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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09102
iShares, Inc.
(Exact name of registrant as specified in charter)
c/o: State Street Bank and Trust Company
200 Clarendon Street, Boston, MA 02116
(Address of principal executive offices) (Zip code)
CT Corporation System
300 East Lombard Street, Baltimore, MD 21202
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-800-474-2737
Date of fiscal year end: August 31, 2008
Date of reporting period: August 31, 2008
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Item 1. | Reports to Stockholders. |
Item 1. Reports to Stockholders.
Copies of the annual reports transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company
Act of 1940 are attached.
2008 ANNUAL REPORT TO SHAREHOLDERS
iSHARES® MSCI SERIES
AUGUST 31, 2008
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iShares MSCI Austria Investable Market Index Fund
iShares MSCI Belgium Investable Market Index Fund
iShares MSCI EMU Index Fund
iShares MSCI France Index Fund
iShares MSCI Germany Index Fund
iShares MSCI Italy Index Fund
iShares MSCI Netherlands Investable Market Index Fund
iShares MSCI Spain Index Fund
iShares MSCI Sweden Index Fund
iShares MSCI Switzerland Index Fund
iShares MSCI United Kingdom Index Fund
iShares®
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L iShares®
Dear iShares Shareholder:
Electronic delivery is the easiest, most convenient way to receive reporting on your iShares holdings. In addition, it’s a way we can all care for our environment. To that end, we are pleased to offer shareholder reports and prospectuses online.
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iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated January 1, 2008 (as revised February 25, 2008)
for the iShares MSCI Belgium Investable Market Index Fund, the iShares MSCI EMU Index Fund, the iShares MSCI France Index Fund, the iShares MSCI Germany Index Fund, the iShares MSCI Italy Index Fund, the iShares MSCI Spain Index Fund, the iShares MSCI Sweden Index Fund, the iShares MSCI Switzerland Index Fund and the iShares MSCI United Kingdom Index Fund
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the iShares MSCI Index Funds named above (each a “Fund”).
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 26 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Funds, BGFA is entitled to receive a management fee from each Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Funds and certain other iShares funds (iShares MSCI Australia Index Fund, iShares MSCI Austria Investable Market Index Fund, iShares MSCI Canada Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Japan Small Cap Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund, iShares MSCI Netherlands Investable Market Index Fund and iShares MSCI Singapore Index Fund, which are offered in separate prospectuses) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
Prior to September 1, 2008, for its investment advisory services to each Fund, BGFA was entitled to receive management fees from each Fund based on each Fund’s allocable portion of aggregate average daily net assets, as shown in the following table:
Fund | Management Fee | ||
iShares MSCI Belgium Investable Market Index Fund | 0.51 | % | |
iShares MSCI EMU Index Fund | 0.51 | % | |
iShares MSCI France Index Fund | 0.51 | % | |
iShares MSCI Germany Index Fund | 0.51 | % | |
iShares MSCI Italy Index Fund | 0.52 | % | |
iShares MSCI Spain Index Fund | 0.51 | % | |
iShares MSCI Sweden Index Fund | 0.51 | % | |
iShares MSCI Switzerland Index Fund | 0.51 | % | |
iShares MSCI United Kingdom Index Fund | 0.51 | % |
If you have any questions, please call 1- 800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A. | BGI-A-055-09008 |
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated February 25, 2008
for the iShares MSCI Austria Investable Market Index Fund (the “Fund”).
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 9 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Australia Index Fund, iShares MSCI Belgium Investable Market Index Fund, iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Japan Small Cap Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund, iShares MSCI Netherlands Investable Market Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, which are offered in separate prospectuses) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at the annual rate of 0.51%.
Also, all references to 45 Fremont Street in the Prospectus are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A. | BGI-A-120-09008 |
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated February 25, 2008
for the iShares MSCI Netherlands Investable Market Index Fund (the “Fund”).
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 9 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Australia Index Fund, iShares MSCI Austria Investable Market Index Fund, iShares MSCI Belgium Investable Market Index Fund, iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Japan Small Cap Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, which are offered in separate prospectuses) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at an annual rate of 0.51%.
Also, all references to 45 Fremont Street in the Prospectus are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A. | BGI-A-121-09008 |
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
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Board Review and Approval of Investment Advisory Contract (Unaudited) | 87 | |
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101 |
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Management’s Discussion of Fund Performance
iSHARES® MSCI AUSTRIA INVESTABLE MARKET INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(17.64)% | (18.02)% | (18.57)% | 24.85% | 24.70% | 25.49% | 12.79% | 13.19% | 12.93% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(17.64)% | (18.02)% | (18.57)% | 203.38% | 201.48% | 211.24% | 233.15% | 245.35% | 237.22% |
Effective February 1, 2008, to broaden its coverage of the market, the Fund changed its underlying index from the MSCI Austria IndexSM to the MSCI Austria Investable Market IndexSM. Effective June 25, 2008, the Fund changed its name from the iShares MSCI Austria Index Fund to the iShares MSCI Austria Investable Market Index Fund.
Index performance reflects the performance of the MSCI Austria IndexSM through January 31, 2008 and the MSCI Austria Investable Market IndexSM thereafter.
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Index performance reflects the performance of the MSCI Austria IndexSM through January 31, 2008 and the MSCI Austria Investable Market IndexSM thereafter.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 1 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI AUSTRIA INVESTABLE MARKET INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 39.24 | % | |
Industrial | 18.11 | ||
Energy | 13.91 | ||
Communications | 9.02 | ||
Basic Materials | 8.64 | ||
Utilities | 5.74 | ||
Consumer Non-Cyclical | 2.80 | ||
Consumer Cyclical | 1.48 | ||
Short-Term and Other Net Assets | 1.06 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Erste Group Bank AG | 14.07 | % | |
OMV AG | 12.73 | ||
Telekom Austria AG | 9.02 | ||
voestalpine AG | 7.27 | ||
Raiffeisen International Bank Holding AG | 4.91 | ||
Oesterreichische Elektrizitaetswirtschafts AG Class A | 4.67 | ||
Strabag SE | 4.39 | ||
Atrium European Real Estate Ltd. | 4.29 | ||
Vienna Insurance Group | 3.64 | ||
Andritz AG | 3.25 | ||
TOTAL | 68.24 | % | |
The iShares MSCI Austria Investable Market Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate Austrian market, as measured by the MSCI Austria Investable Market IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (17.64)%, while the total return for the Index was (18.57)%.
Austria’s equity market experienced a double-digit decline for the reporting period, due largely to slowing global growth and the weak economic environment of its European neighbors. Austria relies on the European Union countries for the vast majority of its exports, making it vulnerable to the economic health of these constituent markets. In particular, softening economic conditions in Germany, Europe’s largest economy and Austria’s leading export market, resulted in slowing demand for Austrian goods. For the second quarter of 2008, annualized Gross Domestic Product (GDP) growth slowed to 2.0% and in July 2008 the business indicator fell to a five-year low. The U.S dollar appreciated against the euro in the final months of the reporting period, further trimming dollar-denominated performance returns.
The Fund’s ten largest holdings as of August 31, 2008 represented more than 68% of Fund net assets. Seven of the Fund’s ten largest holdings overall declined for the reporting period. Steelmaker voestalpine AG experienced the steepest decline among the ten largest holdings. In addition, several financial firms declined, notably Erste Group Bank AG, the Fund’s largest holding, as well as Raiffeisen International Bank Holding AG and Vienna Insurance Group. On the positive side, Atrium European Real Estate Ltd. produced the strongest results for the reporting period, followed by OMV AG and Oesterreichische Elektrizitaetswirtschafts AG.
2 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI BELGIUM INVESTABLE MARKET INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(26.21)% | (26.64)% | (29.27)% | 14.76% | 14.63% | 13.92% | 3.88% | 4.10% | 2.70% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(26.21)% | (26.64)% | (29.27)% | 99.04% | 97.96% | 91.85% | 46.26% | 49.42% | 30.47% |
Effective December 1, 2007, to broaden its coverage of the market, the Fund changed its underlying index from the MSCI Belgium IndexSM to the MSCI Belgium Investable Market IndexSM. Effective June 25, 2008, the Fund changed its name from the iShares MSCI Belgium Index Fund to the iShares MSCI Belgium Investable Market Index Fund.
Index performance reflects the performance of the MSCI Belgium IndexSM through November 30, 2007 and the MSCI Belgium Investable Market IndexSM thereafter.
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Index performance reflects the performance of the MSCI Belgium IndexSM through November 30, 2007 and the MSCI Belgium Investable Market IndexSM thereafter.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 3 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI BELGIUM INVESTABLE MARKET INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 42.01 | % | |
Consumer Non-Cyclical | 21.91 | ||
Diversified | 12.17 | ||
Basic Materials | 10.12 | ||
Communications | 7.53 | ||
Industrial | 4.65 | ||
Consumer Cyclical | 0.63 | ||
Technology | 0.09 | ||
Short-Term and Other Net Assets | 0.89 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Fortis | 19.86 | % | |
KBC Group NV | 11.26 | ||
InBev | 9.31 | ||
Groupe Bruxelles Lambert SA | 5.85 | ||
Delhaize Group | 4.79 | ||
Solvay SA | 4.68 | ||
Belgacom SA | 4.66 | ||
Dexia SA | 4.14 | ||
Umicore | 3.90 | ||
Colruyt SA | 3.22 | ||
TOTAL | 71.67 | % | |
The iShares MSCI Belgium Investable Market Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Belgian market, as measured by the MSCI Belgium Investable Market IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (26.21)%, while the total return for the Index was (29.27)%.
Belgium’s equity market experienced a large double-digit decline during the reporting period as inflation for the country soared at its fastest pace in more than 20 years. As accelerating food and energy costs dampened consumers’ purchasing power, consumer confidence fell to its lowest level in three years. Business confidence also declined, following weakening sentiment across Europe. Further hindering economic conditions, Belgium experienced slower export levels with trading partners both within Europe and globally.
Within the Fund, the ten largest holdings as of August 31, 2008 accounted for approximately 72% of the net assets of the Fund. Nine of the ten largest Fund holdings delivered negative performance for the reporting period. All four financial companies among the Fund’s ten largest holdings declined for the reporting period, including Fortis, the Fund’s largest holding, and Dexia SA. Retail food chain Delhaize Group and KBC Group NV also notably declined. Telecommunications company Belgacom SA and metals and mining company Umicore both experienced small declines for the reporting period. On the positive side, retailer Colruyt SA posted a strong return.
4 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI EMU INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(14.52)% | (15.11)% | (14.26)% | 15.80% | 15.53% | 16.11% | 3.50% | 3.41% | 3.80% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(14.52)% | (15.11)% | (14.26)% | 108.22% | 105.79% | 111.04% | 32.13% | 31.21% | 35.27% |
Total returns for the period since inception are calculated from the inception date of the Fund (7/25/00). “Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (7/31/00), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 5 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI EMU INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 27.04 | % | |
Communications | 12.77 | ||
Industrial | 11.01 | ||
Utilities | 10.68 | ||
Consumer Non-Cyclical | 10.47 | ||
Basic Materials | 8.36 | ||
Energy | 8.34 | ||
Consumer Cyclical | 7.40 | ||
Technology | 2.41 | ||
Diversified | 1.24 | ||
Short-Term and Other Net Assets | 0.28 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Total SA (France) | 3.87 | % | |
E.ON AG (Germany) | 2.78 | ||
Banco Santander SA (Spain) | 2.68 | ||
Telefonica SA (Spain) | 2.63 | ||
Nokia OYJ (Finland) | 2.40 | ||
Siemens AG Registered (Germany) | 2.35 | ||
Eni SpA (Italy) | 2.13 | ||
Allianz SE Registered (Germany) | 1.87 | ||
Sanofi-Aventis (France) | 1.84 | ||
BNP Paribas (France) | 1.84 | ||
TOTAL | 24.39 | % | |
The iShares MSCI EMU Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the EMU markets, as measured by the MSCI EMU IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (14.52)%, while the total return for the Index was (14.26)%.
Most European markets declined sharply for the reporting period, driven by a softening global economic environment. Sparked by problems in the subprime mortgage market in the U.S., slowing economic activity spread to European markets and helped contribute to poor market performance. Escalating prices for oil and other key commodities raised inflationary pressures and further weighed on stock prices.
The credit crisis in the U.S. threatened markets in Europe, as many European banks had invested in the U.S. subprime mortgage market. Collaborative efforts between the European Central Bank and the U.S. Federal Reserve to inject liquidity into the market, though, helped to alleviate the threat of a global crisis. Both Germany and France experienced slowing economic production as the period progressed. For the second quarter of 2008, France’s economy shrank 0.3%, while economic activity in Germany contracted 0.5%. In spite of weak economic conditions, inflationary concerns led the European Central Bank to raise short-term rates in July 2008. In the United Kingdom, however, the Bank of England responded to sluggish conditions by reducing its key lending rate three times during the reporting period, bringing the rate from 5.75% down to 5.00% by the end of the period.
The Fund’s ten largest holdings as of August 31, 2008 represented more than 24% of Fund net assets. Eight of the Fund’s ten largest holdings as of August 31, 2008 declined for the reporting period. Mobile phone maker Nokia OYJ (Finland) led the detractors from performance with a double-digit decline. All three financial companies among the Fund’s ten largest holdings also declined, with Allianz SE (Germany) experiencing the largest decline among this group. Europe’s largest engineering company, Siemens AG (Germany), and pharmaceutical company Sanofi-Aventis (France) also detracted notably from Fund performance. In addition, the Fund’s largest holding, oil company Total SA (France), posted a slight decline. Utility company E.ON AG (Germany) and telecommunications company Telefonica SA (Spain) were the bright spots, delivering modest gains for the reporting period.
6 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI FRANCE INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(11.96)% | (12.50)% | (11.81)% | 14.93% | 14.78% | 15.23% | 6.88% | 7.20% | 7.18% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(11.96)% | (12.50)% | (11.81)% | 100.57% | 99.21% | 103.16% | 94.55% | 100.48% | 100.14% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 7 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI FRANCE INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 18.17 | % | |
Consumer Non-Cyclical | 16.34 | ||
Energy | 13.57 | ||
Industrial | 12.86 | ||
Communications | 11.33 | ||
Utilities | 8.74 | ||
Basic Materials | 8.17 | ||
Consumer Cyclical | 6.14 | ||
Diversified | 2.36 | ||
Technology | 2.22 | ||
Short-Term and Other Net Assets | 0.10 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Total SA | 12.48 | % | |
Sanofi-Aventis | 6.00 | ||
BNP Paribas | 5.92 | ||
ArcelorMittal | 5.51 | ||
GDF SUEZ | 5.11 | ||
France Telecom SA | 4.33 | ||
AXA | 4.00 | ||
Societe Generale | 3.64 | ||
Vivendi | 3.63 | ||
Carrefour SA | 2.70 | ||
TOTAL | 53.32 | % | |
The iShares MSCI France Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the French market, as measured by the MSCI France IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (11.96)%, while the total return for the Index was (11.81)%.
French equity markets declined during the reporting period amid a backdrop of slowing economic activity and rising inflation. For the second quarter of 2008, in particular, Gross Domestic Product (GDP) declined 0.3% as exports declined and companies cut spending. Adding to the slowing economic conditions, industrial production, which accounts for approximately 15% of the French economy, declined. Rising oil and food prices helped to drive inflation levels to a 12-year high, eroding consumers’ purchasing power and hurting consumer confidence. The U.S dollar appreciated against the euro in the final months of the reporting period, further trimming dollar-denominated performance returns.
The ten largest Fund holdings represented approximately 53% of the net assets of the Fund as of August 31, 2008. Among the Fund’s ten largest holdings, performance was mixed for the reporting period. Natural gas producer GDF SUEZ and steelmaker ArcelorMittal delivered the strongest gains. Telecommunications company France Telecom SA also posted a positive return. On the negative side, financial companies represented some of the larger detractors from performance. Investment bank Societe Generale and insurer AXA in particular, declined notably for the reporting period. Retailer Carrefour SA and pharmaceutical company Sanofi-Aventis also delivered negative returns. The Fund’s largest holding, oil company Total SA, posted a slight decline for the reporting period.
8 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI GERMANY INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.81)% | (10.53)% | (9.66)% | 19.35% | 19.20% | 19.61% | 5.87% | 6.18% | 6.14% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.81)% | (10.53)% | (9.66)% | 142.18% | 140.70% | 144.83% | 76.86% | 82.11% | 81.39% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 9 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI GERMANY INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 19.38 | % | |
Consumer Cyclical | 17.24 | ||
Basic Materials | 15.52 | ||
Utilities | 15.48 | ||
Industrial | 14.93 | ||
Technology | 5.32 | ||
Consumer Non-Cyclical | 5.26 | ||
Communications | 4.77 | ||
Energy | 1.01 | ||
Diversified | 0.46 | ||
Short-Term and Other Net Assets | 0.63 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
E.ON AG | 10.74 | % | |
Siemens AG Registered | 9.08 | ||
Allianz SE Registered | 7.25 | ||
Bayer AG | 5.82 | ||
BASF SE | 5.34 | ||
Daimler AG Registered | 4.92 | ||
SAP AG | 4.70 | ||
Deutsche Telekom AG Registered | 4.52 | ||
RWE AG | 4.51 | ||
Volkswagen AG | 4.18 | ||
TOTAL | 61.06 | % | |
The iShares MSCI Germany Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the German market, as measured by the MSCI Germany IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (9.81)%, while the total return for the Index was (9.66)%.
The German stock market declined for the reporting period against a backdrop of slowing global economic conditions. A contraction in Germany’s Gross Domestic Product (GDP) level for the second quarter of 2008 signaled that the expansion cycle had come to an end. Industrial production fell to its lowest level in more than nine years, and factory orders declined for eight consecutive months through July 2008, extending their longest-ever declining streak. Adding to Germany’s economic concerns, rising prices for food and oil drove the inflation level to its highest level in 12 years.
The ten largest Fund holdings represented approximately 61% of the net assets of the Fund as of August 31, 2008. Among the Fund’s ten largest holdings, performance was mixed for the reporting period. The strongest performer by far was car manufacturer Volkswagen AG. Utility company E.ON AG, the Fund’s largest holding, was also a positive contributor. On the negative side, car manufacturer Daimler AG led the decliners, followed by Allianz SE and Siemens AG.
10 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI ITALY INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(19.43)% | (20.82)% | (20.40)% | 12.46% | 12.13% | 12.26% | 5.30% | 5.31% | 4.99% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(19.43)% | (20.82)% | (20.40)% | 79.92% | 77.23% | 78.30% | 67.64% | 67.81% | 62.69% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 11 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI ITALY INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 47.99 | % | |
Energy | 22.05 | ||
Utilities | 10.97 | ||
Communications | 6.24 | ||
Consumer Non-Cyclical | 4.62 | ||
Industrial | 3.72 | ||
Consumer Cyclical | 3.70 | ||
Diversified | 0.58 | ||
Short-Term and Other Net Assets | 0.13 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Eni SpA | 19.45 | % | |
UniCredito SpA | 12.92 | ||
Intesa Sanpaolo SpA | 9.11 | ||
Assicurazioni Generali SpA | 6.84 | ||
Enel SpA | 4.75 | ||
Terna SpA | 4.65 | ||
Unione di Banche Italiane ScpA | 4.41 | ||
Banco Popolare SpA | 3.49 | ||
Telecom Italia SpA | 3.19 | ||
Mediobanca SpA | 2.75 | ||
TOTAL | 71.56 | % | |
The iShares MSCI Italy Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Italian market, as measured by the MSCI Italy IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (19.43)%, while the total return for the Index was (20.40)%.
Italy’s equity market declined sharply for the reporting period against a backdrop of slowing global economic growth. Already one of the slowest economies in the euro zone, Italy’s economic growth declined further during the reporting period as global economic activity cooled. For the fourth quarter of 2007, in particular, Gross Domestic Product (GDP) contracted 0.4% from the previous quarter, and grew by a modest 0.4% for the first quarter of 2008. As prices for oil and food escalated, inflation grew to its highest level in 11 years by early 2008, curbing consumer spending. The U.S dollar appreciated against the euro in the final months of the reporting period, further trimming dollar-denominated performance returns.
The ten largest Fund holdings represented nearly 72% of the net assets of the Fund as of August 31, 2008. For the reporting period, nine of the Fund’s ten largest holdings declined. Telecommunications company Telecom Italia SpA was the largest detractor from performance among the Fund’s ten largest holdings, declining nearly 40%. All six financial companies among the Fund’s ten largest holdings also posted declines, led by UniCredito SpA and Mediobanca SpA. The Fund’s largest holding, energy company Eni SpA also declined modestly. Electric company Terna SpA posted a strong gain for the reporting period, representing the only holding amongst the top ten to produce a positive return.
12 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(12.67)% | (13.16)% | (11.54)% | 14.44% | 14.31% | 14.83% | 3.16% | 3.31% | 4.49% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(12.67)% | (13.16)% | (11.54)% | 96.28% | 95.15% | 99.62% | 36.50% | 38.47% | 55.17% |
Effective February 1, 2008, to broaden its coverage of the market, the Fund changed its underlying index from the MSCI Netherlands IndexSM to the MSCI Netherlands Investable Market IndexSM. Effective June 25, 2008, the Fund changed its name from the iShares MSCI Netherlands Index Fund to the iShares MSCI Netherlands Investable Market Index Fund.
Index performance reflects the performance of the MSCI Netherlands IndexSM through January 31, 2008 and the MSCI Netherlands Investable Market IndexSM thereafter.
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Index performance reflects the performance of the MSCI Netherlands IndexSM through January 31, 2008 and the MSCI Netherlands Investable Market IndexSM thereafter.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 13 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 26.07 | % | |
Consumer Non-Cyclical | 25.67 | ||
Industrial | 18.40 | ||
Communications | 14.67 | ||
Basic Materials | 7.22 | ||
Technology | 4.25 | ||
Energy | 2.37 | ||
Diversified | 0.76 | ||
Consumer Cyclical | 0.19 | ||
Short-Term and Other Net Assets | 0.40 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
ING Groep NV | 17.40 | % | |
Unilever NV | 13.09 | ||
Koninklijke Philips Electronics NV | 9.84 | ||
Koninklijke KPN NV | 9.03 | ||
Aegon NV | 4.86 | ||
Akzo Nobel NV | 4.78 | ||
Koninklijke Ahold NV | 4.44 | ||
TNT NV | 4.29 | ||
Heineken NV | 3.35 | ||
Reed Elsevier NV | 3.21 | ||
TOTAL | 74.29 | % | |
The iShares MSCI Netherlands Investable Market Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Dutch market, as measured by the MSCI Netherlands Investable Market IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (12.67)%, while the total return for the Index was (11.54)%.
The Dutch stock market declined for the reporting period against a backdrop of slowing global economic growth. Because the Dutch economy relies heavily on its export trade for its livelihood, it is sensitive to the economic health of its trading partners, particularly its neighboring European countries, which account for roughly 75% of its export market. During the reporting period, these European trading partners generally experienced softening economic activity, leading to decreased demand for Dutch products. Further dampening the Netherlands’ economic landscape, rising prices for oil and food drove inflation to its highest level since December 2002 which, in turn, led to reduced consumer spending.
The ten largest Fund holdings accounted for approximately 74% of the net assets of the Fund as of August 31, 2008. Among the ten largest holdings, performance was mostly negative, with nine of the holdings declining for the reporting period. Financial companies Aegon NV and ING Groep NV, the Fund’s largest holding, were among the most significant decliners. Beer producer Heineken NV also delivered negative returns, as did manufacturing conglomerate Akzo Nobel NV and Koninklijke Philips Electronics NV. Telecommunications company Koninklijke KPN NV was the lone positive performer for the reporting period, producing a solid gain.
14 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI SPAIN INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.76)% | (10.50)% | (9.43)% | 19.83% | 19.61% | 20.06% | 9.97% | 10.30% | 10.04% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.76)% | (10.50)% | (9.43)% | 147.10% | 144.86% | 149.47% | 158.73% | 166.48% | 160.28% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 15 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI SPAIN INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 40.52 | % | |
Communications | 20.86 | ||
Utilities | 15.98 | ||
Energy | 6.95 | ||
Industrial | 6.76 | ||
Consumer Non-Cyclical | 3.93 | ||
Consumer Cyclical | 3.00 | ||
Technology | 1.21 | ||
Basic Materials | 0.59 | ||
Short-Term and Other Net Assets | 0.20 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Telefonica SA | 20.43 | % | |
Banco Santander SA | 19.99 | ||
Banco Bilbao Vizcaya Argentaria SA | 9.39 | ||
Iberdrola SA | 4.71 | ||
Repsol YPF SA | 4.66 | ||
Union Fenosa SA | 4.21 | ||
Banco Popular Espanol SA | 3.80 | ||
Gas Natural SDG SA | 3.28 | ||
Actividades de Construcciones y Servicios SA | 2.87 | ||
Industria de Diseno Textil SA | 2.82 | ||
TOTAL | 76.16 | % | |
The iShares MSCI Spain Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Spanish market, as measured by the MSCI Spain IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (9.76)%, while the total return for the Index was (9.43)%.
The Spanish equity market declined for the reporting period, reflecting cooling economic activity. Because Spain’s trade with neighboring European countries accounts for the vast majority of its exports, it was vulnerable to the slowing economic environments in major European countries during the reporting period. Export trade outside of Europe also softened, reflecting sluggish economic conditions in the U.S. and Asia. For the second quarter of 2008, the annualized Gross Domestic Product (GDP) growth rate for Spain was 1.8%, down from an annualized 4.0% rate for the second quarter of 2007. In addition, unemployment and inflation levels rose, contributing to lower household consumption rates.
The ten largest Fund holdings represented more than 76% of the net assets of the Fund as of August 31, 2008. Performance among the ten largest holdings as of August 31, 2008 was mostly negative for the reporting period. Among these holdings, all three financial companies declined, led by Banco Popular Espanol SA and Banco Bilbao Vizcaya Argentaria SA. Industria de Diseno Textil SA and Actividades de Construcciones y Servicios SA also declined notably. On the positive side, utility company Union Fenosa SA was the strongest performer by far, followed by a modest positive return from telecommunications company Telefonica SA.
16 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI SWEDEN INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(23.16)% | (23.71)% | (23.35)% | 17.33% | 17.17% | 17.48% | 7.34% | 7.62% | 8.20% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(23.16)% | (23.71)% | (23.35)% | 122.39% | 120.88% | 123.75% | 103.14% | 108.37% | 119.92% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 17 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI SWEDEN INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 24.95 | % | |
Communications | 24.60 | ||
Industrial | 23.39 | ||
Consumer Cyclical | 13.40 | ||
Basic Materials | 6.45 | ||
Consumer Non-Cyclical | 6.16 | ||
Energy | 0.95 | ||
Short-Term and Other Net Assets | 0.10 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Telefonaktiebolaget LM Ericsson AB Class B | 13.26 | % | |
Nordea Bank AB | 10.94 | ||
Hennes & Mauritz AB Class B | 10.02 | ||
TeliaSonera AB | 6.20 | ||
Sandvik AB | 4.82 | ||
Volvo AB Class B | 4.66 | ||
Svenska Handelsbanken AB Class A | 4.37 | ||
Investor AB Class B | 3.81 | ||
Atlas Copco AB Class A | 3.77 | ||
Skandinaviska Enskilda Banken AB Class A | 3.30 | ||
TOTAL | 65.15 | % | |
The iShares MSCI Sweden Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Swedish market, as measured by the MSCI Sweden IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (23.16)%, while the total return for the Index was (23.35)%.
Sweden’s equity market declined sharply for the reporting period against a backdrop of sluggish global economic growth. Because Sweden’s economy is heavily dependent on exports, it is sensitive to the economic health of its export partners. During the reporting period, economic slowdown in neighboring European countries and in the U.S. resulted in reduced export growth levels for Sweden, in turn leading to slowing economic growth. For the first two quarters of 2008, Gross Domestic Product (GDP) grew by an annualized rate of 2.4%, while inflation grew by an annualized 4.4% rate for this 6-month period, its fastest pace in 14 years.
The ten largest Fund holdings represented about 65% of the net assets of the Fund as of August 31, 2008. Performance was negative among the Fund’s ten largest holdings for the reporting period, as all ten holdings declined in value. Among these holdings, four financial companies detracted from performance, with the Class A shares of Skandinaviska Enskilda Banken AB logging the steepest decline. The Class B shares of mobile phone maker Telefonaktiebolaget LM Ericsson AB, the Fund’s largest holding, also declined sharply, as did machinery company Sandvik AB and car manufacturer Volvo AB. Mobile telephone operator TeliaSonera AB fared the best among the ten largest holdings, managing only a modest decline for the reporting period.
18 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI SWITZERLAND INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(7.97)% | (8.31)% | (9.13)% | 14.68% | 14.49% | 14.19% | 5.02% | 5.39% | 5.32% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(7.97)% | (8.31)% | (9.13)% | 98.32% | 96.71% | 94.14% | 63.25% | 69.04% | 67.99% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 19 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI SWITZERLAND INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Consumer Non-Cyclical | 53.11 | % | |
Financial | 22.45 | ||
Industrial | 9.30 | ||
Basic Materials | 6.01 | ||
Consumer Cyclical | 5.90 | ||
Communications | 1.92 | ||
Technology | 0.77 | ||
Short-Term and Other Net Assets | 0.54 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Nestle SA Registered | 18.58 | % | |
Roche Holding AG Genusschein | 13.35 | ||
Novartis AG Registered | 13.31 | ||
UBS AG Registered | 4.92 | ||
Credit Suisse Group AG Registered | 4.89 | ||
Zurich Financial Services AG Registered | 4.83 | ||
ABB Ltd. Registered | 4.83 | ||
Compagnie Financiere Richemont SA A Units Bearer | 4.19 | ||
Syngenta AG Registered | 3.89 | ||
Swiss Reinsurance Co. Registered | 3.26 | ||
TOTAL | 76.05 | % | |
The iShares MSCI Switzerland Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Swiss market, as measured by the MSCI Switzerland IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (7.97)%, while the total return for the Index was (9.13)%.
Switzerland’s equity market declined for the reporting period. Because it relies on countries in the euro zone for more than half of its exports, Switzerland was vulnerable to sluggish economic conditions in some of its neighboring countries during the reporting period. As export growth slowed and manufacturing growth fell to its lowest level in three years, economic growth cooled. For the first quarter of 2008, Gross Domestic Product (GDP) increased just 0.3%, compared with a 0.9% increase for each of the previous three quarters. In addition, rising oil prices led to an increased inflation level, which climbed 3.1% in June 2008 compared with a year earlier.
The ten largest Fund holdings accounted for approximately 76% of the net assets of the Fund as of August 31, 2008. Among the ten largest holdings, performance was mixed for the reporting period. The best performer was agriculture company Syngenta AG, which posted a strong double-digit return. Healthcare company Novartis AG also posted a sound gain, as did the Fund’s largest holding, packaged food company Nestle SA. On the negative side of the performance spectrum, financial companies UBS AG, Credit Suisse Group AG, and Swiss Reinsurance Co. were the most significant decliners.
20 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI UNITED KINGDOM INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(17.16)% | (17.43)% | (16.68)% | 12.09% | 11.98% | 12.87% | 4.02% | 4.57% | 4.75% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(17.16)% | (17.43)% | (16.68)% | 76.92% | 76.11% | 83.16% | 48.28% | 56.40% | 59.08% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 21 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 23.00 | % | |
Consumer Non-Cyclical | 22.63 | ||
Energy | 19.73 | ||
Basic Materials | 12.36 | ||
Communications | 8.99 | ||
Utilities | 4.86 | ||
Industrial | 3.69 | ||
Consumer Cyclical | 3.42 | ||
Technology | 0.36 | ||
Diversified | 0.10 | ||
Short-Term and Other Net Assets | 0.86 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
HSBC Holdings PLC | 7.56 | % | |
BP PLC | 7.27 | ||
Vodafone Group PLC | 5.45 | ||
GlaxoSmithKline PLC | 5.17 | ||
Royal Dutch Shell PLC Class A | 4.98 | ||
Rio Tinto PLC | 3.80 | ||
Royal Dutch Shell PLC Class B | 3.80 | ||
BG Group PLC | 2.96 | ||
AstraZeneca PLC | 2.87 | ||
Anglo American PLC | 2.82 | ||
TOTAL | 46.68 | % | |
The iShares MSCI United Kingdom Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the British market, as measured by the MSCI United Kingdom IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (17.16)%, while the total return for the Index was (16.68)%.
The United Kingdom equity market experienced a double-digit decline for the reporting period against a backdrop of sluggish economic conditions. Escalating borrowing costs and sharply declining housing prices combined to weaken the economy, following a decade of expansion. In August 2008, the U.K. economy moved a step closer to recession after official data showed that growth had unexpectedly come to a standstill in the second quarter, marking the weakest performance since the early 1990s. The Bank of England responded to weak conditions by reducing its key lending rate three times during the reporting period, bringing the rate from 5.75% down to 5.00% by the end of the period.
The ten largest Fund holdings represented approximately 47% of the net assets of the Fund as of August 31, 2008. Seven of the Fund’s ten largest holdings declined for the reporting period. Wireless telecommunications company Vodafone Group PLC was the largest detractor from performance among the ten largest holdings. Diversified oil company BP PLC was the largest detractor of the three oil companies to decline among the ten largest holdings. The Fund’s largest holding, HSBC Holdings PLC, also registered a decline. Natural gas company BG Group PLC led positive performance among the ten largest holdings, followed closely by mining company Rio Tinto PLC. Pharmaceutical company AstraZeneca PLC also posted a modest gain.
22 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES®, INC.
