, respectively. |
See notes to financial statements.
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 28, 2015
| iShares MSCI Global Metals & Mining Producers ETF |
iShares MSCI Global Silver Miners ETF |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 1,961,140 | $ | 31,627 | ||||
| Interest — affiliated (Note 2) |
7 | — | ||||||
| Securities lending income — affiliated (Note 2) |
37,363 | 3,611 | ||||||
|
|
|
|
|
|||||
| 1,998,510 | 35,238 | |||||||
| Less: Other foreign taxes (Note 1) |
(20 | ) | — | |||||
|
|
|
|
|
|||||
| Total investment income |
1,998,490 | 35,238 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
323,260 | 26,177 | ||||||
|
|
|
|
|
|||||
| Total expenses |
323,260 | 26,177 | ||||||
|
|
|
|
|
|||||
| Net investment income |
1,675,230 | 9,061 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(1,949,149 | ) | (905,344 | ) | ||||
| In-kind redemptions — unaffiliated |
815,031 | 171,327 | ||||||
| Foreign currency transactions |
(75,465 | ) | (655 | ) | ||||
|
|
|
|
|
|||||
| Net realized loss |
(1,209,583 | ) | (734,672 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
(34,784,919 | ) | (2,912,401 | ) | ||||
| Translation of assets and liabilities in foreign currencies |
(394 | ) | (135 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
(34,785,313 | ) | (2,912,536 | ) | ||||
|
|
|
|
|
|||||
| Net realized and unrealized loss |
(35,994,896 | ) | (3,647,208 | ) | ||||
|
|
|
|
|
|||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (34,319,666 | ) | $ | (3,638,147 | ) | ||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $103,696 and $5,300, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
27 |
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, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 326,721 | $ | 903,316 | $ | 184,336 | $ | 143,021 | ||||||||
| Net realized gain (loss) |
724,438 | (54,954 | ) | (73,889 | ) | (96,577 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
(455,067 | ) | 3,654,533 | (1,709,802 | ) | 849,565 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
596,092 | 4,502,895 | (1,599,355 | ) | 896,009 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(351,717 | ) | (869,161 | ) | (106,952 | ) | (128,943 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(351,717 | ) | (869,161 | ) | (106,952 | ) | (128,943 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
1,260,245 | 12,206,285 | 21,355,405 | 2,840,186 | ||||||||||||
| Cost of shares redeemed |
(6,657,304 | ) | (5,161,272 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(5,397,059 | ) | 7,045,013 | 21,355,405 | 2,840,186 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(5,152,684 | ) | 10,678,747 | 19,649,098 | 3,607,252 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
46,394,711 | 35,715,964 | 8,418,590 | 4,811,338 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 41,242,027 | $ | 46,394,711 | $ | 28,067,688 | $ | 8,418,590 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 121,171 | $ | 146,167 | $ | 113,866 | $ | 36,482 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
50,000 | 450,000 | 1,000,000 | 100,000 | ||||||||||||
| Shares redeemed |
(250,000 | ) | (200,000 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(200,000 | ) | 250,000 | 1,000,000 | 100,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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, 2015 (Unaudited) |
Year ended August 31, 2014 |
Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 170,095 | $ | 419,898 | $ | 1,675,230 | $ | 4,351,654 | ||||||||
| Net realized gain (loss) |
(3,763,205 | ) | (9,562,667 | ) | (1,209,583 | ) | 5,287,882 | |||||||||
| Net change in unrealized appreciation/depreciation |
(11,259,165 | ) | 11,792,558 | (34,785,313 | ) | 24,025,906 | ||||||||||
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|
|
|
|
|
|
|
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| Net increase (decrease) in net assets resulting from operations |
(14,852,275 | ) | 2,649,789 | (34,319,666 | ) | 33,665,442 | ||||||||||
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| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(187,852 | ) | (410,920 | ) | (2,429,443 | ) | (4,935,233 | ) | ||||||||
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|||||||||
| Total distributions to shareholders |
(187,852 | ) | (410,920 | ) | (2,429,443 | ) | (4,935,233 | ) | ||||||||
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|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
11,396,957 | 33,392,792 | 54,828,814 | 51,854,849 | ||||||||||||
| Cost of shares redeemed |
(3,990,530 | ) | (2,940,209 | ) | (5,941,724 | ) | (119,693,896 | ) | ||||||||
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|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
7,406,427 | 30,452,583 | 48,887,090 | (67,839,047 | ) | |||||||||||
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|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(7,633,700 | ) | 32,691,452 | 12,137,981 | (39,108,838 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
70,976,471 | 38,285,019 | 183,699,222 | 222,808,060 | ||||||||||||
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|
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| End of period |
$ | 63,342,771 | $ | 70,976,471 | $ | 195,837,203 | $ | 183,699,222 | ||||||||
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|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 39,710 | $ | 57,467 | $ | (236,550 | ) | $ | 517,663 | |||||||
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|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,400,000 | 3,300,000 | 3,500,000 | 2,650,000 | ||||||||||||
| Shares redeemed |
(450,000 | ) | (300,000 | ) | (350,000 | ) | (5,850,000 | ) | ||||||||
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|
|
|
|
|
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|
|||||||||
| Net increase (decrease) in shares outstanding |
950,000 | 3,000,000 | 3,150,000 | (3,200,000 | ) | |||||||||||
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See notes to financial statements.