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2008 to August 31, 2008.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
iShares MSCI Index Fund | Beginning Account Value (3/1/08) | Ending Account Value (8/31/08) | Annualized Expense Ratio | Expenses Paid During Perioda (3/1/08 to 8/31/08) | |||||
Austria Investable Market | |||||||||
Actual | $1,000.00 | $ 896.70 | 0.52 | % | $2.48 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Belgium Investable Market | |||||||||
Actual | 1,000.00 | 811.80 | 0.52 | 2.37 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
EMU | |||||||||
Actual | 1,000.00 | 888.00 | 0.52 | 2.47 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
France | |||||||||
Actual | 1,000.00 | 931.60 | 0.52 | 2.52 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 |
SHAREHOLDER EXPENSES | 23 |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Index Fund | Beginning Account Value (3/1/08) | Ending Account Value (8/31/08) | Annualized Expense Ratio | Expenses Paid During Perioda (3/1/08 to 8/31/08) | |||||
Germany | |||||||||
Actual | $1,000.00 | $ 916.60 | 0.52 | % | $2.51 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Italy | |||||||||
Actual | 1,000.00 | 865.60 | 0.52 | 2.44 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Netherlands Investable Market | |||||||||
Actual | 1,000.00 | 915.50 | 0.52 | 2.50 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Spain | |||||||||
Actual | 1,000.00 | 882.90 | 0.52 | 2.46 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Sweden | |||||||||
Actual | 1,000.00 | 873.20 | 0.52 | 2.45 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Switzerland | |||||||||
Actual | 1,000.00 | 916.50 | 0.52 | 2.51 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
United Kingdom | |||||||||
Actual | 1,000.00 | 898.40 | 0.52 | 2.48 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 |
a | Expenses are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). |
24 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI AUSTRIA INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 98.94% | |||||
AIRLINES – 0.43% | |||||
Austrian Airlines AGa,b | 93,672 | $ | 826,073 | ||
826,073 | |||||
BANKS – 18.98% | |||||
Erste Group Bank AG | 451,546 | 27,243,037 | |||
Raiffeisen International Bank Holding AGb | 86,163 | 9,512,742 | |||
36,755,779 | |||||
BIOTECHNOLOGY – 2.22% | |||||
Intercell AGa | 97,175 | 4,291,977 | |||
4,291,977 | |||||
BUILDING MATERIALS – 2.77% | |||||
Wienerberger AGb | 202,702 | 5,371,704 | |||
5,371,704 | |||||
CHEMICALS – 0.39% | |||||
Lenzing AG | 1,646 | 754,647 | |||
754,647 | |||||
COMMERCIAL SERVICES – 0.19% | |||||
Kapsch TrafficCom AG | 9,216 | 364,308 | |||
364,308 | |||||
ELECTRIC – 5.74% | |||||
EVN AG | 78,599 | 2,078,284 | |||
Oesterreichische Elektrizitaetswirtschafts | 118,985 | 9,032,057 | |||
11,110,341 | |||||
ELECTRICAL COMPONENTS & EQUIPMENT – 0.66% | |||||
Zumtobel AG | 79,238 | 1,284,406 | |||
1,284,406 | |||||
ENGINEERING & CONSTRUCTION – 6.69% | |||||
Flughafen Wien AG | 37,975 | 3,096,224 | |||
Meinl Airports International AGa | 163,546 | 1,348,371 | |||
Strabag SE | 136,939 | 8,503,844 | |||
12,948,439 | |||||
ENTERTAINMENT – 0.95% | |||||
bwin Interactive Entertainment AGa | 65,792 | 1,840,383 | |||
1,840,383 |
Security | Shares | Value | |||
ENVIRONMENTAL CONTROL – 0.58% | |||||
BWT AG | 27,094 | $ | 813,739 | ||
Christ Water Technology AGa | 37,579 | 300,972 | |||
1,114,711 | |||||
FOOD – 0.39% | |||||
Agrana Beteiligungs AG | 9,467 | 749,435 | |||
749,435 | |||||
FOREST PRODUCTS & PAPER – 0.98% | |||||
Mayr-Melnhof Karton AG | 23,948 | 1,900,376 | |||
1,900,376 | |||||
INSURANCE – 4.71% | |||||
UNIQA Versicherungen AG | 71,108 | 2,071,790 | |||
Vienna Insurance Group | 112,518 | 7,056,887 | |||
9,128,677 | |||||
IRON & STEEL – 7.27% | |||||
voestalpine AG | 257,870 | 14,069,796 | |||
14,069,796 | |||||
LODGING – 0.10% | |||||
Warimpex Finanz-und Beteiligungs AG | 28,001 | 200,351 | |||
200,351 | |||||
MACHINERY – 3.52% | |||||
Andritz AG | 101,772 | 6,302,011 | |||
A-TEC Industries AGa | 5,574 | 515,767 | |||
6,817,778 | |||||
MACHINERY - CONSTRUCTION & MINING – 0.36% | |||||
Palfinger AGb | 31,129 | 700,736 | |||
700,736 | |||||
MANUFACTURING – 1.56% | |||||
RHI AGa | 66,450 | 3,026,892 | |||
3,026,892 | |||||
OIL & GAS – 12.73% | |||||
OMV AG | 382,498 | 24,642,686 | |||
24,642,686 | |||||
OIL & GAS SERVICES – 1.18% | |||||
Schoeller-Bleckmann Oilfield Equipment AG | 27,270 | 2,276,005 | |||
2,276,005 |
SCHEDULESOF INVESTMENTS | 25 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI AUSTRIA INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
REAL ESTATE – 15.55% | |||||
Atrium European Real Estate Ltd.a | 811,985 | $ | 8,308,342 | ||
CA Immo International AG | 55,048 | 566,501 | |||
CA Immobilien Anlagen AGa | 349,064 | 5,067,147 | |||
conwert Immobilien Invest SEa | 254,043 | 3,740,148 | |||
ECO Business-Immobilien AGa | 71,297 | 709,577 | |||
Immoeast AGa | 678,330 | 4,384,167 | |||
IMMOFINANZ AG | 651,334 | 5,945,344 | |||
Sparkassen Immobilien AGa | 171,789 | 1,388,511 | |||
30,109,737 | |||||
TELECOMMUNICATIONS – 9.02% | |||||
Telekom Austria AG | 805,923 | 17,453,711 | |||
17,453,711 | |||||
TRANSPORTATION – 1.97% | |||||
Oesterreichische Post AG | 95,899 | 3,814,881 | |||
3,814,881 | |||||
TOTAL COMMON STOCKS | |||||
(Cost: $256,776,004) | 191,553,829 | ||||
RIGHTS – 0.00% | |||||
AIRLINES – 0.00% | |||||
Austrian Airlines AGb,c | 99,436 | 14 | |||
14 | |||||
TOTAL RIGHTS | |||||
(Cost: $0) | 14 | ||||
SHORT-TERM INVESTMENTS – 8.11% | |||||
MONEY MARKET FUNDS – 8.11% | |||||
Barclays Global Investors Funds | 49,863 | 49,863 | |||
BGI Cash Premier Fund LLC | 15,647,007 | 15,647,007 | |||
15,696,870 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $15,696,870) | 15,696,870 | ||||
Security | Value | |||
TOTAL INVESTMENTS IN |
| |||
(Cost: $272,472,874) | $ | 207,250,713 | ||
Other Assets, Less Liabilities – (7.05)% | (13,648,542 | ) | ||
NET ASSETS – 100.00% | $ | 193,602,171 | ||
a | Non-income earning security. |
b | All or a portion of this security represents a security on loan. See Note 5. |
c | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
d | Affiliated issuer. See Note 2. |
e | The rate quoted is the annualized seven-day yield of the fund at period end. |
f | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
26 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI BELGIUM INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.11% | |||||
BANKS – 36.17% | |||||
Banque Nationale de Belgique | 248 | $ | 1,096,095 | ||
Dexia SAa | 347,966 | 4,964,119 | |||
Fortisa | 1,707,073 | 23,825,498 | |||
KBC Group NV | 140,930 | 13,500,996 | |||
43,386,708 | |||||
BEVERAGES – 9.31% | |||||
InBev | 159,970 | 11,165,806 | |||
11,165,806 | |||||
BIOTECHNOLOGY – 0.39% | |||||
Devgen NVb | 14,720 | 234,052 | |||
Innogenetics NVb | 24,275 | 231,230 | |||
465,282 | |||||
BUILDING MATERIALS – 0.07% | |||||
Deceuninck NV | 7,474 | 81,427 | |||
81,427 | |||||
CHEMICALS – 5.74% | |||||
Recticel SA | 1,360 | 16,739 | |||
Solvay SA | 45,560 | 5,614,237 | |||
Tessenderlo Chemie NV | 22,610 | 1,258,270 | |||
6,889,246 | |||||
COMPUTERS – 0.02% | |||||
Econocom Group SA | 1,530 | 18,921 | |||
18,921 | |||||
DIVERSIFIED FINANCIAL SERVICES – 1.75% | |||||
KBC Ancora SCA | 28,730 | 2,095,007 | |||
2,095,007 | |||||
ELECTRICAL COMPONENTS & EQUIPMENT – 1.37% | |||||
NV Bekaert SA | 9,350 | 1,640,164 | |||
1,640,164 | |||||
ELECTRONICS – 1.08% | |||||
Barco NV | 14,450 | 676,939 | |||
EVS Broadcast Equipment SA | 7,140 | 620,200 | |||
1,297,139 | |||||
ENGINEERING & CONSTRUCTION – 0.19% | |||||
Compagnie d’Entreprises CFE | 2,210 | 233,288 | |||
233,288 |
Security | Shares | Value | |||
ENTERTAINMENT – 0.06% | |||||
Kinepolis | 2,040 | $ | 72,412 | ||
72,412 | |||||
FOOD – 8.01% | |||||
Colruyt SA | 14,110 | 3,867,601 | |||
Delhaize Group | 88,740 | 5,744,569 | |||
9,612,170 | |||||
HEALTH CARE - PRODUCTS – 0.27% | |||||
Ion Beam Applications SA | 14,110 | 321,365 | |||
321,365 | |||||
HOLDING COMPANIES - DIVERSIFIED – 12.17% | |||||
Ackermans & van Haaren NV | 19,550 | 1,948,574 | |||
Compagnie Nationale a Portefeuille SA | 27,370 | 2,007,924 | |||
Groupe Bruxelles Lambert SA | 66,980 | 7,011,264 | |||
Sofina SA | 31,960 | 3,636,264 | |||
14,604,026 | |||||
INVESTMENT COMPANIES – 0.58% | |||||
RHJ International SAb | 68,340 | 694,234 | |||
694,234 | |||||
MANUFACTURING – 0.63% | |||||
AGFA-Gevaert NVb | 94,860 | 759,738 | |||
759,738 | |||||
MEDIA – 0.04% | |||||
Roularta Media Group NV | 1,419 | 51,079 | |||
51,079 | |||||
MINING – 4.38% | |||||
Nyrstar NV | 63,800 | 571,092 | |||
Umicore | 106,080 | 4,680,603 | |||
5,251,695 | |||||
PHARMACEUTICALS – 3.93% | |||||
Omega Pharma SA | 21,420 | 1,091,762 | |||
UCB SA | 91,630 | 3,626,173 | |||
4,717,935 | |||||
REAL ESTATE INVESTMENT TRUSTS – 2.54% | |||||
Befimmo SCA | 2,550 | 285,322 | |||
Cofinimmo SA | 14,960 | 2,724,035 | |||
Warehouses De Pauw SCA | 680 | 42,248 | |||
3,051,605 |
SCHEDULESOF INVESTMENTS | 27 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI BELGIUM INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
RETAIL – 0.57% |
| |||||
SA D’leteren NV | 2,720 | $ | 687,937 | |||
687,937 | ||||||
SEMICONDUCTORS – 0.07% |
| |||||
Melexis NV | 5,270 | 81,157 | ||||
81,157 | ||||||
TELECOMMUNICATIONS – 7.49% |
| |||||
Belgacom SA | 139,400 | 5,588,458 | ||||
Mobistar SA | 28,730 | 2,141,958 | ||||
Option NVa,b | 39,928 | 198,102 | ||||
Telenet Group Holding NVb | 45,900 | 1,052,838 | ||||
8,981,356 | ||||||
TRANSPORTATION – 1.31% |
| |||||
Compagnie Maritime Belge SA | 12,920 | 692,191 | ||||
Euronav SA | 19,380 | 824,295 | ||||
Exmar NV | 1,870 | 49,528 | ||||
1,566,014 | ||||||
VENTURE CAPITAL – 0.97% |
| |||||
GIMV NV | 19,040 | 1,162,472 | ||||
1,162,472 | ||||||
TOTAL COMMON STOCKS | ||||||
(Cost: $169,472,008) | 118,888,183 | |||||
SHORT-TERM INVESTMENTS – 15.78% |
| |||||
MONEY MARKET FUNDS – 15.78% |
| |||||
Barclays Global Investors Funds | 28,337 | 28,337 | ||||
BGI Cash Premier Fund LLC | 18,898,386 | 18,898,386 | ||||
18,926,723 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $18,926,723) | 18,926,723 | |||||
TOTAL INVESTMENTS IN | ||||||
(Cost: $188,398,731) | 137,814,906 | |||||
Other Assets, Less Liabilities – (14.89)% | (17,860,273 | ) | ||||
NET ASSETS – 100.00% | $ | 119,954,633 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
28 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI EMU INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 97.94% | |||||
AUSTRIA – 1.77% | |||||
Andritz AG | 14,432 | $ | 893,670 | ||
Atrium European Real Estate Ltd.a | 101,441 | 1,037,958 | |||
Erste Group Bank AG | 61,539 | 3,712,821 | |||
Immoeast AGa | 153,200 | 990,159 | |||
IMMOFINANZ AG | 165,962 | 1,514,893 | |||
Oesterreichische Elektrizitaetswirtschafts | 29,692 | 2,253,896 | |||
OMV AG | 53,115 | 3,421,969 | |||
Raiffeisen International Bank Holding AGb | 18,265 | 2,016,530 | |||
Strabag SE | 15,174 | 942,298 | |||
Telekom Austria AG | 104,117 | 2,254,841 | |||
Vienna Insurance Group | 11,579 | 726,210 | |||
voestalpine AG | 42,782 | 2,334,254 | |||
Wienerberger AG | 28,900 | 765,864 | |||
22,865,363 | |||||
BELGIUM – 2.98% | |||||
Belgacom SA | 48,051 | 1,926,334 | |||
Colruyt SA | 6,182 | 1,694,508 | |||
Compagnie Nationale a Portefeuille SA | 15,497 | 1,136,894 | |||
Delhaize Group | 33,720 | 2,182,859 | |||
Dexia SA | 181,526 | 2,589,669 | |||
Fortisb | 704,748 | 9,836,118 | |||
Groupe Bruxelles Lambert SA | 26,986 | 2,824,813 | |||
InBev | 57,886 | 4,040,406 | |||
KBC Ancora SCA | 11,693 | 852,660 | |||
KBC Group NV | 52,547 | 5,033,966 | |||
Mobistar SA | 8,712 | 649,521 | |||
Solvay SA | 20,234 | 2,493,382 | |||
UCB SA | 31,880 | 1,261,622 | |||
Umicore | 43,836 | 1,934,190 | |||
38,456,942 | |||||
FINLAND – 4.50% | |||||
Cargotec Corp. Class B | 10,898 | 336,455 | |||
Elisa OYJ Class A | 36,948 | 793,104 | |||
Fortum OYJ | 148,368 | 6,124,911 | |||
Kesko OYJ Class B | 17,876 | 554,519 |
Security | Shares | Value | |||
Kone OYJ Class B | 46,365 | $ | 1,447,130 | ||
Metso OYJ | 38,425 | 1,509,886 | |||
Neste Oil OYJ | 43,099 | 1,034,276 | |||
Nokia OYJ | 1,231,489 | 30,967,059 | |||
Nokian Renkaat OYJ | 35,406 | 1,272,929 | |||
Orion OYJ Class B | 26,107 | 493,903 | |||
Outokumpu OYJ | 39,360 | 951,502 | |||
Pohjola Bank PLC Class Ab | 38,217 | 620,603 | |||
Rautaruukki OYJ | 26,699 | 914,688 | |||
Sampo OYJ Class A | 136,566 | 3,460,230 | |||
SanomaWSOY OYJ Class B | 27,086 | 539,541 | |||
Stora Enso OYJ Class Rb | 191,354 | 1,932,606 | |||
UPM-Kymmene OYJ | 177,289 | 3,053,861 | |||
Wartsila OYJ Class B | 27,807 | 1,610,944 | |||
YIT OYJ | 33,540 | 526,383 | |||
58,144,530 | |||||
FRANCE – 30.76% | |||||
Accor SA | 69,096 | 4,603,128 | |||
Aeroports de Paris | 9,274 | 814,030 | |||
Air France-KLM | 46,110 | 1,118,752 | |||
Alcatel-Lucenta | 708,682 | 4,329,932 | |||
ALSTOM | 69,134 | 7,088,135 | |||
ArcelorMittal | 279,314 | 22,107,189 | |||
Atos Origin SA | 22,199 | 1,202,062 | |||
AXA | 486,130 | 15,645,309 | |||
BNP Paribas | 261,892 | 23,704,874 | |||
Bouygues SA | 76,996 | 4,674,858 | |||
Bureau Veritas SA | 12,648 | 721,006 | |||
Cap Gemini SA | 42,712 | 2,543,607 | |||
Carrefour SA | 200,072 | 10,642,308 | |||
Casino Guichard-Perrachon SA | 14,626 | 1,442,289 | |||
Christian Dior SA | 15,455 | 1,656,464 | |||
CNP Assurances SA | 10,678 | 1,288,939 | |||
Compagnie de Saint-Gobain | 91,887 | 5,668,259 | |||
Compagnie Generale de Geophysique-Veritasa | 40,745 | 1,686,230 | |||
Compagnie Generale des Etablissements Michelin Class B | 47,770 | 3,119,811 | |||
Credit Agricole SA | 299,546 | 6,403,416 | |||
Dassault Systemes SA | 19,108 | 1,162,404 | |||
Eiffage SA | 11,240 | 751,945 | |||
Electricite de France | 62,663 | 5,387,727 |
SCHEDULESOF INVESTMENTS | 29 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMU INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Eramet | 1,973 | $ | 1,091,053 | ||
Essilor International SA | 59,853 | 3,208,397 | |||
Eurazeo | 8,434 | 833,799 | |||
European Aeronautic Defence and | 105,094 | 2,371,929 | |||
Eutelsat Communicationsa | 27,275 | 760,547 | |||
France Telecom SA | 579,703 | 17,184,573 | |||
GDF SUEZ | 357,199 | 20,719,917 | |||
Gecina SA | 5,857 | 727,865 | |||
Groupe Danone | 139,980 | 9,807,612 | |||
Hermes Internationalb | 23,353 | 3,343,940 | |||
Icade | 6,464 | 608,398 | |||
Imerys SA | 10,682 | 688,824 | |||
JCDecaux SA | 19,397 | 432,357 | |||
Klepierre | 22,763 | 914,565 | |||
Lafarge SA | 47,770 | 5,810,614 | |||
Lagardere SCA | 39,349 | 2,212,986 | |||
L’Air Liquide SA | 81,209 | 9,924,671 | |||
Legrand SA | 31,999 | 824,434 | |||
L’Oreal SA | 77,837 | 7,782,182 | |||
LVMH Moet Hennessy Louis Vuitton SA | 75,027 | 8,032,542 | |||
M6-Metropole Television | 20,910 | 469,467 | |||
Natixis | 135,112 | 1,145,771 | |||
Neopost SA | 10,959 | 1,151,350 | |||
PagesJaunes SA | 36,499 | 526,609 | |||
Pernod Ricard SA | 51,264 | 4,830,299 | |||
PPR SA | 24,166 | 2,836,310 | |||
PSA Peugeot Citroen SAb | 49,753 | 2,382,053 | |||
Publicis Groupe SA | 42,331 | 1,429,039 | |||
Renault SA | 59,291 | 4,999,166 | |||
Safran SA | 62,615 | 1,119,125 | |||
Sanofi-Aventis | 332,184 | 23,773,104 | |||
Schneider Electric SA | 70,812 | 7,183,029 | |||
SCOR SE | 56,359 | 1,308,508 | |||
SES SA | 112,565 | 2,734,443 | |||
Societe BIC | 7,031 | 426,788 | |||
Societe Generale | 149,492 | 14,547,922 | |||
Societe Television Francaise 1 | 37,614 | 658,435 | |||
Sodexo | 35,251 | 2,400,815 | |||
STMicroelectronics NV | 207,659 | 2,736,247 | |||
Technip SA | 32,596 | 2,694,608 |
Security | Shares | Value | |||
Thales SA | 30,653 | $ | 1,741,975 | ||
Total SA | 692,384 | 49,994,626 | |||
Unibail-Rodamco | 26,133 | 5,467,584 | |||
Valeo SA | 25,864 | 929,110 | |||
Vallourec SA | 17,141 | 4,816,007 | |||
Veolia Environnement | 117,177 | 6,322,632 | |||
Vinci SA | 131,227 | 7,505,779 | |||
Vivendi | 368,953 | 14,361,971 | |||
Wendel | 8,976 | 997,198 | |||
Zodiac SA | 16,688 | 842,713 | |||
397,376,562 | |||||
GERMANY – 24.68% | |||||
Adidas AG | 65,754 | 3,877,093 | |||
Allianz SE Registered | 144,153 | 24,215,358 | |||
BASF SE | 313,315 | 18,165,128 | |||
Bayer AG | 243,346 | 19,349,955 | |||
Bayerische Motoren Werke AG | 106,499 | 4,390,208 | |||
Beiersdorf AG | 30,069 | 1,755,269 | |||
Bilfinger Berger AG | 11,716 | 829,844 | |||
Celesio AG | 26,695 | 1,027,740 | |||
Commerzbank AG | 205,411 | 6,075,544 | |||
Continental AG | 50,592 | 5,515,546 | |||
Daimler AG Registered | 285,675 | 16,781,342 | |||
Deutsche Bank AG Registered | 164,104 | 14,061,243 | |||
Deutsche Boerse AG | 65,473 | 6,248,170 | |||
Deutsche Lufthansa AG Registered | 80,100 | 1,732,941 | |||
Deutsche Post AG Registered | 267,231 | 6,294,893 | |||
Deutsche Postbank AG | 28,943 | 1,901,744 | |||
Deutsche Telekom AG Registered | 895,547 | 14,911,885 | |||
E.ON AG | 611,175 | 35,857,125 | |||
Fraport AG | 11,243 | 727,483 | |||
Fresenius Medical Care | 60,977 | 3,285,706 | |||
Fresenius SE | 8,152 | 686,742 | |||
GEA Group AG | 49,626 | 1,570,830 | |||
Hamburger Hafen und Logistik AG | 8,582 | 540,266 | |||
Hannover Rueckversicherung AG | 21,192 | 910,102 | |||
HeidelbergCement AG | 8,492 | 962,681 | |||
Henkel AG & Co. KGaA | 41,101 | 1,444,396 | |||
Hochtief AG | 13,769 | 1,169,458 | |||
Hypo Real Estate Holding AG | 53,390 | 1,311,105 | |||
Infineon Technologies AGa | 238,007 | 2,049,874 |
30 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMU INDEX FUND
August 31, 2008
Security | Shares | Value | |||
IVG Immobilien AG | 35,656 | $ | 659,856 | ||
K+S AG | 49,094 | 5,984,672 | |||
Linde AG | 43,836 | 5,550,875 | |||
MAN AG | 33,439 | 3,291,063 | |||
Merck KGaA | 21,092 | 2,429,874 | |||
METRO AG | 34,844 | 1,950,904 | |||
Muenchener | |||||
AG Registered | 66,597 | 10,410,676 | |||
Puma AG | 1,405 | 444,813 | |||
Q-Cells AGa | 19,389 | 1,960,216 | |||
Rheinmetall AG | 10,961 | 702,942 | |||
RWE AG | 142,748 | 15,474,136 | |||
Salzgitter AG | 13,488 | 2,087,045 | |||
SAP AG | 277,909 | 15,629,588 | |||
Siemens AG Registered | 277,347 | 30,322,149 | |||
SolarWorld AG | 27,540 | 1,444,646 | |||
ThyssenKrupp AG | 114,086 | 5,746,018 | |||
TUI AG | 77,557 | 1,551,751 | |||
United Internet AG Registered | 39,017 | 572,130 | |||
Volkswagen AGb | 46,927 | 14,094,008 | |||
Wacker Chemie AG | 4,777 | 884,322 | |||
318,841,355 | |||||
GREECE – 1.49% | |||||
Coca-Cola Hellenic Bottling Co. SA ADR | 140,575 | 3,494,695 | |||
Hellenic Telecommunications Organization SA SP ADR | 499,509 | 5,314,776 | |||
National Bank of Greece SA ADR | 1,179,119 | 10,388,038 | |||
19,197,509 | |||||
IRELAND – 1.38% | |||||
Allied Irish Banks PLC | 305,730 | 3,915,966 | |||
Anglo Irish Bank Corp. PLC | 255,436 | 2,237,591 | |||
Bank of Ireland | 356,285 | 2,858,746 | |||
CRH PLC | 173,096 | 4,536,162 | |||
Elan Corp. PLCa | 148,930 | 2,141,095 | |||
Irish Life & Permanent PLC | 80,568 | 754,399 | |||
Kerry Group PLC Class A | 43,843 | 1,194,135 | |||
Ryanair Holdings PLCa | 43,520 | 165,947 | |||
17,804,041 |
Security | Shares | Value | |||
ITALY – 10.34% | |||||
A2A SpA | 382,741 | $ | 1,203,052 | ||
Alleanza Assicurazioni SpA | 107,345 | 1,024,881 | |||
Assicurazioni Generali SpA | 334,671 | 11,219,220 | |||
Atlantia SpA | 81,941 | 2,181,128 | |||
Autogrill SpA | 58,451 | 732,754 | |||
Banca Carige SpA | 261,771 | 879,658 | |||
Banca Monte dei Paschi di Siena SpA | 597,082 | 1,580,539 | |||
Banca Popolare di Milano Scrl | 152,892 | 1,534,024 | |||
Banco Popolare SpA | 217,299 | 4,171,737 | |||
Bulgari SpA | 46,594 | 479,500 | |||
Enel SpA | 1,408,934 | 13,016,252 | |||
Eni SpA | 839,066 | 27,461,051 | |||
Fiat SpA | 230,420 | 3,592,508 | |||
Finmeccanica SpA | 101,998 | 2,746,546 | |||
Fondiaria-Sai SpA | 23,182 | 646,758 | |||
IFIL Investments SpA | 129,562 | 850,258 | |||
Intesa Sanpaolo SpA | 2,534,620 | 13,704,280 | |||
Italcementi SpA | 26,413 | 372,533 | |||
Lottomatica SpA | 30,712 | 951,339 | |||
Luxottica Group SpAb | 38,551 | 979,053 | |||
Mediaset SpA | 223,951 | 1,638,668 | |||
Mediobanca SpA | 164,104 | 2,353,205 | |||
Mediolanum SpA | 60,223 | 263,108 | |||
Parmalat SpA | 534,192 | 1,482,485 | |||
Pirelli & C. SpA | 829,788 | 564,405 | |||
Prysmian SpA | 28,662 | 707,232 | |||
Saipem SpA | 84,019 | 3,353,425 | |||
Snam Rete Gas SpA | 269,080 | 1,690,583 | |||
Telecom Italia SpA | 3,153,918 | 5,144,838 | |||
Terna SpA | 437,798 | 1,769,285 | |||
UniCredito SpA | 3,688,406 | 20,010,492 | |||
Unione di Banche | 211,473 | 4,757,292 | |||
Unipol Gruppo | 209,071 | 524,807 | |||
133,586,896 | |||||
NETHERLANDS – 7.64% | |||||
Aegon NV | 444,261 | 5,261,939 | |||
Akzo Nobel NV | 86,267 | 5,303,795 | |||
ASML Holding NV | 136,566 | 3,243,086 | |||
Corio NV | 15,733 | 1,166,021 | |||
Fugro NV CVA | 19,389 | 1,506,058 | |||
Heineken Holding NV | 29,224 | 1,304,089 |
SCHEDULESOF INVESTMENTS | 31 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMU INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Heineken NV | 74,184 | $ | 3,499,325 | ||
ING Groep NV | 612,018 | 19,228,268 | |||
Koninklijke Ahold NV | 378,507 | 4,753,402 | |||
Koninklijke Boskalis | 18,655 | 1,110,952 | |||
Koninklijke DSM NV | 48,332 | 2,798,596 | |||
Koninklijke KPN NV | 591,786 | 10,106,581 | |||
Koninklijke Philips Electronics NV | 343,101 | 11,234,101 | |||
Randstad Holding NV | 32,041 | 990,620 | |||
Reed Elsevier NV | 205,811 | 3,463,350 | |||
SBM Offshore NV | 43,274 | 1,054,403 | |||
SNS REAAL NV | 44,323 | 741,944 | |||
TNT NV | 121,392 | 4,557,344 | |||
TomTom NVa | 20,232 | 503,691 | |||
Unilever NV | 520,131 | 14,430,801 | |||
Wolters Kluwer NV | 98,161 | 2,406,217 | |||
98,664,583 | |||||
PORTUGAL – 0.83% | |||||
Banco BPI SA Registered | 110,616 | 373,751 | |||
Banco Comercial Portugues SA Registeredb | 858,393 | 1,491,248 | |||
Banco Espirito Santo SA Registered | 84,934 | 1,102,889 | |||
BRISA - Auto-estradas de | 116,615 | 1,088,492 | |||
CIMPOR - Cimentos de Portugal SGPS SAb | 115,246 | 727,040 | |||
Energias de Portugal SA | 567,339 | 2,898,369 | |||
Jeronimo Martins SGPS SA | 74,620 | 640,480 | |||
Portugal Telecom | 188,699 | 1,983,578 | |||
Zon Multimedia - Servicos de Telecomunicacoes e Multimedia SGPS SA | 51,705 | 408,018 | |||
10,713,865 | |||||
SPAIN – 11.57% | |||||
Abertis Infraestructuras SA | 89,080 | 1,853,122 | |||
Acciona SA | 9,273 | 1,859,426 | |||
Acerinox SA | 46,651 | 888,057 | |||
Actividades de Construcciones y Servicios SA | 64,573 | 2,885,302 | |||
Banco Bilbao Vizcaya | 1,165,026 | 19,827,822 |
Security | Shares | Value | |||
Banco Popular Espanol SAb | 277,463 | $ | 2,953,418 | ||
Banco Sabadell SAb | 326,244 | 2,555,264 | |||
Banco Santander SA | 2,023,200 | 34,671,558 | |||
Bankinter SAb | 86,829 | 929,353 | |||
Cintra Concesiones de Infraestructuras de Transporte SAb | 76,718 | 895,678 | |||
Criteria CaixaCorp SA | 277,656 | 1,418,463 | |||
Enagas SA | 58,523 | 1,497,469 | |||
Fomento de Construcciones y Contratas SA | 14,893 | 752,289 | |||
Gamesa Corporacion Tecnologica SA | 62,663 | 2,986,314 | |||
Gas Natural SDG SA | 37,935 | 1,768,205 | |||
Gestevision Telecinco SA | 31,753 | 411,386 | |||
Grifols SA | 40,557 | 1,212,114 | |||
Grupo Ferrovial SA | 19,670 | 991,562 | |||
Iberdrola Renovables SAa | 251,214 | 1,612,545 | |||
Iberdrola SA | 1,109,669 | 13,461,772 | |||
Iberia Lineas Aereas de Espana SA | 172,900 | 516,741 | |||
Indra Sistemas SA | 35,024 | 902,887 | |||
Industria de Diseno Textil SA | 68,002 | 3,189,694 | |||
Mapfre SA | 222,840 | 1,072,809 | |||
Promotora de Informaciones SA | 26,100 | 229,017 | |||
Red Electrica Corporacion SA | 37,654 | 2,235,184 | |||
Repsol YPF SA | 244,470 | 7,630,324 | |||
Sacyr Vallehermoso SAb | 24,339 | 444,689 | |||
Telefonica SA | 1,364,255 | 33,964,148 | |||
Union Fenosa SA | 121,428 | 3,101,701 | |||
Zardoya Otis SAb | 37,094 | 755,279 | |||
149,473,592 | |||||
TOTAL COMMON STOCKS | |||||
(Cost: $1,490,005,699) | 1,265,125,238 | ||||
PREFERRED STOCKS – 1.61% | |||||
GERMANY – 1.19% | |||||
Bayerische Motoren Werke AG | 18,279 | 629,723 | |||
Fresenius SE | 24,463 | 2,005,352 | |||
Henkel AG & Co. KGaA | 57,137 | 2,251,050 | |||
Porsche Automobil | 28,100 | 3,978,575 | |||
ProSiebenSat.1 Media AG | 10,959 | 112,779 |
32 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMU INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
RWE AG | 12,536 | $ | 1,096,848 | |||
Volkswagen AG | 34,563 | 5,358,230 | ||||
15,432,557 | ||||||
ITALY – 0.42% | ||||||
Intesa Sanpaolo SpA RNC | 328,423 | 1,601,663 | ||||
Istituto Finanziario | 20,943 | 454,483 | ||||
Italcementi SpA RNC | 41,880 | 483,089 | ||||
Telecom Italia SpA RNC | 1,793,848 | 2,296,343 | ||||
Unipol Gruppo | 278,763 | 523,271 | ||||
5,358,849 | ||||||
TOTAL PREFERRED STOCKS |
| |||||
(Cost: $25,051,338) | 20,791,406 | |||||
RIGHTS – 0.17% | ||||||
FRANCE – 0.17% | ||||||
Suez Environnement SAa | 77,847 | 2,244,069 | ||||
2,244,069 | ||||||
TOTAL RIGHTS | ||||||
(Cost: $2,221,549) | 2,244,069 | |||||
SHORT-TERM INVESTMENTS – 2.44% |
| |||||
MONEY MARKET FUNDS – 2.44% |
| |||||
Barclays Global Investors Funds | 247,769 | 247,769 | ||||
BGI Cash Premier Fund LLC 2.63%c,d,e | 31,256,539 | 31,256,539 | ||||
31,504,308 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $31,504,308) | 31,504,308 | |||||
TOTAL INVESTMENTS IN |
| |||||
(Cost: $1,548,782,894) | 1,319,665,021 | |||||
Other Assets, Less Liabilities – (2.16)% | (27,856,992 | ) | ||||
NET ASSETS – 100.00% | $ | 1,291,808,029 | ||||
ADR – American Depositary Receipts
SP ADR – Sponsored American Depositary Receipts
a | Non-income earning security. |
b | All or a portion of this security represents a security on loan. See Note 5. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 33 |
Table of Contents
iSHARES® MSCI FRANCE INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.27% | |||||
ADVERTISING – 0.62% | |||||
JCDecaux SAa | 12,509 | $ | 278,824 | ||
PagesJaunes SA | 24,420 | 352,333 | |||
Publicis Groupe SA | 23,199 | 783,168 | |||
1,414,325 | |||||
AEROSPACE & DEFENSE – 1.44% | |||||
European Aeronautic Defence | 59,533 | 1,343,636 | |||
Safran SA | 33,448 | 597,820 | |||
Thales SA | 16,132 | 916,763 | |||
Zodiac SA | 7,943 | 401,107 | |||
3,259,326 | |||||
AIRLINES – 0.24% | |||||
Air France-KLM | 22,792 | 552,995 | |||
552,995 | |||||
APPAREL – 0.80% | |||||
Hermes International | 12,691 | 1,817,237 | |||
1,817,237 | |||||
AUTO MANUFACTURERS – 1.84% | |||||
PSA Peugeot Citroen SAa | 27,898 | 1,335,688 | |||
Renault SA | 33,818 | 2,851,390 | |||
4,187,078 | |||||
AUTO PARTS & EQUIPMENT – 0.97% | |||||
Compagnie Generale | 26,270 | 1,715,668 | |||
Valeo SA | 13,695 | 491,964 | |||
2,207,632 | |||||
BANKS – 11.37% | |||||
BNP Paribas | 148,666 | 13,456,344 | |||
Credit Agricole SA | 161,431 | 3,450,922 | |||
Natixis | 77,515 | 657,340 | |||
Societe Generale | 84,841 | 8,256,363 | |||
25,820,969 | |||||
BEVERAGES – 1.24% | |||||
Pernod Ricard SA | 29,859 | 2,813,434 | |||
2,813,434 |
Security | Shares | Value | |||
BUILDING MATERIALS – 2.98% | |||||
Compagnie de Saint-Gobain | 51,726 | $ | 3,190,836 | ||
Imerys SA | 5,304 | 342,026 | |||
Lafarge SA | 26,640 | 3,240,418 | |||
6,773,280 | |||||
CHEMICALS – 2.43% | |||||
L’Air Liquide SA | 45,177 | 5,521,148 | |||
5,521,148 | |||||
COMMERCIAL SERVICES – 0.19% | |||||
Bureau Veritas SA | 7,553 | 430,563 | |||
430,563 | |||||
COMPUTERS – 0.95% | |||||
Atos Origin SA | 12,358 | 669,178 | |||
Cap Gemini SA | 24,975 | 1,487,324 | |||
2,156,502 | |||||
COSMETICS & PERSONAL CARE – 2.43% | |||||
Christian Dior SA | 10,115 | 1,084,124 | |||
L’Oreal SA | 44,326 | 4,431,735 | |||
5,515,859 | |||||
ELECTRIC – 1.37% | |||||
Electricite de France | 36,260 | 3,117,613 | |||
3,117,613 | |||||
ELECTRICAL COMPONENTS & | |||||
Legrand SA | 15,984 | 411,818 | |||
411,818 | |||||
ENGINEERING & CONSTRUCTION – 3.50% | |||||
Aeroports de Paris | 5,513 | 483,907 | |||
Bouygues SA | 44,326 | 2,691,279 | |||
Eiffage SA | 6,956 | 465,350 | |||
Vinci SA | 75,258 | 4,304,525 | |||
7,945,061 | |||||
FOOD – 5.49% | |||||
Carrefour SA | 115,477 | 6,142,498 | |||
Casino Guichard-Perrachon SA | 7,992 | 788,102 | |||
Groupe Danone | 79,143 | 5,545,105 | |||
12,475,705 | |||||
FOOD SERVICE – 0.52% | |||||
Sodexo | 17,464 | 1,189,408 | |||
1,189,408 |
34 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI FRANCE INDEX FUND
August 31, 2008
Security | Shares | Value | |||
GAS – 5.11% | |||||
GDF SUEZ | 200,133 | $ | 11,609,045 | ||
11,609,045 | |||||
HAND & MACHINE TOOLS – 1.79% | |||||
Schneider Electric SA | 40,108 | 4,068,476 | |||
4,068,476 | |||||
HEALTH CARE - PRODUCTS – 0.86% | |||||
Essilor International SA | 36,408 | 1,951,637 | |||
1,951,637 | |||||
HOLDING COMPANIES - DIVERSIFIED – 2.36% | |||||
LVMH Moet Hennessy Louis Vuitton SA | 44,696 | 4,785,244 | |||
Wendel | 5,173 | 574,700 | |||
5,359,944 | |||||
HOUSEHOLD PRODUCTS & WARES – 0.13% | |||||
Societe BIC | 4,736 | 287,479 | |||
287,479 | |||||
INSURANCE – 4.69% | |||||
AXA | 282,236 | 9,083,310 | |||
CNP Assurances SA | 6,934 | 837,002 | |||
SCOR SE | 31,693 | �� | 735,828 | ||
10,656,140 | |||||
INVESTMENT COMPANIES – 0.21% | |||||
Eurazeo | 4,795 | 474,041 | |||
474,041 | |||||
IRON & STEEL – 5.51% | |||||
ArcelorMittal | 158,138 | 12,516,332 | |||
12,516,332 | |||||
LODGING – 1.04% | |||||
Accor SA | 35,520 | 2,366,319 | |||
2,366,319 | |||||
MACHINERY – 1.78% | |||||
ALSTOM | 39,518 | 4,051,681 | |||
4,051,681 | |||||
MEDIA – 4.46% | |||||
Lagardere SCA | 21,941 | 1,233,961 | |||
M6-Metropole Television | 12,839 | 288,259 | |||
Societe Television Francaise 1 | 21,238 | 371,772 | |||
Vivendi | 211,603 | 8,236,920 | |||
10,130,912 |
Security | Shares | Value | |||
METAL FABRICATE & HARDWARE – 1.19% | |||||
Vallourec SA | 9,620 | $ | 2,702,875 | ||
2,702,875 | |||||
MINING – 0.23% | |||||
Eramet | 925 | 511,517 | |||
511,517 | |||||
OFFICE & BUSINESS EQUIPMENT – 0.26% | |||||
Neopost SA | 5,698 | 598,631 | |||
598,631 | |||||
OIL & GAS – 12.90% | |||||
Compagnie Generale de Geophysique-Veritasb | 23,310 | 964,683 | |||
Total SA | 392,570 | 28,346,106 | |||
29,310,789 | |||||
OIL & GAS SERVICES – 0.67% | |||||
Technip SA | 18,537 | 1,532,395 | |||
1,532,395 | |||||
PHARMACEUTICALS – 6.00% | |||||
Sanofi-Aventis | 190,476 | 13,631,619 | |||
13,631,619 | |||||
REAL ESTATE – 1.75% | |||||
Gecina SA | 2,935 | 364,740 | |||
Klepierre | 12,284 | 493,543 | |||
Unibail-Rodamco | 14,911 | 3,119,701 | |||
3,977,984 | |||||
REAL ESTATE INVESTMENT TRUSTS – 0.15% | |||||
Icade | 3,707 | 348,906 | |||
348,906 | |||||
RETAIL – 0.73% | |||||
PPR SA | 14,134 | 1,658,876 | |||
1,658,876 | |||||
SEMICONDUCTORS – 0.72% | |||||
STMicroelectronics NV | 124,394 | 1,639,095 | |||
1,639,095 | |||||
SOFTWARE – 0.29% | |||||
Dassault Systemes SA | 10,989 | 668,498 | |||
668,498 |
SCHEDULESOF INVESTMENTS | 35 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI FRANCE INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
TELECOMMUNICATIONS – 6.25% |
| |||||
Alcatel-Lucentb | 423,650 | $ | 2,588,433 | |||
Eutelsat Communicationsb | 14,985 | 417,848 | ||||
France Telecom SA | 331,927 | 9,839,562 | ||||
SES SA | 55,405 | 1,345,905 | ||||
14,191,748 | ||||||
WATER – 1.63% |
| |||||
Veolia Environnement | 68,598 | 3,701,408 | ||||
3,701,408 | ||||||
TOTAL COMMON STOCKS | ||||||
(Cost: $292,263,808) | 225,556,300 | |||||
RIGHTS – 0.63% |
| |||||
WATER – 0.63% |
| |||||
Suez Environnement SAb | 49,321 | 1,421,759 | ||||
1,421,759 | ||||||
TOTAL RIGHTS |
| |||||
(Cost: $1,407,492) | 1,421,759 | |||||
SHORT-TERM INVESTMENTS – 0.43% |
| |||||
MONEY MARKET FUNDS – 0.43% |
| |||||
Barclays Global Investors Funds | 27,603 | 27,603 | ||||
BGI Cash Premier Fund LLC | 955,062 | 955,062 | ||||
982,665 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $982,665) | 982,665 | |||||
TOTAL INVESTMENTS IN | ||||||
(Cost: $294,653,965) | 227,960,724 | |||||
Other Assets, Less Liabilities – (0.33)% | (758,197 | ) | ||||
NET ASSETS – 100.00% | $ | 227,202,527 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
36 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI GERMANY INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 94.84% | |||||
AIRLINES – 0.48% | |||||
Deutsche Lufthansa AG Registered | 147,177 | $ | 3,184,132 | ||
3,184,132 | |||||
APPAREL – 1.35% | |||||
Adidas AG | 130,329 | 7,684,669 | |||
Puma AG | 4,212 | 1,333,488 | |||
9,018,157 | |||||
AUTO MANUFACTURERS – 10.41% | |||||
Bayerische Motoren Werke AG | 212,544 | 8,761,701 | |||
Daimler AG Registered | 560,115 | 32,902,709 | |||
Volkswagen AGa | 93,231 | 28,000,905 | |||
69,665,315 | |||||
AUTO PARTS & EQUIPMENT – 1.61% | |||||
Continental AG | 98,739 | 10,764,537 | |||
10,764,537 | |||||
BANKS – 6.81% | |||||
Commerzbank AG | 402,894 | 11,916,598 | |||
Deutsche Bank AG Registereda | 322,866 | 27,664,757 | |||
Deutsche Postbank AG | 53,217 | 3,496,704 | |||
Hypo Real Estate Holding AGa | 103,702 | 2,546,623 | |||
45,624,682 | |||||
BUILDING MATERIALS – 0.28% | |||||
HeidelbergCement AG | 16,524 | 1,873,214 | |||
1,873,214 | |||||
CHEMICALS – 13.17% | |||||
BASF SE | 616,896 | 35,765,906 | |||
Bayer AG | 490,374 | 38,992,688 | |||
K+S AG | 94,527 | 11,523,059 | |||
Wacker Chemie AG | 10,368 | 1,919,332 | |||
88,200,985 | |||||
COMMERCIAL SERVICES – 0.16% | |||||
Hamburger Hafen und Logistik AG | 16,767 | 1,055,540 | |||
1,055,540 | |||||
COSMETICS & PERSONAL CARE – 0.50% | |||||
Beiersdorf AG | 57,105 | 3,333,488 | |||
3,333,488 |
Security | Shares | Value | |||
DIVERSIFIED FINANCIAL SERVICES – 1.83% | |||||
Deutsche Boerse AG | 128,223 | $ | 12,236,481 | ||
12,236,481 | |||||
ELECTRIC – 15.25% | |||||
E.ON AG | 1,225,368 | 71,891,314 | |||
RWE AG | 278,721 | 30,213,849 | |||
102,105,163 | |||||
ENERGY - ALTERNATE SOURCES – 1.01% | |||||
Q-Cells AGb | 38,961 | 3,938,934 | |||
SolarWorld AG | 53,703 | 2,817,059 | |||
6,755,993 | |||||
ENGINEERING & CONSTRUCTION – 2.44% | |||||
Bilfinger Berger AG | 24,543 | 1,738,379 | |||
Fraport AG | 23,976 | 1,551,376 | |||
Hochtief AG | 27,783 | 2,359,724 | |||
Linde AGa | 84,564 | 10,708,189 | |||
16,357,668 | |||||
FOOD – 0.61% | |||||
METRO AG | 73,386 | 4,108,858 | |||
4,108,858 | |||||
HEALTH CARE - PRODUCTS – 1.20% | |||||
Fresenius Medical Care AG & Co. KGaA | 121,500 | 6,546,949 | |||
Fresenius SE | 17,901 | 1,508,019 | |||
8,054,968 | |||||
HOLDING COMPANIES - DIVERSIFIED – 0.46% | |||||
GEA Group AG | 97,524 | 3,086,964 | |||
3,086,964 | |||||
HOUSEHOLD PRODUCTS & WARES – 0.44% | |||||
Henkel AG & Co. KGaA | 83,673 | 2,940,487 | |||
2,940,487 | |||||
INSURANCE – 10.59% | |||||
Allianz SE Registered | 288,927 | 48,535,034 | |||
Hannover Rueckversicherung AG | 38,070 | 1,634,936 | |||
Muenchener | |||||
AG Registered | 132,597 | 20,728,028 | |||
70,897,998 |
SCHEDULESOF INVESTMENTS | 37 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI GERMANY INDEX FUND
August 31, 2008
Security | Shares | Value | |||
INTERNET – 0.18% | |||||
United Internet AG Registered | 83,106 | $ | 1,218,634 | ||
1,218,634 | |||||
IRON & STEEL – 2.35% | |||||
Salzgitter AG | 26,649 | 4,123,492 | |||
ThyssenKrupp AG | 231,093 | 11,639,154 | |||
15,762,646 | |||||
LEISURE TIME – 0.41% | |||||
TUI AGa | 136,728 | 2,735,637 | |||
2,735,637 | |||||
MACHINERY - DIVERSIFIED – 1.22% | |||||
MAN AG | 67,959 | 6,688,519 | |||
Rheinmetall AG | 23,328 | 1,496,053 | |||
8,184,572 | |||||
MANUFACTURING – 9.08% | |||||
Siemens AG Registered | 555,903 | 60,776,478 | |||
60,776,478 | |||||
PHARMACEUTICALS – 1.04% | |||||
Celesio AG | 57,024 | 2,195,386 | |||
Merck KGaA | 41,148 | 4,740,396 | |||
6,935,782 | |||||
REAL ESTATE – 0.15% | |||||
IVG Immobilien AG | 53,865 | 996,836 | |||
996,836 | |||||
RETAIL – 0.06% | |||||
Arcandor AGb | 51,030 | 406,447 | |||
406,447 | |||||
SEMICONDUCTORS – 0.62% | |||||
Infineon Technologies AGb | 481,707 | 4,148,780 | |||
4,148,780 | |||||
SOFTWARE – 4.70% | |||||
SAP AG | 558,900 | 31,432,508 | |||
31,432,508 | |||||
TELECOMMUNICATIONS – 4.52% | |||||
Deutsche Telekom | 1,816,344 | 30,244,212 | |||
30,244,212 |
Security | Shares | Value | |||
TRANSPORTATION – 1.91% | |||||
Deutsche Post AG Registered | 543,591 | $ | 12,804,830 | ||
12,804,830 | |||||
TOTAL COMMON STOCKS | |||||
(Cost: $788,511,493) | 634,911,992 | ||||
PREFERRED STOCKS – 4.53% | |||||
AUTO MANUFACTURERS – 2.92% | |||||
Bayerische Motoren Werke AG | 34,263 | 1,180,383 | |||
Porsche Automobil Holding SE | 56,457 | 7,993,537 | |||
Volkswagen AG | 67,068 | 10,397,413 | |||
19,571,333 | |||||
ELECTRIC – 0.23% | |||||
RWE AG | 17,334 | 1,516,652 | |||
1,516,652 | |||||
HEALTH CARE - SERVICES – 0.63% | |||||
Fresenius SE | 51,192 | 4,196,458 | |||
4,196,458 | |||||
HOUSEHOLD PRODUCTS & WARES – 0.68% | |||||
Henkel AG & Co. KGaA | 115,830 | 4,563,402 | |||
4,563,402 | |||||
MEDIA – 0.07% | |||||
ProSiebenSat.1 Media AG | 44,226 | 455,131 | |||
455,131 | |||||
TOTAL PREFERRED STOCKS | |||||
(Cost: $34,986,050) | 30,302,976 | ||||
SHORT-TERM INVESTMENTS – 10.89% | |||||
MONEY MARKET FUNDS – 10.89% | |||||
Barclays Global Investors Funds | 52,953 | 52,953 | |||
BGI Cash Premier Fund LLC | 72,879,678 | 72,879,678 | |||
72,932,631 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $72,932,631) | 72,932,631 | ||||
38 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI GERMANY INDEX FUND
August 31, 2008
Value | ||||||
TOTAL INVESTMENTS IN |
| |||||
(Cost: $896,430,174) | $ | 738,147,599 | ||||
Other Assets, Less Liabilities – (10.26)% | (68,695,620 | ) | ||||
NET ASSETS – 100.00% | $ | 669,451,979 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 39 |
Table of Contents
iSHARES® MSCI ITALY INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 96.82% | |||||
AEROSPACE & DEFENSE – 2.41% | |||||
Finmeccanica SpA | 218,769 | $ | 5,890,892 | ||
5,890,892 | |||||
AUTO MANUFACTURERS – 2.55% | |||||
Fiat SpAa | 399,059 | 6,221,780 | |||
6,221,780 | |||||
AUTO PARTS & EQUIPMENT – 0.42% | |||||
Pirelli & C. SpA | 1,524,186 | 1,036,720 | |||
1,036,720 | |||||
BANKS – 33.58% | |||||
Banca Carige SpA | 719,075 | 2,416,387 | |||
Banca Monte dei Paschi di Siena SpA | 1,325,549 | 3,508,868 | |||
Banca Popolare di Milano Scrl | 296,985 | 2,979,764 | |||
Banco Popolare SpA | 444,275 | 8,529,254 | |||
Intesa Sanpaolo SpA | 4,113,135 | 22,239,055 | |||
UniCredito SpA | 5,813,860 | 31,541,593 | |||
Unione di Banche Italiane ScpA | 479,180 | 10,779,624 | |||
81,994,545 | |||||
BUILDING MATERIALS – 0.16% | |||||
Italcementi SpA | 28,062 | 395,791 | |||
395,791 | |||||
COMMERCIAL SERVICES – 1.97% | |||||
Atlantia SpA | 180,871 | 4,814,475 | |||
4,814,475 | |||||
DIVERSIFIED FINANCIAL SERVICES – 2.75% | |||||
Mediobanca SpA | 468,780 | 6,722,172 | |||
6,722,172 | |||||
ELECTRIC – 10.97% | |||||
A2A SpA | 1,221,581 | 3,839,739 | |||
Enel SpA | 1,255,345 | 11,597,340 | |||
Terna SpA | 2,804,880 | 11,335,435 | |||
26,772,514 | |||||
ELECTRICAL COMPONENTS & EQUIPMENT – 0.95% | |||||
Prysmian SpA | 93,588 | 2,309,275 | |||
2,309,275 |
Security | Shares | Value | |||
ENTERTAINMENT – 0.35% | |||||
Lottomatica SpA | 27,445 | $ | 850,140 | ||
850,140 | |||||
FOOD – 1.13% | |||||
Parmalat SpA | 990,732 | 2,749,471 | |||
2,749,471 | |||||
HEALTH CARE - PRODUCTS – 1.52% | |||||
Luxottica Group SpA | 146,097 | 3,710,325 | |||
3,710,325 | |||||
HOLDING COMPANIES - DIVERSIFIED – 0.48% | |||||
IFIL Investments SpA | 176,787 | 1,160,174 | |||
1,160,174 | |||||
INSURANCE – 10.14% | |||||
Assicurazioni Generali SpA | 498,420 | 16,708,600 | |||
Fondiaria-Sai SpA | 101,870 | 2,842,085 | |||
Mediolanum SpAa | 556,987 | 2,433,421 | |||
Unipol Gruppo Finanziario SpA | 1,109,004 | 2,783,807 | |||
24,767,913 | |||||
MEDIA – 1.82% | |||||
Mediaset SpA | 605,692 | 4,431,898 | |||
4,431,898 | |||||
OIL & GAS – 19.45% | |||||
Eni SpA | 1,451,210 | 47,495,371 | |||
47,495,371 | |||||
OIL & GAS SERVICES – 2.60% | |||||
Saipem SpA | 158,946 | 6,343,964 | |||
6,343,964 | |||||
RETAIL – 0.38% | |||||
Autogrill SpA | 41,046 | 514,561 | |||
Bulgari SpA | 40,531 | 417,106 | |||
931,667 | |||||
TELECOMMUNICATIONS – 3.19% | |||||
Telecom Italia SpA | 4,775,030 | 7,789,282 | |||
7,789,282 | |||||
TOTAL COMMON STOCKS | |||||
(Cost: $294,889,629) | 236,388,369 |
40 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI ITALY INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
PREFERRED STOCKS – 3.05% | ||||||
BANKS – 0.50% |
| |||||
Intesa Sanpaolo SpA RNC | 249,015 | $ | 1,214,403 | |||
1,214,403 | ||||||
BUILDING MATERIALS – 0.20% |
| |||||
Italcementi SpA RNC | 42,512 | 490,379 | ||||
490,379 | ||||||
HOLDING COMPANIES - DIVERSIFIED – 0.10% |
| |||||
Istituto Finanziario Industriale SpAb | 10,855 | 235,564 | ||||
235,564 | ||||||
INSURANCE – 1.02% |
| |||||
Unipol Gruppo Finanziario SpA | 1,332,143 | 2,500,591 | ||||
2,500,591 | ||||||
TELECOMMUNICATIONS – 1.23% |
| |||||
Telecom Italia SpA RNC | 2,353,000 | 3,012,126 | ||||
3,012,126 | ||||||
TOTAL PREFERRED STOCKS |
| |||||
(Cost: $11,004,465) | 7,453,063 | |||||
SHORT-TERM INVESTMENTS – 1.18% |
| |||||
MONEY MARKET FUNDS – 1.18% |
| |||||
Barclays Global Investors Funds | 21,405 | 21,405 | ||||
BGI Cash Premier Fund LLC | 2,850,983 | 2,850,983 | ||||
2,872,388 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $2,872,388) | 2,872,388 | |||||
TOTAL INVESTMENTS IN |
| |||||
(Cost: $308,766,482) | 246,713,820 | |||||
Other Assets, Less Liabilities – (1.05)% | (2,559,369 | ) | ||||
NET ASSETS – 100.00% | $ | 244,154,451 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 41 |
Table of Contents
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.60% | |||||
BANKS – 0.70% | |||||
SNS REAAL NV | 87,720 | $ | 1,468,387 | ||
1,468,387 | |||||
BEVERAGES – 4.74% | |||||
Heineken Holding NV | 65,188 | 2,908,943 | |||
Heineken NV | 148,952 | 7,026,198 | |||
9,935,141 | |||||
BIOTECHNOLOGY – 0.30% | |||||
Crucell NVa | 38,506 | 626,996 | |||
626,996 | |||||
BUILDING MATERIALS – 0.17% | |||||
Wavin NV | 44,892 | 366,812 | |||
366,812 | |||||
CHEMICALS – 7.22% | |||||
Akzo Nobel NV | 162,884 | 10,014,297 | |||
Koninklijke DSM NV | 88,408 | 5,119,141 | |||
15,133,438 | |||||
COMMERCIAL SERVICES – 1.27% | |||||
Brunel International NV | 5,839 | 136,082 | |||
Randstad Holding NV | 61,501 | 1,901,442 | |||
USG People NV | 33,973 | 621,208 | |||
2,658,732 | |||||
DIVERSIFIED FINANCIAL SERVICES – 0.24% | |||||
BinckBank NV | 36,292 | 352,644 | |||
KAS Bank NV | 4,472 | 155,643 | |||
508,287 | |||||
ELECTRICAL COMPONENTS & | |||||
Draka Holding NV | 10,807 | 326,167 | |||
InnoConcepts NVb | 9,671 | 154,341 | |||
TKH Group NV | 16,182 | 366,889 | |||
847,397 | |||||
ELECTRONICS – 9.84% | |||||
Koninklijke Philips | 630,036 | 20,629,168 | |||
20,629,168 | |||||
ENGINEERING & CONSTRUCTION – 1.84% | |||||
Arcadis NV | 26,378 | 562,719 | |||
Koninklijke BAM Groep NV | 69,488 | 1,236,852 | |||
Koninklijke Boskalis Westminster NV | 34,572 | 2,058,849 | |||
3,858,420 |
Security | Shares | Value | |||
FOOD – 19.10% | |||||
CSM NV | 38,872 | $ | 1,046,152 | ||
Koninklijke Ahold NV | 741,148 | 9,307,553 | |||
Koninklijke Wessanen NV | 49,906 | 480,521 | |||
Nutreco Holding NV | 18,576 | 1,152,193 | |||
Sligro Food Group NV | 10,810 | 375,595 | |||
Super de Boer NVa | 42,151 | 230,851 | |||
Unilever NV | 989,516 | 27,453,677 | |||
40,046,542 | |||||
HOLDING COMPANIES - DIVERSIFIED – 0.76% | |||||
Eriks Group NV | 6,364 | 393,515 | |||
Imtech NV | 32,474 | 841,453 | |||
Kendrion NV | 4,486 | 106,333 | |||
Ordina NV | 23,351 | 251,651 | |||
1,592,952 | |||||
INSURANCE – 22.26% | |||||
Aegon NV | 859,828 | 10,184,019 | |||
ING Groep NV | 1,161,344 | 36,486,891 | |||
46,670,910 | |||||
INVESTMENT COMPANIES – 0.12% | |||||
Kardan NV | 20,802 | 244,700 | |||
244,700 | |||||
MANUFACTURING – 0.72% | |||||
Aalberts Industries NV | 59,646 | 924,680 | |||
Koninklijke Ten Cate NV | 14,475 | 575,392 | |||
1,500,072 | |||||
MEDIA – 5.64% | |||||
Reed Elsevier NV | 400,244 | 6,735,233 | |||
Telegraaf Media Groep NV | 15,670 | 415,724 | |||
Wolters Kluwer NV | 191,092 | 4,684,231 | |||
11,835,188 | |||||
METAL FABRICATE & HARDWARE – 0.37% | |||||
Advanced Metallurgical | 12,675 | 769,383 | |||
769,383 | |||||
OFFICE & BUSINESS EQUIPMENT – 0.24% | |||||
Oce NV | 51,600 | 505,188 | |||
505,188 |
42 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
OIL & GAS SERVICES – 2.37% | |||||
Fugro NV CVA | 35,776 | $ | 2,778,933 | ||
SBM Offshore NV | 89,956 | 2,191,844 | |||
4,970,777 | |||||
PHARMACEUTICALS – 0.26% | |||||
OPG Groep NV | 32,468 | 546,844 | |||
546,844 | |||||
REAL ESTATE – 0.06% | |||||
NR Nordic and Russia | |||||
Properties Ltd. | 135,784 | 135,937 | |||
135,937 | |||||
REAL ESTATE INVESTMENT TRUSTS – 2.69% | |||||
Corio NV | 29,068 | 2,154,319 | |||
Eurocommercial Properties NV | 15,308 | 646,818 | |||
VastNed Offices/Industrial NV | 12,384 | 284,425 | |||
VastNed Retail NV | 10,320 | 807,845 | |||
Wereldhave NV | 15,480 | 1,737,770 | |||
5,631,177 | |||||
RETAIL – 0.15% | |||||
Beter Bed Holding NV | 10,153 | 142,004 | |||
Macintosh Retail Group NV | 9,119 | 163,522 | |||
305,526 | |||||
SEMICONDUCTORS – 3.37% | |||||
ASM International NVa | 27,864 | 695,746 | |||
ASML Holding NV | 268,303 | 6,371,497 | |||
7,067,243 | |||||
SOFTWARE – 0.64% | |||||
Exact Holding NV | 6,190 | 189,008 | |||
TomTom NVa | 36,636 | 912,081 | |||
Unit 4 Agresso NV | 10,693 | 232,993 | |||
1,334,082 | |||||
TELECOMMUNICATIONS – 9.03% | |||||
Koninklijke KPN NV | 1,108,024 | 18,922,945 | |||
18,922,945 | |||||
TEXTILES – 0.04% | |||||
Gamma Holding NV | 2,309 | 82,946 | |||
82,946 |
Security | Shares | Value | |||
TRANSPORTATION – 5.06% | |||||
Royal Vopak NV | 17,285 | $ | 1,024,276 | ||
Smit Internationale NV | 7,740 | 600,300 | |||
TNT NV | 239,596 | 8,995,003 | |||
10,619,579 | |||||
TOTAL COMMON STOCKS | 208,814,769 | ||||
SHORT-TERM INVESTMENTS – 0.38% | |||||
MONEY MARKET FUNDS – 0.38% | |||||
Barclays Global Investors Funds | 26,452 | 26,452 | |||
BGI Cash Premier Fund LLC | 768,475 | 768,475 | |||
794,927 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $794,927) | 794,927 | ||||
TOTAL INVESTMENTS IN | 209,609,696 | ||||
Other Assets, Less Liabilities – 0.02% | 42,851 | ||||
NET ASSETS – 100.00% | $ | 209,652,547 | |||
a | Non-income earning security. |
b | All or a portion of this security represents a security on loan. See Note 5. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 43 |
Table of Contents
iSHARES® MSCI SPAIN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.80% | |||||
AIRLINES – 0.18% | |||||
Iberia Lineas Aereas de Espana SA | 191,675 | $ | 572,853 | ||
572,853 | |||||
BANKS – 36.14% | |||||
Banco Bilbao Vizcaya Argentaria SA | 1,771,910 | 30,156,508 | |||
Banco Popular Espanol SAa | 1,147,893 | 12,218,595 | |||
Banco Sabadell SAa | 854,165 | 6,690,136 | |||
Banco Santander SA | 3,748,670 | 64,240,920 | |||
Bankinter SAa | 264,775 | 2,833,955 | |||
116,140,114 | |||||
COMMERCIAL SERVICES – 2.95% | |||||
Abertis Infraestructuras SA | 363,630 | 7,564,556 | |||
Cintra Concesiones de Infraestructuras de Transporte SAa | 163,289 | 1,906,390 | |||
9,470,946 | |||||
COMPUTERS – 1.21% | |||||
Indra Sistemas SA | 150,948 | 3,891,303 | |||
3,891,303 | |||||
DIVERSIFIED FINANCIAL SERVICES – 1.86% | |||||
Criteria CaixaCorp SA | 1,168,665 | 5,970,368 | |||
5,970,368 | |||||
ELECTRIC – 11.41% | |||||
Iberdrola SA | 1,247,035 | 15,128,206 | |||
Red Electrica Corporacion SA | 134,897 | 8,007,637 | |||
Union Fenosa SA | 530,147 | 13,541,830 | |||
36,677,673 | |||||
ENERGY - ALTERNATE SOURCES – 2.29% | |||||
Gamesa Corporacion Tecnologica SA | 154,190 | 7,348,192 | |||
7,348,192 | |||||
ENGINEERING & CONSTRUCTION – 6.18% | |||||
Acciona SA | 30,090 | 6,033,660 | |||
Actividades de Construcciones y Servicios SA | 206,627 | 9,232,670 | |||
Fomento de Construcciones y Contratas SAa | 34,523 | 1,743,857 |
Security | Shares | Value | |||
Grupo Ferrovial SAa | 44,285 | $ | 2,232,400 | ||
Sacyr Vallehermoso SAa | 34,510 | 630,519 | |||
19,873,106 | |||||
GAS – 4.57% | |||||
Enagas SA | 161,503 | 4,132,491 | |||
Gas Natural SDG SA | 226,185 | 10,542,807 | |||
14,675,298 | |||||
INSURANCE – 2.52% | |||||
Mapfre SA | 1,680,979 | 8,092,666 | |||
8,092,666 | |||||
IRON & STEEL – 0.59% | |||||
Acerinox SA | 100,417 | 1,911,557 | |||
1,911,557 | |||||
MACHINERY – 0.58% | |||||
Zardoya Otis SAa | 91,602 | 1,865,128 | |||
1,865,128 | |||||
MEDIA – 0.43% | |||||
Gestevision Telecinco SA | 45,900 | 594,671 | |||
Promotora de | 91,206 | 800,297 | |||
1,394,968 | |||||
OIL & GAS – 4.66% | |||||
Repsol YPF SA | 480,165 | 14,986,766 | |||
14,986,766 | |||||
PHARMACEUTICALS – 0.98% | |||||
Grifols SA | 104,903 | 3,135,202 | |||
3,135,202 | |||||
RETAIL – 2.82% | |||||
Industria de Diseno Textil SA | 192,950 | 9,050,491 | |||
9,050,491 | |||||
TELECOMMUNICATIONS – 20.43% | |||||
Telefonica SA | 2,637,635 | 65,665,895 | |||
65,665,895 | |||||
TOTAL COMMON STOCKS | 320,722,526 |
44 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI SPAIN INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
SHORT-TERM INVESTMENTS – 7.90% |
| |||||
MONEY MARKET FUNDS – 7.90% |
| |||||
Barclays Global Investors Funds | 25,070 | $ | 25,070 | |||
BGI Cash Premier Fund LLC | 25,354,104 | 25,354,104 | ||||
25,379,174 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $25,379,174) | 25,379,174 | |||||
TOTAL INVESTMENTS IN | 346,101,700 | |||||
Other Assets, Less Liabilities – (7.70)% | (24,753,152 | ) | ||||
NET ASSETS – 100.00% | $ | 321,348,548 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Affiliated issuer. See Note 2. |
c | The rate quoted is the annualized seven-day yield of the fund at period end. |
d | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 45 |
Table of Contents
iSHARES® MSCI SWEDEN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.90% | |||||
AGRICULTURE – 1.99% | |||||
Swedish Match AB | 228,036 | $ | 4,527,095 | ||
4,527,095 | |||||
AUTO MANUFACTURERS – 2.07% | |||||
Scania AB Class B | 326,740 | 4,718,699 | |||
4,718,699 | |||||
BANKS – 21.14% | |||||
Nordea Bank AB | 1,861,612 | 24,899,370 | |||
Skandinaviska Enskilda Banken AB Class A | 417,508 | 7,524,746 | |||
Svenska Handelsbanken AB Class A | 411,184 | 9,955,719 | |||
Swedbank AB Class Aa | 324,880 | 5,754,140 | |||
48,133,975 | |||||
COMMERCIAL SERVICES – 1.68% | |||||
Securitas AB Class B | 280,860 | 3,826,520 | |||
3,826,520 | |||||
ENGINEERING & CONSTRUCTION – 1.89% | |||||
Skanska AB Class B | 338,892 | 4,300,559 | |||
4,300,559 | |||||
FOREST PRODUCTS & PAPER – 3.24% | |||||
Holmen AB Class B | 48,484 | 1,558,923 | |||
Svenska Cellulosa AB Class B | 508,772 | 5,822,595 | |||
7,381,518 | |||||
HAND & MACHINE TOOLS – 4.82% | |||||
Sandvik AB | 875,564 | 10,974,628 | |||
10,974,628 | |||||
HEALTH CARE - PRODUCTS – 1.61% | |||||
Getinge AB Class B | 159,712 | 3,668,053 | |||
3,668,053 | |||||
HOME FURNISHINGS – 1.31% | |||||
Electrolux AB Class B | 230,268 | 2,975,896 | |||
2,975,896 | |||||
HOUSEHOLD PRODUCTS & WARES – 0.88% | |||||
Husqvarna AB Class Ba | 246,388 | 2,004,527 | |||
2,004,527 | |||||
INVESTMENT COMPANIES – 3.81% | |||||
Investor AB Class B | 408,456 | 8,665,384 | |||
8,665,384 |
Security | Shares | Value | |||
IRON & STEEL – 2.49% | |||||
SSAB Svenskt Stal AB Class A | 162,812 | $ | 4,005,433 | ||
SSAB Svenskt Stal AB Class B | 76,012 | 1,662,894 | |||
5,668,327 | |||||
MACHINERY – 10.46% | |||||
Atlas Copco AB Class A | 608,964 | 8,581,165 | |||
Atlas Copco AB Class B | 357,368 | 4,618,488 | |||
Volvo AB Class B | 926,404 | 10,602,146 | |||
23,801,799 | |||||
MANUFACTURING – 2.07% | |||||
Alfa Laval AB | 342,488 | 4,719,486 | |||
4,719,486 | |||||
MEDIA – 1.09% | |||||
Modern Times Group MTG | 46,500 | 2,479,817 | |||
2,479,817 | |||||
METAL FABRICATE & HARDWARE – 4.15% | |||||
Assa Abloy AB Class B | 282,720 | 4,071,967 | |||
SKF AB Class B | 351,788 | 5,368,008 | |||
9,439,975 | |||||
MINING – 0.72% | |||||
Boliden AB | 260,400 | 1,650,218 | |||
1,650,218 | |||||
OIL & GAS – 0.95% | |||||
Lundin Petroleum ABb | 196,416 | 2,156,115 | |||
2,156,115 | |||||
RETAIL – 10.02% | |||||
Hennes & Mauritz AB Class B | 457,932 | 22,816,919 | |||
22,816,919 | |||||
TELECOMMUNICATIONS – 23.51% | |||||
Millicom International Cellular SA SDR | 62,868 | 5,002,148 | |||
Tele2 AB Class B | 272,800 | 4,226,428 | |||
Telefonaktiebolaget LM Ericsson AB Class B | 2,655,337 | 30,182,036 | |||
TeliaSonera AB | 2,009,792 | 14,113,466 | |||
53,524,078 | |||||
TOTAL COMMON STOCKS | 227,433,588 |
46 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI SWEDEN INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
SHORT-TERM INVESTMENTS – 2.86% |
| |||||
MONEY MARKET FUNDS – 2.86% |
| |||||
Barclays Global Investors Funds | 63,018 | $ | 63,018 | |||
BGI Cash Premier Fund LLC | 6,438,507 | 6,438,507 | ||||
6,501,525 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $6,501,525) | 6,501,525 | |||||
TOTAL INVESTMENTS IN | 233,935,113 | |||||
Other Assets, Less Liabilities – (2.76)% | (6,281,317 | ) | ||||
NET ASSETS – 100.00% | $ | 227,653,796 | ||||
SDR – Swedish Depositary Receipts
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See |
Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 47 |
Table of Contents
iSHARES® MSCI SWITZERLAND INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.46% | |||||
BANKS – 7.96% | |||||
Baloise Holding Registered | 19,449 | $ | 1,673,356 | ||
Banque Cantonale | 1,288 | 391,671 | |||
Credit Suisse Group | 384,876 | 17,923,619 | |||
EFG International AG | 46,568 | 1,420,338 | |||
Julius Baer Holding | 111,202 | 6,813,761 | |||
Vontobel Holding | 28,706 | 961,789 | |||
29,184,534 | |||||
BUILDING MATERIALS – 2.80% | |||||
Geberit AG Registered | 17,949 | 2,622,857 | |||
Holcim Ltd. Registered | 105,746 | 7,639,591 | |||
10,262,448 | |||||
CHEMICALS – 6.01% | |||||
Givaudan SA Registered | 4,955 | 4,141,385 | |||
Lonza Group AG Registered | 25,582 | 3,628,785 | |||
Syngenta AG Registered | 52,959 | 14,272,194 | |||
22,042,364 | |||||
COMMERCIAL SERVICES – 1.80% | |||||
Adecco SA Registered | 58,601 | 2,769,055 | |||
SGS SA Registered | 2,974 | 3,831,393 | |||
6,600,448 | |||||
COMPUTERS – 0.56% | |||||
Logitech International | 76,147 | 2,045,192 | |||
2,045,192 | |||||
DIVERSIFIED FINANCIAL SERVICES – 4.92% | |||||
UBS AG Registereda | 820,420 | 18,031,537 | |||
18,031,537 | |||||
ENGINEERING & CONSTRUCTION – 4.83% | |||||
ABB Ltd. Registereda | 715,899 | 17,689,715 | |||
17,689,715 | |||||
FOOD – 19.47% | |||||
Aryzta AGa | 359 | 18,729 | |||
Aryzta AG Dublina | 30,379 | 1,484,886 | |||
Lindt & Sprungli AG Participation Certificates | 686 | 1,764,419 | |||
Nestle SA Registered | 1,539,367 | 68,114,204 | |||
71,382,238 |
Security | Shares | Value | |||
HAND & MACHINE TOOLS – 0.63% | |||||
Schindler Holding AG Participation Certificates | 27,178 | $ | 1,880,574 | ||
Schindler Holding | 5,842 | 420,192 | |||
2,300,766 | |||||
HEALTH CARE - PRODUCTS – 4.39% | |||||
Nobel Biocare Holding | 101,861 | 3,436,945 | |||
Sonova Holding AG Registered | 36,742 | 2,676,160 | |||
Straumann Holding | 8,524 | 2,291,356 | |||
Synthes Inc. | 55,257 | 7,672,138 | |||
16,076,599 | |||||
INSURANCE – 8.93% | |||||
Swiss Life Holding | 16,797 | 3,073,881 | |||
Swiss Reinsurance | 193,389 | 11,964,112 | |||
Zurich Financial Services | 67,377 | 17,697,696 | |||
32,735,689 | |||||
INVESTMENT COMPANIES – 0.64% | |||||
Pargesa Holding SA Bearer | 22,763 | 2,362,618 | |||
2,362,618 | |||||
MANUFACTURING – 0.42% | |||||
Sulzer AG Registered | 12,466 | 1,543,566 | |||
1,543,566 | |||||
PHARMACEUTICALS – 27.45% | |||||
Actelion Ltd. Registereda | 50,038 | 2,883,785 | |||
Novartis AG Registered | 870,839 | 48,800,601 | |||
Roche Holding AG Genusschein | 288,925 | 48,927,983 | |||
100,612,369 | |||||
RETAIL – 5.90% | |||||
Compagnie Financiere Richemont SA Class A Bearer Units | 262,084 | 15,354,946 | |||
Swatch Group AG (The) Bearer | 18,384 | 4,351,837 | |||
Swatch Group AG (The) Registered | 42,447 | 1,920,714 | |||
21,627,497 | |||||
SEMICONDUCTORS – 0.21% | |||||
OC Oerlikon Corp. | 3,218 | 757,366 | |||
757,366 |
48 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI SWITZERLAND INDEX FUND
August 31, 2008
Security | Shares | Value | |||
TELECOMMUNICATIONS – 1.92% | |||||
Swisscom AG Registered | 21,811 | $ | 7,024,756 | ||
7,024,756 | |||||
TRANSPORTATION – 0.62% | |||||
Kuehne & Nagel International | 28,466 | 2,267,743 | |||
2,267,743 | |||||
TOTAL COMMON STOCKS | 364,547,445 | ||||
SHORT-TERM INVESTMENTS – 0.01% | |||||
MONEY MARKET FUNDS – 0.01% | |||||
Barclays Global Investors Funds | 18,762 | 18,762 | |||
18,762 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $18,762) | 18,762 | ||||
TOTAL INVESTMENTS IN | 364,566,207 | ||||
Other Assets, Less Liabilities – 0.53% | 1,958,706 | ||||
NET ASSETS – 100.00% | $ | 366,524,913 | |||
a | Non-income earning security. |
b | Affiliated issuer. See Note 2. |
c | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 49 |
Table of Contents
iSHARES® MSCI UNITED KINGDOM INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.14% | |||||
ADVERTISING – 0.45% | |||||
WPP Group PLC | 402,420 | $ | 3,945,218 | ||
3,945,218 | |||||
AEROSPACE & DEFENSE – 2.08% | |||||
BAE Systems PLC | 1,236,421 | 10,824,816 | |||
Cobham PLC | 404,140 | 1,697,244 | |||
Meggitt PLC | 250,572 | 1,052,313 | |||
Rolls-Royce Group PLCa | 654,816 | 4,750,534 | |||
18,324,907 | |||||
AGRICULTURE – 3.38% | |||||
British American | 531,240 | 18,032,256 | |||
Imperial Tobacco Group PLC | 357,048 | 11,800,427 | |||
29,832,683 | |||||
AIRLINES – 0.11% | |||||
British Airways PLC | 212,518 | 972,932 | |||
972,932 | |||||
APPAREL – 0.15% | |||||
Burberry Group PLC | 159,190 | 1,303,692 | |||
1,303,692 | |||||
AUTO PARTS & EQUIPMENT – 0.13% | |||||
GKN PLC | 253,093 | 1,134,453 | |||
1,134,453 | |||||
BANKS – 16.52% | |||||
Alliance & Leicester PLC | 111,492 | 665,482 | |||
Barclays PLCb | 2,878,075 | 18,530,611 | |||
HBOS PLC | 1,859,882 | 10,711,287 | |||
HSBC Holdings PLC | 4,228,032 | 66,744,928 | |||
Lloyds TSB Group PLC | 2,017,393 | 11,176,858 | |||
Royal Bank of Scotland | 5,723,582 | 24,506,791 | |||
Standard Chartered PLC | 494,988 | 13,461,245 | |||
145,797,202 | |||||
BEVERAGES – 2.68% | |||||
Diageo PLC | 904,411 | 16,776,436 | |||
SABMiller PLC | 320,463 | 6,903,045 | |||
23,679,481 | |||||
CHEMICALS – 0.26% | |||||
Johnson Matthey PLC | 76,780 | 2,279,898 | |||
2,279,898 |
Security | Shares | Value | |||
COMMERCIAL SERVICES – 1.37% | |||||
Bunzl PLC | 115,283 | $ | 1,503,434 | ||
Capita Group PLC | 215,305 | 2,780,355 | |||
Experian PLC | 366,794 | 2,771,390 | |||
G4S PLC | 458,167 | 1,951,298 | |||
Hays PLC | 509,478 | 887,446 | |||
Rentokil Initial PLC | 646,155 | 857,398 | |||
Serco Group PLC | 172,509 | 1,353,772 | |||
12,105,093 | |||||
COMPUTERS – 0.15% | |||||
Logica PLC | 524,172 | 1,283,515 | |||
1,283,515 | |||||
DISTRIBUTION & WHOLESALE – 0.28% | |||||
Inchcape PLC | 161,439 | 761,907 | |||
Wolseley PLC | 215,688 | 1,750,648 | |||
2,512,555 | |||||
DIVERSIFIED FINANCIAL SERVICES – 1.56% | |||||
ICAP PLC | 184,980 | 1,604,310 | |||
Investec PLC | 145,197 | 1,067,273 | |||
London Stock Exchange | 54,720 | 791,466 | |||
Man Group PLC | 604,530 | 6,273,979 | |||
Old Mutual PLC | 1,821,720 | 3,242,981 | |||
Schroders PLC | 43,820 | 811,244 | |||
13,791,253 | |||||
ELECTRIC – 3.38% | |||||
British Energy Group PLC | 364,800 | 4,900,501 | |||
Drax Group PLC | 113,544 | 1,545,991 | |||
International Power PLC | 533,770 | 3,848,035 | |||
National Grid PLC | 883,500 | 11,513,880 | |||
Scottish & Southern | 303,012 | 7,997,261 | |||
29,805,668 | |||||
ENGINEERING & CONSTRUCTION – 0.36% | |||||
AMEC PLC | 121,980 | 1,880,002 | |||
Balfour Beatty PLC | 172,631 | 1,298,840 | |||
3,178,842 | |||||
ENTERTAINMENT – 0.10% | |||||
Ladbrokes PLC | 224,124 | 925,912 | |||
925,912 | |||||
FOOD – 5.11% | |||||
Cadbury PLC | 478,267 | 5,508,796 | |||
J Sainsbury PLC | 372,842 | 2,364,857 |
50 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Tate & Lyle PLC | 160,512 | $ | 1,296,953 | ||
Tesco PLC | 2,765,942 | 19,246,446 | |||
Unilever PLC | 456,456 | 12,296,807 | |||
Wm Morrison | 855,656 | 4,408,903 | |||
45,122,762 | |||||
FOOD SERVICE – 0.71% | |||||
Associated British Foods PLC | 128,136 | 1,884,901 | |||
Compass Group PLC | 658,405 | 4,401,290 | |||
6,286,191 | |||||
FOREST PRODUCTS & PAPER – 0.09% | |||||
Mondi PLC | 132,184 | 787,784 | |||
787,784 | |||||
GAS – 0.89% | |||||
Centrica PLC | 1,309,411 | 7,815,712 | |||
7,815,712 | |||||
HEALTH CARE - PRODUCTS – 0.44% | |||||
Smith & Nephew PLC | 319,200 | 3,857,107 | |||
3,857,107 | |||||
HOLDING COMPANIES - DIVERSIFIED – 0.10% | |||||
Tomkins PLC | 313,341 | 850,133 | |||
850,133 | |||||
HOME BUILDERS – 0.13% | |||||
Berkeley Group Holdings PLC (The) Unitsa | 31,197 | 484,234 | |||
Persimmon PLC | 94,777 | 645,664 | |||
1,129,898 | |||||
HOUSEHOLD PRODUCTS & WARES – 1.21% | |||||
Reckitt Benckiser PLC | 211,356 | 10,713,122 | |||
10,713,122 | |||||
INSURANCE – 3.36% | |||||
Aviva PLC | 928,599 | 8,714,180 | |||
Friends Provident PLC | 838,128 | 1,513,417 | |||
Legal & General Group PLC | 2,190,271 | 4,014,920 | |||
Prudential PLC | 868,714 | 8,683,010 | |||
RSA Insurance Group PLC | 1,144,981 | 3,149,289 | |||
Standard Life PLC | 782,128 | 3,580,671 | |||
29,655,487 |
Security | Shares | Value | |||
LEISURE TIME – 0.40% | |||||
Carnival PLC | 59,321 | $ | 2,036,296 | ||
Thomas Cook Group PLC | 174,491 | 728,822 | |||
TUI Travel PLC | 194,856 | 749,022 | |||
3,514,140 | |||||
LODGING – 0.15% | |||||
InterContinental Hotels | 94,848 | 1,287,105 | |||
1,287,105 | |||||
MANUFACTURING – 0.62% | |||||
IMI PLC | 119,016 | 1,087,567 | |||
Invensys PLCa | 284,772 | 1,462,139 | |||
Smiths Group PLC | 140,717 | 2,938,766 | |||
5,488,472 | |||||
MEDIA – 1.79% | |||||
British Sky Broadcasting | 409,951 | 3,484,422 | |||
Daily Mail & General Trust PLC Class A NVS | 84,588 | 573,166 | |||
ITV PLC | 938,448 | 766,834 | |||
Pearson PLC | 293,899 | 3,639,828 | |||
Reed Elsevier PLC | 397,529 | 4,528,081 | |||
Thomson Reuters PLC | 67,034 | 1,879,239 | |||
United Business Media Ltd. | 87,009 | 944,265 | |||
15,815,835 | |||||
MINING – 12.01% | |||||
Anglo American PLC | 465,348 | 24,885,980 | |||
Antofagasta PLC | 141,816 | 1,602,431 | |||
BHP Billiton PLC | 776,514 | 24,332,424 | |||
Eurasian Natural | 115,368 | 2,114,776 | |||
Kazakhmys PLC | 73,416 | 1,730,080 | |||
Lonmin PLC | 56,088 | 3,559,076 | |||
Rio Tinto PLC | 351,804 | 33,553,076 | |||
Vedanta Resources PLC | 51,756 | 1,719,030 | |||
Xstrata PLC | 223,668 | 12,508,031 | |||
106,004,904 | |||||
OIL & GAS – 19.73% | |||||
BG Group PLC | 1,174,428 | 26,112,174 | |||
BP PLC | 6,654,408 | 64,176,013 | |||
Cairn Energy PLCa | 47,196 | 2,563,556 | |||
Royal Dutch Shell PLC Class A | 1,254,228 | 43,945,740 |
SCHEDULESOF INVESTMENTS | 51 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Royal Dutch Shell PLC | 971,052 | $ | 33,510,164 | ||
Tullow Oil PLC | 252,852 | 3,804,813 | |||
174,112,460 | |||||
PACKAGING & CONTAINERS – 0.19% | |||||
Rexam PLC | 232,009 | 1,718,082 | |||
1,718,082 | |||||
PHARMACEUTICALS – 8.44% | |||||
AstraZeneca PLC | 514,721 | 25,282,567 | |||
GlaxoSmithKline PLC | 1,930,020 | 45,640,171 | |||
Shire Ltd. | 201,096 | 3,550,518 | |||
74,473,256 | |||||
REAL ESTATE – 1.15% | |||||
British Land Co. PLC | 183,996 | 2,569,014 | |||
Hammerson PLC | 104,451 | 1,813,688 | |||
Land Securities Group PLC | 165,121 | 4,095,945 | |||
Liberty International PLC | 91,237 | 1,638,323 | |||
10,116,970 | |||||
REAL ESTATE INVESTMENT TRUSTS – 0.14% | |||||
SEGRO PLC | 157,583 | 1,261,789 | |||
1,261,789 | |||||
RETAIL – 1.26% | |||||
Carphone Warehouse Group | 145,960 | 528,987 | |||
Enterprise Inns PLC | 186,431 | 1,032,024 | |||
Home Retail Group PLC | 307,026 | 1,421,000 | |||
Kingfisher PLC | 852,614 | 2,076,092 | |||
Marks & Spencer Group PLC | 561,792 | 2,687,225 | |||
Mitchells & Butlers PLC | 144,921 | 756,641 | |||
Next PLC | 70,680 | 1,367,807 | |||
Whitbread PLC | 62,700 | 1,292,287 | |||
11,162,063 | |||||
SOFTWARE – 0.21% | |||||
Sage Group PLC | 477,483 | 1,828,901 | |||
1,828,901 | |||||
TELECOMMUNICATIONS – 6.75% | |||||
BT Group PLC | 2,756,064 | 8,666,415 | |||
Cable & Wireless PLC | 872,967 | 2,826,241 | |||
Vodafone Group PLC | 18,693,492 | 48,092,401 | |||
59,585,057 |
Security | Shares | Value | |||
TRANSPORTATION – 0.44% | |||||
FirstGroup PLC | 173,120 | $ | 1,916,677 | ||
National Express Group PLC | 46,512 | 882,290 | |||
Stagecoach Group PLC | 188,660 | 1,100,280 | |||
3,899,247 | |||||
VENTURE CAPITAL – 0.27% | |||||
3i Group PLC | 139,541 | 2,340,274 | |||
2,340,274 | |||||
WATER – 0.59% | |||||
Severn Trent PLC | 83,986 | 2,089,461 | |||
United Utilities Group PLC | 237,849 | 3,101,847 | |||
5,191,308 | |||||
TOTAL COMMON STOCKS | |||||
(Cost: $991,051,716) | 874,891,363 | ||||
SHORT-TERM INVESTMENTS – 0.01% | |||||
MONEY MARKET FUNDS – 0.01% | |||||
Barclays Global Investors Funds | 126,329 | 126,329 | |||
126,329 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $126,329) | 126,329 | ||||
TOTAL INVESTMENTS IN | 875,017,692 | ||||
Other Assets, Less Liabilities – 0.85% | 7,484,375 | ||||
NET ASSETS – 100.00% | $ | 882,502,067 | |||
NVS – Non-Voting Shares
a | Non-income earning security. |
b | Affiliated issuer. See Note 2. |
c | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
52 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities
iSHARES®, INC.
August 31, 2008
iShares MSCI | ||||||||||||||||
Austria Investable Market Index Fund | Belgium Investable Market Index Fund | EMU Index Fund | France Index Fund | |||||||||||||
ASSETS | ||||||||||||||||
Investments, at cost: | ||||||||||||||||
Unaffiliated issuers | $ | 256,776,004 | $ | 169,472,008 | $ | 1,517,278,586 | $ | 293,671,300 | ||||||||
Affiliated issuers (Note 2) | 15,696,870 | 18,926,723 | 31,504,308 | 982,665 | ||||||||||||
Total cost of investments | $ | 272,472,874 | $ | 188,398,731 | $ | 1,548,782,894 | $ | 294,653,965 | ||||||||
Investments in securities, at value | ||||||||||||||||
Unaffiliated issuers | $ | 191,553,843 | $ | 118,888,183 | $ | 1,288,160,713 | $ | 226,978,059 | ||||||||
Affiliated issuers (Note 2) | 15,696,870 | 18,926,723 | 31,504,308 | 982,665 | ||||||||||||
Total value of investments | 207,250,713 | 137,814,906 | 1,319,665,021 | 227,960,724 | ||||||||||||
Foreign currencies, at valueb | 82,991 | 120,750 | 1,428,802 | 107,019 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 3,389,359 | – | 3,061,459 | 450,874 | ||||||||||||
Dividends and interest | 2,017,765 | 971,147 | 2,484,680 | 11,208 | ||||||||||||
Total Assets | 212,740,828 | 138,906,803 | 1,326,639,962 | 228,529,825 | ||||||||||||
LIABILITIES | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 2,667,829 | – | 2,790,608 | 259,465 | ||||||||||||
Securities related to in-kind transactions (Note 4) | – | – | 43,372 | – | ||||||||||||
Collateral for securities on loan (Note 5) | 15,647,007 | 18,898,386 | 31,256,539 | 955,062 | ||||||||||||
Capital shares redeemed | 698,572 | – | 89,876 | – | ||||||||||||
Investment advisory fees (Note 2) | 125,249 | 53,784 | 651,538 | 112,771 | ||||||||||||
Total Liabilities | 19,138,657 | 18,952,170 | 34,831,933 | 1,327,298 | ||||||||||||
NET ASSETS | $ | 193,602,171 | $ | 119,954,633 | $ | 1,291,808,029 | $ | 227,202,527 | ||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 282,735,010 | $ | 180,435,697 | $ | 1,549,466,620 | $ | 302,975,911 | ||||||||
Undistributed net investment income | 1,801,453 | 623,146 | 10,227,903 | 1,991,490 | ||||||||||||
Accumulated net realized loss | (25,773,092 | ) | (10,497,614 | ) | (38,665,056 | ) | (11,067,093 | ) | ||||||||
Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies | (65,161,200 | ) | (50,606,596 | ) | (229,221,438 | ) | (66,697,781 | ) | ||||||||
NET ASSETS | $ | 193,602,171 | $ | 119,954,633 | $ | 1,291,808,029 | $ | 227,202,527 | ||||||||
Shares outstandingc | 6,500,000 | 6,800,000 | 28,100,000 | d | 7,400,000 | |||||||||||
Net asset value per share | $ | 29.78 | $ | 17.64 | $ | 45.97 | d | $ | 30.70 | |||||||
a | Securities on loan with market values of $14,969,573, $18,512,590, $29,933,605 and $891,880, respectively. See Note 5. |
b | Cost of foreign currencies: $82,907, $126,455, $1,462,764 and $112,827, respectively. |
c | $0.001 par value, number of shares authorized: 19.8 million, 136.2 million, 1 billion and 340.2 million, respectively. |
d | Shares outstanding and net asset value per share reflect a two-for-one stock split effective July 24, 2008. See Note 4. |
See notes to financial statements.
FINANCIAL STATEMENTS | 53 |
Table of Contents
Statements of Assets and Liabilities (Continued)
iSHARES®, INC.
August 31, 2008
iShares MSCI | ||||||||||||||||
Germany Index Fund | Italy Index Fund | Netherlands Investable Market Index Fund | Spain Index Fund | |||||||||||||
ASSETS | ||||||||||||||||
Investments, at cost: | ||||||||||||||||
Unaffiliated issuers | $ | 823,497,543 | $ | 305,894,094 | $ | 245,565,011 | $ | 421,883,990 | ||||||||
Affiliated issuers (Note 2) | 72,932,631 | 2,872,388 | 794,927 | 25,379,174 | ||||||||||||
Total cost of investments | $ | 896,430,174 | $ | 308,766,482 | $ | 246,359,938 | $ | 447,263,164 | ||||||||
Investments in securities, at value | ||||||||||||||||
Unaffiliated issuers | $ | 665,214,968 | $ | 243,841,432 | $ | 208,814,769 | $ | 320,722,526 | ||||||||
Affiliated issuers (Note 2) | 72,932,631 | 2,872,388 | 794,927 | 25,379,174 | ||||||||||||
Total value of investments | 738,147,599 | 246,713,820 | 209,609,696 | 346,101,700 | ||||||||||||
Foreign currencies, at valueb | 113,549 | 289,874 | 402,745 | 628,795 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 2,691,356 | 1,163,271 | 1,832,040 | 525,075 | ||||||||||||
Dividends and interest | 3,546,530 | 79,716 | 479,897 | 344,530 | ||||||||||||
Total Assets | 744,499,034 | 248,246,681 | 212,324,378 | 347,600,100 | ||||||||||||
LIABILITIES | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 1,805,483 | 1,126,584 | 1,804,154 | 683,472 | ||||||||||||
Collateral for securities on loan (Note 5) | 72,879,678 | 2,850,983 | 768,475 | 25,354,104 | ||||||||||||
Capital shares redeemed | – | – | – | 38,702 | ||||||||||||
Investment advisory fees (Note 2) | 361,894 | 114,663 | 99,202 | 175,274 | ||||||||||||
Total Liabilities | 75,047,055 | 4,092,230 | 2,671,831 | 26,251,552 | ||||||||||||
NET ASSETS | $ | 669,451,979 | $ | 244,154,451 | $ | 209,652,547 | $ | 321,348,548 | ||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 887,049,031 | $ | 322,486,540 | $ | 262,500,168 | $ | 425,389,263 | ||||||||
Undistributed net investment income | 1,949,256 | 1,358,007 | 2,265,509 | 6,489,523 | ||||||||||||
Accumulated net realized loss | (61,065,132 | ) | (17,643,299 | ) | (18,354,638 | ) | (9,329,112 | ) | ||||||||
Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies | (158,481,176 | ) | (62,046,797 | ) | (36,758,492 | ) | (101,201,126 | ) | ||||||||
NET ASSETS | $ | 669,451,979 | $ | 244,154,451 | $ | 209,652,547 | $ | 321,348,548 | ||||||||
Shares outstandingc | 24,300,000 | 9,750,000 | 8,600,000 | 6,375,000 | ||||||||||||
Net asset value per share | $ | 27.55 | $ | 25.04 | $ | 24.38 | $ | 50.41 | ||||||||
a | Securities on loan with market values of $68,856,746, $2,703,556, $742,154 and $24,409,010, respectively. See Note 5. |
b | Cost of foreign currencies: $115,685, $311,908, $403,334 and $662,048, respectively. |
c | $0.001 par value, number of shares authorized: 382.2 million, 63.6 million, 255 million and 127.8 million, respectively. |
See notes to financial statements.
54 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Continued)
iSHARES®, INC.
August 31, 2008
iShares MSCI | ||||||||||||
Sweden Index Fund | Switzerland Index Fund | United Kingdom Index Fund | ||||||||||
ASSETS | ||||||||||||
Investments, at cost: | ||||||||||||
Unaffiliated issuers | $ | 306,453,559 | $ | 398,727,743 | $ | 962,325,419 | ||||||
Affiliated issuers (Note 2) | 6,501,525 | 18,762 | 28,852,626 | |||||||||
Total cost of investments | $ | 312,955,084 | $ | 398,746,505 | $ | 991,178,045 | ||||||
Investments in securities, at value (including securities on loana) (Note 1): | ||||||||||||
Unaffiliated issuers | $ | 227,433,588 | $ | 364,547,445 | $ | 856,360,752 | ||||||
Affiliated issuers (Note 2) | 6,501,525 | 18,762 | 18,656,940 | |||||||||
Total value of investments | 233,935,113 | 364,566,207 | 875,017,692 | |||||||||
Foreign currencies, at valueb | 128,624 | 249,443 | 1,383,851 | |||||||||
Receivables: | ||||||||||||
Investment securities sold | 1,179,617 | 1,932,772 | 2,048,312 | |||||||||
Dividends and interest | 5,352 | 1,550,292 | 6,621,668 | |||||||||
Total Assets | 235,248,706 | 368,298,714 | 885,071,523 | |||||||||
LIABILITIES | ||||||||||||
Payables: | ||||||||||||
Investment securities purchased | 1,055,797 | 1,600,402 | 2,144,615 | |||||||||
Collateral for securities on loan (Note 5) | 6,438,507 | – | – | |||||||||
Investment advisory fees (Note 2) | 100,606 | 173,399 | 424,841 | |||||||||
Total Liabilities | 7,594,910 | 1,773,801 | 2,569,456 | |||||||||
NET ASSETS | $ | 227,653,796 | $ | 366,524,913 | $ | 882,502,067 | ||||||
Net assets consist of: | ||||||||||||
Paid-in capital | $ | 325,072,289 | $ | 409,072,816 | $ | 1,044,390,792 | ||||||
Undistributed net investment income | 175,146 | 1,044,066 | 8,677,006 | |||||||||
Accumulated net realized loss | (18,567,046 | ) | (9,298,020 | ) | (54,118,517 | ) | ||||||
Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies | (79,026,593 | ) | (34,293,949 | ) | (116,447,214 | ) | ||||||
NET ASSETS | $ | 227,653,796 | $ | 366,524,913 | $ | 882,502,067 | ||||||
Shares outstandingc | 9,300,000 | 15,875,000 | 45,600,000 | |||||||||
Net asset value per share | $ | 24.48 | $ | 23.09 | $ | 19.35 | ||||||
a | Securities on loan with market values of $5,959,848, $– and $–, respectively. See Note 5. |
b | Cost of foreign currencies: $135,246, $250,103 and $1,458,728, respectively. |
c | $0.001 par value, number of shares authorized: 63.6 million, 318.625 million and 943.2 million, respectively. |
See notes to financial statements.
FINANCIAL STATEMENTS | 55 |
Table of Contents
Statements of Operations
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI | ||||||||||||||||
Austria Investable Market Index Fund | Belgium Investable Market Index Fund | EMU Index Fund | France Index Fund | |||||||||||||
NET INVESTMENT INCOME | ||||||||||||||||
Dividends from unaffiliated issuersa | $ | 7,221,838 | $ | 10,200,532 | $ | 90,204,420 | $ | 14,713,798 | ||||||||
Interest from affiliated issuers (Note 2) | 9,826 | 17,349 | 96,237 | 13,410 | ||||||||||||
Securities lending income from affiliated issuers (Note 2) | 61,668 | 112,195 | 814,073 | 20,206 | ||||||||||||
Total investment income | 7,293,332 | 10,330,076 | 91,114,730 | 14,747,414 | ||||||||||||
EXPENSES | ||||||||||||||||
Investment advisory fees (Note 2) | 1,803,461 | 1,386,685 | 13,126,393 | 2,443,788 | ||||||||||||
Total expenses | 1,803,461 | 1,386,685 | 13,126,393 | 2,443,788 | ||||||||||||
Net investment income | 5,489,871 | 8,943,391 | 77,988,337 | 12,303,626 | ||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments in unaffiliated issuers | (18,771,297 | ) | (9,309,326 | ) | (39,542,904 | ) | (14,098,151 | ) | ||||||||
In-kind redemptions | 19,377,954 | 19,515,339 | 459,358,019 | 34,258,921 | ||||||||||||
Foreign currency transactions | 221,019 | 95,042 | 1,075,957 | 111,244 | ||||||||||||
Net realized gain | 827,676 | 10,301,055 | 420,891,072 | 20,272,014 | ||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments | (72,256,258 | ) | (77,277,870 | ) | (780,131,943 | ) | (74,328,356 | ) | ||||||||
Translation of assets and liabilities in foreign currencies | (5,149 | ) | (27,050 | ) | (124,487 | ) | (9,361 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (72,261,407 | ) | (77,304,920 | ) | (780,256,430 | ) | (74,337,717 | ) | ||||||||
Net realized and unrealized loss | (71,433,731 | ) | (67,003,865 | ) | (359,365,358 | ) | (54,065,703 | ) | ||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (65,943,860 | ) | $ | (58,060,474 | ) | $ | (281,377,021 | ) | $ | (41,762,077 | ) | ||||
a | Net of foreign withholding tax of $1,267,742, $1,715,743, $14,534,791 and $2,299,395, respectively. |
See notes to financial statements.