| FINANCIAL STATEMENTS |
29 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Global Silver Miners ETF |
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| Six months ended February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 9,061 | $ | 55,868 | ||||
| Net realized loss |
(734,672 | ) | (1,309,004 | ) | ||||
| Net change in unrealized appreciation/depreciation |
(2,912,536 | ) | 1,092,563 | |||||
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|
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|
|||||
| Net decrease in net assets resulting from operations |
(3,638,147 | ) | (160,573 | ) | ||||
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|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(234,737 | ) | (104,622 | ) | ||||
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|
|||||
| Total distributions to shareholders |
(234,737 | ) | (104,622 | ) | ||||
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|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
5,799,772 | 7,281,618 | ||||||
| Cost of shares redeemed |
(957,750 | ) | — | |||||
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|
|||||
| Net increase in net assets from capital share transactions |
4,842,022 | 7,281,618 | ||||||
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|
|||||
| INCREASE IN NET ASSETS |
969,138 | 7,016,423 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
13,975,325 | 6,958,902 | ||||||
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| End of period |
$ | 14,944,463 | $ | 13,975,325 | ||||
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|||||
| Distributions in excess of net investment income included in net assets at end of period |
$ | (268,555 | ) | $ | (42,879 | ) | ||
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|
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| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
600,000 | 600,000 | ||||||
| Shares redeemed |
(100,000 | ) | — | |||||
|
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|
|
|||||
| Net increase in shares outstanding |
500,000 | 600,000 | ||||||
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|
|
|
|||||
See notes to financial statements.
| 30 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Global Agriculture Producers ETF | ||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to |
|||||||||||||
| Net asset value, beginning of period |
$ | 27.29 | $ | 24.63 | $ | 24.91 | $ | 24.88 | ||||||||
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|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.20 | 0.58 | 0.50 | 0.28 | ||||||||||||
| Net realized and unrealized gain (loss)c |
0.22 | 2.63 | (0.46 | ) | (0.05 | ) | ||||||||||
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| Total from investment operations |
0.42 | 3.21 | 0.04 | 0.23 | ||||||||||||
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|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.22 | ) | (0.55 | ) | (0.32 | ) | (0.20 | ) | ||||||||
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|||||||||
| Total distributions |
(0.22 | ) | (0.55 | ) | (0.32 | ) | (0.20 | ) | ||||||||
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| Net asset value, end of period |
$ | 27.49 | $ | 27.29 | $ | 24.63 | $ | 24.91 | ||||||||
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| Total return |
1.59 | %d | 13.05 | % | 0.10 | % | 0.97 | %d | ||||||||
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| Ratios/Supplemental data: |
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| Net assets, end of period (000s) |
$ | 41,242 | $ | 46,395 | $ | 35,716 | $ | 9,965 | ||||||||
| Ratio of expenses to average net assetse |
0.38 | % | 0.38 | % | 0.38 | % | 0.38 | % | ||||||||
| Ratio of expenses to average net assets prior to waived feese |
0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | ||||||||
| Ratio of net investment income to average net assetse |
1.50 | % | 2.17 | % | 1.87 | % | 1.93 | % | ||||||||
| Portfolio turnover ratef |
4 | % | 14 | % | 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 3%, 13%, 6% and 6%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
31 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Global Energy Producers ETF | ||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to |
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| Net asset value, beginning of period |
$ | 28.06 | $ | 24.06 | $ | 23.51 | $ | 24.79 | ||||||||
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| Income from investment operations: |
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| Net investment incomeb |
0.35 | 0.68 | 0.63 | 0.43 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(6.64 | ) | 3.96 | 0.55 | (1.39 | ) | ||||||||||
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| Total from investment operations |
(6.29 | ) | 4.64 | 1.18 | (0.96 | ) | ||||||||||
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| Less distributions from: |
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| Net investment income |
(0.18 | ) | (0.64 | ) | (0.63 | ) | (0.32 | ) | ||||||||
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| Total distributions |
(0.18 | ) | (0.64 | ) | (0.63 | ) | (0.32 | ) | ||||||||
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| Net asset value, end of period |
$ | 21.59 | $ | 28.06 | $ | 24.06 | $ | 23.51 | ||||||||
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| Total return |
(22.40 | )%d | 19.44 | % | 5.10 | % | (3.77 | )%d | ||||||||
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| Ratios/Supplemental data: |
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| Net assets, end of period (000s) |
$ | 28,068 | $ | 8,419 | $ | 4,811 | $ | 4,701 | ||||||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | ||||||||
| Ratio of net investment income to average net assetse |
3.16 | % | 2.57 | % | 2.61 | % | 3.16 | % | ||||||||
| Portfolio turnover ratef |
1 | % | 8 | % | 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 1%, 8%, 6% and 5%, respectively. See Note 4. |
See notes to financial statements.
| 32 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Global Gold Miners ETF | ||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to |
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| Net asset value, beginning of period |
$ | 11.27 | $ | 11.60 | $ | 20.05 | $ | 25.00 | ||||||||
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| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.03 | 0.08 | 0.21 | 0.15 | ||||||||||||
| Net realized and unrealized lossc |
(2.53 | ) | (0.33 | ) | (8.47 | ) | (5.02 | ) | ||||||||
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| Total from investment operations |
(2.50 | ) | (0.25 | ) | (8.26 | ) | (4.87 | ) | ||||||||
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| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.03 | ) | (0.08 | ) | (0.19 | ) | (0.08 | ) | ||||||||
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| Total distributions |
(0.03 | ) | (0.08 | ) | (0.19 | ) | (0.08 | ) | ||||||||
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| Net asset value, end of period |
$ | 8.74 | $ | 11.27 | $ | 11.60 | $ | 20.05 | ||||||||
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| Total return |
(22.13 | )%d | (2.01 | )% | (41.28 | )% | (19.45 | )%d | ||||||||
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| Ratios/Supplemental data: |
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| Net assets, end of period (000s) |
$ | 63,343 | $ | 70,976 | $ | 38,285 | $ | 32,084 | ||||||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | ||||||||
| Ratio of net investment income to average net assetse |
0.62 | % | 0.81 | % | 1.37 | % | 1.25 | % | ||||||||
| Portfolio turnover ratef |
8 | % | 22 | % | 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.
| FINANCIAL HIGHLIGHTS |
33 |
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 Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to |
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| Net asset value, beginning of period |
$ | 20.19 | $ | 18.11 | $ | 19.00 | $ | 24.76 | ||||||||
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| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.17 | 0.50 | 0.50 | 0.37 | ||||||||||||
| Net realized and unrealized gain (loss)c |
(4.12 | ) | 2.23 | (1.00 | ) | (6.00 | ) | |||||||||
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|||||||||
| Total from investment operations |
(3.95 | ) | 2.73 | (0.50 | ) | (5.63 | ) | |||||||||
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|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.25 | ) | (0.65 | ) | (0.39 | ) | (0.13 | ) | ||||||||
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|||||||||
| Total distributions |
(0.25 | ) | (0.65 | ) | (0.39 | ) | (0.13 | ) | ||||||||
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| Net asset value, end of period |
$ | 15.99 | $ | 20.19 | $ | 18.11 | $ | 19.00 | ||||||||
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| Total return |
(19.46 | )%d | 15.32 | % | (2.68 | )% | (22.76 | )%d | ||||||||
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|||||||||
| Ratios/Supplemental data: |
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| Net assets, end of period (000s) |
$ | 195,837 | $ | 183,699 | $ | 222,808 | $ | 123,524 | ||||||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | ||||||||
| Ratio of expenses to average net assets prior to waived feese |
0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | ||||||||
| Ratio of net investment income to average net assetse |
2.02 | % | 2.53 | % | 2.51 | % | 2.98 | % | ||||||||
| Portfolio turnover ratef |
2 | % | 18 | % | 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, 2015, the years ended August 31, 2014, August 31, 2013 and the period ended August 31, 2012 were 2%, 15%, 7% and 1%, respectively. See Note 4. |
See notes to financial statements.
| 34 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Global Silver Miners ETF | ||||||||||||||||
| Six months ended Feb. 28, 2015 (Unaudited) |
Year ended Aug. 31, 2014 |
Year ended Aug. 31, 2013 |
Period from to |
|||||||||||||
| Net asset value, beginning of period |
$ | 12.70 | $ | 13.92 | $ | 20.94 | $ | 24.87 | ||||||||
|
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|
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|
|
|
|
|||||||||
| Income from investment operations: |
||||||||||||||||
| Net investment incomeb |
0.01 | 0.08 | 0.16 | 0.11 | ||||||||||||
| Net realized and unrealized lossc |
(3.21 | ) | (1.15 | ) | (6.90 | ) | (3.90 | ) | ||||||||
|
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|
|
|
|
|
|
|||||||||
| Total from investment operations |
(3.20 | ) | (1.07 | ) | (6.74 | ) | (3.79 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less distributions from: |
||||||||||||||||
| Net investment income |
(0.16 | ) | (0.15 | ) | (0.28 | ) | (0.14 | ) | ||||||||
|
|
|
|
|
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|
|
|
|||||||||
| Total distributions |
(0.16 | ) | (0.15 | ) | (0.28 | ) | (0.14 | ) | ||||||||
|
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|
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|
|
|
|||||||||
| Net asset value, end of period |
$ | 9.34 | $ | 12.70 | $ | 13.92 | $ | 20.94 | ||||||||
|
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|
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|
|
|
|||||||||
| Total return |
(25.05 | )%d | (7.48 | )% | (32.49 | )% | (15.18 | )%d | ||||||||
|
|
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|
|
|
|
|
|
|||||||||
| Ratios/Supplemental data: |
||||||||||||||||
| Net assets, end of period (000s) |
$ | 14,944 | $ | 13,975 | $ | 6,959 | $ | 2,094 | ||||||||
| Ratio of expenses to average net assetse |
0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | ||||||||
| Ratio of net investment income to average net assetse |
0.13 | % | 0.63 | % | 1.03 | % | 0.86 | % | ||||||||
| Portfolio turnover ratef |
9 | % | 22 | % | 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.
| FINANCIAL HIGHLIGHTS |
35 |
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.