56 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Operations (Continued)
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI | ||||||||||||||||
Germany Index Fund | Italy Index Fund | Netherlands Investable Market Index Fund | Spain Index Fund | |||||||||||||
NET INVESTMENT INCOME | ||||||||||||||||
Dividends from unaffiliated issuersa | $ | 54,051,811 | $ | 13,077,080 | $ | 11,144,800 | $ | 21,690,149 | ||||||||
Interest from affiliated issuers (Note 2) | 54,585 | 12,554 | 15,659 | 28,352 | ||||||||||||
Securities lending income from affiliated issuers (Note 2) | 640,460 | 29,276 | 40,977 | 1,296,203 | ||||||||||||
Total investment income | 54,746,856 | 13,118,910 | 11,201,436 | 23,014,704 | ||||||||||||
EXPENSES | ||||||||||||||||
Investment advisory fees (Note 2) | 8,738,608 | 1,220,048 | 1,322,904 | 3,129,000 | ||||||||||||
Total expenses | 8,738,608 | 1,220,048 | 1,322,904 | 3,129,000 | ||||||||||||
Net investment income | 46,008,248 | 11,898,862 | 9,878,532 | 19,885,704 | ||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments in unaffiliated issuers | (34,183,964 | ) | (16,068,706 | ) | (10,290,422 | ) | (10,698,575 | ) | ||||||||
In-kind redemptions | 261,346,019 | 9,543,843 | 23,486,597 | 34,663,865 | ||||||||||||
Foreign currency transactions | 406,821 | 203,602 | (60,048 | ) | 62,531 | |||||||||||
Net realized gain (loss) | 227,568,876 | (6,321,261 | ) | 13,136,127 | 24,027,821 | |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments | (371,106,028 | ) | (51,868,476 | ) | (54,512,738 | ) | (122,498,452 | ) | ||||||||
Translation of assets and liabilities in foreign currencies | (221,105 | ) | (16,305 | ) | (9,168 | ) | (38,752 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (371,327,133 | ) | (51,884,781 | ) | (54,521,906 | ) | (122,537,204 | ) | ||||||||
Net realized and unrealized loss | (143,758,257 | ) | (58,206,042 | ) | (41,385,779 | ) | (98,509,383 | ) | ||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (97,750,009 | ) | $ | (46,307,180 | ) | $ | (31,507,247 | ) | $ | (78,623,679 | ) | ||||
a | Net of foreign withholding tax of $9,155,276, $2,015,182, $1,809,665 and $3,651,339, respectively. |
See notes to financial statements.
FINANCIAL STATEMENTS | 57 |
Table of Contents
Statements of Operations (Continued)
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI | ||||||||||||
Sweden Index Fund | Switzerland Index Fund | United Kingdom Index Fund | ||||||||||
NET INVESTMENT INCOME | ||||||||||||
Dividends from unaffiliated issuersa | $ | 12,220,988 | $ | 9,383,103 | $ | 43,660,500 | ||||||
Dividends from affiliated issuers (Note 2) | – | – | 1,874,570 | |||||||||
Interest from affiliated issuers (Note 2) | 18,346 | 12,148 | 55,840 | |||||||||
Securities lending income from affiliated issuers (Note 2) | 33,742 | 20,063 | 6,763 | |||||||||
Total investment income | 12,273,076 | 9,415,314 | 45,597,673 | |||||||||
EXPENSES | ||||||||||||
Investment advisory fees (Note 2) | 1,842,608 | 1,995,890 | 5,668,706 | |||||||||
Total expenses | 1,842,608 | 1,995,890 | 5,668,706 | |||||||||
Net investment income | 10,430,468 | 7,419,424 | 39,928,967 | |||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||
Net realized gain (loss) from: | ||||||||||||
Investments in unaffiliated issuers | (16,718,602 | ) | (3,603,902 | ) | (25,896,900 | ) | ||||||
Investments in affiliated issuers (Note 2) | – | – | (1,368,896 | ) | ||||||||
In-kind redemptions | 21,812,450 | 58,891,723 | 117,552,669 | |||||||||
Foreign currency transactions | 53,875 | 184,962 | (551,383 | ) | ||||||||
Net realized gain | 5,147,723 | 55,472,783 | 89,735,490 | |||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||
Investments | (109,862,168 | ) | (89,845,698 | ) | (319,445,393 | ) | ||||||
Translation of assets and liabilities in foreign currencies | (3,107 | ) | (116,959 | ) | (312,315 | ) | ||||||
Net change in unrealized appreciation (depreciation) | (109,865,275 | ) | (89,962,657 | ) | (319,757,708 | ) | ||||||
Net realized and unrealized loss | (104,717,552 | ) | (34,489,874 | ) | (230,022,218 | ) | ||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (94,287,084 | ) | $ | (27,070,450 | ) | $ | (190,093,251 | ) | |||
a | Net of foreign withholding tax of $2,143,478, $1,779,849 and $334,141, respectively. |
See notes to financial statements.
58 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
iShares MSCI Austria Investable Market Index Fund | iShares MSCI Belgium Investable Market Index Fund | |||||||||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 5,489,871 | $ | 6,906,656 | $ | 8,943,391 | $ | 7,500,507 | ||||||||
Net realized gain | 827,676 | 89,929,345 | 10,301,055 | 4,698,517 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (72,261,407 | ) | (27,238,773 | ) | (77,304,920 | ) | 13,471,138 | |||||||||
Net increase (decrease) in net assets resulting from operations | (65,943,860 | ) | 69,597,228 | (58,060,474 | ) | 25,670,162 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||
From net investment income | (10,677,774 | ) | (8,705,133 | ) | (16,629,945 | ) | (4,042,358 | ) | ||||||||
Total distributions to shareholders | (10,677,774 | ) | (8,705,133 | ) | (16,629,945 | ) | (4,042,358 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Proceeds from shares sold | 202,420,621 | 345,391,061 | 83,185,830 | 145,006,107 | ||||||||||||
Cost of shares redeemed | (405,710,636 | ) | (324,406,725 | ) | (192,024,177 | ) | (15,634,722 | ) | ||||||||
Net increase (decrease) in net assets from capital share transactions | (203,290,015 | ) | 20,984,336 | (108,838,347 | ) | 129,371,385 | ||||||||||
INCREASE (DECREASE) IN NET ASSETS | (279,911,649 | ) | 81,876,431 | (183,528,766 | ) | 150,999,189 | ||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 473,513,820 | 391,637,389 | 303,483,399 | 152,484,210 | ||||||||||||
End of year | $ | 193,602,171 | $ | 473,513,820 | $ | 119,954,633 | $ | 303,483,399 | ||||||||
Undistributed net investment income included in net assets at end of year | $ | 1,801,453 | $ | 6,668,789 | $ | 623,146 | $ | 6,750,550 | ||||||||
SHARES ISSUED AND REDEEMED | ||||||||||||||||
Shares sold | 5,700,000 | 8,800,000 | 3,320,000 | 5,640,000 | ||||||||||||
Shares redeemed | (11,900,000 | ) | (8,700,000 | ) | (8,240,000 | ) | (600,000 | ) | ||||||||
Net increase (decrease) in shares outstanding | (6,200,000 | ) | 100,000 | (4,920,000 | ) | 5,040,000 | ||||||||||
See notes to financial statements.
FINANCIAL STATEMENTS | 59 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI EMU Index Fund | iShares MSCI France Index Fund | |||||||||||||||
Year ended August 31, 2008a | Year ended August 31, 2007a | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS |
| |||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 77,988,337 | $ | 64,897,028 | $ | 12,303,626 | $ | 5,363,789 | ||||||||
Net realized gain | 420,891,072 | 78,401,296 | 20,272,014 | 16,902,131 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (780,256,430 | ) | 372,001,498 | (74,337,717 | ) | 131,397 | ||||||||||
Net increase (decrease) in net assets resulting from operations | (281,377,021 | ) | 515,299,822 | (41,762,077 | ) | 22,397,317 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: |
| |||||||||||||||
From net investment income | (132,228,318 | ) | (39,632,439 | ) | (15,471,999 | ) | (2,600,180 | ) | ||||||||
Total distributions to shareholders | (132,228,318 | ) | (39,632,439 | ) | (15,471,999 | ) | (2,600,180 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: |
| |||||||||||||||
Proceeds from shares sold | 935,523,497 | 890,425,624 | 392,494,736 | 308,549,207 | ||||||||||||
Cost of shares redeemed | (2,201,675,459 | ) | (189,448,664 | ) | (553,753,893 | ) | (94,536,345 | ) | ||||||||
Net increase (decrease) in net assets from capital share transactions | (1,266,151,962 | ) | 700,976,960 | (161,259,157 | ) | 214,012,862 | ||||||||||
INCREASE (DECREASE) IN NET ASSETS | (1,679,757,301 | ) | 1,176,644,343 | (218,493,233 | ) | 233,809,999 | ||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 2,971,565,330 | 1,794,920,987 | 445,695,760 | 211,885,761 | ||||||||||||
End of year | $ | 1,291,808,029 | $ | 2,971,565,330 | $ | 227,202,527 | $ | 445,695,760 | ||||||||
Undistributed net investment income included in net assets at end of year | $ | 10,227,903 | $ | 62,166,681 | $ | 1,991,490 | $ | 5,048,619 | ||||||||
SHARES ISSUED AND REDEEMED |
| |||||||||||||||
Shares sold | 17,500,000 | 16,600,000 | 10,800,000 | 8,200,000 | ||||||||||||
Shares redeemed | (41,400,000 | ) | (3,500,000 | ) | (15,600,000 | ) | (2,800,000 | ) | ||||||||
Net increase (decrease) in shares outstanding | (23,900,000 | ) | 13,100,000 | (4,800,000 | ) | 5,400,000 | ||||||||||
a | Share transactions were adjusted to reflect a two-for-one stock split effective July 24, 2008. See Note 4. |
See notes to financial statements.
60 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Germany Index Fund | iShares MSCI Italy Index Fund | |||||||||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS |
| |||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 46,008,248 | $ | 28,068,699 | $ | 11,898,862 | $ | 8,244,893 | ||||||||
Net realized gain (loss) | 227,568,876 | 152,044,593 | (6,321,261 | ) | 45,811,884 | |||||||||||
Net change in unrealized appreciation (depreciation) | (371,327,133 | ) | 148,406,473 | (51,884,781 | ) | (31,574,902 | ) | |||||||||
Net increase (decrease) in net assets resulting from operations | (97,750,009 | ) | 328,519,765 | (46,307,180 | ) | 22,481,875 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: |
| |||||||||||||||
From net investment income | (72,915,709 | ) | (17,227,480 | ) | (18,054,401 | ) | (4,310,712 | ) | ||||||||
Total distributions to shareholders | (72,915,709 | ) | (17,227,480 | ) | (18,054,401 | ) | (4,310,712 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: |
| |||||||||||||||
Proceeds from shares sold | 961,273,471 | 972,720,932 | 499,630,008 | 255,824,310 | ||||||||||||
Cost of shares redeemed | (1,762,400,887 | ) | (445,562,698 | ) | (363,609,192 | ) | (247,823,971 | ) | ||||||||
Net increase (decrease) in net assets from capital share transactions | (801,127,416 | ) | 527,158,234 | 136,020,816 | 8,000,339 | |||||||||||
INCREASE (DECREASE) IN NET ASSETS | (971,793,134 | ) | 838,450,519 | 71,659,235 | 26,171,502 | |||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 1,641,245,113 | 802,794,594 | 172,495,216 | 146,323,714 | ||||||||||||
End of year | $ | 669,451,979 | $ | 1,641,245,113 | $ | 244,154,451 | $ | 172,495,216 | ||||||||
Undistributed net investment income included in net assets at end of year | $ | 1,949,256 | $ | 27,920,700 | $ | 1,358,007 | $ | 7,309,944 | ||||||||
SHARES ISSUED AND REDEEMED |
| |||||||||||||||
Shares sold | 29,100,000 | 31,800,000 | 16,800,000 | 7,500,000 | ||||||||||||
Shares redeemed | (55,800,000 | ) | (14,700,000 | ) | (12,150,000 | ) | (7,200,000 | ) | ||||||||
Net increase (decrease) in shares outstanding | (26,700,000 | ) | 17,100,000 | 4,650,000 | 300,000 | |||||||||||
See notes to financial statements.
FINANCIAL STATEMENTS | 61 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Netherlands Investable Market Index Fund | iShares MSCI Spain Index Fund | |||||||||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS |
| |||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 9,878,532 | $ | 7,751,323 | $ | 19,885,704 | $ | 12,640,003 | ||||||||
Net realized gain | 13,136,127 | 25,566,651 | 24,027,821 | 113,046,969 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (54,521,906 | ) | 4,801,697 | (122,537,204 | ) | (7,855,721 | ) | |||||||||
Net increase (decrease) in net assets resulting from operations | (31,507,247 | ) | 38,119,671 | (78,623,679 | ) | 117,831,251 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||
From net investment income | (15,733,536 | ) | (3,524,849 | ) | (24,006,924 | ) | (4,483,132 | ) | ||||||||
Total distributions to shareholders | (15,733,536 | ) | (3,524,849 | ) | (24,006,924 | ) | (4,483,132 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Proceeds from shares sold | 108,417,983 | 202,315,940 | 1,073,349,945 | 743,582,607 | ||||||||||||
Cost of shares redeemed | (102,878,515 | ) | (95,548,185 | ) | (1,171,926,810 | ) | (512,504,767 | ) | ||||||||
Net increase (decrease) in net assets from capital share transactions | 5,539,468 | 106,767,755 | (98,576,865 | ) | 231,077,840 | |||||||||||
INCREASE (DECREASE) IN NET ASSETS | (41,701,315 | ) | 141,362,577 | (201,207,468 | ) | 344,425,959 | ||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 251,353,862 | 109,991,285 | 522,556,016 | 178,130,057 | ||||||||||||
End of year | $ | 209,652,547 | $ | 251,353,862 | $ | 321,348,548 | $ | 522,556,016 | ||||||||
Undistributed net investment income included in net assets at end of year | $ | 2,265,509 | $ | 8,180,561 | $ | 6,489,523 | $ | 10,548,212 | ||||||||
SHARES ISSUED AND REDEEMED | ||||||||||||||||
Shares sold | 3,550,000 | 7,350,000 | 17,250,000 | 14,100,000 | ||||||||||||
Shares redeemed | (3,400,000 | ) | (3,450,000 | ) | (19,875,000 | ) | (9,075,000 | ) | ||||||||
Net increase (decrease) in shares outstanding | 150,000 | 3,900,000 | (2,625,000 | ) | 5,025,000 | |||||||||||
See notes to financial statements.
62 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Sweden Index Fund | iShares MSCI Switzerland Index Fund | |||||||||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 10,430,468 | $ | 13,800,011 | $ | 7,419,424 | $ | 3,903,136 | ||||||||
Net realized gain | 5,147,723 | 35,325,675 | 55,472,783 | 8,791,737 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (109,865,275 | ) | 28,147,722 | (89,962,657 | ) | 19,142,733 | ||||||||||
Net increase (decrease) in net assets resulting from operations | (94,287,084 | ) | 77,273,408 | (27,070,450 | ) | 31,837,606 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||
From net investment income | (24,097,389 | ) | (3,600,238 | ) | (10,490,319 | ) | (1,891,314 | ) | ||||||||
Total distributions to shareholders | (24,097,389 | ) | (3,600,238 | ) | (10,490,319 | ) | (1,891,314 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Proceeds from shares sold | 281,026,512 | 453,975,174 | 294,689,801 | 119,606,280 | ||||||||||||
Cost of shares redeemed | (508,014,443 | ) | (106,048,705 | ) | (209,602,175 | ) | (18,873,671 | ) | ||||||||
Net increase (decrease) in net assets from capital share transactions | (226,987,931 | ) | 347,926,469 | 85,087,626 | 100,732,609 | |||||||||||
INCREASE (DECREASE) IN NET ASSETS | (345,372,404 | ) | 421,599,639 | 47,526,857 | 130,678,901 | |||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 573,026,200 | 151,426,561 | 318,998,056 | 188,319,155 | ||||||||||||
End of year | $ | 227,653,796 | $ | 573,026,200 | $ | 366,524,913 | $ | 318,998,056 | ||||||||
Undistributed net investment income included in net assets at end of year | $ | 175,146 | $ | 13,788,192 | $ | 1,044,066 | $ | 3,929,999 | ||||||||
SHARES ISSUED AND REDEEMED | ||||||||||||||||
Shares sold | 9,300,000 | 13,725,000 | 11,750,000 | 4,750,000 | ||||||||||||
Shares redeemed | (16,575,000 | ) | (3,000,000 | ) | (8,250,000 | ) | (750,000 | ) | ||||||||
Net increase (decrease) in shares outstanding | (7,275,000 | ) | 10,725,000 | 3,500,000 | 4,000,000 | |||||||||||
See notes to financial statements.
FINANCIAL STATEMENTS | 63 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI United Kingdom Index Fund | ||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||
OPERATIONS: | ||||||||
Net investment income | $ | 39,928,967 | $ | 37,583,387 | ||||
Net realized gain | 89,735,490 | 40,620,180 | ||||||
Net change in unrealized appreciation (depreciation) | (319,757,708 | ) | 76,385,578 | |||||
Net increase (decrease) in net assets resulting from operations | (190,093,251 | ) | 154,589,145 | |||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||
From net investment income | (63,131,140 | ) | (34,304,512 | ) | ||||
Total distributions to shareholders | (63,131,140 | ) | (34,304,512 | ) | ||||
CAPITAL SHARE TRANSACTIONS: | ||||||||
Proceeds from shares sold | 463,470,489 | 229,005,308 | ||||||
Cost of shares redeemed | (455,482,369 | ) | (93,960,543 | ) | ||||
Net increase in net assets from capital share transactions | 7,988,120 | 135,044,765 | ||||||
INCREASE (DECREASE) IN NET ASSETS | (245,236,271 | ) | 255,329,398 | |||||
NET ASSETS | ||||||||
Beginning of year | 1,127,738,338 | 872,408,940 | ||||||
End of year | $ | 882,502,067 | $ | 1,127,738,338 | ||||
Undistributed net investment income included in net assets at end of year | $ | 8,677,006 | $ | 32,407,502 | ||||
SHARES ISSUED AND REDEEMED | ||||||||
Shares sold | 20,200,000 | 9,800,000 | ||||||
Shares redeemed | (20,200,000 | ) | (4,000,000 | ) | ||||
Net increase in shares outstanding | – | 5,800,000 | ||||||
See notes to financial statements.
64 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Austria Investable Market Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 37.28 | $ | 31.08 | $ | 26.62 | $ | 17.04 | $ | 10.61 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.56 | 0.51 | 0.44 | 0.29 | 0.21 | |||||||||||||||
Net realized and unrealized gain (loss)b | (6.98 | ) | 6.42 | 4.31 | 9.38 | 6.39 | ||||||||||||||
Total from investment operations | (6.42 | ) | 6.93 | 4.75 | 9.67 | 6.60 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.08 | ) | (0.73 | ) | (0.29 | ) | (0.09 | ) | (0.17 | ) | ||||||||||
Total distributions | (1.08 | ) | (0.73 | ) | (0.29 | ) | (0.09 | ) | (0.17 | ) | ||||||||||
Net asset value, end of year | $ | 29.78 | $ | 37.28 | $ | 31.08 | $ | 26.62 | $ | 17.04 | ||||||||||
Total return | (17.64 | )% | 22.35 | % | 18.00 | % | 56.82 | % | 62.70 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 193,602 | $ | 473,514 | $ | 391,637 | $ | 196,952 | $ | 57,920 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.77 | % | ||||||||||
Ratio of net investment income to average net assets | 1.57 | % | 1.36 | % | 1.48 | % | 1.26 | % | 1.37 | % | ||||||||||
Portfolio turnover ratec | 26 | % | 21 | % | 32 | % | 21 | % | 11 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | 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 Belgium Investable Market Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 25.89 | $ | 22.83 | $ | 18.94 | $ | 14.77 | $ | 11.16 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.78 | 0.76 | 0.75 | 0.71 | 0.37 | |||||||||||||||
Net realized and unrealized gain (loss)b | (7.27 | ) | 2.74 | 3.95 | 3.75 | 4.25 | ||||||||||||||
Total from investment operations | (6.49 | ) | 3.50 | 4.70 | 4.46 | 4.62 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.76 | ) | (0.44 | ) | (0.81 | ) | (0.29 | ) | (1.01 | ) | ||||||||||
Total distributions | (1.76 | ) | (0.44 | ) | (0.81 | ) | (0.29 | ) | (1.01 | ) | ||||||||||
Net asset value, end of year | $ | 17.64 | $ | 25.89 | $ | 22.83 | $ | 18.94 | $ | 14.77 | ||||||||||
Total return | (26.21 | )% | 15.36 | % | 25.66 | % | 30.22 | % | 42.88 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 119,955 | $ | 303,483 | $ | 152,484 | $ | 46,960 | $ | 24,813 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.78 | % | ||||||||||
Ratio of net investment income to average net assets | 3.32 | % | 2.90 | % | 3.60 | % | 3.89 | % | 2.79 | % | ||||||||||
Portfolio turnover ratec | 31 | % | 12 | % | 10 | % | 10 | % | 21 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | 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 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI EMU Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008a | Year ended Aug. 31, 2007a | Year ended Aug. 31, 2006a | Year ended Aug. 31, 2005a | Year ended Aug. 31, 2004a | ||||||||||||||||
Net asset value, beginning of year | $ | 57.15 | $ | 46.14 | $ | 37.49 | $ | 29.69 | $ | 25.06 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomeb | 1.71 | 1.40 | 1.37 | 0.88 | 0.68 | |||||||||||||||
Net realized and unrealized gain (loss)c | (9.59 | ) | 10.54 | 7.94 | 7.57 | 4.35 | ||||||||||||||
Total from investment operations | (7.88 | ) | 11.94 | 9.31 | 8.45 | 5.03 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (3.30 | ) | (0.93 | ) | (0.66 | ) | (0.65 | ) | (0.40 | ) | ||||||||||
Total distributions | (3.30 | ) | (0.93 | ) | (0.66 | ) | (0.65 | ) | (0.40 | ) | ||||||||||
Net asset value, end of year | $ | 45.97 | $ | 57.15 | $ | 46.14 | $ | 37.49 | $ | 29.69 | ||||||||||
Total return | (14.52 | )% | 26.10 | % | 25.18 | % | 28.54 | % | 20.07 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 1,291,808 | $ | 2,971,565 | $ | 1,794,921 | $ | 547,284 | $ | 326,606 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.58 | % | 0.79 | % | ||||||||||
Ratio of expenses to average net assets exclusive of foreign taxes | n/a | n/a | n/a | 0.57 | % | 0.79 | % | |||||||||||||
Ratio of net investment income to average net assets | 3.06 | % | 2.60 | % | 3.23 | % | 2.50 | % | 2.29 | % | ||||||||||
Portfolio turnover rated | 27 | % | 5 | % | 8 | % | 8 | % | 11 | % |
a | Per share amounts were adjusted to reflect a two-for-one stock split effective July 24, 2008. See Note 4. |
b | Based on average shares outstanding throughout each period. |
c | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | 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 France Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 36.53 | $ | 31.16 | $ | 25.41 | $ | 20.40 | $ | 16.90 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.93 | 0.77 | 0.55 | 0.47 | 0.24 | |||||||||||||||
Net realized and unrealized gain (loss)b | (5.17 | ) | 5.06 | 5.52 | 4.84 | 3.54 | ||||||||||||||
Total from investment operations | (4.24 | ) | 5.83 | 6.07 | 5.31 | 3.78 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.59 | ) | (0.46 | ) | (0.32 | ) | (0.30 | ) | (0.28 | ) | ||||||||||
Total distributions | (1.59 | ) | (0.46 | ) | (0.32 | ) | (0.30 | ) | (0.28 | ) | ||||||||||
Net asset value, end of year | $ | 30.70 | $ | 36.53 | $ | 31.16 | $ | 25.41 | $ | 20.40 | ||||||||||
Total return | (11.96 | )% | 18.83 | % | 24.13 | % | 26.13 | % | 22.44 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 227,203 | $ | 445,696 | $ | 211,886 | $ | 81,326 | $ | 61,201 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.79 | % | ||||||||||
Ratio of net investment income to average net assets | 2.60 | % | 2.17 | % | 1.95 | % | 1.98 | % | 1.23 | % | ||||||||||
Portfolio turnover ratec | 10 | % | 6 | % | 10 | % | 7 | % | 9 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | 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 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Germany Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 32.18 | $ | 23.68 | $ | 19.08 | $ | 14.96 | $ | 12.57 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.88 | 0.68 | 0.57 | 0.28 | 0.19 | |||||||||||||||
Net realized and unrealized gain (loss)b | (3.84 | ) | 8.33 | 4.15 | 4.03 | 2.40 | ||||||||||||||
Total from investment operations | (2.96 | ) | 9.01 | 4.72 | 4.31 | 2.59 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.67 | ) | (0.51 | ) | (0.12 | ) | (0.19 | ) | (0.20 | ) | ||||||||||
Total distributions | (1.67 | ) | (0.51 | ) | (0.12 | ) | (0.19 | ) | (0.20 | ) | ||||||||||
Net asset value, end of year | $ | 27.55 | $ | 32.18 | $ | 23.68 | $ | 19.08 | $ | 14.96 | ||||||||||
Total return | (9.81 | )% | 38.47 | % | 24.82 | % | 28.89 | % | 20.55 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 669,452 | $ | 1,641,245 | $ | 802,795 | $ | 314,793 | $ | 98,764 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.80 | % | ||||||||||
Ratio of net investment income to average net assets | 2.72 | % | 2.32 | % | 2.62 | % | 1.54 | % | 1.27 | % | ||||||||||
Portfolio turnover ratec | 11 | % | 4 | % | 12 | % | 9 | % | 9 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 69 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Italy Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 33.82 | $ | 30.48 | $ | 25.77 | $ | 20.21 | $ | 16.67 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 1.53 | 1.35 | 1.07 | 0.78 | 0.56 | |||||||||||||||
Net realized and unrealized gain (loss)b | (7.71 | ) | 2.66 | 4.15 | 5.42 | 3.59 | ||||||||||||||
Total from investment operations | (6.18 | ) | 4.01 | 5.22 | 6.20 | 4.15 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (2.60 | ) | (0.67 | ) | (0.51 | ) | (0.64 | ) | (0.61 | ) | ||||||||||
Total distributions | (2.60 | ) | (0.67 | ) | (0.51 | ) | (0.64 | ) | (0.61 | ) | ||||||||||
Net asset value, end of year | $ | 25.04 | $ | 33.82 | $ | 30.48 | $ | 25.77 | $ | 20.21 | ||||||||||
Total return | (19.43 | )% | 13.20 | % | 20.61 | % | 30.74 | % | 25.09 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 244,154 | $ | 172,495 | $ | 146,324 | $ | 42,526 | $ | 27,279 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.52 | % | 0.54 | % | 0.57 | % | 0.83 | % | ||||||||||
Ratio of expenses to average net assets exclusive of foreign taxes | n/a | n/a | n/a | n/a | 0.79 | % | ||||||||||||||
Ratio of net investment income to average net assets | 5.06 | % | 4.02 | % | 3.87 | % | 3.18 | % | 2.85 | % | ||||||||||
Portfolio turnover ratec | 29 | % | 16 | % | 15 | % | 18 | % | 9 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
70 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Netherlands Investable Market Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 29.75 | $ | 24.17 | $ | 19.10 | $ | 15.70 | $ | 14.31 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 1.10 | 0.98 | 0.60 | 0.57 | 0.39 | |||||||||||||||
Net realized and unrealized gain (loss)b | (4.68 | ) | 5.05 | 4.95 | 3.09 | 1.37 | ||||||||||||||
Total from investment operations | (3.58 | ) | 6.03 | 5.55 | 3.66 | 1.76 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.79 | ) | (0.45 | ) | (0.48 | ) | (0.26 | ) | (0.37 | ) | ||||||||||
Total distributions | (1.79 | ) | (0.45 | ) | (0.48 | ) | (0.26 | ) | (0.37 | ) | ||||||||||
Net asset value, end of year | $ | 24.38 | $ | 29.75 | $ | 24.17 | $ | 19.10 | $ | 15.70 | ||||||||||
Total return | (12.67 | )% | 25.22 | % | 29.53 | % | 23.40 | % | 12.28 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 209,653 | $ | 251,354 | $ | 109,991 | $ | 63,974 | $ | 28,265 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.78 | % | ||||||||||
Ratio of net investment income to average net assets | 3.86 | % | 3.50 | % | 2.78 | % | 3.13 | % | 2.45 | % | ||||||||||
Portfolio turnover ratec | 26 | % | 8 | % | 17 | % | 6 | % | 9 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 71 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Spain Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 58.06 | $ | 44.81 | $ | 35.70 | $ | 27.55 | $ | 22.39 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 1.98 | 1.30 | 1.07 | 0.79 | 0.44 | |||||||||||||||
Net realized and unrealized gain (loss)b | (7.33 | ) | 12.33 | 8.78 | 7.97 | 4.99 | ||||||||||||||
Total from investment operations | (5.35 | ) | 13.63 | 9.85 | 8.76 | 5.43 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (2.30 | ) | (0.38 | ) | (0.74 | ) | (0.61 | ) | (0.27 | ) | ||||||||||
Total distributions | (2.30 | ) | (0.38 | ) | (0.74 | ) | (0.61 | ) | (0.27 | ) | ||||||||||
Net asset value, end of year | $ | 50.41 | $ | 58.06 | $ | 44.81 | $ | 35.70 | $ | 27.55 | ||||||||||
Total return | (9.76 | )% | 30.47 | % | 28.09 | % | 31.85 | % | 24.28 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 321,349 | $ | 522,556 | $ | 178,130 | $ | 66,945 | $ | 45,456 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.80 | % | ||||||||||
Ratio of net investment income to average net assets | 3.28 | % | 2.36 | % | 2.67 | % | 2.33 | % | 1.64 | % | ||||||||||
Portfolio turnover ratec | 22 | % | 12 | % | 6 | % | 8 | % | 6 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
72 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Sweden Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 34.57 | $ | 25.88 | $ | 21.58 | $ | 16.82 | $ | 12.59 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.91 | 1.15 | 0.76 | 0.46 | 0.28 | |||||||||||||||
Net realized and unrealized gain (loss)b | (8.63 | ) | 7.88 | 3.96 | 4.45 | 4.20 | ||||||||||||||
Total from investment operations | (7.72 | ) | 9.03 | 4.72 | 4.91 | 4.48 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (2.37 | ) | (0.34 | ) | (0.42 | ) | (0.15 | ) | (0.25 | ) | ||||||||||
Total distributions | (2.37 | ) | (0.34 | ) | (0.42 | ) | (0.15 | ) | (0.25 | ) | ||||||||||
Net asset value, end of year | $ | 24.48 | $ | 34.57 | $ | 25.88 | $ | 21.58 | $ | 16.82 | ||||||||||
Total return | (23.16 | )% | 35.01 | % | 22.16 | % | 29.21 | % | 35.81 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 227,654 | $ | 573,026 | $ | 151,427 | $ | 61,513 | $ | 27,758 | ||||||||||
Ratio of expenses to average net assets | 0.51 | % | 0.51 | % | 0.54 | % | 0.58 | % | 0.92 | % | ||||||||||
Ratio of expenses to average net assets exclusive of foreign taxes | n/a | n/a | n/a | 0.57 | % | 0.79 | % | |||||||||||||
Ratio of net investment income to average net assets | 2.91 | % | 3.42 | % | 3.13 | % | 2.28 | % | 1.74 | % | ||||||||||
Portfolio turnover ratec | 17 | % | 7 | % | 14 | % | 6 | % | 9 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 73 |
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iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Switzerland Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 25.78 | $ | 22.49 | $ | 17.63 | $ | 14.58 | $ | 12.23 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.49 | 0.36 | 0.27 | 0.22 | 0.09 | |||||||||||||||
Net realized and unrealized gain (loss)b | (2.51 | ) | 3.12 | 4.71 | 2.92 | 2.31 | ||||||||||||||
Total from investment operations | (2.02 | ) | 3.48 | 4.98 | 3.14 | 2.40 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.67 | ) | (0.19 | ) | (0.12 | ) | (0.09 | ) | (0.05 | ) | ||||||||||
Total distributions | (0.67 | ) | (0.19 | ) | (0.12 | ) | (0.09 | ) | (0.05 | ) | ||||||||||
Net asset value, end of year | $ | 23.09 | $ | 25.78 | $ | 22.49 | $ | 17.63 | $ | 14.58 | ||||||||||
Total return | (7.97 | )% | 15.53 | % | 28.36 | % | 21.54 | % | 19.56 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 366,525 | $ | 318,998 | $ | 188,319 | $ | 79,324 | $ | 41,920 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.79 | % | ||||||||||
Ratio of net investment income to average net assets | 1.93 | % | 1.42 | % | 1.34 | % | 1.34 | % | 0.64 | % | ||||||||||
Portfolio turnover ratec | 11 | % | 5 | % | 11 | % | 5 | % | 4 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | 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.
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iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI United Kingdom Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 24.73 | $ | 21.92 | $ | 18.74 | $ | 15.72 | $ | 13.00 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.83 | 0.84 | 0.97 | 0.60 | 0.48 | |||||||||||||||
Net realized and unrealized gain (loss)b | (4.89 | ) | 2.78 | 2.79 | 2.76 | 2.72 | ||||||||||||||
Total from investment operations | (4.06 | ) | 3.62 | 3.76 | 3.36 | 3.20 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.32 | ) | (0.81 | ) | (0.58 | ) | (0.34 | ) | (0.48 | ) | ||||||||||
Total distributions | (1.32 | ) | (0.81 | ) | (0.58 | ) | (0.34 | ) | (0.48 | ) | ||||||||||
Net asset value, end of year | $ | 19.35 | $ | 24.73 | $ | 21.92 | $ | 18.74 | $ | 15.72 | ||||||||||
Total return | (17.16 | )% | 16.77 | % | 20.61 | % | 21.53 | % | 24.77 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 882,502 | $ | 1,127,738 | $ | 872,409 | $ | 464,850 | $ | 452,870 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.77 | % | ||||||||||
Ratio of net investment income to average net assets | 3.64 | % | 3.51 | % | 4.81 | % | 3.39 | % | 3.11 | % | ||||||||||
Portfolio turnover ratec | 14 | % | 8 | % | 10 | % | 11 | % | 6 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 75 |
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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 iShares MSCI Austria Investable Market (formerly iShares MSCI Austria Index Fund), iShares MSCI Belgium Investable Market (formerly iShares MSCI Belgium Index Fund), iShares MSCI EMU, iShares MSCI France, iShares MSCI Germany, iShares MSCI Italy, iShares MSCI Netherlands Investable Market (formerly iShares MSCI Netherlands Index Fund), iShares MSCI Spain, iShares MSCI Sweden, iShares MSCI Switzerland and iShares MSCI United Kingdom Index Funds (each, a “Fund,” 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 publicly traded equity securities in the aggregate in a particular market, as measured by that market’s equity securities index compiled by MSCI Inc. (“MSCI”). The investment adviser uses a “passive” or index approach to achieve each Fund’s investment objective. Each of the Funds is classified as a non-diversified fund under the 1940 Act. Non-diversified funds generally hold securities of fewer companies than diversified funds and may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.
Each Fund invests in the securities of foreign issuers of a single country or region, which may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets and the risk of war.
Pursuant to the Company’s organizational documents, the 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 Company 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 the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
The securities and other assets of each Fund are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. The investment adviser may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing
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Notes to Financial Statements (Continued)
iSHARES®, INC.
service based on such pricing service’s valuation matrix may be considered a market valuation. In the event that current market valuations are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Directors of the Company (the “Board”).
Investments that may be valued using fair value pricing include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (i.e., one that may not be publicly sold without registration under the Securities Act of 1933, as amended); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (i.e., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Fund’s NAV is computed and that may materially affect the value of the Fund’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.
Valuing a Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Accordingly, 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 benchmark index, which, in turn, could result in a difference between the Fund’s performance and the performance of the Fund’s benchmark index.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source, and 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. Any use of a rate different from the rates used by MSCI may adversely affect a Fund’s ability to track its underlying index. 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, corporate events, capital gains on investments or currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign markets in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are disclosed in their Statements of Operations. Foreign taxes payable as of August 31, 2008, if any, are reflected in the Funds’ Statements of Assets and Liabilities.
NOTESTO FINANCIAL STATEMENTS | 77 |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income, if any, including any net foreign currency gains, are declared and distributed at least annually by each Fund. Distributions of net realized capital gains, if any, generally are declared and distributed once a year. 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.
As of August 31, 2008, the tax year-end of the Funds, the components of net accumulated losses on a tax basis were as follows:
iShares MSCI Index Fund | Undistributed Ordinary Income | Unrealized Depreciation | Capital and Other Losses | Net Accumulated Losses | |||||||||||
Austria Investable Market | $ | 1,858,667 | $ | (68,573,853 | ) | $ | (22,417,653 | ) | $ | (89,132,839 | ) | ||||
Belgium Investable Market | 783,669 | (51,535,501 | ) | (9,729,232 | ) | (60,481,064 | ) | ||||||||
EMU | 9,716,846 | (240,818,188 | ) | (26,557,249 | ) | (257,658,591 | ) | ||||||||
France | 1,973,533 | (68,770,033 | ) | (8,976,884 | ) | (75,773,384 | ) | ||||||||
Germany | 1,317,923 | (163,041,526 | ) | (55,873,449 | ) | (217,597,052 | ) | ||||||||
Italy | 1,337,510 | (72,274,945 | ) | (7,394,654 | ) | (78,332,089 | ) | ||||||||
Netherlands Investable Market | 2,232,976 | (40,010,242 | ) | (15,070,355 | ) | (52,847,621 | ) | ||||||||
Spain | 5,360,722 | (102,477,644 | ) | (6,923,793 | ) | (104,040,715 | ) | ||||||||
Sweden | 148,655 | (80,232,237 | ) | (17,334,911 | ) | (97,418,493 | ) | ||||||||
Switzerland | 1,024,002 | (38,079,198 | ) | (5,492,707 | ) | (42,547,903 | ) | ||||||||
United Kingdom | 8,678,934 | (137,367,977 | ) | (33,199,682 | ) | (161,888,725 | ) |
For the years ended August 31, 2008 and August 31, 2007, the tax characterization of distributions paid for each Fund was equal to the book characterization of distributions paid. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for all Funds.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity 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 was required for the year ended August 31, 2008.
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Notes to Financial Statements (Continued)
iSHARES®, INC.
From November 1, 2007 to August 31, 2008, certain Funds incurred net realized capital losses. As permitted by tax regulations, these Funds have elected to defer those losses and treat them as arising in the year ending August 31, 2009, as follows:
iShares MSCI Index Fund | Deferred Net Realized | |
Austria Investable Market | $ 7,179,631 | |
Belgium Investable Market | 5,965,717 | |
EMU | 24,023,638 | |
France | 3,408,375 | |
Germany | 23,185,643 |
iShares MSCI Index Fund | Deferred Net Realized | |
Italy | $ 2,355,896 | |
Netherlands Investable Market | 5,819,155 | |
Spain | 5,928,123 | |
Sweden | 13,686,747 | |
United Kingdom | 12,779,672 |
The Funds had tax basis net capital loss carryforwards as of August 31, 2008, the tax year-end of the Funds, as follows:
iShares MSCI Index Fund | Expiring 2009 | Expiring 2010 | Expiring 2011 | Expiring 2012 | Expiring 2013 | Expiring 2014 | Expiring 2015 | Expiring 2016 | Total | ||||||||||||||||||
Austria Investable Market | $ | 336,553 | $ | 1,291,324 | $ | 370,948 | $ | 855,364 | $ | – | $ | – | $ | 9,795,917 | $ | 2,587,916 | $ | 15,238,022 | |||||||||
Belgium Investable Market | 59,876 | 1,677,678 | 117,767 | 175,781 | 33,969 | – | – | 1,698,444 | 3,763,515 | ||||||||||||||||||
EMU | – | – | – | 659,648 | 1,873,963 | – | – | – | 2,533,611 | ||||||||||||||||||
France | – | 2,436,748 | 236,944 | 2,400,550 | – | – | 158,472 | 335,795 | 5,568,509 | ||||||||||||||||||
Germany | – | 8,697,227 | 5,469,732 | 8,656,712 | 2,241,687 | – | 4,227,713 | 3,394,735 | 32,687,806 | ||||||||||||||||||
Italy | – | 2,648,775 | 848,408 | 541,980 | 527,327 | – | – | 472,268 | 5,038,758 | ||||||||||||||||||
Netherlands Investable Market | 60,885 | 3,222,792 | 1,497,810 | 2,481,175 | 129,137 | 403,525 | 260,715 | 1,195,162 | 9,251,201 | ||||||||||||||||||
Spain | – | – | – | 995,671 | – | – | – | – | 995,671 | ||||||||||||||||||
Sweden | – | 713,472 | 1,577,551 | 1,149,514 | – | 107,613 | – | 100,015 | 3,648,165 | ||||||||||||||||||
Switzerland | – | 1,970,979 | 1,018,305 | 2,149,171 | 354,252 | – | – | – | 5,492,707 | ||||||||||||||||||
United Kingdom | – | 856,798 | 6,448,554 | 4,272,059 | 1,517,783 | 7,063,063 | – | 261,754 | 20,420,011 |
Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first.
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.
Each Fund reclassifies at the end of its tax year certain amounts to paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset values per share.
NOTESTO FINANCIAL STATEMENTS | 79 |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
As of August 31, 2008, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
iShares MSCI Index Fund | Tax Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Depreciation | ||||||||||
Austria Investable Market | $ | 275,885,527 | $ | – | $ | (68,634,814 | ) | $ | (68,634,814 | ) | ||||
Belgium Investable Market | 189,327,636 | 2,810,793 | (54,323,523 | ) | (51,512,730 | ) | ||||||||
EMU | 1,560,379,644 | 7,002,976 | (247,717,599 | ) | (240,714,623 | ) | ||||||||
France | 296,726,217 | – | (68,765,493 | ) | (68,765,493 | ) | ||||||||
Germany | 900,990,524 | 9,529,216 | (172,372,141 | ) | (162,842,925 | ) | ||||||||
Italy | 318,994,630 | – | (72,280,810 | ) | (72,280,810 | ) | ||||||||
Netherlands Investable Market | 249,611,688 | – | (40,001,992 | ) | (40,001,992 | ) | ||||||||
Spain | 448,539,682 | 171,471 | (102,609,453 | ) | (102,437,982 | ) | ||||||||
Sweden | 314,160,728 | – | (80,225,615 | ) | (80,225,615 | ) | ||||||||
Switzerland | 402,531,754 | 3,636,677 | (41,602,224 | ) | (37,965,547 | ) | ||||||||
United Kingdom | 1,012,098,808 | 6,954,738 | (144,035,854 | ) | (137,081,116 | ) |
The Funds adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in a tax position taken or expected to be taken in a tax return. FIN 48 provides guidance on the measurement, recognition, classification and disclosures of tax positions, along with accounting for the related interest and penalties. Management has reviewed the tax positions as of August 31, 2008, inclusive of the prior three open tax return years, and has determined that the implementation of FIN 48 did not have a material impact on the Funds’ financial statements.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement with the Company, Barclays Global Fund Advisors (“BGFA”) manages the investment of each Fund’s assets. BGFA is a California corporation indirectly owned by Barclays Bank PLC. Under the Investment Advisory Agreement, BGFA is responsible for all expenses (“Covered Expenses”) of the Company, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees and extraordinary expenses.
For its investment advisory services to the iShares MSCI Austria Investable Market, iShares MSCI Belgium Investable Market, iShares MSCI EMU, iShares MSCI France, iShares MSCI Germany, iShares MSCI Italy, iShares MSCI Netherlands Investable Market, iShares MSCI Spain, iShares MSCI Sweden, iShares MSCI Switzerland and iShares MSCI United Kingdom Index Funds, BGFA 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 Funds 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 |
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iSHARES®, INC.
The Board approved a change to the investment advisory fee structure for the iShares MSCI Austria Investable Market, iShares MSCI Belgium Investable Market, iShares MSCI EMU, iShares MSCI France, iShares MSCI Germany, iShares MSCI Italy, iShares MSCI Netherlands Investable Market, iShares MSCI Spain, iShares MSCI Sweden, iShares MSCI Switzerland and iShares MSCI United Kingdom Index Funds effective September 1, 2008. For its investment advisory services to each Fund, BGFA will be 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 Funds 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 |
State Street Bank and Trust Company (“State Street”) serves as administrator, custodian and transfer agent for the Company. As compensation for its services, State Street receives certain out-of-pocket costs, transaction fees and asset-based fees which are accrued daily and paid monthly. These fees and expenses are Covered Expenses as defined above.
SEI Investments Distribution Co. (“SEI”) serves as each Fund’s underwriter and distributor of the shares of each Fund, pursuant to a Distribution Agreement with the Company. SEI does not receive a fee from the Funds for its distribution services.
Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Funds are permitted to lend portfolio securities to Barclays Capital Inc. (“BarCap”). Pursuant to the same exemptive order, Barclays Global Investors, N.A. (“BGI”) serves as securities lending agent for the Funds. BarCap and BGI are affiliates of BGFA, the Funds’ investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2008, BGI earned securities lending agent fees as follows:
iShares MSCI Index Fund | Securities Lending Agent Fees | |
Austria Investable Market | $ 61,668 | |
Belgium Investable Market | 112,195 | |
EMU | 814,073 | |
France | 20,206 | |
Germany | 640,460 | |
Italy | 29,276 |
iShares MSCI Index Fund | Securities Lending Agent Fees | |
Netherlands Investable Market | $ 40,977 | |
Spain | 1,296,203 | |
Sweden | 33,742 | |
Switzerland | 20,063 | |
United Kingdom | 6,763 |
Cross trades for the year ended August 31, 2008, 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 BGFA (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 in the Institutional Shares of certain money market funds managed by BGFA, the Funds’ investment adviser, including the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”), Prime Money Market Fund (“PMMF”) and Treasury Money Market Fund (“TMMF”) of Barclays Global Investors Funds. The GMMF, IMMF, PMMF and TMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market
NOTESTO FINANCIAL STATEMENTS | 81 |
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iSHARES®, INC.
Master Portfolio, Prime Money Market Master Portfolio and Treasury Money Market Master Portfolio (collectively, the “Money Market Master Portfolios”), respectively, which are also managed by BGFA. While the GMMF, IMMF, PMMF and TMMF do not directly charge an investment advisory fee, the Money Market Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF, PMMF and TMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Funds from temporary cash investments are recorded as interest from affiliated issuers in the accompanying Statements of Operations. Income distributions earned by the Funds from the investment of securities lending collateral, if any, are included in securities lending income in the accompanying Statements of Operations.
Each Fund may invest its securities lending cash collateral, if any, in the BGI Cash Premier Fund LLC (“Premier Fund”), an affiliated private money market fund managed by BGFA. Although the Premier Fund is not registered as an investment company under the 1940 Act, it intends to operate as a money market fund in compliance with Rule 2a-7 under the 1940 Act. See Note 5 for additional information regarding the Premier Fund.
For the year ended August 31, 2008, the iShares MSCI United Kingdom Index Fund had direct investments (exclusive of short-term investments) in issuers of which BGFA is an affiliate or issuers of which the Fund owns 5% or more of the outstanding voting securities as follows:
Name of Affiliated Issuer | Number of (in 000s) | Gross Additions (in 000s) | Gross Reductions (in 000s) | Number of Shares Held End of Year (in 000s) | Value at End of Year | Dividend Income | Net Realized Loss | |||||||||||
Barclays PLC | 2,376 | 1,813 | 1,311 | 2,878 | $ | 18,530,611 | $ | 1,874,570 | $ | (1,368,896 | ) |
Certain directors and officers of the Company are also officers of BGI and/or BGFA.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2008, were as follows:
iShares MSCI Index Fund | Purchases | Sales | ||||
Austria Investable Market | $ | 91,326,473 | $ | 97,879,116 | ||
Belgium Investable Market | 82,639,364 | 88,184,201 | ||||
EMU | 681,223,559 | 703,271,592 | ||||
France | 46,552,210 | 56,597,405 | ||||
Germany | 175,977,743 | 208,700,542 | ||||
Italy | 67,494,964 | 75,907,897 | ||||
Netherlands Investable Market | 65,501,029 | 68,403,276 | ||||
Spain | 131,049,850 | 137,321,642 | ||||
Sweden | 61,831,362 | 73,801,892 | ||||
Switzerland | 42,016,665 | 43,500,845 | ||||
United Kingdom | 152,801,120 | 156,704,082 |
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Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
In-kind transactions (see Note 4) for the year ended August 31, 2008, were as follows:
iShares MSCI Index Fund | In-kind Purchases | In-kind Sales | ||||
Austria Investable Market | $ | 193,303,030 | $ | 392,101,942 | ||
Belgium Investable Market | 71,378,713 | 181,368,919 | ||||
EMU | 900,206,089 | 2,143,270,873 | ||||
France | 390,426,964 | 546,210,236 | ||||
Germany | 959,475,033 | 1,755,176,134 | ||||
Italy | 474,503,385 | 336,090,529 | ||||
Netherlands Investable Market | 104,059,254 | 101,553,774 | ||||
Spain | 1,070,251,943 | 1,165,918,083 | ||||
Sweden | 278,468,113 | 506,491,798 | ||||
Switzerland | 286,699,017 | 203,625,970 | ||||
United Kingdom | 450,624,947 | 448,197,230 |
4. CAPITAL SHARE TRANSACTIONS
The Company issues and redeems capital shares of each Fund only in aggregations of a specified number of shares (each, a “Creation Unit”) 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 generally consists of the in-kind deposit of a designated portfolio of equity securities, which constitutes a substantial replication, or a portfolio sampling representation, of the corresponding MSCI Index and an amount of cash. Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee directly to State Street, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.
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.
The Board authorized a two-for-one stock split for the iShares MSCI EMU Index Fund, effective July 24, 2008, for the shareholders of record on July 21, 2008. The impact of the stock split was to increase the number of shares outstanding by a factor of two, while decreasing the net asset value per share by a factor of two, resulting in no effect to total net assets of the Fund. The financial statements for the Fund have been adjusted to reflect the stock split.
5. LOANS OF PORTFOLIO SECURITIES
Each Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Fund is required to have a value of at least 102% of the market 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 market value of the securities on loan. The risks to the Funds of securities lending are that the borrower may not provide additional collateral when required or may not return the securities when due.
NOTESTO FINANCIAL STATEMENTS | 83 |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
As of August 31, 2008, certain Funds had loaned securities which were collateralized by cash. The cash collateral received was invested in the Premier Fund. The Premier Fund seeks to achieve its investment objective by investing in a portfolio of high-quality, short-term fixed-income instruments, including money market funds (which may be managed by BGFA or its affiliate) and other instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition.
The market value of the securities on loan as of August 31, 2008 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Funds’ Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.
6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), “Fair Value Measurements.” FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. Management does not believe that the adoption of this standard will have a material impact on the Funds’ financial statements.
84 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
iShares, Inc.
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Austria Investable Market Index Fund (formerly iShares MSCI Austria Index Fund), iShares MSCI Belgium Investable Market Index Fund (formerly iShares MSCI Belgium Index Fund), iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Netherlands Investable Market Index Fund (formerly iShares MSCI Netherlands Index Fund), iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund (the “Funds”) at August 31, 2008, the results of each of their operations, the changes in each of their net assets and their financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 23, 2008
REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 85 |
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iSHARES®, INC.
For the fiscal year ended August 31, 2008, certain Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”) as follows:
iShares MSCI Index Fund | Foreign Source Income Earned | Foreign Taxes Paid | ||
Austria Investable Market | $ 8,489,580 | $1,266,486 | ||
Belgium Investable Market | 11,916,274 | 1,715,371 | ||
EMU | 104,739,212 | 14,344,364 | ||
France | 17,013,192 | 2,232,727 | ||
Germany | 63,207,087 | 9,131,532 |
iShares MSCI Index Fund | Foreign Source Income Earned | Foreign Taxes Paid | ||
Italy | $15,092,261 | $2,001,894 | ||
Netherlands Investable Market | 12,954,464 | 1,776,476 | ||
Spain | 25,341,490 | 3,553,917 | ||
Sweden | 14,364,466 | 1,986,092 | ||
Switzerland | 11,093,390 | 1,779,849 |
Under Section 854(b)(2) of the Code, the Funds hereby designate the following maximum amounts as qualified dividend income for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended August 31, 2008:
iShares MSCI Index Fund | Qualified Dividend Income | |
Austria Investable Market | $ 7,034,590 | |
Belgium Investable Market | 10,431,772 | |
EMU | 85,286,053 | |
France | 14,629,640 | |
Germany | 54,929,513 | |
Italy | 14,083,862 |
iShares MSCI Index Fund | Qualified Dividend Income | |
Netherlands Investable Market | $11,562,427 | |
Spain | 22,373,351 | |
Sweden | 12,443,944 | |
Switzerland | 9,364,171 | |
United Kingdom | 63,131,140 |
In January 2009, shareholders will receive Form 1099-DIV which will include their share of qualified dividend income distributed during the calendar year 2008. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.
86 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory Contract (Unaudited)
iSHARES®, INC.
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BGFA (the “Advisory Contract”) on behalf of the Funds. As required by Section 15(c), the Board requested and BGFA provided such information as the Board deemed reasonably necessary to evaluate the terms of the Advisory Contract. At a meeting held on June 18-19, 2008, the Board approved the selection of BGFA and the continuance of the Advisory Contract, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contract for the Funds, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, no one of which was controlling, and made the following conclusions:
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA
The Board anticipated that there would be no diminution in the scope of services required of or provided by BGFA under the Advisory Contract for the coming year as compared to the scope of services provided by BGFA over the past year. In reviewing the scope of these services, the Board considered BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including over the past year, including investment in technology and increasing the number of their employees supporting the Funds. The Board also considered BGFA’s compliance program and its compliance record with respect to the Funds. In that regard, the Board noted that BGFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and has 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 Funds. In addition to the above considerations, the Board considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as any of the Funds; therefore, comparative performance information was generally not available. However, the Board also noted that the Funds had met their investment objectives consistently since their respective inception dates. Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Funds under the Advisory Contract were appropriate and mitigated in favor of the Board’s approval of the Advisory Contract for the coming year.
FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS
The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other registered investment companies objectively selected by Lipper as comprising such Fund’s applicable peer group pursuant to Lipper’s proprietary methodology and any registered investment companies that would otherwise have been excluded from Lipper’s comparison group due to certain differentiating factors, but were nonetheless included at the request of BGFA (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track indexes similar to those tracked by the Funds, the Lipper Groups included in part mutual funds, closed-end funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the various Lipper Groups, the statistical information may or may not provide meaningful direct comparisons to the Funds. In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three-, five- and ten-year periods, as applicable, and the “last quarter” period ended March 31, 2008, and a comparison of each 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 any particular Fund, Lipper also provided, and the Board reviewed, a comparison
BOARD REVIEWAND APPROVALOF INVESTMENT ADVISORY CONTRACT | 87 |
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Board Review and Approval of Investment Advisory Contract
(Unaudited) (Continued)
iSHARES®, INC.
of such Fund’s performance to that of such relevant comparison funds for the same periods. The Board noted that the Funds generally performed in line with their respective performance benchmark indexes over the relevant periods. In considering this information, the Board noted that the Lipper Groups include funds that may have different investment objectives and/or benchmarks from the Funds. In addition, the Board noted that each Fund seeks to track its benchmark index and that during the prior year the Board received periodic reports on the Funds’ performance in comparison with their relevant benchmark indexes. Such comparative performance information was also considered by the Board.
The Board also noted that the investment advisory fees and overall expenses for the Funds were generally lower than the median or average investment advisory fee rates and overall expense components of the funds in their respective Lipper Groups. The Board also reviewed statistical information from Lipper displaying the effects of the proposed extension of breakpoints in the investment advisory fee rates for the Funds (as discussed below) at various assets levels of such Funds as compared to their Lipper Groups. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of each Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the relevant Lipper Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.
COSTS OF SERVICES PROVIDED TO FUNDS AND PROFITS REALIZED BY BGFA AND AFFILIATES
The Board reviewed information about the profitability to BGFA of the Funds based on the fees payable to BGFA and its affiliates (including fees under the Advisory Contract), and all other sources of revenue and expense to BGFA and its affiliates from the Funds’ operations for the last calendar year. The Board discussed the sources of direct and ancillary revenue with management, including the revenues to BGI from securities lending by the Company (including any securities lending by the Funds). The Board also discussed BGFA’s profit margin as reflected in the Funds’ profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits realized by BGFA and its affiliates under the Advisory Contract and from other relationships between the Funds and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.
ECONOMIES OF SCALE
In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board was also presented with materials regarding the proposed extension of breakpoints in the investment advisory fee rates at certain asset levels for the Funds (effective September 1, 2008). The Board noted that the Advisory Contract already provided for breakpoints in the Funds’ investment advisory fee rates as the assets of the Funds, on an aggregated basis with the assets of certain other iShares funds, increase. The Board also discussed the substantial growth in assets of certain iShares funds, including the iShares funds in the group with which the Funds’ assets are aggregated for the purpose of applying breakpoints in the investment advisory fee rates, over the last few years. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had continued to make significant investments in the iShares funds, that expenses had grown at a pace similar to the growth in revenue, and that BGFA had incurred operating losses during earlier years when the iShares funds, including the Funds, had not yet reached scale. In light of this history, the Board determined that the current and proposed breakpoints were appropriate and warranted at this juncture for the Funds. Based on this review, as well as the discussions described above in connection with the Lipper Group and performance benchmark comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees, with the current and proposed breakpoints for the Funds, reflects appropriate sharing of economies of scale with the Funds’ shareholders.
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Board Review and Approval of Investment Advisory Contract
(Unaudited) (Continued)
iSHARES®, INC.
FEES AND SERVICES PROVIDED FOR OTHER COMPARABLE FUNDS/ACCOUNTS MANAGED BY BGFA AND ITS AFFILIATES
The Board received and considered certain information regarding the Funds’ annual investment advisory fee rates under the Advisory Contract in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts (together, the “Other Accounts”). The Board noted that comparative investment advisory/management fee information was not available, as BGFA and its affiliates do not manage any Other Accounts with substantially similar investment objectives and strategies as any of the Funds. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to Other Accounts differed from the level of services provided to the Funds. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contract are fair and reasonable.
OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES
The Board reviewed any ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Funds by BGFA, such as any payment of revenue to BGI, the Company’s securities lending agent, for loaning any portfolio securities, and payment of advisory fees and/or administration fees to BGFA and BGI in connection with any investments by the Funds in other funds for which BGFA provides investment advisory services and/or BGI provides administration services. The Board noted that BGFA does not use soft dollars or consider the value of research or other services that may be provided to BGFA (including its affiliates) in selecting brokers for portfolio transactions for the Funds. The Board further noted that any portfolio transactions on behalf of the Funds placed through a BGFA affiliate or purchased from an underwriting syndicate in which a BGFA affiliate participates, are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Funds’ shareholders.
Based on this analysis, the Board determined that the Advisory Contract, including the investment advisory fee rates, is fair and reasonable in light of all relevant circumstances and concluded that it is in the best interest of the Funds and their shareholders to approve the Advisory Contract, with the fee schedule to the Advisory Contract as proposed to be amended to reflect the extension of breakpoints, for the coming year.
BOARD REVIEWAND APPROVALOF INVESTMENT ADVISORY CONTRACT | 89 |
Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
The tables that follow present information about the differences between the daily market price on secondary markets for shares of a Fund and that Fund’s net asset value. Net asset value, or “NAV”, is the price per share at which each Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. The “Market Price” of each Fund generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of such Fund is listed for trading, as of the time that the Fund’s NAV is calculated. Each Fund’s Market Price may be at, above or below its NAV. The NAV of each Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of each Fund will fluctuate in accordance with changes in its NAV, as well as market supply and demand.
Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of a Fund on a given day, generally at the time NAV is calculated. A premium is the amount that a Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that a Fund is trading below the reported NAV, expressed as a percentage of the NAV.
The following information shows the frequency distributions of premiums and discounts for each of the Funds included in this report. The information shown for each Fund is for five calendar years (or for each full calendar quarter completed after the inception date of such Fund if less than five years) through the date of the most recent calendar quarter-end. The specific periods covered for each Fund are disclosed in the table for such Fund.
Each line in the table shows the number of trading days in which the Fund traded within the premium/discount range indicated. The number of trading days in each premium/discount range is also shown as a percentage of the total number of trading days in the period covered by each table. All data presented here represents past performance, which cannot be used to predict future results.
iShares MSCI Austria Investable Market Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.5% | 4 | 0.29 | % | ||
Greater than 2.0% and Less than 2.5% | 4 | 0.29 | |||
Greater than 1.5% and Less than 2.0% | 22 | 1.59 | |||
Greater than 1.0% and Less than 1.5% | 71 | 5.14 | |||
Greater than 0.5% and Less than 1.0% | 231 | 16.73 | |||
Between 0.5% and –0.5% | 818 | 59.25 | |||
Less than –0.5% and Greater than –1.0% | 147 | 10.64 | |||
Less than –1.0% and Greater than –1.5% | 62 | 4.49 | |||
Less than –1.5% and Greater than –2.0% | 12 | 0.87 | |||
Less than –2.0% and Greater than –2.5% | 4 | 0.29 | |||
Less than –2.5% and Greater than –3.0% | 2 | 0.14 | |||
Less than –3.0% and Greater than –3.5% | 2 | 0.14 | |||
Less than –3.5% and Greater than –4.0% | 2 | 0.14 | |||
1,381 | 100.00 | % | |||
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Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Belgium Investable Market Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.5% and Less than 4.0% | 1 | 0.07 | % | ||
Greater than 3.0% and Less than 3.5% | 1 | 0.07 | |||
Greater than 2.5% and Less than 3.0% | 3 | 0.22 | |||
Greater than 2.0% and Less than 2.5% | 11 | 0.80 | |||
Greater than 1.5% and Less than 2.0% | 15 | 1.09 | |||
Greater than 1.0% and Less than 1.5% | 72 | 5.21 | |||
Greater than 0.5% and Less than 1.0% | 218 | 15.79 | |||
Between 0.5% and –0.5% | 896 | 64.89 | |||
Less than –0.5% and Greater than –1.0% | 123 | 8.91 | |||
Less than –1.0% and Greater than –1.5% | 31 | 2.24 | |||
Less than –1.5% and Greater than –2.0% | 6 | 0.43 | |||
Less than –2.0% and Greater than –2.5% | 2 | 0.14 | |||
Less than –2.5% and Greater than –3.0% | 1 | 0.07 | |||
Less than –3.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
iShares MSCI EMU Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.5% | 3 | 0.22 | % | ||
Greater than 3.0% and Less than 3.5% | 1 | 0.07 | |||
Greater than 2.5% and Less than 3.0% | 1 | 0.07 | |||
Greater than 2.0% and Less than 2.5% | 4 | 0.29 | |||
Greater than 1.5% and Less than 2.0% | 12 | 0.87 | |||
Greater than 1.0% and Less than 1.5% | 59 | 4.27 | |||
Greater than 0.5% and Less than 1.0% | 248 | 17.96 | |||
Between 0.5% and –0.5% | 898 | 65.03 | |||
Less than –0.5% and Greater than –1.0% | 111 | 8.04 | |||
Less than –1.0% and Greater than –1.5% | 32 | 2.32 | |||
Less than –1.5% and Greater than –2.0% | 9 | 0.65 | |||
Less than –2.0% and Greater than –2.5% | 1 | 0.07 | |||
Less than –2.5% and Greater than –3.0% | 1 | 0.07 | |||
Less than –3.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
SUPPLEMENTAL INFORMATION | 91 |
Table of Contents
Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI France Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.5% | 1 | 0.07 | % | ||
Greater than 3.0% and less than 3.5% | 1 | 0.07 | |||
Greater than 2.5% and Less than 3.0% | 1 | 0.07 | |||
Greater than 2.0% and Less than 2.5% | 2 | 0.14 | |||
Greater than 1.5% and Less than 2.0% | 4 | 0.29 | |||
Greater than 1.0% and Less than 1.5% | 33 | 2.39 | |||
Greater than 0.5% and Less than 1.0% | 130 | 9.41 | |||
Between 0.5% and –0.5% | 1,040 | 75.32 | |||
Less than –0.5% and Greater than –1.0% | 124 | 8.98 | |||
Less than –1.0% and Greater than –1.5% | 33 | 2.39 | |||
Less than –1.5% and Greater than –2.0% | 7 | 0.51 | |||
Less than –2.0% and Greater than –2.5% | 1 | 0.07 | |||
Less than –2.5% and Greater than –3.0% | 4 | 0.29 | |||
1,381 | 100.00 | % | |||
iShares MSCI Germany Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.0% | 2 | 0.14 | % | ||
Greater than 2.5% and Less than 3.0% | 2 | 0.14 | |||
Greater than 2.0% and Less than 2.5% | 2 | 0.14 | |||
Greater than 1.5% and Less than 2.0% | 10 | 0.72 | |||
Greater than 1.0% and Less than 1.5% | 43 | 3.11 | |||
Greater than 0.5% and Less than 1.0% | 164 | 11.88 | |||
Between 0.5% and –0.5% | 971 | 70.33 | |||
Less than –0.5% and Greater than –1.0% | 133 | 9.63 | |||
Less than –1.0% and Greater than –1.5% | 44 | 3.19 | |||
Less than –1.5% and Greater than –2.0% | 3 | 0.22 | |||
Less than –2.0% and Greater than –2.5% | 4 | 0.29 | |||
Less than –2.5% and Greater than –3.0% | 2 | 0.14 | |||
Less than –3.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
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Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Italy Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.5% | 3 | 0.22 | % | ||
Greater than 2.0% and Less than 2.5% | 4 | 0.29 | |||
Greater than 1.5% and Less than 2.0% | 8 | 0.58 | |||
Greater than 1.0% and Less than 1.5% | 30 | 2.17 | |||
Greater than 0.5% and Less than 1.0% | 132 | 9.56 | |||
Between 0.5% and –0.5% | 1,053 | 76.25 | |||
Less than –0.5% and Greater than –1.0% | 111 | 8.04 | |||
Less than –1.0% and Greater than –1.5% | 27 | 1.96 | |||
Less than –1.5% and Greater than –2.0% | 6 | 0.43 | |||
Less than –2.0% and Greater than –2.5% | 4 | 0.29 | |||
Less than –2.5% and Greater than –3.0% | 1 | 0.07 | |||
Less than –3.0% and Greater than –3.5% | 1 | 0.07 | |||
Less than –3.5% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
iShares MSCI Netherlands Investable Market Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.0% | 2 | 0.14 | % | ||
Greater than 2.5% and Less than 3.0% | 3 | 0.22 | |||
Greater than 2.0% and Less than 2.5% | 4 | 0.29 | |||
Greater than 1.5% and Less than 2.0% | 6 | 0.43 | |||
Greater than 1.0% and Less than 1.5% | 46 | 3.33 | |||
Greater than 0.5% and Less than 1.0% | 201 | 14.55 | |||
Between 0.5% and –0.5% | 946 | 68.53 | |||
Less than –0.5% and Greater than –1.0% | 121 | 8.76 | |||
Less than –1.0% and Greater than –1.5% | 37 | 2.68 | |||
Less than –1.5% and Greater than –2.0% | 10 | 0.72 | |||
Less than –2.0% and Greater than –2.5% | 1 | 0.07 | |||
Less than –2.5% and Greater than –3.0% | 2 | 0.14 | |||
Less than –3.0% | 2 | 0.14 | |||
1,381 | 100.00 | % | |||
SUPPLEMENTAL INFORMATION | 93 |
Table of Contents
Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Spain Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.0% | 3 | 0.22 | % | ||
Greater than 2.5% and Less than 3.0% | 1 | 0.07 | |||
Greater than 2.0% and Less than 2.5% | 4 | 0.29 | |||
Greater than 1.5% and Less than 2.0% | 5 | 0.36 | |||
Greater than 1.0% and Less than 1.5% | 44 | 3.19 | |||
Greater than 0.5% and Less than 1.0% | 172 | 12.45 | |||
Between 0.5% and –0.5% | 978 | 70.82 | |||
Less than –0.5% and Greater than –1.0% | 121 | 8.76 | |||
Less than –1.0% and Greater than –1.5% | 40 | 2.90 | |||
Less than –1.5% and Greater than –2.0% | 8 | 0.58 | |||
Less than –2.0% and Greater than –2.5% | 3 | 0.22 | |||
Less than –2.5% | 2 | 0.14 | |||
1,381 | 100.00 | % | |||
iShares MSCI Sweden Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.0% | 2 | 0.14 | % | ||
Greater than 3.5% and Less than 4.0% | 1 | 0.07 | |||
Greater than 3.0% and Less than 3.5% | 2 | 0.14 | |||
Greater than 2.5% and Less than 3.0% | 2 | 0.14 | |||
Greater than 2.0% and Less than 2.5% | 11 | 0.80 | |||
Greater than 1.5% and Less than 2.0% | 25 | 1.81 | |||
Greater than 1.0% and Less than 1.5% | 66 | 4.78 | |||
Greater than 0.5% and Less than 1.0% | 253 | 18.32 | |||
Between 0.5% and –0.5% | 817 | 59.19 | |||
Less than –0.5% and Greater than –1.0% | 125 | 9.05 | |||
Less than –1.0% and Greater than –1.5% | 51 | 3.69 | |||
Less than –1.5% and Greater than –2.0% | 17 | 1.23 | |||
Less than –2.0% and Greater than –2.5% | 4 | 0.29 | |||
Less than –2.5% and Greater than –3.0% | 2 | 0.14 | |||
Less than –3.0% and Greater than –3.5% | 1 | 0.07 | |||
Less than –3.5% and Greater than –4.0% | 1 | 0.07 | |||
Less than –4.0% and Greater than –4.5% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
94 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Switzerland Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.5% and Less than 4.0% | 1 | 0.07 | % | ||
Greater than 3.0% and Less than 3.5% | 2 | 0.14 | |||
Greater than 2.5% and Less than 3.0% | 1 | 0.07 | |||
Greater than 2.0% and Less than 2.5% | 6 | 0.43 | |||
Greater than 1.5% and Less than 2.0% | 27 | 1.96 | |||
Greater than 1.0% and Less than 1.5% | 77 | 5.58 | |||
Greater than 0.5% and Less than 1.0% | 265 | 19.19 | |||
Between 0.5% and –0.5% | 880 | 63.73 | |||
Less than –0.5% and Greater than –1.0% | 92 | 6.66 | |||
Less than –1.0% and Greater than –1.5% | 23 | 1.67 | |||
Less than –1.5% and Greater than –2.0% | 5 | 0.36 | |||
Less than –2.0% and Greater than –2.5% | 2 | 0.14 | |||
1,381 | 100.00 | % | |||
iShares MSCI United Kingdom Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.0% | 3 | 0.22 | % | ||
Greater than 2.5% and Less than 3.0% | 2 | 0.14 | |||
Greater than 2.0% and Less than 2.5% | 4 | 0.29 | |||
Greater than 1.5% and Less than 2.0% | 35 | 2.53 | |||
Greater than 1.0% and Less than 1.5% | 150 | 10.86 | |||
Greater than 0.5% and Less than 1.0% | 371 | 26.86 | |||
Between 0.5% and –0.5% | 698 | 50.56 | |||
Less than –0.5% and Greater than –1.0% | 84 | 6.08 | |||
Less than –1.0% and Greater than –1.5% | 25 | 1.81 | |||
Less than –1.5% and Greater than –2.0% | 7 | 0.51 | |||
Less than –2.0% and Greater than –2.5% | 1 | 0.07 | |||
Less than –2.5% and Greater than –3.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
SUPPLEMENTAL INFORMATION | 95 |
Table of Contents
Director and Officer Information (Unaudited)
iSHARES®, INC.
The Board of Directors has responsibility for the overall management and operations of the Company, including general supervision of the duties performed by BGFA and other service providers. Each Director serves until his or her successor is duly elected or appointed and qualified.
iShares, Inc., iShares Trust, Barclays Global Investors Funds (“BGIF”) and Master Investment Portfolio (“MIP”) are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 161 portfolios within the fund complex. In addition, Lee T. Kranefuss serves as a Trustee for BGIF and MIP and oversees an additional 26 portfolios within the fund complex.
Unless otherwise noted in the tables below, the address of each Director and Officer is c/o Barclays Global Investors, N.A., 400 Howard Street, San Francisco, California 94105. The Board has designated George G.C. Parker as its Lead Independent Director. Additional information about the Funds’ Directors and Officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.
Interested Directors and Officers
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
*Lee T. Kranefuss, 46 | Director and Chairman (since 2003). | Global Chief Executive Officer, iShares/Intermediary Groups of BGI (since 2008); Chief Executive Officer, iShares Intermediary Index and Market Group of BGI (2005-2008); Chief Executive Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2005); Director of BGFA (since 2005); Director, President and Chief Executive Officer of Barclays Global Investors International, Inc. (since 2005); Director and Chairman of Barclays Global Investors Services (since 2005). | Trustee of iShares Trust (since 2003); Trustee of BGlF and MIP (since 2001). | |||
*John E. Martinez, 47 | Director (since 2003). | Co-Chief Executive Officer of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003); Director, Barclays Global Investors UK Holdings, Inc. (2000-2003); Director of Real Estate Equity Exchange (since 2005). | Trustee of iShares Trust (since 2003); Chairman, Independent Review Committee, Canadian iShares Funds (since 2007). |
* | Lee T. Kranefuss and John E. Martinez are deemed to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser; BGI, the parent company of BGFA; and Barclays Global Investors Services, an affiliate of BGFA and BGI. |
96 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Independent Directors
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
George G.C. Parker, 69 | Director (since 2002); Lead Independent Director (since 2006). | Dean Witter Distinguished Professor of Finance, Emeritus, Stanford University: Graduate School of Business (since 1994). | Trustee of iShares Trust (since 2000); Director of Continental Airlines, Inc. (since 1996); Director of Community First Financial Group (since 1995); Director of Tejon Ranch Company (since 1999); Director of Threshold Pharmaceuticals (since 2004); Director of NETGEAR, Inc. (since 2007). | |||
Cecilia H. Herbert, 59 | Director (since 2005). | Chair of Investment Committee, Archdiocese of San Francisco (1994-2005); Director (since 1998) and President (since 2007) of the Board of Directors, Catholic Charities CYO; Trustee of Pacific Select Funds (2004-2005); Trustee of the Montgomery Funds (1992-2003); Trustee (since 2005) and Chair of the Finance and Investment Committees (since 2006) of the Thacher School. | Trustee of iShares Trust (since 2005). | |||
Charles A. Hurty, 64 | Director (since 2005). | Retired; Partner, KPMG LLP (1968-2001). | Trustee of iShares Trust (since 2005); Director of GMAM Absolute Return Strategy Fund (1 portfolio) (since 2002); Director of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (1 portfolio) (since 2002); Director of CSFB Alternative Investments Fund (6 portfolios) (since 2005). | |||
John E. Kerrigan, 53 | Director (since 2005). | Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002). | Trustee of iShares Trust (since 2005); Member of Advisory Council for Commonfund Distressed Debt Partners II (since 2004). |
DIRECTORAND OFFICER INFORMATION | 97 |
Table of Contents
Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Independent Directors (Continued)
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Robert H. Silver, 53 | Director (since 2007). | President and Co-Founder of The Bravitas Group, Inc. (since 2006); Member, Non-Investor Advisory Board of Russia Partners II, LP (since 2006); President and Chief Operating Officer (2003-2005) and Director (1999-2005) of UBS Financial Services, Inc.; President and Chief Executive Officer of UBS Services USA, LLC (1999-2005); Managing Director, UBS America, Inc. (2000-2005); Director and Chairman of the YMCA of Greater NYC (since 2001); Broadway Producer (since 2006). | Trustee of iShares Trust (since 2007); Director and Member of the Audit and Compensation Committee of EPAM Systems, Inc. (since 2006). | |||
Darrell Duffie, 54 | Director (since 2008). | Professor, Stanford University: Graduate School of Business (since 1984). | Trustee of iShares Trust (since 2008). |
Officers
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Michael A. Latham, 42 | President (since 2007). | Head of Americas iShares (since 2007); Chief Operating Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2007); Director and Chief Financial Officer of Barclays Global Investors International, Inc. (since 2005). | None. | |||
Geoffrey D. Flynn, 51 | Treasurer and Chief Financial Officer (since 2007). | Chief Operating Officer, U.S. iShares, BGI (since 2008); Director, Mutual Fund Operations of BGI (2007-2008); President, Van Kampen Investors Services (2003-2007); Managing Director, Morgan Stanley (2002-2007); President, Morgan Stanley Trust, FSB (2002-2007). | None. |
98 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Officers (Continued)
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Eilleen M. Clavere, 56 | Secretary (since 2007). | Head of Legal Administration of Intermediary Investors Business of BGI (since 2006); Legal Counsel and Vice President of Atlas Funds, Atlas Advisers, Inc. and Atlas Securities, Inc. (2005-2006); Counsel of Kirkpatrick & Lockhart LLP (2001-2005). | None. | |||
Ira P. Shapiro, 45 | Vice President and Chief Legal Officer (since 2007). | Associate General Counsel, BGI (since 2004); First Vice President of Merrill Lynch Investment Managers (1993-2004). | None. | |||
Amy Schioldager, 45 | Executive Vice President (since 2007). | Head of U.S. Indexing, BGI (since 2006); Head of Domestic Equity Portfolio Management, BGI (2001-2006). | None. | |||
H. Michael Williams, 48 | Executive Vice President (since 2007). | Vice Chairman – Capital Markets, BGI (since 2008); Head of Global Index and Markets Group of BGI (2006-2008); Global Head of Securities Lending, BGI (2002-2006). | Trustee of BGIF and MIP (since 2007); Trustee, University of California, Berkeley Foundation; Executive Board, College of Letters and Science, University of California, Berkeley. | |||
Patrick O’Connor, 41 | Vice President (since 2007). | Head of iShares Portfolio Management, BGI (since 2006); Senior Portfolio Manager, BGI (1999-2006). | None. | |||
Lee Sterne, 43 | Vice President (since 2007). | Head of U.S. Fixed Income Index and iShares, BGI (since 2007); Senior Portfolio Manager, BGI (2004-2007); Portfolio Manager, BGI (2001-2004). | None. | |||
Matt Tucker, 36 | Vice President (since 2007). | Head of U.S. Fixed Income Investment Solutions, BGI (since 2005); Fixed Income Investment Strategist, BGI (2003-2005); Fixed Income Portfolio Manager, BGI (1997-2003). | None. |
DIRECTORAND OFFICER INFORMATION | 99 |
Table of Contents
Notes:
100 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
The following is a list of iShares Funds being offered, along with their respective exchange trading symbols. Please call 1-800-iShares (1-800-474-2737) to obtain a prospectus for any iShares Fund. The prospectus contains more complete information, including charges, expenses, investment objectives and risk factors that should be carefully considered to determine if the Fund(s) are an appropriate investment for you. Read the prospectus(es) carefully before investing. Investing involves risk, including possible loss of principal.
iShares S&P Domestic Index Funds
iShares S&P 1500 (ISI)
iShares S&P 100 (OEF)
iShares S&P 500 (IVV)
iShares S&P 500 Growth (IVW)
iShares S&P 500 Value (IVE)
iShares S&P MidCap 400 (IJH)
iShares S&P MidCap 400 Growth (IJK)
iShares S&P MidCap 400 Value (IJJ)
iShares S&P SmallCap 600 (IJR)
iShares S&P SmallCap 600 Growth (IJT)
iShares S&P SmallCap 600 Value (IJS)
iShares S&P North American Natural Resources Sector (IGE)
iShares S&P North American
Technology-Multimedia Networking (IGN)
iShares S&P North American
Technology-Semiconductors (IGW)
iShares S&P North American
Technology-Software (IGV)
iShares S&P North American Technology Sector (IGM)
iShares Domestic Sector Index Funds
iShares Cohen & Steers Realty Majors (ICF)
iShares Dow Jones U.S. Basic Materials Sector (IYM)
iShares Dow Jones U.S. Consumer Services Sector (IYC)
iShares Dow Jones U.S. Consumer Goods Sector (IYK)
iShares Dow Jones U.S. Energy Sector (IYE)
iShares Dow Jones U.S. Financial Sector (IYF)
iShares Dow Jones U.S. Financial Services (IYG)
iShares Dow Jones U.S. Healthcare Sector (IYH)
iShares Dow Jones U.S. Industrial Sector (IYJ)
iShares Dow Jones U.S. Real Estate (IYR)
iShares Dow Jones U.S. Technology Sector (IYW)
iShares Dow Jones U.S. Telecommunications Sector (IYZ)
iShares Dow Jones Transportation Average (IYT)
iShares Dow Jones U.S. Utilities Sector (IDU)
iShares Dow Jones U.S. (IYY)
iShares Nasdaq Biotechnology (IBB)
iShares Domestic Subsector Index Funds
iShares Dow Jones U.S. Aerospace & Defense (ITA)
iShares Dow Jones U.S. Broker-Dealers (IAI)
iShares Dow Jones U.S. Healthcare Providers (IHF)
iShares Dow Jones U.S. Home Construction (ITB)
iShares Dow Jones U.S. Insurance (IAK)
iShares Dow Jones U.S. Medical Devices (IHI)
iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO)
iShares Dow Jones U.S. Oil Equipment & Services (IEZ)
iShares Dow Jones U.S. Pharmaceuticals (IHE)
iShares Dow Jones U.S. Regional Banks (IAT)
iShares FTSE NAREIT Industrial/Office (FIO)
iShares FTSE NAREIT Mortgage REITs (REM)
iShares FTSE NAREIT Real Estate 50 (FTY)
iShares FTSE NAREIT Residential (REZ)
iShares FTSE NAREIT Retail (RTL)
iShares Global Index Funds
iShares S&P Global 100 (IOO)
iShares S&P Global Clean Energy (ICLN)
iShares S&P Global Consumer Discretionary Sector (RXI)
iShares S&P Global Consumer Staples Sector (KXI)
iShares S&P Global Energy Sector (IXC)
iShares S&P Global Financials Sector (IXG)
iShares S&P Global Healthcare Sector (IXJ)
iShares S&P Global Industrials Sector (EXI)
iShares S&P Global Infrastructure (IGF)
iShares S&P Global Materials Sector (MXI)
iShares S&P Global Nuclear Energy (NUCL)
iShares S&P Global Technology Sector (IXN)
iShares S&P Global Telecommunications Sector (IXP)
iShares S&P Global Timber & Forestry (WOOD)
iShares S&P Global Utilities Sector (JXI)
iShares Russell Index Funds
iShares Russell 3000 (IWV)
iShares Russell 3000 Growth (IWZ)
iShares Russell 3000 Value (IWW)
iShares Russell 1000 (IWB)
iShares Russell 1000 Growth (IWF)
iShares Russell 1000 Value (IWD)
iShares Russell Midcap (IWR)
iShares Russell Midcap Growth (IWP)
iShares Russell Midcap Value (IWS)
iShares Russell 2000 (IWM)
iShares Russell 2000 Growth (IWO)
iShares Russell 2000 Value (IWN)
iShares Russell Microcap (IWC)
iShares International Country Index Funds
iShares FTSE China (HK Listed) (FCHI)
iShares FTSE/Xinhua China 25 (FXI)
iShares MSCI Australia (EWA)
iShares MSCI Austria Investable Market (EWO)
iShares MSCI Belgium Investable Market (EWK)
iShares MSCI Brazil (EWZ)
iShares MSCI Canada (EWC)
iShares MSCI Chile Investable Market (ECH)
iShares MSCI France (EWQ)
iShares MSCI Germany (EWG)
iShares MSCI Hong Kong (EWH)
iShares MSCI Israel Capped Investable Market (EIS)
iShares MSCI Italy (EWI)
iShares MSCI Japan (EWJ)
iShares MSCI Japan Small Cap (SCJ)
iShares MSCI Malaysia (EWM)
iShares MSCI Mexico Investable Market (EWW)
iShares MSCI Netherlands Investable Market (EWN)
iShares MSCI Singapore (EWS)
iShares MSCI South Africa (EZA)
iShares MSCI South Korea (EWY)
iShares MSCI Spain (EWP)
iShares MSCI Sweden (EWD)
iShares MSCI Switzerland (EWL)
iShares MSCI Taiwan (EWT)
iShares MSCI Thailand Investable Market (THD)
iShares MSCI Turkey Investable Market (TUR)
iShares MSCI United Kingdom (EWU)
iShares S&P/TOPIX 150 (ITF)
iShares Bond Funds
iShares Lehman Aggregate (AGG)
iShares Lehman MBS (MBB)
iShares Lehman Short Treasury (SHV)
iShares Lehman 1-3 Year Treasury (SHY)
iShares Lehman 3-7 Year Treasury (IEI)
iShares Lehman 7-10 Year Treasury (IEF)
iShares Lehman 10-20 Year Treasury (TLH)
iShares Lehman 20+ Year Treasury (TLT)
iShares Lehman TIPS (TIP)
iShares Lehman Credit (CFT)
iShares Lehman 1-3 Year Credit (CSJ)
iShares Lehman Intermediate Credit (CIU)
iShares iBoxx $ Investment Grade Corporate (LQD)
iShares iBoxx $ High Yield Corporate (HYG)
iShares Lehman Government/Credit (GBF)
iShares Lehman Intermediate Government/Credit (GVI)
iShares S&P National Municipal (MUB)
iShares S&P California Municipal (CMF)
iShares S&P New York Municipal (NYF)
iShares JPMorgan USD Emerging Markets (EMB)
iShares Specialty Index Funds
iShares KLD 400 Social (DSI)
iShares KLD Select SocialSM (KLD)
iShares Dow Jones Select Dividend (DVY)
iShares Dow Jones EPAC Select Dividend (IDV)
iShares S&P U.S. Preferred Stock (PFF)
iShares International Index Funds
iShares FTSE Developed Small Cap ex-North America (IFSM)
iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. (IFGL)
iShares FTSE EPRA/NAREIT North America (IFNA)
iShares FTSE EPRA/NAREIT Europe (IFEU)
iShares FTSE EPRA/NAREIT Asia (IFAS)
iShares MSCI ACWI (ACWI)
iShares MSCI ACWI ex US (ACWX)
iShares MSCI All Country Asia ex Japan (AAXJ)
iShares MSCI BRIC (BKF)
iShares MSCI EAFE (EFA)
iShares MSCI EAFE Growth (EFG)
iShares MSCI EAFE Value (EFV)
iShares MSCI EAFE Small Cap (SCZ)
iShares MSCI Emerging Markets (EEM)
iShares MSCI EMU (EZU)
iShares MSCI Kokusai (TOK)
iShares MSCI Pacific ex-Japan (EPP)
iShares S&P Asia 50 (AIA)
iShares S&P Europe 350 (IEV)
iShares S&P Latin America 40 (ILF)
iShares S&P World ex-U.S. Property (WPS)
iSHARES FAMILYOF FUNDS | 101 |
Table of Contents
The iShares® Family of Funds (Continued)
iShares Morningstar Index Funds
iShares Morningstar Large Core (JKD)
iShares Morningstar Large Growth (JKE)
iShares Morningstar Large Value (JKF)
iShares Morningstar Mid Core (JKG)
iShares Morningstar Mid Growth (JKH)
iShares Morningstar Mid Value (JKI)
iShares Morningstar Small Core (JKJ)
iShares Morningstar Small Growth (JKK)
iShares Morningstar Small Value (JKL)
iShares NYSE Index Funds
iShares NYSE Composite (NYC)
iShares NYSE 100 (NY)
iShares® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., European Public Real Estate Association (“EPRA®”), FTSE International Limited (“FTSE”), FTSE/Xinhua Index Limited (“FXI”), iBoxx®, J.P. Morgan Securities Inc., KLD Research & Analytics, Inc., MSCI Inc., Morningstar Inc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50/Residential/Retail/Mortgage REITs or Industrial/Office Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Global Real Estate ex-US/North America/Europe/Asia Index; all rights vest in FTSE, NAREIT, and EPRA. All rights in the FTSE Developed Small Cap ex-North America Index vest in FTSE. “FTSE” is a trade- and servicemark of London Stock Exchange and The Financial Times Limited; “Xinhua” is a trade- and servicemark of Xinhua Financial Network Limited. “NAREIT®” is a trademark of NAREIT; “EPRA®” is a trademark of EPRA.
An investment in the Fund(s) is not a deposit of a bank and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
This advertising section does not constitute part of the 2008 Annual Report.
7821-iS-0908
102 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
For more information:
WWW.iSHARES.COM
1-800-iShares (1-800-474-2737)
The iShares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as an advisor to the iShares Funds. BGFA is a subsidiary of Barclays Global Investors, NA., neither of which is affiliated with SEI.
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. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the company listed above.
©2008 Barclays Global Investors. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.
Investing involves risk, including possible loss of principal.
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 ended 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 monthly basis on the Funds’ website.
Certain financial information required by regulations or listing exchange rules in jurisdictions outside the U.S. in which iShares Funds are cross-listed may be publicly filed in those jurisdictions. This information is available upon request by calling 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.
iShares® LET’S BUILD A BETTER INVESTMENT WORLDSM BARCLAYS GLOBAL INVESTORS
Table of Contents
2008 ANNUAL REPORT TO SHAREHOLDERS
iSHARES® MSCI SERIES
AUGUST 31, 2008
Would you prefer to receive materials like this electronically? See inside cover for details.
iShares MSCI Australia Index Fund
iShares MSCI Brazil Index Fund
iShares MSCI BRIC Index Fund
iShares MSCI Canada Index Fund
iShares MSCI Chile Investable Market Index Fund
iShares MSCI Hong Kong Index Fund
iShares MSCI Israel Capped Investable Market Index Fund iShares MSCI Japan Small Cap Index Fund
iShares MSCI Malaysia Index Fund
iShares MSCI Mexico Investable Market Index Fund
iShares MSCI Pacific ex-Japan Index Fund
iShares MSCI Singapore Index Fund
iShares MSCI South Africa Index Fund
iShares MSCI South Korea Index Fund
iShares MSCI Taiwan Index Fund
iShares MSCI Thailand Investable Market Index Fund
iShares MSCI Turkey Investable Market Index Fund
iShares®
Table of Contents
iShares®
Dear iShares Shareholder:
Electronic delivery is the easiest, most convenient way to receive reporting on your iShares holdings. In addition, it’s a way we can all care for our environment. To that end, we are pleased to offer shareholder reports and prospectuses online.
To sign up for electronic delivery, please follow these simple steps:
1. Go to www.icsdelivery.com.
2. From the main page, select the first letter of your brokerage firm’s name.
3. Select your brokerage institution from the list that follows. If your brokerage firm is not listed, electronic delivery may not be available. Please contact your brokerage firm or financial adviser.
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Your information and email address will be kept confidential and only used to deliver documents to you. If at any time you are not satisfied, you can cancel electronic delivery at www.icsdelivery.com and once again receive physical delivery of your materials. If you have any questions, please contact your brokerage firm or financial adviser.
Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail. Instead, you will receive e-mail notifications announcing that the shareholder report or prospectus has been posted on the ishares website at www.iShares.com.