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. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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. |
| 36 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| • | 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 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.
| NOTES TO FINANCIAL STATEMENTS |
37 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 28, 2015. 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 |
$ | 40,516,962 | $ | — | $ | 0 | a | $ | 40,516,962 | |||||||
| Investment Companies |
340,026 | — | — | 340,026 | ||||||||||||
| Preferred Stocks |
258,306 | — | — | 258,306 | ||||||||||||
| Money Market Funds |
520,908 | — | — | 520,908 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 41,636,202 | $ | — | $ | 0 | a | $ | 41,636,202 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Global Energy Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 27,674,775 | $ | — | $ | — | $ | 27,674,775 | ||||||||
| Preferred Stocks |
221,777 | — | — | 221,777 | ||||||||||||
| Warrants |
— | 0 | a | — | 0 | a | ||||||||||
| Money Market Funds |
202,082 | — | — | 202,082 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 28,098,634 | $ | 0 | a | $ | — | $ | 28,098,634 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Global Gold Miners |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 63,314,326 | $ | — | $ | — | $ | 63,314,326 | ||||||||
| Money Market Funds |
408,873 | — | — | 408,873 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 63,723,199 | $ | — | $ | — | $ | 63,723,199 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Global Metals & Mining Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 190,417,030 | $ | 41,771 | $ | 2 | $ | 190,458,803 | ||||||||
| Preferred Stocks |
4,985,376 | — | — | 4,985,376 | ||||||||||||
| Money Market Funds |
5,646,869 | — | — | 5,646,869 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 201,049,275 | $ | 41,771 | $ | 2 | $ | 201,091,048 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| MSCI Global Silver Miners |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 14,931,439 | $ | 20,816 | $ | — | $ | 14,952,255 | ||||||||
| Money Market Funds |
929,866 | — | — | 929,866 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 15,861,305 | $ | 20,816 | $ | — | $ | 15,882,121 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax
| 38 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
authorities as of February 28, 2015 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, 2015, 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.
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. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
| NOTES TO FINANCIAL STATEMENTS |
39 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the schedules of investments. The value of any securities on loan as of February 28, 2015 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 or request additional collateral. 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.
The following table is a summary of each Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| iShares ETF | Market Value of Securities on Loan |
Cash
Collateral Received a |
Net Amount |
|||||||||
| MSCI Global Agriculture Producers |
$ | 468,059 | $ | 468,059 | $ | — | ||||||
| MSCI Global Energy Producers |
170,649 | 170,649 | — | |||||||||
| MSCI Global Gold Miners |
351,351 | 351,351 | — | |||||||||
| MSCI Global Metals & Mining Producers |
5,237,446 | 5,237,446 | — | |||||||||
| MSCI Global Silver Miners |
878,081 | 878,081 | — | |||||||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in each Fund’s statement of assets and liabilities. |
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statements and disclosures.
| 40 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 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.
In addition, each of the iShares MSCI Global Agriculture Producers and iShares MSCI Global Metals & Mining Producers ETFs indirectly pays its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses”). BFA has contractually agreed to waive a portion of its investment advisory fees for each Fund through December 31, 2015 in an amount equal to the acquired fund fees and expenses attributable to each Fund’s investments in other iShares funds, if any.
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. 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% (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, each Fund retains 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees 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, each Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
Prior to January 1, 2015, each Fund retained 75% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, each Fund retained for the remainder of calendar year 2014, 80% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
| NOTES TO FINANCIAL STATEMENTS |
41 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For the six months ended February 28, 2015, 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 |
$ | 3,482 | ||
| MSCI Global Energy Producers |
109 | |||
| MSCI Global Gold Miners |
3,001 | |||
| MSCI Global Metals & Mining Producers |
11,933 | |||
| MSCI Global Silver Miners |
1,221 | |||
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, 2015, 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.
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, 2015, 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 |
12,183 | 358 | (2,290 | ) | 10,251 | $ | 340,026 | $ | 440 | $ | 17,760 | |||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| 42 | 2015 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, 2015 were as follows:
| iShares ETF | Purchases | Sales | ||||||
| MSCI Global Agriculture Producers |
$ | 1,565,268 | $ | 1,868,968 | ||||
| MSCI Global Energy Producers |
706,265 | 141,711 | ||||||
| MSCI Global Gold Miners |
4,603,031 | 4,479,551 | ||||||
| MSCI Global Metals & Mining Producers |
10,770,053 | 4,114,123 | ||||||
| MSCI Global Silver Miners |
1,246,173 | 1,447,646 | ||||||
In-kind transactions (see Note 4) for the six months ended February 28, 2015 were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
| MSCI Global Agriculture Producers |
$ | 1,175,785 | $ | 6,274,579 | ||||
| MSCI Global Energy Producers |
20,740,582 | — | ||||||
| MSCI Global Gold Miners |
11,285,033 | 3,955,997 | ||||||
| MSCI Global Metals & Mining Producers |
46,839,680 | 5,105,782 | ||||||
| MSCI Global Silver Miners |
5,782,384 | 955,883 | ||||||
| 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. Such variable charges, if any, are included in “Proceeds from shares sold” in the statements of changes in net assets.
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. | MARKET AND CREDIT RISK |
In the normal course of business, each Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks each Fund is exposed to include market risk and credit risk. Each Fund’s prospectus provides details of these and other types of risk.
| NOTES TO FINANCIAL STATEMENTS |
43 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss each Fund may suffer through holding market positions in the face of market movements. Each Fund is exposed to market risk by virtue of its direct or indirect investment in equity instruments. The fair value of securities held by the Funds may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of each Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s schedule of investments.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.
Each Fund invests a substantial amount of its assets 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 issuers from countries with less developed markets.
Each Fund invests all or substantially all of its assets in securities within a single or limited number of market sectors. When a fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions affecting those market sectors may have a significant impact on its investment performance.
The United States and the European Union, along with the regulatory bodies of a number of countries including Japan, Australia and Canada (collectively, “Sanctioning Bodies”), have imposed sectorial economic sanctions on certain Russian individuals and Russian corporate entities which include prohibitions on transacting in or dealing in new debt of longer than 30 or 90 days maturity or new equity of such issuers. Securities held by the iShares MSCI Global Agriculture Producers ETF, iShares MSCI Global Energy Producers ETF and iShares MSCI Global Metals & Mining Producers ETF issued prior to the date of the sanctions being imposed are not currently subject to any restrictions under the sanctions. However, compliance with each of these sanctions may impair the ability of a Fund to buy, sell, hold, receive or deliver the affected securities or other securities of such issuers. The Sanctioning Bodies 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. Current or future sanctions may result in Russia taking counter measures or retaliatory actions, which may further impair the value and liquidity of Russian securities. These retaliatory measures may include the immediate freeze of Russian assets held by a Fund.
| 44 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of each Fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its statement of assets and liabilities.
| 6. | INCOME TAX INFORMATION |
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.
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, 2014, the Funds’ fiscal year end, the following Funds had non-expiring capital loss carryforwards available to offset future realized capital gains as follows:
| iShares ETF | Non- Expiring |
|||
| MSCI Global Agriculture Producers |
$ | 17,007 | ||
| MSCI Global Energy Producers |
38,653 | |||
| MSCI Global Gold Miners |
1,723,545 | |||
| MSCI Global Metals & Mining Producers |
1,369,119 | |||
| MSCI Global Silver Miners |
112,746 | |||
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
| NOTES TO FINANCIAL STATEMENTS |
45 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 28, 2015, 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 |
$ | 42,218,725 | $ | 3,697,640 | $ | (4,280,163 | ) | $ | (582,523 | ) | ||||||
| MSCI Global Energy Producers |
29,181,283 | 351,419 | (1,434,068 | ) | (1,082,649 | ) | ||||||||||
| MSCI Global Gold Miners |
88,253,917 | 1,664,821 | (26,195,539 | ) | (24,530,718 | ) | ||||||||||
| MSCI Global Metals & Mining Producers |
230,284,815 | 9,156,039 | (38,349,806 | ) | (29,193,767 | ) | ||||||||||
| MSCI Global Silver Miners |
20,051,377 | 225,673 | (4,394,929 | ) | (4,169,256 | ) | ||||||||||
Management has analyzed tax laws and regulations and their application to the Funds as of February 28, 2015, 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.
| 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.
| 46 | 2015 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 estimates and are provided pursuant to regulatory requirements 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 |
$ | 0.192497 | $ | — | $ | 0.027326 | $ | 0.219823 | 88 | % | — | % | 12 | % | 100 | % | ||||||||||||||||
| MSCI Global Energy Producers |
0.169263 | — | 0.008990 | 0.178253 | 95 | — | 5 | 100 | ||||||||||||||||||||||||
| MSCI Global Gold Miners |
0.029108 | — | 0.000475 | 0.029583 | 98 | — | 2 | 100 | ||||||||||||||||||||||||
| MSCI Global Metals & Mining Producers |
0.216352 | — | 0.036715 | 0.253067 | 85 | — | 15 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
47 |
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Notes:
| 48 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
49 |
Table of Contents
Notes:
| 50 | 2015 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 basis on the Funds’ website.
©2015 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-812-0215
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Table of Contents
FEBRUARY 28, 2015
|
2015 SEMI-ANNUAL REPORT (UNAUDITED)
|
|
iShares, Inc.
| Ø | iShares Core MSCI Emerging Markets ETF | IEMG | NYSE Arca |
Table of Contents
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| 6 | ||||
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Table of Contents
iSHARES® CORE MSCI EMERGING MARKETS ETF
Performance as of February 28, 2015
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 equities, 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, 2015, the total return for the Fund was -8.11%, net of fees, while the total return for the Index was -8.10%.