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated January 1, 2008
for the iShares MSCI Australia Index Fund, the iShares MSCI Canada Index Fund,
the iShares MSCI Hong Kong Index Fund,
the iShares MSCI Malaysia Index Fund, the iShares MSCI Mexico Investable Market Index Fund,
the iShares MSCI Pacific ex-Japan Index Fund, the iShares MSCI South Africa Index Fund and the
iShares MSCI South Korea Index Fund
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the iShares MSCI Index Funds named above (each, a “Fund”).
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 25 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the iShares MSCI South Africa Index Fund and the iShares MSCI South Korea Index Fund, BGFA is entitled to receive a management fee from each Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Funds and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Chile Investable Market Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate prospectuses) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion. For its investment advisory services to the iShares MSCI Pacific ex-Japan Index Fund, BGFA is paid a management fee equal to the Fund’s average daily net assets at an annual rate of 0.50% per year. For its investment advisory services to each of the other Funds included in this Prospectus, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Austria Investable Market Index Fund, iShares MSCI Belgium Investable Market Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Japan Small Cap Index Fund, iShares MSCI Netherlands Investable Market Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, which are offered in separate prospectuses) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
Prior to September 1, 2008, for its investment advisory services to each Fund, BGFA was entitled to receive management fees from each Fund based on each Fund’s allocable portion of aggregate average daily net assets, as shown in the following table:
Fund | Management Fee | ||
iShares MSCI Australia Index Fund | 0.51 | % | |
iShares MSCI Canada Index Fund | 0.52 | % | |
iShares MSCI Hong Kong Index Fund | 0.52 | % | |
iShares MSCI Malaysia Index Fund | 0.51 | % | |
iShares MSCI Mexico Investable Market Index Fund | 0.51 | % | |
iShares MSCI Pacific ex-Japan Index Fund | 0.50 | % | |
iShares MSCI South Africa Index Fund | 0.68 | % | |
iShares MSCI South Korea Index Fund | 0.68 | % |
In addition, all references in the Prospectus to MSCI South Korea Index are replaced with MSCI Korea Index.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
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Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated January 1, 2008
for the iShares MSCI Brazil Index Fund (the “Fund”)
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 10 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Chile Investable Market Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate prospectuses) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at the annual rate of 0.68%.
Also, all references to 45 Fremont Street in the Prospectus are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-118-09008
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PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated November 9, 2007 and the Statement of Additional Information (“SAI”) dated November 9, 2007
(as revised December 19, 2007) for the iShares MSCI BRIC Index Fund and the iShares MSCI Chile Investable Market
Index Fund
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus and SAI for the iShares MSCI Index Funds named above (each, a “Fund”).
Effective September 1, 2008, under the heading “Management” beginning on page 12 of the Prospectus, the second paragraph is hereby deleted in its entirety and replaced with the following with the fourth paragraph deleted in its entirety as well.
Effective August 12, 2008, for its investment advisory services to the iShares MSCI BRIC Index Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI All Country Asia ex Japan Index Fund and iShares MSCI Emerging Markets Index Fund, which are offered in separate prospectuses) as follows: 0.75% per annum of the aggregate net assets less than or equal to $14.0 billion, plus 0.68% per annum of the aggregate net assets over $14.0 billion, up to and including $28.0 billion, plus 0.61% per annum of the aggregate net assets in excess of $28.0 billion. Effective September 1, 2008, for its investment advisory services to the iShares MSCI Chile Investable Market Index Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate prospectuses) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets between $2.0 billion and $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
In addition, effective the same date, the fourth paragraph on page 25 under the “Investment Adviser” heading of the SAI is hereby deleted in its entirety and replaced with the following:
For its investment advisory services to the iShares MSCI BRIC Index Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI All Country Asia ex Japan Index Fund and iShares MSCI Emerging Markets Index Fund, which are offered in separate SAIs) as follows: 0.75% per annum of the aggregate net assets less than or equal to $14.0 billion, plus 0.68% per annum of the aggregate net assets over $14.0 billion, up to and including $28.0 billion, plus 0.61% per annum of the aggregate net assets in excess of $28.0 billion. For its investment advisory services to the iShares MSCI Chile Investable Market Index Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate SAIs) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion. For its investment advisory services to the iShares MSCI Japan Small Cap Index Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Australia Index Fund, iShares MSCI Austria Investable Market Index Fund, iShares MSCI Belgium Investable Market Index Fund, iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund, iShares MSCI Netherlands Investable Market Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, which are offered in separate SAIs) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
Also, all references to 45 Fremont Street in both the Prospectus and the SAI are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-095-09008
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FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated March 26, 2008 and the Statement of Additional Information (“SAI”) dated March 26, 2008
for the iShares MSCI Israel Capped Investable Market Index Fund (the “Fund”)
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus and SAI for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 6 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Chile Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate prospectuses) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at an annual rate of 0.68%.
In addition, effective the same date, the first sentence of the third paragraph under the heading “Investment Advisory, Administrative and Distribution Services” on page 23 of the SAI is hereby deleted in its entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Chile Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate SAIs) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
Also, all references to 45 Fremont Street in both the Prospectus and the SAI are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-122-09008
|
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated December 19, 2007 and the Statement of Additional Information (“SAI”) dated November 9, 2007
(as revised December 19, 2007) for the iShares MSCI Japan Small Cap Index Fund (the “Fund”)
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus and SAI for the Fund.
The following information replaces the second and fourth paragraph under the heading “Management” beginning on page 8 of the Prospectus are hereby deleted in their entirety and replaced with the following:
Effective September 1, 2008, for its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Australia Index Fund, iShares MSCI Austria Investable Market Index Fund, iShares MSCI Belgium Investable Market Index Fund, iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund, iShares MSCI Netherlands Investable Market Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, which are offered in separate Prospectuses) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
In addition, effective the same date, the fourth paragraph on page 25 under the “Investment Adviser” heading of the SAI is hereby deleted in its entirety and replaced with the following:
For its investment advisory services to the iShares MSCI BRIC Index Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI All Country Asia ex Japan Index Fund and iShares MSCI Emerging Markets Index Fund, which are offered in separate SAIs) as follows: 0.75% per annum of the aggregate net assets less than or equal to $14.0 billion, plus 0.68% per annum of the aggregate net assets over $14.0 billion, up to and including $28.0 billion, plus 0.61% per annum of the aggregate net assets in excess of $28.0 billion. For its investment advisory services to the iShares MSCI Chile Investable Market Index Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate SAIs) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion. For its investment advisory services to the iShares MSCI Japan Small Cap Index Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Australia Index Fund, iShares MSCI Austria Investable Market Index Fund, iShares MSCI Belgium Investable Market Index Fund, iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund, iShares MSCI Netherlands Investable Market Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, which are offered in separate SAIs) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
Also, all references to 45 Fremont Street in both the Prospectus and the SAI are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-109-09008
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PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated January 1, 2008
for the iShares MSCI Singapore Index Fund (the “Fund”).
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 9 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Australia Index Fund, iShares MSCI Austria Investable Market Index Fund, iShares MSCI Belgium Investable Market Index Fund, iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Japan Small Cap Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund, iShares MSCI Netherlands Investable Market Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, which are offered in separate prospectuses) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at an annual rate of 0.51%.
Also, all references to 45 Fremont Street in the Prospectus are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-116-09008
|
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated January 1, 2008
for the iShares MSCI Taiwan Index Fund (the “Fund”)
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 9 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Chile Investable Market Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate prospectuses) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at the annual rate of 0.68%.
Also, all references to 45 Fremont Street in the Prospectus are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-117-09008
|
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated March 26, 2008 and the Statement of Additional Information (“SAI”) dated March 26, 2008
for the iShares MSCI Thailand Investable Market Index Fund (the “Fund”).
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus and SAI for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 6 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Chile Investable Market Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate prospectuses) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at the annual rate of 0.68%.
In addition, effective the same date, the first sentence of the third paragraph under the “Investment Advisory, Administrative and Distribution Services” heading on page 23 of the SAI is hereby deleted in its entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Chile Investable Market Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund and iShares MSCI Turkey Investable Market Index Fund, which are offered in separate SAIs) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
Also, all references to 45 Fremont Street in both the Prospectus and the SAI are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-123-09008
|
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated March 26, 2008 and the Statement of Additional Information (“SAI”) dated March 26, 2008
for the iShares MSCI Turkey Investable Market Index Fund (the “Fund”).
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus and SAI for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 6 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Chile Investable Market Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund and iShares MSCI Thailand Investable Market Index Fund, which are offered in separate prospectuses) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at the annual rate of 0.68%.
In addition, effective the same date, the first sentence of the third paragraph under the heading “Investment Advisory, Administrative and Distribution Services” beginning on page 22 of the SAI is hereby deleted in its entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Brazil Index Fund, iShares MSCI Chile Investable Market Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund and iShares MSCI Thailand Investable Market Index Fund, which are offered in separate SAIs) as follows: 0.74% per annum of the aggregate net assets less than or equal to $2.0 billion, plus 0.69% per annum of the aggregate net assets over $2.0 billion, up to and including $4.0 billion, plus 0.64% per annum of the aggregate net assets over $4.0 billion, up to and including $8.0 billion, plus 0.57% per annum of the aggregate net assets over $8.0 billion, up to and including $16.0 billion, plus 0.51% per annum of the aggregate net assets in excess of $16.0 billion.
Also, all references to 45 Fremont Street in both the Prospectus and the SAI are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-124-09008
|
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
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Board Review and Approval of Investment Advisory Contract (Unaudited) | 138 | |
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Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI AUSTRALIA INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.25)% | (10.72)% | (10.09)% | 21.01% | 20.59% | 20.34% | 15.35% | 15.35% | 15.04% |
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.25)% | (10.72)% | (10.09)% | 159.43% | 154.96% | 152.41% | 316.99% | 317.08% | 306.01% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 1 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI AUSTRALIA INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 38.81 | % | |
Basic Materials | 26.57 | ||
Consumer Non-Cyclical | 12.16 | ||
Industrial | 8.45 | ||
Energy | 6.63 | ||
Communications | 2.60 | ||
Consumer Cyclical | 2.36 | ||
Utilities | 0.77 | ||
Technology | 0.48 | ||
Short-Term and Other Net Assets | 1.17 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
BHP Billiton Ltd. | 15.83 | % | |
Commonwealth Bank of Australia | 6.40 | ||
Westpac Banking Corp. | 5.04 | ||
National Australia Bank Ltd. | 4.56 | ||
Rio Tinto Ltd. | 4.15 | ||
Woolworths Ltd. | 3.93 | ||
Australia and New Zealand Banking Group Ltd. | 3.64 | ||
Woodside Petroleum Ltd. | 3.46 | ||
Westfield Group | 3.45 | ||
CSL Ltd. | 2.80 | ||
TOTAL | 53.26 | % | |
The iShares MSCI Australia Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Australian market, as measured by the MSCI Australia IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (9.25)%, while the total return for the Index was (10.09)%.
The Australian stock market declined during the reporting period as the credit crunch and economic slowdown that began in the U.S. spread to Australia and other regions of the world. The Australian economy grew by 2.7% for the 12 months ended June 30, 2008. Although this extended the economy’s current expansion to 17 years, it was lower than the 4.3% growth rate from the prior 12-month period, and evidence of slowing economic activity had become increasingly apparent. Economic growth was just 0.3% in the second quarter of 2008, the weakest quarterly growth rate in more than three years, as consumer spending declined for the first time since 1993.
Despite the slowing economic environment, inflation increased significantly during the reporting period. The Australian consumer price index rose by 4.5% for the 12 months ended June 30, 2008, more than double the 2.1% inflation rate for the previous 12 months. As a result, the Reserve Bank of Australia raised interest rates three times during the reporting period, boosting its cash rate target to a 12-year high of 7.25%.
The combination of weaker economic growth and rising inflation weighed on Australian stock market performance, particularly during the last six months of the reporting period. A substantial portion of Australia’s economy is in commodity-based industries, such as mining and metals, and these industries struggled as global economic growth slowed and commodity prices eased late in the reporting period.
Among the Fund’s ten largest holdings as of August 31, 2008, the best performer was energy producer Woodside Petroleum Ltd., which benefited from a 56% increase in the price of crude oil. Mining firm Rio Tinto Ltd. and biotechnology firm CSL Ltd. also generated robust results for the reporting period. On the downside, the weakest performers among the top ten holdings were commercial banks – Australia and New Zealand Banking Group Ltd., National Australia Bank Ltd., and Commonwealth Bank of Australia. Like many global financial stocks, these three companies were hampered by concerns about credit conditions and exposure to mortgage-related investments, particularly in the U.S.
2 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI BRAZIL INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
21.58% | 22.51% | 23.37% | 45.96% | 45.94% | 47.86% | 19.81% | 19.82% | 22.16% |
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
21.58% | 22.51% | 23.37% | 562.40% | 562.09% | 606.80% | 335.89% | 336.06% | 410.16% |
Total returns for the period since inception are calculated from the inception date of the Fund (7/10/00). “Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (7/14/00), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 3 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI BRAZIL INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Basic Materials | 31.86 | % | |
Energy | 24.39 | ||
Financial | 18.21 | ||
Utilities | 7.03 | ||
Consumer Non-Cyclical | 6.85 | ||
Communications | 5.76 | ||
Industrial | 2.25 | ||
Consumer Cyclical | 1.69 | ||
Diversified | 1.46 | ||
Short-Term and Other Net Assets | 0.50 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Petroleo Brasileiro SA Preferred | 12.90 | % | |
Petroleo Brasileiro SA | 11.49 | ||
Companhia Vale do Rio Doce | 9.60 | ||
Companhia Vale do Rio Doce ADR | 7.60 | ||
Banco Bradesco SA Preferred | 4.81 | ||
Banco Itau Holding | 4.32 | ||
Unibanco - Uniao de Bancos Brasileiros SA Units | 3.46 | ||
Companhia Siderurgica Nacional | 3.12 | ||
Gerdau SA Preferred | 2.67 | ||
Companhia de Bebidas das Americas Preferred | 2.67 | ||
TOTAL | 62.64 | % | |
The iShares MSCI Brazil Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Brazilian market, as measured by the MSCI Brazil IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was 21.58%, while the total return for the Index was 23.37%.
The Brazilian stock market continued to advance, generating strong results for the reporting period. Brazil’s economy grew by 6.1% for the 12 months ended June 30, 2008 – among the fastest growth rates in the world. While commodity exports such as oil and metals contributed notably to economic growth, particularly in the last half of 2007, robust domestic consumption was also a driving force behind the rapid growth in the Brazilian economy. However, the increase in domestic demand boosted the Brazilian inflation rate to 6.0%, well above the government’s 4.5% target. This led to a change in monetary policy – after 18 interest rate cuts between November 2005 and September 2007, the Brazilian central bank raised interest rates three times in the first eight months of 2008, lifting its benchmark interest rate to 13.0%.
Despite a strong overall return, the Brazilian stock market declined sharply in the last few months of the reporting period. Global economic activity began to weaken as an economic slowdown in the U.S. spread to other regions of the world, dampening demand for Brazil’s raw materials exports. In addition, prices for oil and other commodities eased after peaking in mid-2008, crimping profits for Brazilian energy and mining companies.
Among the Fund’s ten largest holdings as of August 31, 2008, performance was largely positive for the reporting period. Top performers included steelmakers Companhia Siderurgica Nacional and Gerdau SA, both of which benefited from healthy global demand for steel and rising prices. The Fund’s largest holding, energy producer Petroleo Brasileiro SA, also performed well as the price of oil surged by 56% for the reporting period. In addition, Petroleo Brasileiro SA discovered a sizable offshore oil field that could make Brazil one of the largest oil exporters in the world. The only stock among the Fund’s top ten holdings to decline for the reporting period was beverage company Companhia de Bebidas das Americas.
4 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI BRIC INDEX FUND
Performance as of August 31, 2008
Cumulative Total Returns | ||||
Inception to 8/31/08 | ||||
NAV | MARKET | INDEX | ||
(21.65)% | (21.74)% | (22.37)% |
“Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated and are calculated from an inception date of 11/12/07.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (11/16/07), the NAV of the Fund is used as a proxy for Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 5 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI BRIC INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Energy | 31.27 | % | |
Financial | 22.98 | ||
Basic Materials | 14.28 | ||
Communications | 11.71 | ||
Technology | 5.10 | ||
Consumer Non-Cyclical | 4.61 | ||
Industrial | 3.89 | ||
Utilities | 2.37 | ||
Diversified | 2.13 | ||
Consumer Cyclical | 1.35 | ||
Short-Term and Other Net Assets | 0.31 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
OAO Gazprom SP ADR (Russia) | 6.68 | % | |
China Mobile Ltd. (China) | 5.20 | ||
Petroleo Brasileiro SA Preferred (Brazil) | 4.94 | ||
Petroleo Brasileiro SA (Brazil) | 4.26 | ||
Reliance Industries Ltd. GDR (India) | 3.46 | ||
Companhia Vale do Rio Doce Class A Preferred (Brazil) | 3.38 | ||
Companhia Vale do Rio Doce (Brazil) | 2.78 | ||
LUKOIL SP ADR (Russia) | 2.64 | ||
Infosys Technologies Ltd. SP ADR (India) | 2.42 | ||
Banco Bradesco SA Preferred (Brazil) | 2.11 | ||
TOTAL | 37.87 | % | |
The iShares MSCI BRIC Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI BRIC IndexSM (the “Index”). The Index is designed to measure the combined equity market performance in Brazil, Russia, India and China (“BRIC”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from November 12, 2007 (inception date of the Fund) through August 31, 2008 (the “reporting period”), the total return for the Fund was (21.65)%, while the total return for the Index was (22.37)%.
The total return for the Fund declined sharply for the reporting period as the four markets comprising the Fund – Brazil, Russia, India, and China – declined along with equity markets worldwide. Much of the decline occurred in the last few months of the reporting period as a global economic slowdown that began in the U.S. spread to other regions of the world, leading to a broad decline in the global equity indexes.
The Brazilian stock market declined modestly for the reporting period despite solid economic growth. Brazil’s economy grew by 6.1% for the 12 months ended June 30, 2008, led by robust domestic consumption and commodity exports. However, weaker global economic activity late in the reporting period dampened demand for Brazil’s raw materials exports. In addition, prices for oil and other commodities eased after peaking in mid-2008, crimping profits for Brazilian energy and mining companies.
In Russia, the economy grew at an 8.0% annualized rate in the first half of 2008, in line with its growth rate in 2007. Meanwhile, inflation reached a five-year high of 15.1% for the 12 months ended June 30, 2008, brought on by surging domestic demand as consumer spending and construction activity increased significantly. Soaring inflation, along with falling oil prices – Russia is one of the largest oil exporters in the world – and geopolitical tensions toward the end of the period, put downward pressure on the Russian stock market.
The economies in India and China, both of which generated strong growth in 2007, slowed somewhat in 2008. India’s economy grew at a 7.9% annualized rate in the second quarter of 2008, down from 9.2% a year earlier. The Chinese economy grew by 11.4% in 2007 – the fifth straight year of double-digit growth and its fastest growth rate since 1994 – but slowed to 10.1% for the 12 months ended June 30, 2008. Nonetheless, growth remained robust in both countries, leading to accelerating inflation rates. The combination of slowing economic growth, double-digit inflation, and weaker export demand from developed nations led to stock market declines in India and China.
Looking at the Fund’s ten largest holdings as of August 31, 2008, the only firm to advance for the reporting period was Brazilian energy producer Petroleo Brasileiro SA, whose shares benefited from strong demand and the discovery of a sizable offshore oil field. Among the decliners, Indian information technology services company Infosys Technologies Ltd. and Brazilian commercial bank Banco Bradesco SA held up the best. The weakest performers among the Fund’s ten largest holdings included the Fund’s two largest holdings, Russian energy producer OAO Gazprom and wireless services provider China Mobile Ltd.
6 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI CANADA INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
3.88% | 3.39% | 4.11% | 21.50% | 21.38% | 21.78% | 16.55% | 16.46% | 16.85% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
3.88% | 3.39% | 4.11% | 164.82% | 163.53% | 167.89% | 362.55% | 359.10% | 374.74% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 7 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI CANADA INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Energy | 29.94 | % | |
Financial | 28.69 | ||
Basic Materials | 18.15 | ||
Technology | 5.69 | ||
Communications | 5.38 | ||
Industrial | 5.25 | ||
Consumer Cyclical | 2.11 | ||
Diversified | 1.80 | ||
Consumer Non-Cyclical | 1.58 | ||
Utilities | 1.13 | ||
Short-Term and Other Net Assets | 0.28 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Research In Motion Ltd. | 5.42 | % | |
Royal Bank of Canada | 5.20 | ||
EnCana Corp. | 4.94 | ||
Potash Corp. of Saskatchewan Inc. | 4.76 | ||
Manulife Financial Corp. | 4.71 | ||
Suncor Energy Inc. | 4.64 | ||
Toronto-Dominion Bank (The) | 4.12 | ||
Canadian Natural Resources Ltd. | 4.05 | ||
Bank of Nova Scotia | 4.00 | ||
Barrick Gold Corp. | 2.66 | ||
TOTAL | 44.50 | % | |
The iShares MSCI Canada Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Canadian market, as measured by the MSCI Canada IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was 3.88%, while the total return for the Index was 4.11%.
The Canadian market posted modest gains for the reporting period. Canada’s market is driven largely by the production of energy and materials, which are exported primarily to the United States. Underlying the slight gains for the reporting period, a surge in demand for energy, agricultural products, and other commodities led to increased share prices for energy and materials-related companies. These gains were mitigated, though, as economic growth slowed in the United States, Canada’s key export partner. As the U.S. economy slowed, its demand for Canadian exports shrank. Real gross domestic product (GDP) edged up 0.1% in the second quarter of 2008, following a 0.2% decline in the first quarter of 2008. Domestic demand outpaced GDP, growing by 0.5% during the second quarter of 2008, while foreign demand for Canadian goods and services declined in the second quarter of 2008 for the fourth consecutive quarter.
The Fund’s ten largest holdings as of August 31, 2008 represented more than 44% of Fund net assets. Among the Fund’s ten largest holdings, performance was mixed for the reporting period. Potash Corp. of Saskatchewan Inc. delivered the strongest gain, as rising food prices led to increasing demand for fertilizer. The Fund’s largest holding, Research In Motion Ltd., which produces the Blackberry® handheld device, also logged a large return. Two oil and gas exploration companies, Canadian Natural Resources Ltd. and EnCana Corp., were also strong performers, as was integrated oil and gas company Suncor Energy Inc. Leading the detractors from performance, Toronto-Dominion Bank was one of three financial companies among the Fund’s ten largest holdings to decline for the reporting period.
8 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI CHILE INVESTABLE MARKET INDEX FUND
Performance as of August 31, 2008
Cumulative Total Returns | ||||
Inception to 8/31/08 | ||||
NAV | MARKET | INDEX | ||
(7.15)% | (8.17)% | (7.02)% |
Effective June 25, 2008, the Fund changed its name from the iShares MSCI Chile Index Fund to the iShares MSCI Chile Investable Market Index Fund.
“Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated and are calculated from an inception date of 11/12/07.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (11/16/07), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 9 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI CHILE INVESTABLE MARKET INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Utilities | 28.23 | % | |
Basic Materials | 21.88 | ||
Consumer Non-Cyclical | 13.23 | ||
Diversified | 11.74 | ||
Financial | 9.15 | ||
Consumer Cyclical | 7.06 | ||
Communications | 5.08 | ||
Industrial | 2.71 | ||
Technology | 0.82 | ||
Short-Term and Other Net Assets | 0.10 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Empresa Nacional de Electricidad SA | 11.76 | % | |
Empresas Copec SA | 11.30 | ||
Enersis SA | 10.47 | ||
Sociedad Quimica y Minera de Chile SA Class B Preferred | 8.38 | ||
Empresas CMPC SA | 7.22 | ||
Centros Comerciales Sudamericanos SA | 4.97 | ||
CAP SA | 4.88 | ||
Banco Santander Chile SA | 4.78 | ||
LAN Airlines SA | 3.92 | ||
Empresa Nacional de Telecomunicaciones SA | 3.13 | ||
TOTAL | 70.81 | % | |
The iShares MSCI Chile Investable Market Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Chile Investable Market IndexSM (the “Index”). The Index is designed to measure broad based equity market performance in Chile. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from November 12, 2007 (inception date of the Fund) through August 31, 2008 (the “reporting period”), the total return for the Fund was (7.15)%, while the total return for the Index was (7.02)%.
The Chilean stock market fell for the reporting period, mirroring the broad decline in global equity markets. Chile’s economy grew by 5.1% in 2007, but slowed to a 3.8% annualized growth rate in the first half of 2008. The decelerating economic activity in Chile reflected a global economic slowdown that began in the U.S. and spread to other regions of the world. Weaker global growth dampened demand for exports, which slowed markedly in Chile during the first half of 2008. On the positive side, however, domestic demand surged, as evidenced by a 5.9% increase in private consumption and a 23% increase in fixed capital for the 12 months ended June 30, 2008.
Another challenge facing the Chilean economy was inflation, which increased substantially during the reporting period. Inflation rose by 9.5% for the 12 months ended July 31, 2008, a 13-year high and well above the 3% target of Banco Central de Chile, the country’s central bank. As a result, the central bank raised short-term interest rates five times during the reporting period, lifting its target rate to 7.75% – its highest level since December 1998.
The combination of weaker economic conditions, rising inflation, and global challenges to export growth put downward pressure on Chile’s stock market, particularly over the last three months of the reporting period.
Among the Fund’s ten largest holdings as of August 31, 2008, just three advanced during the reporting period. The leading performer by far was chemicals producer Sociedad Quimica y Minera de Chile SA, which posted a triple-digit return thanks to robust global demand for agricultural chemicals. The other positive performers were steel producer CAP SA and electric utility Empresa Nacional de Electricidad SA, the Fund’s largest holding. On the downside, the biggest decliners among the Fund’s ten largest holdings included retailer Centros Comerciales Sudamericanos SA and industrial conglomerate Empresas Copec SA.
10 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI HONG KONG INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(10.54)% | (11.20)% | (10.22)% | 14.57% | 14.47% | 15.16% | 11.95% | 13.48% | 13.10% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(10.54)% | (11.20)% | (10.22)% | 97.40% | 96.57% | 102.50% | 209.26% | 254.25% | 242.57% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 11 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI HONG KONG INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 49.80 | % | |
Diversified | 14.62 | ||
Utilities | 14.32 | ||
Consumer Cyclical | 9.55 | ||
Industrial | 5.64 | ||
Communications | 2.84 | ||
Basic Materials | 2.29 | ||
Technology | 0.57 | ||
Short-Term and Other Net Assets | 0.37 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Cheung Kong (Holdings) Ltd. | 8.45 | % | |
Hutchison Whampoa Ltd. | 8.16 | ||
Sun Hung Kai Properties Ltd. | 7.94 | ||
CLP Holdings Ltd. | 6.83 | ||
Hang Seng Bank Ltd. | 6.01 | ||
Hong Kong Exchanges and Clearing Ltd. | 5.41 | ||
Hongkong Electric Holdings Ltd. | 3.75 | ||
Hong Kong and China Gas Co. Ltd. (The) | 3.74 | ||
Esprit Holdings Ltd. | 3.50 | ||
Swire Pacific Ltd. Class A | 3.38 | ||
TOTAL | 57.17 | % | |
The iShares MSCI Hong Kong Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Hong Kong market, as measured by the MSCI Hong Kong IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (10.54)%, while the total return for the Index was (10.22)%.
The Hong Kong stock market fell for the reporting period, mirroring the general decline in equity markets worldwide. The Hong Kong economy grew by 4.2% for the 12 months ended June 30, 2008, below the 6.8% growth rate for all of 2007. The weaker growth rate resulted primarily from a 4.6% decline in exports, reflecting a global economic slowdown that curtailed demand for exported goods. In addition, Hong Kong’s close relationship and trade partnership with mainland China weighed on growth as China’s export-fueled economy slowed markedly in the first eight months of 2008 after growing by more than 11% in 2007.
The inflation rate in Hong Kong picked up notably during the reporting period, rising by 6.1% for the 12 months ended June 30, 2008 – well above the 1.3% inflation rate for the previous 12 months. Higher inflation had a further dampening impact on economic activity in Hong Kong, and it also crimped profit margins for many companies.
The combination of weaker economic growth – both domestically and in China, as well as elsewhere in the world – and rising inflation weighed on the performance of the Hong Kong stock market, particularly during the last six months of the reporting period.
Among the Fund’s ten largest holdings as of August 31, 2008, performance was mixed for the reporting period. The leading performers included electric utilities Hongkong Electric Holdings Ltd. and CLP Holdings Ltd., where international expansion and sales growth helped offset weaker domestic energy revenues. Commercial bank Hang Seng Bank Ltd. also performed well as it largely avoided the U.S. mortgage crisis. On the downside, the largest decliners among the Fund’s top ten holdings were apparel maker Esprit Holdings Ltd. and stock exchange Hong Kong Exchanges and Clearing Ltd.
12 | 2008 iSHARES ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
Performance as of August 31, 2008
Cumulative Total Returns | ||||
Inception to 8/31/08 | ||||
NAV | MARKET | INDEX | ||
(3.40)% | (5.30)% | (1.44)% |
“Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated and are calculated from an inception date of 3/26/08.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/28/08), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
As of 8/31/08, the Fund did not have six months of performance and therefore line graphs are not presented.
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Consumer Non-Cyclical | 27.71 | % | |
Financial | 26.47 | ||
Communications | 19.39 | ||
Basic Materials | 17.09 | ||
Industrial | 6.04 | ||
Consumer Cyclical | 1.14 | ||
Energy | 0.96 | ||
Diversified | 0.58 | ||
Technology | 0.41 | ||
Short-Term and Other Net Assets | 0.21 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Teva Pharmaceutical Industries Ltd. | 24.64 | % | |
Israel Chemicals Ltd. | 12.81 | ||
Bank Leumi le-Israel | 5.47 | ||
Check Point Software Technologies Ltd. | 4.96 | ||
Bank Hapoalim Ltd. | 4.61 | ||
Makhteshim-Agan Industries Ltd. | 3.64 | ||
Bezeq Israeli Telecommunication Corp. Ltd. | 3.62 | ||
Israel Corp. Ltd. (The) | 3.24 | ||
Partner Communications Co. Ltd. | 3.06 | ||
NICE Systems Ltd. | 2.88 | ||
TOTAL | 68.93 | % | |
The iShares MSCI Israel Capped Investable Market Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Israel Capped Investable Market IndexSM (the “Index”). The Index is a custom, free float adjusted market capitalization index designed to measure broad based equity market performance in Israel. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from March 26, 2008 (inception date of the Fund) through August 31, 2008 (the “reporting period”), the total return for the Fund was (3.40)%, while the total return for the Index was (1.44)%.
The Israel stock market declined modestly for the reporting period. Despite a global economic slowdown that began in the U.S. and spread to other regions of the world, Israel’s economy maintained solid economic growth. After growing by 5.4% in 2007, the Israeli economy grew
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 13 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
at a 5.2% annualized rate in the first half of 2008. Although domestic demand declined in the second quarter of 2008, export growth remained healthy even as weaker economic activity in the U.S. – Israel’s largest trading partner – and other developed nations, dampened demand for exports.
Another challenge facing the Israeli economy was inflation, which increased significantly during the reporting period. Inflation rose by 4.4% for the first eight months of 2008 – an annualized rate of 6.5% – compared with a 2.8% increase for all of 2007. As a result, the Israeli central bank raised short-term interest rates four times in the last four months of the reporting period, lifting its target rate to 4.25%.
After rising sharply during the first half of the reporting period, the Israeli stock market reversed course as the combination of weaker economic conditions, rising inflation, and global challenges to export growth put downward pressure on equities.
Among the Fund’s ten largest holdings as of August 31, 2008, the leading performer was chemicals producer Israel Chemicals Ltd., which benefited from robust global demand for agricultural chemicals. Other positive performers included generic drug manufacturer Teva Pharmaceutical Industries Ltd., the Fund’s largest holding, and technology company NICE Systems Ltd. On the downside, the largest decliners among the Fund’s top ten holdings included chemicals maker Makhteshim-Agan Industries Ltd. and two commercial banks, Bank Leumi le-Israel and Bank Hapoalim Ltd.
14 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
Performance as of August 31, 2008
Cumulative Total Returns | ||||
Inception to 8/31/08 | ||||
NAV | MARKET | INDEX | ||
(11.19)% | (11.90)% | (10.92)% |
“Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated and are calculated from an inception date of 12/20/07.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (12/21/07), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 15 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Industrial | 25.95 | % | |
Consumer Cyclical | 23.91 | ||
Financial | 18.92 | ||
Consumer Non-Cyclical | 13.64 | ||
Basic Materials | 9.97 | ||
Communications | 3.84 | ||
Technology | 2.90 | ||
Utilities | 0.58 | ||
Energy | 0.12 | ||
Short-Term and Other Net Assets | 0.17 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
GS Yuasa Corp. | 0.60 | % | |
Keihan Electric Railway Co. Ltd. | 0.59 | ||
Air Water Inc. | 0.58 | ||
Rengo Co. Ltd. | 0.51 | ||
Tokai Carbon Co. Ltd. | 0.48 | ||
Hamamatsu Photonics K.K. | 0.46 | ||
Shiga Bank Ltd. | 0.46 | ||
Tsumura & Co. | 0.45 | ||
Meiji Seika Kaisha Ltd. | 0.44 | ||
Fujikura Ltd. | 0.44 | ||
TOTAL | 5.01 | % | |
The iShares MSCI Japan Small Cap Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Japan Small Cap IndexSM (the “Index”). The Index targets 40% of the eligible small cap universe within each industry group in the MSCI Japan IndexSM. The small cap universe is defined as all listed securities that have a market capitalization in the range of $200 million to $1,500 million. 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 December 20, 2007 (inception date of the Fund) through August 31, 2008 (the “reporting period”), the total return for the Fund was (11.19)%, while the total return for the Index was (10.92)%.
The Japanese equity markets declined for the reporting period amid signs of a slowing domestic economy. Industrial production fell for the first two quarters of 2008 and Gross Domestic Product (GDP) contracted, bringing an end to the longest period of growth for Japan since World War II. Inflation topped 2% for the first time in a decade, unemployment crept to a two-year high of 4.1%, and export levels fell during the period. Retail sales suffered their sharpest decline in more than two years in July 2008, underlining the weakness of household spending. In response to the public’s discontent over the economy, the Japanese government announced a stimulus package worth US$105.7 billion, including an income tax cut, fuel subsidies, and government loans to companies.
The ten largest Fund holdings represented approximately 5% of the net assets of the Fund as of August 31, 2008. For the reporting period, eight of the Fund’s ten largest holdings delivered positive returns. Leading the positive contributors to performance, battery manufacturer GS Yuasa Corp. posted triple-digit gains for the reporting period. Pharmaceutical company Tsumura & Co. also delivered strong returns. Air conditioner manufacturer Air Water Inc. and Tokai Carbon Co. Ltd. both performed well. Hamamatsu Photonics K.K., which manufactures optical products, was the largest detractor from performance among the ten largest holdings.
16 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI MALAYSIA INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.86)% | (12.35)% | (9.64)% | 12.82% | 12.35% | 13.54% | 19.33% | 19.94% | 20.79% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.86)% | (12.35)% | (9.64)% | 82.76% | 79.03% | 88.65% | 485.52% | 516.25% | 561.21% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. In the case of the iShares MSCI Malaysia Index Fund, which has a NAV determined prior to the opening of the regular trading day on the primary stock exchange on which it is listed, the market return will use the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 17 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI MALAYSIA INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 30.73 | % | |
Consumer Non-Cyclical | 16.79 | ||
Consumer Cyclical | 14.20 | ||
Industrial | 12.99 | ||
Utilities | 7.99 | ||
Communications | 7.96 | ||
Diversified | 7.72 | ||
Energy | 0.70 | ||
Basic Materials | 0.63 | ||
Short-Term and Other Net Assets | 0.29 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Bumiputra-Commerce Holdings Bhd | 9.02 | % | |
Malayan Banking Bhd | 8.18 | ||
IOI Corp. Bhd | 7.37 | ||
Sime Darby Bhd | 6.98 | ||
Genting Bhd | 5.56 | ||
Public Bank Bhd | 4.61 | ||
Tenaga Nasional Bhd | 4.40 | ||
MISC Bhd | 4.10 | ||
Resorts World Bhd | 3.38 | ||
DiGi.Com Bhd | 2.99 | ||
TOTAL | 56.59 | % | |
The iShares MSCI Malaysia Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Malaysian market, as measured by the MSCI Malaysia IndexSM (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 included in the Index. For the 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (9.86)%, while the total return for the Index was (9.64)%.
The Malaysian stock market fell for the reporting period, mirroring the general decline in equity markets worldwide. Malaysian equities declined despite a 6.3% annualized growth rate for the Malaysian economy in the second quarter of 2008, matching the 6.3% growth rate for all of 2007. Much of the economic strength derived from robust export growth – Malaysia is the world’s leading producer and exporter of palm oil, whose prices soared to record highs in March 2008, as well as energy and metals. However, healthy domestic consumption also contributed to the strength in the Malaysian economy, which led to an increase in the inflation rate during the reporting period. Malaysian inflation rose by 7.7% for the 12 months ended June 30, 2008 – well above the 1.7% inflation rate for the previous 12 months.
The strong economy helped the Malaysian stock market advance for much of the reporting period, but the market fell sharply in the last few months, leading to the overall decline. Global economic activity began to weaken as an economic slowdown in the U.S. spread to other regions of the world, dampening demand for Malaysian exports. In addition, prices for oil and other commodities eased after peaking in mid-2008, crimping profits for Malaysian energy and mining companies, as well as palm oil producers – the price of palm oil plunged by more than 40% from its all-time high in March through the end of the reporting period.
Among the Fund’s ten largest holdings as of August 31, 2008, just three posted positive returns for the reporting period. The leading performer was commercial bank Public Bank Bhd, which performed well as it largely avoided the U.S. mortgage crisis. The other two positive performers were palm oil producer IOI Corp. Bhd and energy and industrial conglomerate MISC Bhd. On the downside, the two largest decliners among the top ten holdings were resort owner Resorts World Bhd and commercial bank Bumiputra-Commerce Holdings Bhd, the Fund’s largest holding as of August 31, 2008. Energy producer Tenaga Nasional Bhd and conglomerate Genting Bhd also declined notably during the reporting period.
18 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI MEXICO INVESTABLE MARKET INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(8.44)% | (8.13)% | (9.10)% | 30.05% | 30.11% | 29.35% | 22.45% | 22.73% | 23.51% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(8.44)% | (8.13)% | (9.10)% | 271.98% | 272.85% | 262.04% | 657.73% | 675.15% | 725.84% |
Effective December 1, 2007, to broaden its coverage of the market, the Fund changed its underlying index from the MSCI Mexico IndexSM to the MSCI Mexico Investable Market IndexSM. Effective June 25, 2008, the Fund changed its name from the iShares MSCI Mexico Index Fund to the iShares MSCI Mexico Investable Market Index Fund.
Index performance reflects the performance of the MSCI Mexico IndexSM through November 30, 2007 and the MSCI Mexico Investable Market IndexSM thereafter.
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Index performance reflects the performance of the MSCI Mexico IndexSM through November 30, 2007 and the MSCI Mexico Investable Market IndexSM thereafter.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 19 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI MEXICO INVESTABLE MARKET INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Communications | 46.04 | % | |
Industrial | 13.53 | ||
Consumer Non-Cyclical | 11.21 | ||
Consumer Cyclical | 10.92 | ||
Basic Materials | 7.78 | ||
Financial | 6.22 | ||
Diversified | 4.18 | ||
Short-Term and Other Net Assets | 0.12 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
America Movil SAB de CV Series L | 25.28 | % | |
Cemex SAB de CV Series CPO | 9.59 | ||
Telefonos de Mexico SAB de CV Series L | 6.20 | ||
Fomento Economico Mexicano SAB de CV BD Units | 5.59 | ||
Grupo Televisa SA Series CPO | 5.58 | ||
Wal-Mart de Mexico SAB de CV Series V | 4.87 | ||
Carso Global Telecom SAB de CV Class A1 | 4.02 | ||
Grupo Mexico SA de CV Series B | 3.88 | ||
Grupo Financiero Banorte SAB de CV Series O | 3.74 | ||
Telmex Internacional SAB de CV Class L | 3.58 | ||
TOTAL | 72.33 | % | |
The iShares MSCI Mexico Investable Market Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Mexican market, as measured by the MSCI Mexico Investable Market IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (8.44)%, while the total return for the Index was (9.10)%.
The Mexican stock market fell for the reporting period, mirroring the general decline in equity markets worldwide. The Mexican economy grew at a 2.7% annualized rate in the first half of 2008, down from 3.3% in 2007 and 4.8% in 2006. The decelerating economic activity reflected the sharp economic slowdown in the U.S., which consumes 80% of Mexico’s exports. In particular, declining output at Mexico’s state-owned oil company – the third-largest oil producer by volume in the world – was a notable drag on economic growth in the first half of 2008.
Inflation in Mexico also picked up, reaching its highest level in five years. Consumer prices rose by 5.6% for the reporting period, up from 4.0% for the previous 12 months. The increase was driven largely by surging energy and grain prices. In response, the Mexican central bank raised short-term interest rates four times during the reporting period, boosting rates from 7.25% to 8.25%.
Despite the challenging economic and inflationary environment, the Mexican stock market advanced for much of the reporting period. The overall decline in Mexican stocks resulted from a sharp drop in the last few months of the reporting period as the U.S. economy slowed, dampening demand for exports, and the prices of oil and other commodities eased, crimping profits for Mexico’s mining companies.
Among the Fund’s ten largest holdings as of August 31, 2008, performance was mixed during the reporting period. The leading performer was beverage maker Fomento Economico Mexicano SAB de CV, which benefited from growing demand domestically and increased market share internationally, most notably in the U.S. Other positive performers included telecommunication services providers Telefonos de Mexico SAB de CV and Carso Global Telecom SAB de CV. On the downside, the two largest decliners among the ten largest holdings were cement manufacturer Cemex SAB de CV and international telecommunications company Telmex Internacional SAB de CV. Wireless telecom provider America Movil SAB de CV, the Fund’s largest holding as of August 31, 2008, also declined for the reporting period.
20 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.87)% | (11.35)% | (10.28)% | 19.21% | 18.67% | 18.98% | 17.68% | 17.53% | 17.56% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.87)% | (11.35)% | (10.28)% | 140.73% | 135.34% | 138.40% | 205.15% | 202.46% | 202.87% |
Total returns for the period since inception are calculated from the inception date of the Fund (10/25/01). “Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (10/26/01), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 21 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 42.06 | % | |
Basic Materials | 18.00 | ||
Consumer Non-Cyclical | 8.92 | ||
Industrial | 8.37 | ||
Communications | 4.92 | ||
Energy | 4.37 | ||
Consumer Cyclical | 4.33 | ||
Diversified | 4.09 | ||
Utilities | 3.64 | ||
Technology | 0.47 | ||
Short-Term and Other Net Assets | 0.83 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
BHP Billiton Ltd. (Australia) | 10.43 | % | |
Commonwealth Bank of Australia (Australia) | 4.20 | ||
Westpac Banking Corp. (Australia) | 3.32 | ||
National Australia Bank Ltd. (Australia) | 3.01 | ||
Rio Tinto Ltd. (Australia) | 2.74 | ||
Woolworths Ltd. (Australia) | 2.58 | ||
Australia and New Zealand Banking Group Ltd. (Australia) | 2.38 | ||
Westfield Group (Australia) | 2.30 | ||
Woodside Petroleum Ltd. (Australia) | 2.28 | ||
CSL Ltd. (Australia) | 1.85 | ||
TOTAL | 35.09 | % | |
The iShares MSCI Pacific ex-Japan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Australia, Hong Kong, New Zealand and Singapore markets, as measured by the MSCI Pacific ex-Japan IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (9.87)%, while the total return for the Index was (10.28)%.
The Fund declined for the reporting period as the four markets comprising the Fund – Australia, Hong Kong, New Zealand, and Singapore – mirrored the equity markets worldwide. Much of the decline occurred in the last few months of the reporting period as a global economic slowdown that began in the U.S. spread to other regions of the world, leading to a broad decline in the global equity indexes.
The Australian economy grew by 2.7% for the 12 months ended June 30, 2008, lower than the 4.3% growth rate from the prior 12-month period. In particular, economic growth was just 0.3% in the second quarter of 2008, the weakest quarterly growth rate in more than three years, as consumer spending declined for the first time since 1993. A substantial portion of Australia’s economy is tied to commodity-based industries, such as mining and metals, and these industries struggled as global economic growth slowed and commodity prices eased late in the reporting period.
In Hong Kong, the economy grew by 4.2% for the 12 months ended June 30, 2008, below the 6.8% growth rate for all of 2007. The weaker growth resulted primarily from a 4.6% decline in exports, reflecting the global economic weakness that dampened demand for exported goods. In addition, Hong Kong’s close relationship and trade partnership with mainland China weighed on the market as China’s export-fueled economy slowed markedly in the first half of 2008 after growing by more than 11% in 2007.
The Singapore economy grew by 7.7% in 2007, but slowed to a 4.5% annualized growth rate in the first half of 2008. Exports comprise a significant part of Singapore’s economy, particularly electronics and chemicals, and the deceleration in economic activity worldwide hurt Singapore’s exports. At the same time, inflation increased notably, putting additional downward pressure on domestic consumption. These factors ultimately led to the overall decline in the Singapore stock market.
22 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
The New Zealand equity market was the weakest performer among the four markets represented in the Fund. Weakness in many of the country’s trading partners, led by China and other emerging Asian economies, curtailed profit growth and led to a recession in the New Zealand economy. In addition, the “carry trade” – where investors borrowed at low interest rates in Japan and invested in the relatively high interest rates in New Zealand – collapsed as the New Zealand central bank lowered interest rates for the first time in five years in order to stimulate economic activity. The central bank’s actions sent the New Zealand dollar to a 17-month low against the U.S. dollar by the end of the period, further eroding New Zealand stock market returns.
The Fund’s ten largest holdings as of August 31, 2008, consisted of all Australian companies. The best performer was energy producer Woodside Petroleum Ltd., which benefited from a 56% increase in the price of crude oil. Mining company Rio Tinto Ltd. and biotechnology firm CSL Ltd. also generated robust results for the reporting period. On the downside, the weakest performers among the ten largest holdings were commercial banks – Australia and New Zealand Banking Group Ltd., National Australia Bank Ltd., and Commonwealth Bank of Australia. Like many global financial stocks, these three companies were hampered by concerns about credit conditions and exposure to mortgage-related investments, particularly in the U.S.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 23 |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI SINGAPORE INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.55)% | (10.93)% | (9.38)% | 20.36% | 19.83% | 20.22% | 16.34% | 16.77% | 15.54% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(9.55)% | (10.93)% | (9.38)% | 152.57% | 147.06% | 151.10% | 354.40% | 371.36% | 323.94% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
24 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI SINGAPORE INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 50.11 | % | |
Communications | 17.93 | ||
Industrial | 10.74 | ||
Consumer Non-Cyclical | 8.47 | ||
Diversified | 6.43 | ||
Consumer Cyclical | 5.63 | ||
Short-Term and Other Net Assets | 0.69 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Singapore Telecommunications Ltd. | 14.62 | % | |
United Overseas Bank Ltd. | 12.92 | ||
DBS Group Holdings Ltd. | 10.69 | ||
Oversea-Chinese Banking Corp. | 10.50 | ||
Keppel Corp. Ltd. | 4.75 | ||
Singapore Airlines Ltd. | 4.30 | ||
Capital and Ltd. | 3.85 | ||
Singapore Press Holdings Ltd. | 3.31 | ||
Singapore Exchange Ltd. | 2.78 | ||
City Developments Ltd. | 2.72 | ||
TOTAL | 70.44 | % | |
The iShares MSCI Singapore Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Singaporean market, as measured by the MSCI Singapore IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (9.55)%, while the total return for the Index was (9.38)%.
The Singapore stock market fell for the reporting period, mirroring the general decline in equity markets worldwide. The Singapore economy grew by 7.7% in 2007, but slowed to a 4.5% annualized growth rate in the first half of 2008. The decelerating economic activity in Singapore reflected a global economic slowdown that began in the U.S. and spread to other regions of the world. Weaker global growth dampened demand for exports, which comprise a significant part of Singapore’s economy, particularly exports of electronics and chemicals.
At the same time, inflation increased notably in Singapore during the reporting period, putting additional downward pressure on domestic consumption. Consumer prices rose by 6.5% for the 12 months ended July 31, 2008, well above the 2.6% increase for the 12 months ended July 31, 2007. Much of the increase was driven by higher energy prices, rising housing costs, and an increase in electricity tariffs.
The performance of the Singapore stock market tracked the changing economic environment. Stocks advanced in late 2007 and early 2008 amid robust economic growth, then fell sharply over the last few months of the reporting period as economic activity waned, producing the overall decline in the Singapore market.
Among the Fund’s ten largest holdings as of August 31, 2008, performance was mixed for the reporting period. The top performers included telecommunication services company Singapore Telecommunications Ltd., the Fund’s largest holding, and Singapore Press Holdings Ltd., the largest newspaper publisher in Southeast Asia. The remaining positive performers were commercial banks – Oversea-Chinese Banking Corp., United Overseas Bank Ltd., and DBS Group Holdings Ltd., all of which produced modest gains. On the downside, the largest decliners included property developers CapitaLand Ltd. and City Developments Ltd., as well as stock exchange Singapore Exchange Ltd., each of which declined sharply.
MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE | 25 |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI SOUTH AFRICA INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(6.18)% | (7.84)% | (5.74)% | 22.06% | 21.87% | 23.00% | 23.72% | 23.42% | 25.01% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(6.18)% | (7.84)% | (5.74)% | 170.92% | 168.79% | 181.58% | 227.60% | 223.23% | 246.78% |
Total returns for the period since inception are calculated from the inception date of the Fund (2/3/03). “Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/7/03), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
26 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI SOUTH AFRICA INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Basic Materials | 26.15 | % | |
Communications | 18.13 | ||
Financial | 18.05 | ||
Energy | 15.29 | ||
Diversified | 8.31 | ||
Industrial | 5.16 | ||
Consumer Cyclical | 4.56 | ||
Consumer Non-Cyclical | 4.17 | ||
Short-Term and Other Net Assets | 0.18 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Sasol Ltd. | 15.29 | % | |
MTN Group Ltd. | 11.28 | ||
Impala Platinum Holdings Ltd. | 7.01 | ||
Standard Bank Group Ltd. | 6.18 | ||
Remgro Ltd. | 5.15 | ||
Naspers Ltd. | 4.45 | ||
Anglo Platinum Ltd. | 4.17 | ||
Anglo Gold Ashanti Ltd. | 3.47 | ||
FirstRand Ltd. | 2.78 | ||
Gold Fields Ltd. | 2.64 | ||
TOTAL | 62.42 | % | |
The iShares MSCI South Africa Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the South African market, as measured by the MSCI South Africa IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (6.18)%, while the total return for the Index was (5.74)%.
The South African stock market fell for the reporting period, mirroring the general decline in equity markets worldwide. The South African economy grew by 5.1% in 2007, but slowed to a 3.5% annualized growth rate in the first half of 2008. Part of the slowdown resulted from an electricity shortage that crimped manufacturing and mining activity – the major drivers of the South African economy – early in the year. However, the decelerating economic activity also reflected a global economic slowdown that began in the U.S. and spread to other regions of the world, curtailing exports in many developed nations.
Another dampening factor for economic growth in South Africa was inflation, which increased markedly during the reporting period. Consumer prices rose by 11.6% for the 12 months ended June 30, 2008, up from 6.4% for the previous 12 months. Soaring food and energy prices accounted for the bulk of the increase in the inflation rate. To combat inflation, the South African central bank raised short-term interest rates four times during the reporting period, boosting rates from 10% to 12%.
The performance of the South African stock market tracked the changing economic environment. Stocks advanced in late 2007 and early 2008 amid solid economic growth, then fell sharply over the last few months of the reporting period as economic activity waned, producing the overall decline in the South African market.
Among the Fund’s ten largest holdings as of August 31, 2008, performance was mostly negative for the reporting period. The top performer by a wide margin was energy producer Sasol Ltd., the Fund’s largest holding. Sasol benefited from a 56% increase in the price of crude oil, which provided a strong lift to the company’s profits. Wireless telecommunication services provider MTN Group Ltd. and electronic media company Naspers Ltd. also produced modest positive returns. On the downside, the largest decliners among the Fund’s top ten holdings included gold producers Gold Fields Ltd. and AngloGold Ashanti Ltd., as well as financial services company FirstRand Ltd.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 27 |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI SOUTH KOREA INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(30.35)% | (31.46)% | (30.22)% | 14.54% | 14.23% | 15.68% | 10.24% | 10.15% | 10.81% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(30.35)% | (31.46)% | (30.22)% | 97.11% | 94.46% | 107.18% | 124.95% | 123.35% | 134.66% |
Total returns for the period since inception are calculated from the inception date of the Fund (5/9/00). “Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. In the case of the iShares MSCI South Korea Index Fund, the NAV of which is determined prior to the opening of the regular trading day on the primary stock exchange on which it is listed, the market return is calculated using the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (5/12/00), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
28 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI SOUTH KOREA INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 19.71 | % | |
Technology | 18.46 | ||
Industrial | 18.02 | ||
Consumer Cyclical | 13.33 | ||
Basic Materials | 11.83 | ||
Communications | 6.15 | ||
Consumer Non-Cyclical | 4.85 | ||
Energy | 3.04 | ||
Utilities | 2.65 | ||
Diversified | 1.87 | ||
Short-Term and Other Net Assets | 0.09 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Samsung Electronics Co. Ltd. | 14.58 | % | |
POSCO | 7.36 | ||
Kookmin Bank | 5.15 | ||
Shinhan Financial Group Ltd. | 4.29 | ||
Hyundai Motor Co. Ltd. | 2.81 | ||
KT&G Corp. | 2.63 | ||
Hyundai Heavy Industries Co. Ltd. | 2.52 | ||
LG Electronics Inc. | 2.44 | ||
Korea Electric Power Corp. | 2.18 | ||
Shinsegae Co. Ltd. | 2.07 | ||
TOTAL | 46.03 | % | |
The iShares MSCI South Korea Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the South Korean market, as measured by the MSCI Korea IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (30.35)%, while the total return for the Index was (30.22)%.
The South Korean stock market fell sharply for the reporting period. The South Korean economy grew by 5.0% in 2007, but slowed to a 3.2% annualized growth rate in the first half of 2008. The main culprit was a slump in domestic demand as a 10-year high inflation rate crimped consumer spending, leading to the first decline in private consumption in more than four years. Inflation rose by 5.9% for the 12 months ended July 31, 2008, its highest 12-month increase in 10 years and well above the South Korean central bank’s target of 2.5% to 3.5%. As a result, the Bank of Korea, South Korea’s central bank, raised short-term interest rates to 5.25% in August 2008, its highest level since February 2001.
One of the few bright spots in the South Korean economy was exports, which experienced positive growth during the reporting period. However, decelerating economic activity in South Korea also reflected a global economic slowdown that began in the U.S. and spread to other regions of the world. Weaker global growth late in the reporting period dampened demand for exports, which comprise 40% of South Korea’s Gross Domestic Product. In particular, economic activity grew increasingly sluggish in China and the U.S., two of South Korea’s biggest trading partners.
The combination of slower economic growth and rising inflation put significant downward pressure on South Korea’s stock market, particularly over the last six months. Hampering returns further was weakness in the South Korean currency, which fell by 15% versus the U.S. dollar during the reporting period.
Among the Fund’s ten largest holdings as of August 31, 2008, just two advanced for the reporting period – LG Electronics Inc., which manufactures appliances and consumer electronics, and KT&G Corp., a tobacco company. Among the remaining top ten holdings, some of the larger decliners came from the manufacturing sector, including shipbuilder Hyundai Heavy Industries Co. Ltd. and steelmaker POSCO, as well as electric utility Korea Electric Power Corp. Financial stocks Kookmin Bank and Shinhan Financial Group Ltd. also declined sharply during the reporting period.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 29 |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI TAIWAN INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(15.69)% | (16.67)% | (15.07)% | 5.39% | 4.59% | 6.28% | (3.41)% | (3.52)% | (2.52)% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(15.69)% | (16.67)% | (15.07)% | 30.03% | 25.14% | 35.58% | (24.78)% | (25.43)% | (18.85)% |
Total returns for the period since inception are calculated from the inception date of the Fund (6/20/00). “Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. In the case of the iShares MSCI Taiwan Index Fund, the NAV of which is determined prior to the opening of the regular trading day on the primary stock exchange on which it is listed, the market return is calculated using the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (6/23/00), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
30 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI TAIWAN INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Technology | 35.54 | % | |
Industrial | 23.51 | ||
Financial | 16.57 | ||
Basic Materials | 11.25 | ||
Communications | 6.06 | ||
Consumer Cyclical | 3.38 | ||
Energy | 1.18 | ||
Consumer Non-Cyclical | 1.13 | ||
Short-Term and Other Net Assets | 1.38 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Taiwan Semiconductor Manufacturing Co. Ltd. | 12.23 | % | |
Hon Hai Precision Industry Co. Ltd. | 8.11 | ||
HTC Corp. | 3.72 | ||
Chunghwa Telecom Co. Ltd. | 3.71 | ||
Cathay Financial Holding Co. Ltd. | 3.60 | ||
China Steel Corp. | 3.47 | ||
MediaTek Inc. | 3.24 | ||
ASUSTeK Computer Inc. | 2.72 | ||
AU Optronics Corp. | 2.71 | ||
Formosa Plastics Corp. | 2.46 | ||
TOTAL | 45.97 | % | |
The iShares MSCI Taiwan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Taiwanese market, as measured by the MSCI Taiwan IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (15.69)%, while the total return for the Index was (15.07)%.
The Taiwanese stock market fell for the reporting period. The Taiwan economy grew by 5.7% in 2007, but slowed to a 4.3% annualized growth rate in the second quarter of 2008. The main culprit was a decline in domestic demand as rising inflation crimped consumer spending and private investment. Inflation rose by 5.9% for the 12 months ended July 31, 2008, prompting Taiwan’s central bank to raise its discount rate four times during the reporting period. The central bank has enacted 16 rate hikes in the past four years, lifting the discount rate to a seven-year high of 3.625% as of the end of the reporting period.
One of the few bright spots in the Taiwanese economy was exports, which continued to exhibit robust growth during the reporting period. However, a global economic slowdown that began in the U.S. and spread to other regions of the world dampened demand for exports late in the reporting period. In particular, economic activity grew increasingly sluggish in China, Taiwan’s biggest trading partner.
The combination of slower economic growth, rising inflation, and global challenges to export growth put downward pressure on Taiwan’s stock market, particularly over the last six months of the reporting period.
Among the Fund’s ten largest holdings as of August 31, 2008, performance was mixed for the reporting period. The leading positive performer by far was wireless devices manufacturer HTC Corp., which benefited from an emphasis on high-end mobile devices and international expansion. Other positive performers included Chunghwa Telecom Co. Ltd. and chipmaker Taiwan Semiconductor Manufacturing Co. Ltd., the Fund’s largest holding. On the downside, the biggest decliners among the Fund’s top ten holdings included electronics manufacturer Hon Hai Precision Industry Co. Ltd. and fabless semiconductor manufacturer MediaTek Inc.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 31 |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
Performance as of August 31, 2008
Cumulative Total Returns | ||||
Inception to 8/31/08 | ||||
NAV | MARKET | INDEX | ||
(22.39)% | (22.95)% | (22.43)% |
“Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated and are calculated from an inception date of 3/26/08.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/28/08), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
As of 8/31/08, the Fund did not have six months of performance and therefore line graphs are not presented.
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 34.76 | % | |
Energy | 29.09 | ||
Communications | 8.55 | ||
Industrial | 8.42 | ||
Consumer Cyclical | 6.96 | ||
Basic Materials | 5.11 | ||
Consumer Non-Cyclical | 3.89 | ||
Utilities | 2.04 | ||
Technology | 0.53 | ||
Short-Term and Other Net Assets | 0.65 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
PTT PCL NVDR | 12.07 | % | |
Bangkok Bank PCL NVDR | 10.80 | ||
PTT Exploration & Production | 9.77 | ||
Kasikornbank PCL NVDR | 7.70 | ||
Advanced Info Service PCL NVDR | 4.67 | ||
Siam Commercial Bank PCL NVDR | 4.26 | ||
Banpu PCL NVDR | 4.05 | ||
Siam Cement PCL NVDR | 3.87 | ||
Bank of Ayudhya PCL NVDR | 3.67 | ||
Thai Oil PCL NVDR | 3.20 | ||
TOTAL | 64.06 | % | |
The iShares MSCI Thailand Investable Market Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Thailand Investable Market IndexSM (the “Index”). The Index is a free float adjusted market capitalization index designed to measure broad based equity market performance in Thailand. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from March 26, 2008 (inception date of the Fund) through August 31, 2008 (the “reporting period”), the total return of the Fund was (22.39)%, while the total return of the Index was (22.43)%.
The Thailand stock market fell sharply for the reporting period despite some improving economic conditions. The Thai economy grew at a 5.7% annualized rate in the first half of 2008, up from a 4.8% growth rate in 2007. The increase was driven by strength in agriculture and
32 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
manufacturing, as well as robust growth in exports, particularly to Japan and emerging Asian economies. Consumer spending also increased sharply in the first half of 2008.
However, the difficulty facing the Thai stock market was the inflation rate, which increased substantially during the reporting period. Consumer prices in Thailand rose by 9.2% for the 12 months ended July 31, 2008, its highest 12-month increase in a decade. As a result, Thailand’s central bank raised short-term interest rates in July and August 2008, boosting rates to an 18-month high of 3.75%.
The rapid inflation increase put downward pressure on the Thai stock market, which slid by more than 20% for the reporting period. The Thai currency also declined notably versus the U.S. dollar, further hurting returns for U.S. investors. However, stocks in Thailand recovered a little ground in August 2008 as declining oil and commodity prices eased the 12-month inflation rate back to 6.4%. Unfortunately, this rate remained well above the central bank’s target of 3.5% or less.
Each of the Fund’s ten largest holdings as of August 31, 2008 declined for the reporting period. The weaker performers included several banks – Kasikornbank PCL, Siam Commercial Bank PCL and Bangkok Bank PCL – as well as Thailand’s major refiner Thai Oil PCL and oil and gas company PTT PCL (the Fund’s largest holding). The only stock among the Fund’s ten largest holdings to decline by less than 10% for the reporting period was oil exploration firm PTT Exploration & Production PCL.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 33 |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
Performance as of August 31, 2008
Cumulative Total Returns | ||||
Inception to 8/31/08 | ||||
NAV | MARKET | INDEX | ||
4.22% | 4.28% | 4.51% |
“Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated and are calculated from an inception date of 3/26/08.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/28/08), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
As of 8/31/08, the Fund did not have six months of performance and therefore line graphs are not presented.
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Financial | 41.55 | % | |
Communications | 12.07 | ||
Consumer Non-Cyclical | 10.84 | ||
Diversified | 8.39 | ||
Basic Materials | 8.25 | ||
Industrial | 7.33 | ||
Consumer Cyclical | 5.98 | ||
Energy | 4.61 | ||
Utilities | 0.86 | ||
Short-Term and Other Net Assets | 0.12 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Turkiye Garanti Bankasi AS | 10.61 | % | |
Akbank TAS | 7.84 | ||
Turkiye Is Bankasi AS | 7.74 | ||
Turkcell Iletisim Hizmetleri AS | 7.57 | ||
Eregli Demir ve Celik Fabrikalari TAS | 6.32 | ||
Tupras-Turkiye Petrol Rafinerileri AS | 4.61 | ||
Anadolu Efes Biracilik ve Malt Sanayii AS | 3.96 | ||
Enka Insaat ve Sanayi AS | 3.48 | ||
Yapi ve Kredi Bankasi AS | 3.38 | ||
Turk Telekomunikasyon AS | 3.25 | ||
TOTAL | 58.76 | % | |
The iShares MSCI Turkey Investable Market Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Turkey Investable Market IndexSM (the “Index”). The Index is a free float adjusted market capitalization index designed to measure broad based equity market performance in Turkey. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from March 26, 2008 (inception date of the Fund) through August 31, 2008 (the “reporting period”), the total return for the Fund was 4.22%, while the total return for the Index was 4.51%.
The Turkish stock market advanced for the reporting period despite significantly weaker economic conditions. The Turkish economy grew by 1.9% for the 12 months ended June 30, 2008, its slowest growth rate in six years. Despite continued strength in exports, economic
34 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
activity decelerated as agriculture, manufacturing, and construction experienced slowdowns. Turkey’s inflation rate reached 12.1% for the 12 months ended July 31, 2008, up from a 37-year low of 6.9% a year earlier and Turkey’s central bank raised its overnight lending rate three times during reporting period. Cumulatively, these increases boosted the overnight lending rate from 15.25% to 16.75%.
Turkey’s political environment may also have had a significant impact on its securities market. Turkey’s ruling Justice and Development Party was the subject of a lawsuit seeking to disban the party for promoting an Islamic agenda, violating the Turkish Republic’s secular principles. However, in its July 2008 ruling, the country’s Constitutional Court declined to close the party, and the Turkish stock market then advanced, rallying into early August, which may reflect a perception that the court’s ruling averted a potential constitutional crisis. Although, some of these gains were reversed by the end of the reporting period, the Turkish market posted positive results overall.
Seven of the Fund’s ten largest holdings as of August 31, 2008 advanced for the reporting period. The leading performers included metals producer Eregli Demir ve Celik Fabrikalari TAS and oil producer Tupras-Turkiye Petrol Rafinerileri AS, both of which benefited from generally higher commodity prices during the reporting period. Two banking stocks - Yapi ve Kredi Bankasi AS and Turkiye Is Bankasi AS - also generated strong returns. The three decliners among the Fund’s ten largest holdings were wireless services provider Turkcell Iletisim Hizmetleri AS, construction company Enka Insaat ve Sanayi AS, and telecom services provider Turk Telekomunikasyon AS.
MANAGEMENT’S DISCUSSIONSOF FUND PERFORMANCE | 35 |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES®, INC.
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2008 to August 31, 2008.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
iShares MSCI Index Fund | Beginning Account Value (3/1/08)a | Ending Account Value | Annualized Expense Ratio | Expenses Paid During Periodb (3/1/08 to 8/31/08) | |||||
Australia | |||||||||
Actual | $1,000.00 | $ 878.00 | 0.52 | % | $2.45 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Brazil | |||||||||
Actual | 1,000.00 | 882.30 | 0.63 | 2.98 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.00 | 0.63 | 3.20 | |||||
BRIC | |||||||||
Actual | 1,000.00 | 825.60 | 0.72 | 3.30 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,021.50 | 0.72 | 3.66 | |||||
Canada | |||||||||
Actual | 1,000.00 | 954.70 | 0.52 | 2.55 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Chile Investable Market | |||||||||
Actual | 1,000.00 | 927.50 | 0.63 | 3.05 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.00 | 0.63 | 3.20 |
36 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Index Fund | Beginning Account Value (3/1/08)a | Ending Account Value (8/31/08)a | Annualized Expense Ratio | Expenses Paid During Periodb (3/1/08 to 8/31/08) | |||||
Hong Kong | |||||||||
Actual | $1,000.00 | $ 841.30 | 0.52 | % | $2.41 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Israel Capped Investable Market | |||||||||
Actual | 1,000.00 | 966.00 | 0.63 | 2.67 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.00 | 0.63 | 3.20 | |||||
Japan Small Cap | |||||||||
Actual | 1,000.00 | 904.30 | 0.53 | 2.54 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.53 | 2.69 | |||||
Malaysia | |||||||||
Actual | 1,000.00 | 751.10 | 0.52 | 2.29 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Mexico Investable Market | |||||||||
Actual | 1,000.00 | 940.40 | 0.52 | 2.54 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
Pacific ex-Japan | |||||||||
Actual | 1,000.00 | 874.80 | 0.50 | 2.36 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.60 | 0.50 | 2.54 | |||||
Singapore | |||||||||
Actual | 1,000.00 | 921.20 | 0.52 | 2.51 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 | |||||
South Africa | |||||||||
Actual | 1,000.00 | 943.60 | 0.63 | 3.08 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.00 | 0.63 | 3.20 | |||||
South Korea | |||||||||
Actual | 1,000.00 | 748.90 | 0.63 | 2.77 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.00 | 0.63 | 3.20 | |||||
Taiwan | |||||||||
Actual | 1,000.00 | 841.70 | 0.80 | 3.70 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,021.10 | 0.80 | 4.06 | |||||
Thailand Investable Market | |||||||||
Actual | 1,000.00 | 776.10 | 0.63 | 2.42 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.00 | 0.63 | 3.20 | |||||
Turkey Investable Market | |||||||||
Actual | 1,000.00 | 1,042.20 | 0.63 | 2.78 | |||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.00 | 0.63 | 3.20 |
a | Account values are based on a start date of March 26, 2008 (commencement of operations) for the iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund. |
b | Except for the actual expenses for the iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, actual and hypothetical expenses are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Actual expenses for the iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund, which commenced operations on March 26, 2008, are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (158 days) and divided by the number of days in the year (366 days). |
SHAREHOLDER EXPENSES | 37 |
Table of Contents
iSHARES® MSCI AUSTRALIA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 98.83% | |||||
AIRLINES – 0.36% | |||||
Qantas Airways Ltd. | 1,300,453 | $ | 3,785,431 | ||
3,785,431 | |||||
APPAREL – 0.24% | |||||
Billabong International Ltd. | 234,768 | 2,589,954 | |||
2,589,954 | |||||
BANKS – 23.18% | |||||
Australia and New Zealand | 2,694,462 | 38,543,018 | |||
Bendigo and Adelaide | 377,468 | 3,761,123 | |||
Commonwealth Bank of Australia | 1,855,936 | 67,769,280 | |||
National Australia Bank Ltd. | 2,287,523 | 48,265,363 | |||
St. George Bank Ltd. | 786,006 | 20,564,476 | |||
Suncorp-Metway Ltd. | 1,338,582 | 13,164,826 | |||
Westpac Banking Corp. | 2,633,356 | 53,407,778 | |||
245,475,864 | |||||
BEVERAGES – 2.06% | |||||
Coca-Cola Amatil Ltd. | 775,503 | 5,710,230 | |||
Foster’s Group Ltd. | 2,688,262 | 12,941,584 | |||
Lion Nathan Ltd. | 411,639 | 3,165,716 | |||
21,817,530 | |||||
BIOTECHNOLOGY – 0.52% | |||||
Sonic Healthcare Ltd. | 442,621 | 5,519,562 | |||
5,519,562 | |||||
BUILDING MATERIALS – 0.96% | |||||
Boral Ltd. | 812,893 | 4,515,409 | |||
CSR Ltd. | 1,389,460 | 3,182,964 | |||
James Hardie Industries NV | 607,130 | 2,441,758 | |||
10,140,131 | |||||
CHEMICALS – 1.10% | |||||
Incitec Pivot Ltd. | 84,840 | 11,662,509 | |||
11,662,509 | |||||
COMMERCIAL SERVICES – 1.93% | |||||
Brambles Ltd. | 1,941,454 | 12,874,247 | |||
Transurban Group | 1,623,687 | 7,592,874 | |||
20,467,121 | |||||
COMPUTERS – 0.48% | |||||
Computershare Ltd. | 659,337 | 5,138,780 | |||
5,138,780 |
Security | Shares | Value | |||
DIVERSIFIED FINANCIAL SERVICES – 2.34% | |||||
ASX Ltd. | 240,075 | $ | 7,310,772 | ||
Babcock & Brown Ltd. | 373,531 | 797,779 | |||
Macquarie Group Ltd.a | 385,164 | 14,608,211 | |||
Perpetual Ltd.a | 53,071 | 2,049,401 | |||
24,766,163 | |||||
ELECTRIC – 0.77% | |||||
AGL Energy Ltd. | 621,087 | 8,210,410 | |||
8,210,410 | |||||
ENGINEERING & CONSTRUCTION – 1.76% | |||||
Boart Longyear Group | 2,013,885 | 3,408,013 | |||
Leighton Holdings Ltd.a | 208,102 | 8,335,403 | |||
Leighton Holdings Ltd. Entitlementb | 14,450 | 138,879 | |||
WorleyParsons Ltd. | 211,070 | 6,736,525 | |||
18,618,820 | |||||
ENTERTAINMENT – 1.07% | |||||
Aristocrat Leisure Ltd. | 450,171 | 2,287,355 | |||
Tabcorp Holdings Ltd. | 733,135 | �� | 5,404,577 | ||
Tatts Group Ltd. | 1,590,133 | 3,601,581 | |||
11,293,513 | |||||
FOOD – 4.50% | |||||
Goodman Fielder Ltd. | 1,861,045 | 2,372,043 | |||
Metcash Ltd. | 1,078,187 | 3,658,427 | |||
Woolworths Ltd. | 1,704,606 | 41,632,670 | |||
47,663,140 | |||||
HEALTH CARE - PRODUCTS – 0.35% | |||||
Cochlear Ltd. | 78,455 | 3,719,478 | |||
3,719,478 | |||||
INSURANCE – 5.26% | |||||
AMP Ltd. | 2,629,119 | 15,758,813 | |||
AXA Asia Pacific Holdings Ltd. | 1,183,680 | 5,290,609 | |||
Insurance Australia Group Ltd. | 2,631,305 | 8,996,337 | |||
QBE Insurance Group Ltd. | 1,243,980 | 25,658,008 | |||
55,703,767 | |||||
INVESTMENT COMPANIES – 0.85% | |||||
Macquarie Airports | 972,900 | 2,681,157 | |||
Macquarie Infrastructure Group | 3,349,868 | 6,317,945 | |||
8,999,102 |
38 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI AUSTRALIA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
IRON & STEEL – 1.45% | |||||
BlueScope Steel Ltd. | 1,064,591 | $ | 8,462,302 | ||
OneSteel Ltd. | 1,174,319 | 6,917,453 | |||
15,379,755 | |||||
LODGING – 0.47% | |||||
Crown Ltd. | 630,843 | 4,971,030 | |||
4,971,030 | |||||
MANUFACTURING – 3.80% | |||||
Orica Ltd. | 496,832 | 10,662,563 | |||
Wesfarmers Ltd. | 906,620 | 24,048,059 | |||
Wesfarmers Ltd. | 202,248 | 5,502,219 | |||
40,212,841 | |||||
MEDIA – 0.44% | |||||
John Fairfax Holdings Ltd. | 1,919,943 | 4,662,743 | |||
4,662,743 | |||||
METAL FABRICATE & HARDWARE – 0.60% | |||||
Sims Group Ltd. | 214,932 | 6,367,421 | |||
6,367,421 | |||||
MINING – 24.02% | |||||
Alumina Ltd. | 1,591,757 | 5,963,072 | |||
BHP Billiton Ltd. | 4,701,612 | 167,629,770 | |||
Fortescue Metals Group Ltd.c | 1,770,525 | 11,664,537 | |||
Newcrest Mining Ltd. | 635,053 | 14,985,269 | |||
OZ Minerals Ltd. | 4,148,776 | 6,252,620 | |||
Paladin Energy Ltd.c | 778,015 | 3,906,255 | |||
Rio Tinto Ltd. | 400,399 | 43,965,011 | |||
254,366,534 | |||||
OIL & GAS – 6.63% | |||||
Caltex Australia Ltd. | 190,828 | 2,062,480 | |||
Origin Energy Ltd. | 1,230,724 | 17,117,377 | |||
Santos Ltd. | 834,144 | 14,439,133 | |||
Woodside Petroleum Ltd. | 675,057 | 36,654,690 | |||
70,273,680 | |||||
PACKAGING & CONTAINERS – 0.53% | |||||
Amcor Ltd. | 1,176,003 | 5,570,256 | |||
5,570,256 | |||||
PHARMACEUTICALS – 2.80% | |||||
CSL Ltd. | 837,814 | 29,618,618 | |||
29,618,618 | |||||
REAL ESTATE – 6.94% | |||||
CFS Retail Property Trusta | 2,059,459 | 3,830,989 | |||
Dexus Property Group | 4,133,381 | 5,268,308 |
Security | Shares | Value | ||||
Goodman Group | 2,162,976 | $ | 5,923,561 | |||
GPT Group | 3,080,726 | 4,616,431 | ||||
Lend Lease Corp. Ltd. | 508,962 | 4,229,769 | ||||
Mirvac Group | 1,472,750 | 3,665,480 | ||||
Stockland Corp. Ltd. | 2,054,103 | 9,322,596 | ||||
Westfield Group | 2,457,860 | 36,597,899 | ||||
73,455,033 | ||||||
REAL ESTATE INVESTMENT TRUSTS – 0.24% |
| |||||
Macquarie Office Trust | 2,852,616 | 2,554,940 | ||||
2,554,940 | ||||||
RETAIL – 0.22% |
| |||||
Harvey Norman | 745,911 | 2,383,224 | ||||
2,383,224 | ||||||
TELECOMMUNICATIONS – 2.16% |
| |||||
Telstra Corp. Ltd. | 6,102,783 | 22,862,368 | ||||
22,862,368 | ||||||
TRANSPORTATION – 0.80% |
| |||||
Asciano Group | 782,735 | 3,303,048 | ||||
Toll Holdings Ltd. | 859,828 | 5,153,768 | ||||
8,456,816 | ||||||
TOTAL COMMON STOCKS | 1,046,706,534 | |||||
SHORT-TERM INVESTMENTS – 1.82% |
| |||||
MONEY MARKET FUNDS – 1.82% |
| |||||
Barclays Global Investors Funds | 35,568 | 35,568 | ||||
BGI Cash Premier Fund LLC 2.63%d,e,f | 19,242,020 | 19,242,020 | ||||
19,277,588 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $19,277,588) | 19,277,588 | |||||
TOTAL INVESTMENTS IN | 1,065,984,122 | |||||
Other Assets, Less Liabilities – (0.65)% | (6,891,876 | ) | ||||
NET ASSETS – 100.00% | $ | 1,059,092,246 | ||||
SCHEDULESOF INVESTMENTS | 39 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI AUSTRALIA INDEX FUND
August 31, 2008
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
c | Non-income earning security. |
d | Affiliated issuer. See Note 2. |
e | The rate quoted is the annualized seven-day yield of the fund at period end. |
f | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
40 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI BRAZIL INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 43.10% | |||||
AEROSPACE & DEFENSE – 0.93% | |||||
Empresa Brasileira de Aeronautica SA | 7,908,032 | $ | 67,014,756 | ||
67,014,756 | |||||
AGRICULTURE – 0.64% | |||||
Souza Cruz SA | 1,779,300 | 46,477,671 | |||
46,477,671 | |||||
BANKS – 4.63% | |||||
Banco do Brasil SA | 5,833,760 | 85,039,921 | |||
Unibanco - Uniao de Bancos Brasileiros SA Units | 21,153,920 | 250,295,463 | |||
335,335,384 | |||||
COMMERCIAL SERVICES – 0.77% | |||||
Companhia de Concessoes Rodoviarias | 2,174,700 | 39,736,246 | |||
Localiza Rent A Car SA | 1,581,600 | 15,893,529 | |||
55,629,775 | |||||
COSMETICS & PERSONAL CARE – 0.44% | |||||
Natura Cosmeticos SA | 2,767,800 | 32,189,243 | |||
32,189,243 | |||||
DIVERSIFIED FINANCIAL SERVICES – 2.45% | |||||
BM&F Bovespa SA | 12,652,800 | 96,446,588 | |||
Redecard SA | 4,547,100 | 80,883,770 | |||
177,330,358 | |||||
ELECTRIC – 2.58% | |||||
Centrais Eletricas | 3,954,099 | 71,474,216 | |||
CPFL Energia SA | 2,965,550 | 61,782,292 | |||
EDP Energias do Brasil SA | 1,383,900 | 24,150,412 | |||
Tractebel Energia SA | 2,372,400 | 29,291,581 | |||
186,698,501 | |||||
FOOD – 1.33% | |||||
Cosan SA Industria e Comercioa | 1,186,290 | 18,877,421 | |||
JBS SA | 6,919,587 | 28,110,822 | |||
Perdigao SA | 1,977,075 | 49,438,989 | |||
96,427,232 | |||||
HOME BUILDERS – 0.38% | |||||
MRV Engenharia e Participacoes SA | 1,383,949 | 27,305,856 | |||
27,305,856 |
Security | Shares | Value | |||
INTERNET – 0.39% | |||||
B2W - Companhia Global do Varejo | 790,830 | $ | 28,178,165 | ||
28,178,165 | |||||
IRON & STEEL – 5.02% | |||||
Anglo Ferrous Brazil SAa | 2,174,700 | 36,778,015 | |||
Companhia Siderurgica Nacional | 6,524,127 | 225,865,916 | |||
Gerdau SA | 2,863,000 | 44,664,203 | |||
MMX Mineracao e Metalicos SAa | 2,174,700 | 21,307,263 | |||
Usinas Siderurgicas de Minas Gerais SA | 1,013,100 | 34,825,313 | |||
363,440,710 | |||||
MINING – 7.60% | |||||
Companhia Vale do Rio Doce ADRb | 20,732,903 | 550,458,575 | |||
550,458,575 | |||||
OIL & GAS – 11.49% | |||||
Petroleo Brasileiro SA | 31,829,744 | 832,020,146 | |||
832,020,146 | |||||
REAL ESTATE – 0.96% | |||||
Cyrela Brazil Realty SA | 3,360,900 | 42,196,594 | |||
Gafisa SA | 1,929,485 | 27,594,473 | |||
69,791,067 | |||||
RETAIL – 0.59% | |||||
Lojas Renner SA | 2,372,400 | 42,883,456 | |||
42,883,456 | |||||
TELECOMMUNICATIONS – 1.24% | |||||
Brasil Telecom Participacoes SA | 1,046,482 | 34,433,875 | |||
GVT (Holding) SAa | 1,186,203 | 27,111,135 | |||
Tele Norte Leste Participacoes SA | 1,165,538 | 28,588,533 | |||
90,133,543 | |||||
TRANSPORTATION – 1.04% | |||||
ALL - America Latina Logistica SA | 6,128,700 | 70,787,987 | |||
LLX Logistica SAa | 2,174,700 | 4,543,950 | |||
75,331,937 | |||||
WATER – 0.62% | |||||
Companhia de Saneamento Basico do Estado de Sao Paulo | 1,977,000 | 44,688,438 | |||
44,688,438 | |||||
TOTAL COMMON STOCKS | 3,121,334,813 |
SCHEDULESOF INVESTMENTS | 41 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI BRAZIL INDEX FUND
August 31, 2008
Security | Shares | Value | |||
PREFERRED STOCKS – 56.40% | |||||
AIRLINES – 0.29% | |||||
Gol Linhas Aereas Inteligentes SA | 593,100 | $ | 5,327,724 | ||
Tam SA | 790,825 | 15,661,436 | |||
20,989,160 | |||||
BANKS – 9.31% | |||||
Banco Bradesco SA | 18,979,240 | 348,301,616 | |||
Banco do Estado do Rio Grande do Sul SA | 2,570,110 | 12,740,312 | |||
Banco Itau Holding Financeira SA | 16,606,825 | 312,904,331 | |||
673,946,259 | |||||
BEVERAGES – 2.67% | |||||
Companhia de Bebidas das Americas | 3,144,091 | 193,269,123 | |||
193,269,123 | |||||
BUILDING MATERIALS – 0.28% | |||||
Duratex SA | 1,186,200 | 20,286,055 | |||
20,286,055 | |||||
CHEMICALS – 1.54% | |||||