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | |||||||||||||||||||||
| 1 Year |
4.78% | 5.67% | 4.81% | 4.78% | 5.67% | 4.81% | ||||||||||||||||||||
| Since Inception |
1.66% | 1.79% | 1.66% | 3.98% | 4.28% | 3.97% | ||||||||||||||||||||
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 (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Beginning Account Value (9/1/14) |
Ending Account Value (2/28/15) |
Expenses Paid During Period a |
Annualized Expense Ratio |
||||||||||||||||||||
| $ | 1,000.00 | $ | 918.90 | $ | 0.86 | $ | 1,000.00 | $ | 1,023.90 | $ | 0.90 | 0.18% | ||||||||||||||
| 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, 2014 and held through February 28, 2015, 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. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. 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 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
7 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 8 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 10 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 12 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
13 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 14 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 16 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 18 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 20 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
21 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 22 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
23 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 24 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
25 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 26 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
27 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 28 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
29 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 30 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
31 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 32 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
33 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| 34 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
Open futures contracts as of February 28, 2015 were as follows:
| Issue | Number of Contracts Purchased (Sold) |
Expiration | Exchange | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| MSCI Emerging Markets E-Mini | 556 | Mar. 2015 | NYSE Liffe | $ | 27,574,820 | $ | 1,095,397 | |||||||||||||
See notes to consolidated financial statements.
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
35 |
Table of Contents
Consolidated Statement of Assets and Liabilities (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
February 28, 2015
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 6,630,460,556 | ||
| Affiliated (Note 2) |
226,519,269 | |||
|
|
|
|||
| Total cost of investments |
$ | 6,856,979,825 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 6,597,412,242 | ||
| Affiliated (Note 2) |
226,519,269 | |||
|
|
|
|||
| Total fair value of investments |
6,823,931,511 | |||
| Foreign currency, at valueb |
109,154,606 | |||
| Cash |
11,557,016 | |||
| Receivables: |
||||
| Investment securities sold |
43,200,258 | |||
| Dividends and interest |
13,374,304 | |||
| Futures variation margin |
1,095,397 | |||
|
|
|
|||
| Total Assets |
7,002,313,092 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
168,811,335 | |||
| Due to broker for cash pledged for futures, at value |
90,413 | |||
| Collateral for securities on loan (Note 1) |
200,133,529 | |||
| Foreign taxes (Note 1) |
3,402 | |||
| Investment advisory fees (Note 2) |
873,276 | |||
|
|
|
|||
| Total Liabilities |
369,911,955 | |||
|
|
|
|||
| NET ASSETS |
$ | 6,632,401,137 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 6,773,246,334 | ||
| Distributions in excess of net investment income |
(1,513,441 | ) | ||
| Accumulated net realized loss |
(107,386,361 | ) | ||
| Net unrealized depreciation |
(31,945,395 | ) | ||
|
|
|
|||
| NET ASSETS |
$ | 6,632,401,137 | ||
|
|
|
|||
| Shares outstandingc |
135,800,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 48.84 | ||
|
|
|
|||
| a | Securities on loan with a value of $185,899,487. See Note 1. |
| b | Cost of foreign currency: $109,212,166. |
| c | $0.001 par value, number of shares authorized: 250 million. |
See notes to consolidated financial statements.
| 36 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statement of Operations (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
Six months ended February 28, 2015
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 45,176,854 | ||
| Interest — unaffiliated |
294 | |||
| Interest — affiliated (Note 2) |
983 | |||
| Securities lending income — affiliated (Note 2) |
2,318,276 | |||
|
|
|
|||
| 47,496,407 | ||||
| Less: Other foreign taxes (Note 1) |
(79,949 | ) | ||
|
|
|
|||
| Total investment income |
47,416,458 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
5,337,194 | |||
| Mauritius income taxes (Note 1) |
105,154 | |||
| Commitment fees (Note 8) |
9,459 | |||
|
|
|
|||
| Total expenses |
5,451,807 | |||
|
|
|
|||
| Net investment income |
41,964,651 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(43,429,582 | ) | ||
| Futures contracts |
(2,362,754 | ) | ||
| Foreign currency transactions |
(2,187,077 | ) | ||
|
|
|
|||
| Net realized loss |
(47,979,413 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
(466,807,643 | ) | ||
| Futures contracts |
724,867 | |||
| Translation of assets and liabilities in foreign currencies |
205,512 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
(465,877,264 | ) | ||
|
|
|
|||
| Net realized and unrealized loss |
(513,856,677 | ) | ||
|
|
|
|||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (471,892,026 | ) | |
|
|
|
|||
| a | Net of foreign withholding tax of $5,675,341. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
37 |
Table of Contents
Consolidated Statements of Changes in Net Assets
iSHARES® CORE MSCI EMERGING MARKETS ETF
| Six months February 28, 2015 (Unaudited) |
Year ended August 31, 2014 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 41,964,651 | $ | 95,944,162 | ||||
| Net realized loss |
(47,979,413 | ) | (50,781,092 | ) | ||||
| Net change in unrealized appreciation/depreciation |
(465,877,264 | ) | 584,785,351 | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
(471,892,026 | ) | 629,948,421 | |||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(78,618,279 | ) | (69,107,942 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(78,618,279 | ) | (69,107,942 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
1,513,744,516 | 3,243,361,038 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
1,513,744,516 | 3,243,361,038 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
963,234,211 | 3,804,201,517 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
5,669,166,926 | 1,864,965,409 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 6,632,401,137 | $ | 5,669,166,926 | ||||
|
|
|
|
|
|||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (1,513,441 | ) | $ | 35,140,187 | |||
|
|
|
|
|
|||||
| SHARES ISSUED |
||||||||
| Shares sold |
30,600,000 | 64,400,000 | ||||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
30,600,000 | 64,400,000 | ||||||
|
|
|
|
|
|||||
See notes to consolidated financial statements.
| 38 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Financial Highlights
iSHARES® CORE MSCI EMERGING MARKETS ETF
(For a share outstanding throughout each period)
| Six months ended |
Year ended Aug. 31, 2014 |
Period from to Aug. 31, 2013 |
||||||||||
| Net asset value, beginning of period |
$ | 53.89 | $ | 45.71 | $ | 49.06 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.34 | 1.31 | 1.33 | |||||||||
| Net realized and unrealized gain (loss)c |
(4.75 | ) | 7.78 | (4.14 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
(4.41 | ) | 9.09 | (2.81 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.64 | ) | (0.91 | ) | (0.54 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.64 | ) | (0.91 | ) | (0.54 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 48.84 | $ | 53.89 | $ | 45.71 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
(8.11 | )%d | 20.05 | % | (5.75 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 6,632,401 | $ | 5,669,167 | $ | 1,864,965 | ||||||
| Ratio of expenses to average net assetse |
0.18 | % | 0.17 | % | 0.05 | % | ||||||
| Ratio of expenses to average net assets prior to waived feese |
0.18 | % | 0.18 | % | 0.18 | % | ||||||
| Ratio of net investment income to average net assetse |
1.42 | % | 2.61 | % | 3.17 | % | ||||||
| Portfolio turnover ratef |
3 | % | 8 | % | 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, 2015, the year ended August 31, 2014 and the period ended August 31, 2013 were 3%, 8% and 15%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
39 |
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 ETF | Diversification Classification | |
| Core 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. Intercompany accounts and transactions, if any, have been eliminated.
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. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
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”).
| 40 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
| • | 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). |
| • | 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. |
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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
41 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
The following table summarizes the value of each of the Fund’s investments according to the fair value hierarchy as of February 28, 2015. The breakdown of the Fund’s investments into major categories is disclosed in its consolidated schedule of investments.
| Investment Type |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 6,325,968,801 | $ | 10,721,856 | $ | 41,648 | $ | 6,336,732,305 | ||||||||
| Preferred Stocks |
260,323,684 | — | — | 260,323,684 | ||||||||||||
| Rights |
285,449 | 57,650 | — | 343,099 | ||||||||||||
| Warrants |
13,154 | 0 | a | — | 13,154 | |||||||||||
| Money Market Funds |
226,519,269 | — | — | 226,519,269 | ||||||||||||
| Futures Contractsb |
1,095,397 | — | — | 1,095,397 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 6,814,205,754 | $ | 10,779,506 | $ | 41,648 | $ | 6,825,026,908 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
| b | Shown at the unrealized appreciation (depreciation) on the contracts. |
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income and capital gain distributions, if any, are 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, 2015 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 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
| 42 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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, 2015, 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”) between India and Mauritius. In order to be eligible to claim benefits under the DTAA, the Subsidiary must, on an annual basis, satisfy certain tests and conditions, including the establishment and maintenance of valid tax residence in Mauritius and related requirements. The Fund has obtained a tax residence certificate from the Mauritian Revenue Authorities.
Based upon current interpretation and practice of the current tax laws in India and Mauritius and the DTAA, 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. Any dividends paid by the Subsidiary to the Fund are not subject to tax in Mauritius. Further, the Subsidiary is also exempt from tax in Mauritius on any gains from the sale of securities.
However, there can be no assurance that any future changes to the India-Mauritius treaty will not adversely affect the tax position of the Fund’s investments in India. If the DTAA is interpreted, amended, terminated, renegotiated, or possibly overridden by the General Anti-Avoidance Rules provisions (which are due to take effect April 1, 2017, the details of which are pending further authoritative guidance), in a manner that would adversely affect the tax position in India of the Fund, such an interpretation, amendment, or override renegotiation may cause the Fund to incur capital gains tax in India.
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.
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. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
Any cash received as collateral for securities on loan 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, 2015, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA and is disclosed in the consolidated schedule of investments. The value of any securities on loan as of February 28, 2015 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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
43 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
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 or request additional collateral. 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.
The following table is a summary of the Fund’s securities lending agreements which are subject to offset under an MSLA as of February 28, 2015:
| Market Value of Securities on Loan |
Cash
Collateral Received a |
Net Amount |
||||||||
| $ | 185,899,487 | $ | 185,899,487 | $ | — | |||||
| a | Collateral received in excess of the market value of securities on loan is not presented for financial reporting purposes. The total collateral received is disclosed in the Fund’s consolidated statement of assets and liabilities. |
RECENT ACCOUNTING STANDARD
In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings, including securities lending. The guidance is effective for financial statements for fiscal years beginning after December 15, 2014, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Fund’s financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, 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.
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. In addition, the Fund indirectly pays its pro rata share of fees and expenses attributable to
| 44 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
its investments in other investment companies (“acquired fund fees and expenses”). BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through December 31, 2015 in an amount equal to the acquired fund fees and expenses attributable to the Fund’s investments in other iShares funds, if any.
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. 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% (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, the Fund retains 80% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees 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, the Fund, pursuant to a securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.
Prior to January 1, 2015, the Fund retained 75% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in calendar year 2014 exceeded the aggregate securities lending income generated across the iShares ETF Complex in calendar year 2013 and pursuant to a securities lending agreement, the Fund retained for the remainder of calendar year 2014, 80% of securities lending income and the amount retained was never less than 65% of the total of securities lending income plus the collateral investment fees.
For the six months ended February 28, 2015, the Fund paid to BTC securities lending agent services and collateral investment fees in the amount of $698,365.
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.
Cross trades for the six months ended February 28, 2015, if any, were executed by the Fund 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.
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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
45 |
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, 2015, were $1,503,136,940 and $158,229,179, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 28, 2015, were $125,825,908 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. Such variable charges, if any, are included in “Proceeds from shares sold” in the consolidated statements of changes in net assets.
| 5. | FUTURES CONTRACTS |
The Fund may purchase or sell 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.
| 46 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
The following table shows the value of futures contracts held by the Fund as of February 28, 2015 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 appreciationa |
$ | 1,095,397 | ||
|
|
|
|||
| a | Represents cumulative appreciation 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, 2015 and the related locations in the consolidated statement of operations, presented by risk exposure category:
|
Net Realized Gain (Loss) |
Net Change in Unrealized |
|||||||
| Equity contracts: |
||||||||
| Futures contracts |
$ | (2,362,754 | ) | $ | 724,867 | |||
|
|
|
|
|
|||||
The following table shows the average quarter-end balances of open futures contracts for the six months ended February 28, 2015:
| Average value of contracts purchased |
$ | 24,905,217 | ||
|
|
|
|||
| 6. | MARKET AND CREDIT RISK |
In the normal course of business, the Fund’s investment activities expose it to various types of risk associated with the financial instruments and markets in which it invests. The significant types of financial risks the Fund is exposed to include market risk and credit risk. The Fund’s prospectus provides details of these and other types of risk.
BFA uses a “passive” or index approach to try to achieve the Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.
MARKET RISK
Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss the Fund may suffer through holding market positions in the face of market movements. The Fund is exposed to market risk by virtue of its investment in equity and financial derivative instruments. The fair value of securities held by the Fund may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of the Fund’s exposure to market risk is the market value of the investments held as shown in the Fund’s consolidated schedule of investments.
A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within the Fund’s portfolio are disclosed in its consolidated schedule of investments.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
47 |
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Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
The Fund invests a substantial amount of its assets 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 issuers from countries with less developed markets.
The United States and the European Union, along with the regulatory bodies of a number of countries including Japan, Australia and Canada (collectively, “Sanctioning Bodies”), have imposed sectorial economic sanctions on certain Russian individuals and Russian corporate entities which include prohibitions on transacting in or dealing in new debt of longer than 30 or 90 days maturity or new equity of such issuers. Securities held by the Fund issued prior to the date of the sanctions being imposed are not currently subject to any restrictions under the sanctions. However, compliance with each of these sanctions may impair the ability of a Fund to buy, sell, hold, receive or deliver the affected securities or other securities of such issuers. The Sanctioning Bodies 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. Current or future sanctions may result in Russia taking counter measures or retaliatory actions, which may further impair the value and liquidity of Russian securities. These retaliatory measures may include the immediate freeze of Russian assets held by a Fund.
CREDIT RISK
Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its consolidated statement of assets and liabilities.
| 7. | INCOME TAX INFORMATION |
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.
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.
| 48 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® CORE MSCI EMERGING MARKETS ETF
The tax character of current year distributions will be determined at the end of the current fiscal year.
As of August 31, 2014, the Fund’s fiscal year-end, the Fund had non-expiring capital loss carryforwards in the amount of $6,567,880 available to offset future realized capital gains.
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, 2015, the cost of investments for federal income tax purposes was $6,900,010,521. Net unrealized depreciation was $76,079,010, of which $640,669,220 represented gross unrealized appreciation on securities and $716,748,230 represented gross unrealized depreciation on securities.
Management has analyzed tax laws and regulations and their application to the Fund as of February 28, 2015, 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.
| 8. | 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 28, 2015. 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, 2015.
| 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 |
49 |
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Supplemental Information (Unaudited)
iSHARES® CORE MSCI EMERGING MARKETS ETF
Section 19(a) Notices
The amounts and sources of distributions reported are estimates and are provided pursuant to regulatory requirements 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 |
|||||||||||||||||||||||
| $ | 0.545817 | $ | — | $ | 0.093356 | $ | 0.639173 | 85 | % | — | % | 15 | % | 100 | % | |||||||||||||||
| 50 | 2015 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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For more information visit www.iShares.com or call 1-800-474-2737
This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Fund’s website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund also discloses its complete schedule of portfolio holdings on a daily basis on the Fund’s website.
©2015 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-813-0215
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| 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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| iShares, Inc. | ||
| By: | /s/ Manish Mehta | |
| Manish Mehta, President (Principal Executive Officer) | ||
| Date: April 24, 2015 | ||
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 24, 2015 | ||
| By: | /s/ Jack Gee | |
| Jack Gee, Treasurer and Chief Financial Officer (Principal Financial Officer) | ||
| Date: | April 24, 2015 | |