Braskem SA Class A | 2,767,836 | 19,809,022 | |||
Fertilizantes Fosfatados SA | 737,420 | 42,473,946 | |||
Ultrapar Participacoes SA | 1,383,900 | 49,640,629 | |||
111,923,597 | |||||
ELECTRIC – 3.83% | |||||
Centrais Eletricas Brasileiras SA Class B | 3,749,000 | 57,521,422 | |||
Companhia Energetica de Minas Gerais | 5,034,586 | 108,558,261 | |||
Companhia Energetica de Sao Paulo Class B | 2,570,170 | 41,135,319 | |||
Companhia Paranaense de Energia Class B | 1,977,000 | 33,919,118 | |||
Eletropaulo Metropolitana Electricidade de Sao Paulo SA Class B | 1,977,020 | 36,584,561 | |||
277,718,681 | |||||
FOOD – 1.00% | |||||
Companhia Brasileira de Distribuicao Grupo Pao de Acucar | 988,928 | 20,554,190 |
Security | Shares | Value | |||
Sadia SA | 7,908,000 | $ | 52,186,985 | ||
72,741,175 | |||||
FOREST PRODUCTS & PAPER – 2.03% | |||||
Aracruz Celulose SA Class B | 8,501,100 | 46,724,796 | |||
Klabin SA | 9,885,000 | 30,345,496 | |||
Suzano Bahia Sul Papel e Celulose SA | 2,174,785 | 27,584,589 | |||
Votorantim Celulose e Papel SA | 1,977,100 | 42,316,240 | |||
146,971,121 | |||||
HOLDING COMPANIES - DIVERSIFIED – 1.46% | |||||
Itausa - Investimentos Itau SA | 18,103,597 | 105,715,245 | |||
105,715,245 | |||||
INVESTMENT COMPANIES – 0.86% | |||||
Bradespar SA | 3,115,600 | 62,235,637 | |||
62,235,637 | |||||
IRON & STEEL – 6.07% | |||||
Gerdau SA | 10,280,546 | 193,390,173 | |||
Metalurgica Gerdau SA | 3,954,190 | 100,550,787 | |||
Usinas Siderurgicas de Minas Gerais SA Class A | 4,151,700 | 145,513,015 | |||
439,453,975 | |||||
MEDIA – 0.41% | |||||
Net Servicos de Comunicacao SAa | 2,570,192 | 29,607,604 | |||
29,607,604 | |||||
MINING – 9.60% | |||||
Companhia Vale do Rio Doce Class A | 29,852,700 | 695,099,633 | |||
695,099,633 | |||||
OIL & GAS – 12.90% | |||||
Petroleo Brasileiro SA | 43,691,750 | 934,339,507 | |||
934,339,507 | |||||
RETAIL – 0.43% | |||||
Lojas Americanas SA | 4,942,500 | 31,284,329 | |||
31,284,329 | |||||
TELECOMMUNICATIONS – 3.72% | |||||
Brasil Telecom Participacoes SA | 3,321,630 | 42,761,916 | |||
Brasil Telecom SA | 2,749,559 | 28,236,893 | |||
Tele Norte Leste Participacoes SA | 4,151,739 | 96,543,195 | |||
Telemar Norte Leste SA Class A | 790,880 | 41,191,667 |
42 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI BRAZIL INDEX FUND
August 31, 2008
Security | Shares | Value | |||
TIM Participacoes SA | 8,105,700 | $ | 17,830,553 | ||
Vivo Participacoes SAa | 8,303,483 | 42,840,274 | |||
269,404,498 | |||||
TOTAL PREFERRED STOCKS | 4,084,985,599 | ||||
SHORT-TERM INVESTMENTS – 0.18% | |||||
MONEY MARKET FUNDS – 0.18% | |||||
Barclays Global Investors Funds | 9,354,357 | 9,354,357 | |||
BGI Cash Premier Fund LLC | 3,430,000 | 3,430,000 | |||
12,784,357 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $12,784,357) | 12,784,357 | ||||
TOTAL INVESTMENTS IN | 7,219,104,769 | ||||
Other Assets, Less Liabilities – 0.32% | 23,155,233 | ||||
NET ASSETS – 100.00% | $ | 7,242,260,002 | |||
ADR – American Depositary Receipts
a | Non-income earning security. |
b | All or a portion of this security represents a security on loan. See Note 5. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 43 |
Table of Contents
iSHARES® MSCI BRIC INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 79.85% | |||||
BRAZIL – 14.64% | |||||
ALL - America Latina Logistica SA | 51,100 | $ | 590,217 | ||
Anglo Ferrous Brazil SAa | 14,600 | 246,912 | |||
B2W - Companhia Global do Varejo | 7,300 | 260,107 | |||
Banco do Brasil SA | 43,800 | 638,482 | |||
BM&F Bovespa SA | 117,669 | 896,938 | |||
Brasil Telecom Participacoes SA | 7,300 | 240,202 | |||
Centrais Eletricas Brasileiras SA | 36,500 | 659,773 | |||
Companhia de Concessoes Rodoviarias | 21,900 | 400,158 | |||
Companhia Siderurgica Nacional | 43,800 | 1,516,360 | |||
Companhia Vale do Rio Doce | 167,900 | 4,472,189 | |||
Cosan SA Industria e Comercioa | 14,600 | 232,330 | |||
CPFL Energia SA | 14,600 | 304,167 | |||
Cyrela Brazil Realty SA | 29,200 | 366,610 | |||
Empresa Brasileira de Aeronautica SA | 43,800 | 371,173 | |||
Gafisa SA | 14,600 | 208,801 | |||
Gerdau SA | 29,200 | 455,534 | |||
GVT (Holding) SAa | 7,300 | 166,844 | |||
JBS SA | 17,252 | 70,086 | |||
LLX Logistica SAa | 14,600 | 30,506 | |||
Lojas Renner SA | 7,300 | 131,955 | |||
MMX Mineracao e Metalicos SAa | 14,600 | 143,048 | |||
MRV Engenharia e Participacoes SA | 7,300 | 144,032 | |||
OGX Petroleo e Gas Participacoes SAa | 1,300 | 459,063 | |||
Perdigao SA | 21,900 | 547,634 | |||
Petroleo Brasileiro SA | 262,800 | 6,869,515 | |||
Redecard SA | 29,200 | 519,409 | |||
Souza Cruz SA | 14,600 | 381,371 | |||
Tele Norte Leste Participacoes SA | 7,300 | 179,056 | |||
Tractebel Energia SA | 21,900 | 270,395 | |||
Unibanco - Uniao de Bancos Brasileiros SA Units | 131,400 | 1,554,739 | |||
Usinas Siderurgicas de Minas Gerais SA | 7,300 | 250,938 | |||
23,578,544 | |||||
CHINA – 32.18% | |||||
Agile Property Holdings Ltd. | 292,000 | 217,744 | |||
Air China Ltd. Class Hb | 438,000 | 226,723 | |||
Aluminum Corp. of China Ltd. Class Hb | 438,000 | 393,960 | |||
Angang New Steel Co. Ltd. Class H | 146,000 | 200,534 |
Security | Shares | Value | |||
Anhui Conch Cement Co. Ltd. Class Ha,b | 38,000 | $ | 198,648 | ||
Bank of China Ltd. Class Hb | 2,555,000 | 1,109,766 | |||
Bank of Communications Co. Ltd. Class H | 803,000 | 933,177 | |||
Beijing Capital International Airport Co. Ltd. Class H | 146,000 | 115,981 | |||
Belle International Holdings Ltd.b | 365,000 | 369,455 | |||
BYD Co. Ltd. Class Hb | 109,500 | 126,410 | |||
Chaoda Modern Agriculture (Holdings) Ltd. | 292,150 | 311,437 | |||
China Agri-Industries Holdings Ltd.a | 292,000 | 198,290 | |||
China CITIC Bank Class H | 584,000 | 337,466 | |||
China Coal Energy Co. Class H | 438,000 | 743,024 | |||
China Communications Construction Co. Ltd. Class H | 584,000 | 999,678 | |||
China Construction Bank Class H | 3,431,000 | 2,813,466 | |||
China COSCO Holdings Co. Ltd. Class H | 365,000 | 703,367 | |||
China Everbright Ltd.b | 146,000 | 265,633 | |||
China High Speed Transmission Equipment Group Co. Ltd. | 73,000 | 143,292 | |||
China Life Insurance Co. Ltd. Class H | 876,000 | 3,350,344 | |||
China Mengniu Dairy Co. Ltd. | 146,000 | 444,281 | |||
China Merchants Bank Co. Ltd. Class H | 365,000 | 1,234,633 | |||
China Merchants Holdings (International) Co. Ltd. | 146,000 | 544,361 | |||
China Mobile Ltd. | 730,000 | 8,380,538 | |||
China National Building Material Co. Ltd. Class H | 146,000 | 228,594 | |||
China Netcom Group Corp. (Hong Kong) Ltd. | 161,000 | 379,976 | |||
China Oilfield Services Ltd. Class H | 292,000 | 392,838 | |||
China Overseas Land & Investment Ltd. | 584,000 | 980,224 | |||
China Petroleum & Chemical Corp. Class H | 1,898,000 | 1,828,753 | |||
China Railway Construction Corp. Class Ha | 182,500 | 252,539 | |||
China Railway Group Ltd. Class Ha | 438,000 | 339,524 | |||
China Resources Enterprises Ltd. | 146,000 | 399,385 |
44 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI BRIC INDEX FUND
August 31, 2008
Security | Shares | Value | |||
China Resources Land Ltd. | 292,000 | $ | 345,697 | ||
China Resources Power Holdings Co. Ltd. | 146,000 | 362,907 | |||
China Shenhua Energy Co. Ltd. Class H | 401,500 | 1,388,962 | |||
China Shipping Container Lines Co. Ltd. Class H | 365,000 | 90,259 | |||
China Shipping Development Co. Ltd. Class H | 146,000 | 349,439 | |||
China Telecom Corp. Ltd. Class H | 1,180,000 | 603,248 | |||
China Unicom Ltd. | 376,000 | 594,489 | |||
China Yurun Food Group Ltd. | 146,000 | 250,668 | |||
CITIC Pacific Ltd.b | 73,000 | 255,812 | |||
CITIC Resources Holdings Ltd.a | 293,800 | 70,394 | |||
CNOOC Ltd. | 1,898,000 | 2,932,814 | |||
Country Garden Holdings Co.b | 438,000 | 196,980 | |||
Datang International Power Generation Co. Ltd. Class H | 438,000 | 291,822 | |||
Denway Motors Ltd. | 730,000 | 261,892 | |||
Dongfeng Motor Group Co. Ltd. Class H | 438,000 | 186,879 | |||
Fosun International Ltd. | 255,500 | 144,040 | |||
GOME Electrical Appliances Holdings Ltd. | 876,000 | 362,533 | |||
Guangdong Investment Ltd. | 438,000 | 149,840 | |||
Guangshen Railway Co. Ltd. Class H | 146,000 | 66,034 | |||
Guangzhou Investment Co. Ltd. | 876,000 | 117,851 | |||
Guangzhou R&F Properties Co. Ltd. Class Hb | 146,000 | 256,280 | |||
Harbin Power Equipment Co. Ltd. Class H | 146,000 | 182,202 | |||
Hengan International Group Co. Ltd. Class Hb | 146,000 | 490,112 | |||
Hidili Industry International Development Ltd. | 146,000 | 170,978 | |||
Huaneng Power International Inc. Class H | 292,000 | 217,744 | |||
Industrial and Commercial Bank of China Class H | 4,453,000 | 3,086,675 | |||
Jiangsu Expressway Co. Ltd. Class H | 292,000 | 225,227 | |||
Jiangxi Copper Co. Ltd. Class H | 219,000 | 351,870 | |||
KWG Property Holding Ltd. | 146,000 | 67,344 |
Security | Shares | Value | |||
Lenovo Group Ltd. | 438,000 | $ | 297,434 | ||
Li Ning Co. Ltd.b | 146,000 | 365,152 | |||
Maanshan Iron & Steel Co. Ltd. Class H | 292,000 | 132,442 | |||
PetroChina Co. Ltd. Class H | 2,336,000 | 3,005,021 | |||
PICC Property & Casualty Co. Ltd. Class Hb | 438,000 | 250,855 | |||
Ping An Insurance (Group) Co. of China Ltd. Class H | 182,500 | 1,349,210 | |||
Shanghai Electric Group Corp. Class Ha | 438,000 | 182,389 | |||
Shanghai Industrial Holdings Ltd. | 73,000 | 198,289 | |||
Shimao Property Holdings Ltd. | 219,000 | 248,049 | |||
Shui On Land Ltd. | 365,000 | 278,728 | |||
Sinofert Holdings Ltd. | 292,000 | 191,181 | |||
Sino-Ocean Land Holdings Ltd. | 474,500 | 235,890 | |||
Soho China Ltd. | 109,500 | 57,523 | |||
Tencent Holdings Ltd. | 73,000 | 626,670 | |||
Tingyi (Cayman Islands) Holding Corp. | 146,000 | 175,280 | |||
Yanzhou Coal Mining Co. Ltd. Class H | 292,000 | 511,811 | |||
Zhejiang Expressway Co. Ltd. Class H | 292,000 | 197,167 | |||
Zijin Mining Group Co. Ltd. Class H | 438,000 | 299,679 | |||
51,837,803 | |||||
INDIA – 13.90% | |||||
Ambuja Cements Ltd. SP GDRc | 269,662 | 469,212 | |||
Dr. Reddy’s Laboratories Ltd. ADR | 99,937 | 1,365,139 | |||
HDFC Bank Ltd. ADR | 24,528 | 2,219,539 | |||
Hindalco Industries Ltd. GDRa,d | 332,004 | 966,132 | |||
ICICI Bank Ltd. SP ADR | 81,395 | 2,524,873 | |||
Infosys Technologies Ltd. SP ADR | 94,462 | 3,899,391 | |||
Mahanagar Telephone Nigam Ltd. ADRb | 173,229 | 807,247 | |||
Reliance Industries Ltd. GDRd | 57,889 | 5,574,711 | |||
Satyam Computer Services Ltd. ADRb | 104,171 | 2,318,846 | |||
Tata Communications Ltd. ADRb | 28,835 | 536,619 | |||
Wipro Ltd. ADRb | 147,752 | 1,710,968 | |||
22,392,677 | |||||
RUSSIA – 19.13% | |||||
Comstar United Telesystems GDRc | 33,434 | 230,695 | |||
JSC MMC Norilsk Nickel ADR | 98,477 | 1,945,906 | |||
LUKOIL SP ADR | 57,232 | 4,252,338 | |||
Mechel OAO ADR | 19,199 | 524,901 |
SCHEDULESOF INVESTMENTS | 45 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI BRIC INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Mobile TeleSystems SP ADR | 21,900 | $ | 1,489,200 | ||
Novolipetsk Steel GDRc | 10,658 | 410,013 | |||
OAO Gazprom SP ADR | 275,794 | 10,755,966 | |||
OAO NOVATEK SP GDRc | 11,169 | 804,168 | |||
OAO Rosneft Oil Co. GDRc | 156,439 | 1,334,425 | |||
OAO Tatneft SP ADRc | 7,957 | 823,550 | |||
OAO TMK GDRc | 7,227 | 191,516 | |||
Pharmstandard GDRa,c | 4,672 | 113,062 | |||
PIK Group GDRc | 11,388 | 227,077 | |||
Polyus Gold SP ADR | 16,060 | 255,996 | |||
Rostelecom SP ADR | 7,300 | 501,875 | |||
Sberbank GDRc | 10,512 | 2,901,805 | |||
Severstal GDRc | 24,163 | 408,355 | |||
Sistema JSFC SP GDRc | 12,775 | 318,992 | |||
Surgutneftegaz SP ADR | 78,110 | 562,392 | |||
Uralkali SP GDR | 20,294 | 872,642 | |||
Vimpel-Communications | 56,502 | 1,357,743 | |||
VTB Bank OJSC GDRc | 72,197 | 400,693 | |||
Wimm-Bill-Dann Foods OJSC ADRa | 1,898 | 131,949 | |||
30,815,259 | |||||
TOTAL COMMON STOCKS | 128,624,283 | ||||
PREFERRED STOCKS – 19.84% | |||||
BRAZIL – 19.84% | |||||
Aracruz Celulose SA Class B | 36,500 | 200,616 | |||
Banco Bradesco SA | 184,907 | 3,393,361 | |||
Banco do Estado do Rio Grande do Sul SA | 7,300 | 36,187 | |||
Banco Itau Holding | 146,000 | 2,750,919 | |||
Bradespar SA | 36,500 | 729,105 | |||
Brasil Telecom Participacoes SA | 24,421 | 314,390 | |||
Brasil Telecom SA | 11,753 | 120,699 | |||
Braskem SA Class A | 21,900 | 156,735 | |||
Centrais Eletricas Brasileiras SA Class B | 21,900 | 336,015 | |||
Companhia de Bebidas | 21,900 | 1,346,206 | |||
Companhia Energetica de Minas Gerais | 29,523 | 636,590 | |||
Companhia Energetica de Sao Paulo Class B | 21,900 | 350,507 |
Security | Shares | Value | |||
Companhia Paranaense de Energia Class B | 14,600 | $ | 250,490 | ||
Companhia Vale do Rio Doce Class A | 233,600 | 5,439,216 | |||
Duratex SA | 7,300 | 124,843 | |||
Eletropaulo Metropolitana Electricidade de Sao Paulo SA Class B | 7,300 | 135,086 | |||
Fertilizantes Fosfatados SA | 1,680 | 96,765 | |||
Gerdau SA | 73,000 | 1,373,223 | |||
Gol Linhas Aereas Inteligentes SA | 7,300 | 65,575 | |||
Itausa - Investimentos Itau SA | 242,051 | 1,413,447 | |||
Klabin SA | 73,000 | 224,099 | |||
Lojas Americanas SA | 43,800 | 277,239 | |||
Metalurgica Gerdau SA | 21,900 | 556,893 | |||
Net Servicos de Comunicacao SAa | 21,900 | 252,279 | |||
Petroleo Brasileiro SA | 372,300 | 7,961,563 | |||
Sadia SA | 73,000 | 481,746 | |||
Tam SA | 7,300 | 144,569 | |||
Tele Norte Leste Participacoes SA | 29,200 | 679,007 | |||
Telemar Norte Leste SA Class A | 7,300 | 380,208 | |||
TIM Participacoes SA | 65,700 | 144,524 | |||
Usinas Siderurgicas de Minas Gerais SA Class A | 31,350 | 1,098,787 | |||
Vivo Participacoes SAa | 65,700 | 338,967 | |||
Votorantim Celulose e | 7,300 | 156,243 | |||
31,966,099 | |||||
TOTAL PREFERRED STOCKS | 31,966,099 | ||||
SHORT-TERM INVESTMENTS – 2.58% | |||||
MONEY MARKET FUNDS – 2.58% | |||||
Barclays Global Investors Funds | 101,802 | 101,802 | |||
BGI Cash Premier Fund LLC 2.63%e,f,g | 4,059,736 | 4,059,736 | |||
4,161,538 | |||||
TOTAL SHORT-TERM INVESTMENTS | 4,161,538 | ||||
46 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI BRIC INDEX FUND
August 31, 2008
Value | ||||
TOTAL INVESTMENTS IN | $ | 164,751,920 | ||
Other Assets, Less Liabilities – (2.27)% | (3,660,373 | ) | ||
NET ASSETS – 100.00% | $ | 161,091,547 | ||
ADR – American Depositary Receipts
GDR – Global Depositary Receipts
SP ADR – Sponsored American Depositary Receipts
SP GDR – Sponsored Global Depositary Receipts
a | Non-income earning security. |
b | All or a portion of this security represents a security on loan. See Note 5. |
c | This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933. |
d | This security may be resold to qualified institutional buyers under Rule 144A of the Securities Act of 1933. |
e | Affiliated issuer. See Note 2. |
f | The rate quoted is the annualized seven-day yield of the fund at period end. |
g | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 47 |
Table of Contents
iSHARES® MSCI CANADA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.72% | |||||
ADVERTISING – 0.27% | |||||
Groupe Aeroplan Inc. | 361,388 | $ | 5,660,273 | ||
5,660,273 | |||||
AEROSPACE & DEFENSE – 0.23% | |||||
CAE Inc. | 460,362 | 4,864,891 | |||
4,864,891 | |||||
AIRLINES – 0.01% | |||||
Jazz Air Income Funda | 20,078 | 112,339 | |||
112,339 | |||||
APPAREL – 0.24% | |||||
Gildan Activewear Inc.b | 208,146 | 4,894,087 | |||
4,894,087 | |||||
AUTO PARTS & EQUIPMENT – 0.43% | |||||
Magna International Inc. Class A | 153,228 | 8,816,194 | |||
8,816,194 | |||||
BANKS – 17.91% | |||||
Bank of Montreal | 911,232 | 40,005,307 | |||
Bank of Nova Scotia | 1,787,208 | 82,712,226 | |||
Canadian Imperial Bank of Commerce | 687,492 | 41,625,099 | |||
National Bank of Canada | 286,794 | 13,535,346 | |||
Royal Bank of Canada | 2,341,134 | 107,685,316 | |||
Toronto-Dominion Bank (The) | 1,455,666 | 85,333,329 | |||
370,896,623 | |||||
CHEMICALS – 6.36% | |||||
Agrium Inc. | 285,438 | 24,187,561 | |||
Methanex Corp. | 176,284 | 4,487,562 | |||
NOVA Chemicals Corp. | 150,516 | 4,374,103 | |||
Potash Corp. of | 566,130 | 98,691,493 | |||
131,740,719 | |||||
COAL – 1.16% | |||||
Fording Canadian Coal Trust | 269,166 | 23,987,101 | |||
23,987,101 | |||||
COMMERCIAL SERVICES – 0.23% | |||||
Ritchie Bros. Auctioneers Inc. | 179,670 | 4,797,529 | |||
4,797,529 | |||||
COMPUTERS – 5.69% | |||||
CGI Group Inc.b | 524,094 | 5,731,235 | |||
Research In Motion Ltd.b | 919,368 | 112,222,143 | |||
117,953,378 |
Security | Shares | Value | |||
DIVERSIFIED FINANCIAL SERVICES – 0.79% | |||||
CI Financial Income Fund | 113,420 | $ | 2,488,102 | ||
IGM Financial Inc. | 215,604 | 9,030,204 | |||
TMX Group Inc. | 147,126 | 4,807,259 | |||
16,325,565 | |||||
ELECTRIC – 0.96% | |||||
Fortis Inc. | 284,760 | 7,007,162 | |||
TransAlta Corp. | 364,764 | 12,785,755 | |||
19,792,917 | |||||
ENGINEERING & CONSTRUCTION – 0.66% | |||||
SNC-Lavalin Group Inc. | 273,234 | 13,663,634 | |||
13,663,634 | |||||
FOOD – 1.05% | |||||
George Weston Ltd. | 94,242 | 4,190,806 | |||
Loblaw Companies Ltd. | 199,332 | 5,696,812 | |||
Metro Inc. Class A | 184,416 | 5,133,058 | |||
Saputo Inc. | 259,674 | 6,752,480 | |||
21,773,156 | |||||
FOREST PRODUCTS & PAPER – 0.26% | |||||
Sino-Forest Corp.b | 282,048 | 5,322,414 | |||
5,322,414 | |||||
GAS – 0.17% | |||||
Canadian Utilities Ltd. Class A | 88,818 | 3,611,885 | |||
3,611,885 | |||||
HAND & MACHINE TOOLS – 0.35% | |||||
Finning International Inc. | 317,982 | 7,248,616 | |||
7,248,616 | |||||
HEALTH CARE - SERVICES – 0.16% | |||||
MDS Inc.b | 222,384 | 3,413,868 | |||
3,413,868 | |||||
HOLDING COMPANIES - DIVERSIFIED – 1.80% | |||||
Brookfield Asset | 894,282 | 27,802,606 | |||
Onex Corp. | 180,348 | 4,858,174 | |||
Sherritt International Corp. | 520,704 | 4,691,912 | |||
37,352,692 | |||||
INSURANCE – 9.41% | |||||
Fairfax Financial Holdings Ltd. | 31,648 | 6,957,573 | |||
Great-West Lifeco Inc. | 486,804 | 14,743,981 | |||
ING Canada Inc. | 56,274 | 2,123,848 | |||
Manulife Financial Corp. | 2,716,068 | 97,664,152 |
48 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI CANADA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Power Corp. of Canada | 627,150 | $ | 19,456,236 | ||
Power Financial Corp. | 447,480 | 14,621,156 | |||
Sun Life Financial Inc. | 1,019,712 | 39,399,166 | |||
194,966,112 | |||||
IRON & STEEL – 0.19% | |||||
Gerdau Ameristeel Corp. | 275,268 | 3,895,853 | |||
3,895,853 | |||||
MANUFACTURING – 0.98% | |||||
Bombardier Inc. Class B | 2,596,740 | 20,213,337 | |||
20,213,337 | |||||
MEDIA – 3.26% | |||||
Astral Media Inc. Class A | 94,242 | 2,955,705 | |||
Rogers Communications Inc. Class B | 905,130 | 32,862,577 | |||
Shaw Communications Inc. Class B | 630,540 | 13,623,971 | |||
Thomson Reuters Corp. | 406,800 | 13,721,847 | |||
Yellow Pages Income Fund | 465,786 | 4,421,198 | |||
67,585,298 | |||||
MINING – 11.34% | |||||
Agnico-Eagle Mines Ltd. | 258,996 | 14,894,378 | |||
Barrick Gold Corp. | 1,581,774 | 55,146,058 | |||
Cameco Corp. | 623,760 | 18,797,844 | |||
Eldorado Gold Corp.b | 625,794 | 4,983,442 | |||
First Quantum Minerals Ltd. | 123,396 | 7,975,304 | |||
Goldcorp Inc. | 1,289,556 | 43,948,448 | |||
Inmet Mining Corp. | 78,648 | 4,745,520 | |||
Ivanhoe Mines Ltd.b | 442,734 | 4,991,906 | |||
Kinross Gold Corp. | 1,110,564 | 18,337,378 | |||
Lundin Mining Corp.b | 603,420 | 2,892,271 | |||
Pan American Silver Corp.b | 139,668 | 3,755,756 | |||
SilverWheaton Corp.b | 404,088 | 4,689,609 | |||
Teck Cominco Ltd. Class B | 797,328 | 33,372,147 | |||
Uranium One Inc.b | 849,534 | 3,647,101 | |||
Yamana Gold Inc. | 1,168,194 | 12,708,663 | |||
234,885,825 | |||||
OIL & GAS – 25.37% | |||||
Addax Petroleum Corp. | 155,262 | 5,943,274 | |||
ARC Energy Trust | 186,450 | 5,314,577 | |||
Canadian Natural | 980,388 | 83,844,288 |
Security | Shares | Value | |||
Canadian Oil Sands Trust | 425,784 | $ | 20,673,534 | ||
EnCana Corp. | 1,358,034 | 102,264,182 | |||
Enerplus Resources Fund | 297,642 | 12,929,601 | |||
Ensign Resource Service Group | 235,944 | 5,322,849 | |||
Harvest Energy Trust | 259,182 | 5,318,874 | |||
Husky Energy Inc. | 463,752 | 20,539,245 | |||
Imperial Oil Ltd. | 569,520 | 29,345,178 | |||
Nexen Inc. | 860,382 | 27,016,571 | |||
Niko Resources Ltd. | 80,032 | 5,822,019 | |||
OPTI Canada Inc.b | 352,996 | 6,411,448 | |||
Penn West Energy Trust | 678,000 | 19,939,859 | |||
Petro-Canada | 873,942 | 38,714,513 | |||
Precision Drilling Trust | 113,425 | 2,412,228 | |||
Provident Energy Trust | 459,006 | 4,911,193 | |||
Suncor Energy Inc. | 1,676,016 | 96,147,354 | |||
Talisman Energy Inc. | 1,840,092 | 32,588,127 | |||
525,458,914 | |||||
OIL & GAS SERVICES – 0.22% | |||||
Trican Well Service Ltd. | 223,062 | 4,512,383 | |||
4,512,383 | |||||
PHARMACEUTICALS – 0.14% | |||||
Biovail Corp. | 262,386 | 2,871,800 | |||
2,871,800 | |||||
PIPELINES – 3.19% | |||||
Enbridge Inc. | 638,676 | 26,834,215 | |||
TransCanada Corp. | 1,030,560 | 39,157,099 | |||
65,991,314 | |||||
REAL ESTATE – 0.40% | |||||
Brookfield Properties Corp. | 393,240 | 8,285,181 | |||
8,285,181 | |||||
REAL ESTATE INVESTMENT TRUSTS – 0.18% | |||||
RioCan Real Estate | 187,128 | 3,803,120 | |||
3,803,120 | |||||
RETAIL – 1.43% | |||||
Alimentation Couche-Tard | 249,504 | 3,060,388 | |||
Canadian Tire Corp. | 141,702 | 7,215,792 | |||
Shoppers Drug Mart Corp. | 369,510 | 19,314,860 | |||
29,591,040 |
SCHEDULESOF INVESTMENTS | 49 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI CANADA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
TELECOMMUNICATIONS – 1.85% | |||||
BCE Inc. | 481,380 | $ | 18,272,319 | ||
Nortel Networks Corp.b | 838,686 | 5,080,308 | |||
TELUS Corp. | 111,158 | 4,473,170 | |||
TELUS Corp. NVS | 265,776 | 10,529,730 | |||
38,355,527 | |||||
TRANSPORTATION – 3.03% | |||||
Canadian National Railway Co. | 867,840 | 45,617,178 | |||
Canadian Pacific Railway Ltd. | 279,336 | 17,073,535 | |||
62,690,713 | |||||
TOTAL COMMON STOCKS | 2,065,334,298 | ||||
SHORT-TERM INVESTMENTS – 0.01% | |||||
MONEY MARKET FUNDS – 0.01% | |||||
Barclays Global Investors Funds | 198,232 | 198,232 | |||
198,232 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $198,232) | 198,232 | ||||
TOTAL INVESTMENTS IN | 2,065,532,530 | ||||
Other Assets, Less Liabilities – 0.27% | 5,528,365 | ||||
NET ASSETS – 100.00% | $ | 2,071,060,895 | |||
NVS – Non-Voting Shares
a | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
50 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI CHILE INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 91.51% | |||||
AIRLINES – 3.92% | |||||
LAN Airlines SA | 250,751 | $ | 2,984,059 | ||
2,984,059 | |||||
BANKS – 8.21% | |||||
Banco de Credito e Inversiones | 59,070 | 1,727,726 | |||
Banco Santander Chile SA | 85,818,238 | 3,642,042 | |||
CorpBanca SA | 160,956,765 | 879,373 | |||
6,249,141 | |||||
BEVERAGES – 4.63% | |||||
Coca-Cola Embonor SA Class B | 41,212 | 43,021 | |||
Compania Cervecerias | 248,478 | 1,730,861 | |||
Vina Concha y Toro SA | 877,362 | 1,754,724 | |||
3,528,606 | |||||
BUILDING MATERIALS – 0.24% | |||||
SalfaCorp SA | 124,111 | 179,204 | |||
179,204 | |||||
COMPUTERS – 0.82% | |||||
Sonda SA | 445,982 | 626,550 | |||
626,550 | |||||
ELECTRIC – 26.97% | |||||
Almendral SA | 14,406,375 | 1,321,170 | |||
Colbun SAa | 10,890,124 | 2,284,270 | |||
Empresa Nacional de Electricidad SA | 5,811,353 | 8,957,988 | |||
Enersis SA | 23,157,480 | 7,975,210 | |||
20,538,638 | |||||
ENGINEERING & CONSTRUCTION – 0.16% | |||||
Socovesa SA | 423,751 | 118,237 | |||
118,237 | |||||
FOOD – 7.93% | |||||
Centros Comerciales Sudamericanos SA | 1,296,688 | 3,782,534 | |||
Distribucion y Servicio D&S SA | 5,135,881 | 1,964,161 | |||
Empresas Iansa SA | 4,126,907 | 157,024 | |||
Multiexport Foods SA | 492,475 | 133,569 | |||
6,037,288 | |||||
FOREST PRODUCTS & PAPER – 8.62% | |||||
Empresas CMPC SA | 177,335 | 5,501,710 | |||
Masisa SA | 6,575,688 | 1,065,069 | |||
6,566,779 |
Security | Shares | Value | |||
HEALTH CARE - SERVICES – 0.67% | |||||
Banmedica SA | 510,258 | $ | 512,747 | ||
512,747 | |||||
HOLDING COMPANIES - DIVERSIFIED – 11.74% | |||||
Empresas Copec SA | 701,394 | 8,608,328 | |||
Sigdo Koppers SA | 419,777 | 331,734 | |||
8,940,062 | |||||
IRON & STEEL – 4.88% | |||||
CAP SA | 102,482 | 3,719,147 | |||
3,719,147 | |||||
METAL FABRICATE & HARDWARE – 0.90% | |||||
Cintac SA | 38,676 | 19,244 | |||
Madeco SA | 7,238,358 | 668,189 | |||
687,433 | |||||
REAL ESTATE – 0.94% | |||||
Parque Arauco SA | 798,450 | 716,658 | |||
716,658 | |||||
RETAIL – 3.14% | |||||
Farmacias Ahumada SA | 102,375 | 239,707 | |||
SACI Falabella SA | 555,037 | 2,154,085 | |||
2,393,792 | |||||
TELECOMMUNICATIONS – 5.08% | |||||
Compania de Telecomunicaciones | 1,058,342 | 1,486,842 | |||
Empresa Nacional de Telecomunicaciones SA | 179,710 | 2,384,445 | |||
3,871,287 | |||||
TRANSPORTATION – 1.40% | |||||
Compania SudAmericana de Vapores SA | 792,605 | 1,067,117 | |||
1,067,117 | |||||
WATER – 1.26% | |||||
Inversiones Aguas Metropolitanas SAa | 923,669 | 955,209 | |||
955,209 | |||||
TOTAL COMMON STOCKS | 69,691,954 |
SCHEDULESOF INVESTMENTS | 51 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI CHILE INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
PREFERRED STOCKS – 8.38% |
| |||||
CHEMICALS – 8.38% |
| |||||
Sociedad Quimica y Minera de Chile SA Class B | 166,159 | $ | 6,386,341 | |||
6,386,341 | ||||||
TOTAL PREFERRED STOCKS |
| |||||
(Cost: $3,391,634) | 6,386,341 | |||||
RIGHTS – 0.01% | ||||||
FOOD – 0.00% | ||||||
Centros Comerciales Sudamericanos SA | 21,563 | 42 | ||||
42 | ||||||
TRANSPORTATION – 0.01% |
| |||||
Compania SudAmericana de Vapores SAb | 31,704 | 6,805 | ||||
6,805 | ||||||
TOTAL RIGHTS | ||||||
(Cost: $0) | 6,847 | |||||
SHORT-TERM INVESTMENTS – 0.16% |
| |||||
MONEY MARKET FUNDS – 0.16% | ||||||
Barclays Global Investors Funds | 119,715 | 119,715 | ||||
119,715 | ||||||
TOTAL SHORT-TERM INVESTMENTS | ||||||
(Cost: $119,715) | 119,715 | |||||
TOTAL INVESTMENTS IN | 76,204,857 | |||||
Other Assets, Less Liabilities – (0.06)% | (46,678 | ) | ||||
NET ASSETS – 100.00% | $ | 76,158,179 | ||||
a | Non-income earning security. |
b | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
52 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI HONG KONG INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.63% | |||||
AIRLINES – 0.94% | |||||
Cathay Pacific Airways Ltd.a | 8,442,000 | $ | 15,748,809 | ||
15,748,809 | |||||
APPAREL – 0.72% | |||||
Yue Yuen Industrial | 4,341,000 | 12,097,345 | |||
12,097,345 | |||||
BANKS – 13.48% | |||||
Bank of East Asia Ltd.a | 9,286,300 | 37,063,102 | |||
BOC Hong Kong | 23,919,000 | 53,631,763 | |||
CITIC International Financial | 12,663,000 | 10,221,583 | |||
Hang Seng Bank Ltd.a | 5,065,200 | 100,658,255 | |||
Wing Hang Bank Ltd. | 1,407,000 | 16,062,488 | |||
Wing Lung Bank Ltd.a | 422,600 | 8,067,831 | |||
225,705,022 | |||||
CHEMICALS – 0.95% | |||||
Kingboard Chemical | 3,517,500 | 15,931,788 | |||
15,931,788 | |||||
DISTRIBUTION & WHOLESALE – 6.60% | |||||
Esprit Holdings Ltd.a | 7,035,000 | 58,589,321 | |||
Li & Fung Ltd.a | 16,885,000 | 52,030,398 | |||
110,619,719 | |||||
DIVERSIFIED FINANCIAL SERVICES – 5.41% | |||||
Hong Kong Exchanges and Clearing Ltd.a | 6,927,500 | 90,535,251 | |||
90,535,251 | |||||
ELECTRIC – 10.58% | |||||
CLP Holdings Ltd. | 14,070,200 | 114,476,146 | |||
Hongkong Electric | 9,849,000 | 62,780,710 | |||
177,256,856 | |||||
ENGINEERING & CONSTRUCTION – 2.66% | |||||
Cheung Kong Infrastructure Holdings Ltd.a | 2,814,000 | 12,258,689 | |||
Hong Kong Aircraft Engineering Co. Ltd. | 562,800 | 6,298,803 | |||
New World | 16,884,800 | 25,960,806 | |||
44,518,298 |
Security | Shares | Value | |||
FOREST PRODUCTS & PAPER – 0.17% | |||||
Lee & Man Paper Manufacturing Ltd. | 2,814,000 | $ | 2,830,315 | ||
2,830,315 | |||||
GAS – 3.74% | |||||
Hong Kong and China | 27,758,712 | 62,668,055 | |||
62,668,055 | |||||
HOLDING COMPANIES - DIVERSIFIED – 14.62% | |||||
C C Land Holdings Ltd.a | 7,035,000 | 3,001,576 | |||
Hutchison Whampoa Ltd. | 14,632,800 | 136,770,910 | |||
NWS Holdings Ltd. | 5,628,000 | 12,489,440 | |||
Swire Pacific Ltd. Class A | 5,628,000 | 56,606,297 | |||
Wharf Holdings Ltd. (The) | 9,849,500 | 35,966,655 | |||
244,834,878 | |||||
LODGING – 0.97% | |||||
Shangri-La Asia Ltd. | 8,444,000 | 16,293,493 | |||
16,293,493 | |||||
MEDIA – 0.47% | |||||
Television Broadcasts Ltd. | 1,407,000 | 7,887,024 | |||
7,887,024 | |||||
MINING – 1.17% | |||||
Mongolia Energy Corp. Ltd.b | 21,105,000 | 19,604,888 | |||
19,604,888 | |||||
REAL ESTATE – 28.83% | |||||
Cheung Kong (Holdings) Ltd. | 9,849,000 | 141,587,855 | |||
Chinese Estates Holdings Ltd.a | 7,035,000 | 9,897,088 | |||
Hang Lung | 5,628,000 | 24,156,828 | |||
Hang Lung Properties Ltd. | 14,070,000 | 45,068,708 | |||
Henderson Land | 7,035,332 | 42,817,293 | |||
Hopewell Holdings Ltd. | 4,221,000 | 16,197,694 | |||
Hysan Development Co. Ltd. | 4,221,000 | 11,627,727 | |||
Kerry Properties Ltd. | 4,221,000 | 20,335,001 | |||
Shun Tak Holdings Ltd. | 8,443,000 | 4,932,904 | |||
Sino Land Co. Ltd. | 11,256,000 | 19,931,185 | |||
Sun Hung Kai Properties Ltd. | 9,648,000 | 133,011,922 | |||
Wheelock and Co. Ltd.a | 5,628,000 | 13,441,292 | |||
483,005,497 |
SCHEDULESOF INVESTMENTS | 53 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI HONG KONG INDEX FUND
August 31, 2008
Security | Shares | Value | |||
REAL ESTATE INVESTMENT TRUSTS – 2.08% | |||||
Link REIT (The)a | 14,773,500 | $ | 34,866,955 | ||
34,866,955 | |||||
RETAIL – 0.32% | |||||
Lifestyle International | 4,221,000 | 5,408,245 | |||
5,408,245 | |||||
SEMICONDUCTORS – 0.57% | |||||
ASM Pacific | 1,407,000 | 9,554,566 | |||
9,554,566 | |||||
TELECOMMUNICATIONS – 2.37% | |||||
Foxconn International | 14,070,000 | 10,564,105 | |||
Hutchison Telecommunications | 11,256,000 | 14,061,437 | |||
PCCW Ltd. | 23,919,576 | 15,017,255 | |||
39,642,797 | |||||
TRANSPORTATION – 2.98% | |||||
MTR Corp. Ltd.a | 9,145,583 | 29,646,465 | |||
Orient Overseas | 1,407,200 | 4,859,097 | |||
Pacific Basin Shipping Ltd. | 11,256,000 | 15,431,526 | |||
49,937,088 | |||||
TOTAL COMMON STOCKS | 1,668,946,889 | ||||
SHORT-TERM INVESTMENTS – 19.81% | |||||
MONEY MARKET FUNDS – 19.81% | |||||
Barclays Global Investors Funds | 984,713 | 984,713 | |||
BGI Cash Premier Fund LLC | 330,869,554 | 330,869,554 | |||
331,854,267 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $331,854,267) | 331,854,267 | ||||
Value | ||||||
TOTAL INVESTMENTS IN SECURITIES – 119.44% | $ | 2,000,801,156 | ||||
Other Assets, Less Liabilities – (19.44)% | (325,616,758 | ) | ||||
NET ASSETS – 100.00% | $ | 1,675,184,398 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See |
Note 5. |
See notes to financial statements.
54 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.79% | |||||
AEROSPACE & DEFENSE – 2.59% | |||||
Elbit Systems Ltd. | 95,116 | $ | 5,297,770 | ||
5,297,770 | |||||
AIRLINES – 0.03% | |||||
El Al Israel Airlines Ltd. | 127,930 | 54,819 | |||
54,819 | |||||
BANKS – 14.47% | |||||
Bank Hapoalim Ltd. | 2,381,277 | 9,425,818 | |||
Bank Leumi le-Israela | 2,668,242 | 11,163,092 | |||
First International Bank of | 108,378 | 1,141,335 | |||
Israel Discount Bank Ltd. | 2,191,735 | 3,650,525 | |||
Mizrahi Tefahot Bank Ltd. | 645,662 | 4,165,561 | |||
29,546,331 | |||||
CHEMICALS – 17.07% | |||||
Frutarom Industries Ltd. | 128,102 | 1,262,073 | |||
Israel Chemicals Ltd.a | 1,547,135 | 26,152,444 | |||
Makhteshim-Agan Industries Ltd. | 1,085,963 | 7,434,540 | |||
34,849,057 | |||||
COMMERCIAL SERVICES – 0.16% | |||||
AL-ROV Israel Ltd. | 13,100 | 252,773 | |||
Nitsba Holdings 1995 Ltd.b | 9,352 | 74,405 | |||
327,178 | |||||
DIVERSIFIED FINANCIAL SERVICES – 0.36% | |||||
FIBI Holdings Ltd.b | 43,528 | 708,564 | |||
Mivtach Shamir Holdings Ltd. | 774 | 23,834 | |||
732,398 | |||||
ELECTRICAL COMPONENTS & | |||||
Electra (Israel) Ltd.b | 3,576 | 407,822 | |||
407,822 | |||||
ELECTRONICS – 1.00% | |||||
Elron Electronic Industries Ltd.b | 32,812 | 217,976 | |||
Ituran Location and Control Ltd. | 57,206 | 680,179 | |||
Orbotech Ltd.b | 105,230 | 1,136,484 | |||
2,034,639 | |||||
ENGINEERING & CONSTRUCTION – 0.38% | |||||
Housing & Construction | 658,072 | 780,528 | |||
780,528 |
Security | Shares | Value | |||
FOOD – 1.69% | |||||
Blue Square-Israel Ltd. | 29,076 | $ | 287,360 | ||
Osem Investment Ltd.a | 138,806 | 1,779,313 | |||
Super-Sol Ltd. | 298,356 | 1,393,645 | |||
3,460,318 | |||||
FOREST PRODUCTS & PAPER – 0.02% | |||||
American Israeli Paper Mills Ltd.b | 516 | 34,540 | |||
34,540 | |||||
HEALTH CARE - PRODUCTS – 1.22% | |||||
Given Imaging Ltd.b | 65,120 | 1,024,338 | |||
Syneron Medical Ltd.b | 89,590 | 1,479,131 | |||
2,503,469 | |||||
HOLDING COMPANIES - DIVERSIFIED – 0.58% | |||||
Clal Industries and | 196,356 | 776,684 | |||
Elco Holdings Ltd.b | 30,268 | 400,361 | |||
1,177,045 | |||||
HOME BUILDERS – 0.28% | |||||
Bayside Land Corp. Ltd. | 86 | 16,650 | |||
Property & Building Corp. Ltd. | 7,828 | 553,551 | |||
570,201 | |||||
INSURANCE – 1.58% | |||||
Clal Insurance Enterprise | 37,580 | 657,478 | |||
Harel Insurance Investments & Finances Ltd.a | 36,388 | 1,605,398 | |||
Menorah Mivtachim Holdings | 57,980 | 425,519 | |||
Phoenix Holdings Ltd. | 202,390 | 531,249 | |||
3,219,644 | |||||
INTERNET – 5.63% | |||||
Aladdin Knowledge Systems Ltd.b | 30,063 | 379,094 | |||
Check Point Software | 413,544 | 10,127,693 | |||
RADVision Ltd.b | 46,155 | 318,931 | |||
Radware Ltd.b | 68,770 | 670,507 | |||
11,496,225 | |||||
INVESTMENT COMPANIES – 6.88% | |||||
Delek Group Ltd. (The)a | 18,876 | 2,309,578 | |||
Discount Investment Corp. Ltd. | 66,472 | 1,507,348 | |||
Elbit Imaging Ltd. | 20,576 | 597,078 | |||
IDB Development Corp. Ltd. | 40,972 | 904,974 |
SCHEDULESOF INVESTMENTS | 55 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
IDB Holding Corp. Ltd.a | 35,454 | $ | 684,209 | ||
Israel Corp. Ltd. (The)b | 6,444 | 6,608,300 | |||
Koor Industries Ltd. | 32,308 | 1,442,687 | |||
14,054,174 | |||||
MACHINERY – 1.73% | |||||
Ormat Industries Ltd. | 312,894 | 3,526,063 | |||
3,526,063 | |||||
MANUFACTURING – 0.14% | |||||
FMS Enterprises Migun Ltd.b | 10,458 | 296,401 | |||
296,401 | |||||
MEDIA – 0.76% | |||||
Hot Telecommunication | 144,250 | 1,547,553 | |||
1,547,553 | |||||
OIL & GAS – 0.96% | |||||
Oil Refineries Ltd.a | 3,095,029 | 1,970,634 | |||
1,970,634 | |||||
PHARMACEUTICALS – 24.64% | |||||
Teva Pharmaceutical | 1,051,055 | 50,309,690 | |||
50,309,690 | |||||
REAL ESTATE – 3.18% | |||||
Africa Israel Investments Ltd.a | 42,422 | 1,631,386 | |||
Africa Israel Properties Ltd.b | 19,896 | 618,825 | |||
Alony Hetz Properties & Investments Ltd. | 164,908 | 479,927 | |||
Amot Investments Ltd. | 5,358 | 17,420 | |||
Azorim-Investment Development & Construction Co. Ltd. | 49,648 | 374,021 | |||
Delek Real Estate Ltd. | 88,236 | 213,412 | |||
Gazit Globe Ltd. | 248,373 | 2,024,350 | |||
Industrial Buildings Corp. Ltd. | 321,472 | 625,736 | |||
Jerusalem Economy Ltd.b | 57,120 | 510,290 | |||
6,495,367 | |||||
RETAIL – 0.83% | |||||
Delek Automotive | 129,889 | 1,693,186 | |||
1,693,186 | |||||
SOFTWARE – 0.41% | |||||
Fundtech Ltd.b | 24,148 | 324,308 | |||
Retalix Ltd.b | 43,012 | 519,973 | |||
844,281 |
Security | Shares | Value | ||||
TELECOMMUNICATION EQUIPMENT – 0.16% |
| |||||
AudioCodes Ltd.b | 77,180 | $ | 320,297 | |||
320,297 | ||||||
TELECOMMUNICATIONS – 12.84% |
| |||||
Alvarion Ltd.b | 176,035 | 1,140,707 | ||||
Bezeq Israeli Telecommunication | 4,084,764 | 7,388,135 | ||||
Cellcom Israel Ltd. | 106,912 | 3,362,382 | ||||
Ceragon Networks Ltd.b | 89,760 | 795,274 | ||||
Gilat Satellite Networks Ltd.b | 131,665 | 994,071 | ||||
NICE Systems Ltd.b | 191,850 | 5,891,435 | ||||
Partner Communications | 286,460 | 6,254,585 | ||||
RRSat Global Communications | 27,884 | 385,078 | ||||
26,211,667 | ||||||
TOTAL COMMON STOCKS | 203,761,297 | |||||
SHORT-TERM INVESTMENTS – 5.03% |
| |||||
MONEY MARKET FUNDS – 5.03% |
| |||||
Barclays Global Investors Funds | 184,442 | 184,442 | ||||
BGI Cash Premier Fund | 10,089,250 | 10,089,250 | ||||
10,273,692 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $10,273,692) | 10,273,692 | |||||
TOTAL INVESTMENTS IN | 214,034,989 | |||||
Other Assets, Less Liabilities – (4.82)% | (9,833,957 | ) | ||||
NET ASSETS – 100.00% | $ | 204,201,032 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
56 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.83% | |||||
ADVERTISING – 0.43% | |||||
Asatsu-DK Inc. | 3,200 | $ | 83,741 | ||
Moshi Moshi Hotline Inc. | 2,400 | 65,238 | |||
148,979 | |||||
AEROSPACE & DEFENSE – 0.15% | |||||
Japan Aviation Electronics | 8,000 | 50,422 | |||
50,422 | |||||
AGRICULTURE – 0.42% | |||||
Hokuto Corp. | 1,600 | 36,416 | |||
Sakata Seed Corp. | 7,200 | 108,075 | |||
144,491 | |||||
APPAREL – 1.28% | |||||
Descente Ltd. | 8,000 | 44,745 | |||
Gunze Ltd. | 16,000 | 68,408 | |||
Japan Wool Textile Co. Ltd. (The) | 8,000 | 66,639 | |||
Katakura Industries Co. Ltd. | 3,200 | 40,337 | |||
Sanei-International Co. Ltd. | 1,600 | 20,994 | |||
Sanyo Shokai Ltd. | 8,000 | 38,553 | |||
Tokyo Style Co. Ltd. | 8,000 | 67,081 | |||
Wacoal Holdings Corp. | 8,000 | 94,946 | |||
441,703 | |||||
AUTO MANUFACTURERS – 0.64% | |||||
Kanto Auto Works Ltd. | 4,800 | 62,540 | |||
Nissan Shatai Co. Ltd. | 8,000 | 60,299 | |||
Shinmaywa Industries Ltd. | 8,000 | 26,759 | |||
Toyota Auto Body Co. Ltd. | 4,000 | 70,841 | |||
220,439 | |||||
AUTO PARTS & EQUIPMENT – 3.97% | |||||
Aisan Industry Co. Ltd. | 2,400 | 18,112 | |||
Akebono Brake Industry Co. Ltd.a | 7,200 | 48,896 | |||
Calsonic Kansei Corp. | 16,000 | 53,960 | |||
Exedy Corp. | 3,200 | 73,273 | |||
FCC Co. Ltd. | 4,000 | 66,307 | |||
Futaba Industrial Co. Ltd. | 4,800 | 78,021 | |||
Kayaba Industry Co. Ltd. | 16,000 | 59,267 | |||
Keihin Corp. | 4,000 | 67,081 | |||
Koito Manufacturing Co. Ltd. | 8,000 | 97,526 | |||
Musashi Seimitsu Industry Co. Ltd. | 2,400 | 53,739 | |||
Nifco Inc. | 4,000 | 87,537 | |||
Nissin Kogyo Co. Ltd. | 3,200 | 57,911 |
Security | Shares | Value | |||
Press Kogyo Co. Ltd. | 8,000 | $ | 31,329 | ||
Riken Corp. | 16,000 | 55,139 | |||
Sanden Corp. | 16,000 | 62,806 | |||
Showa Corp. | 6,400 | 45,999 | |||
T. RAD Co. Ltd. | 8,000 | 39,806 | |||
Takata Corp. | 3,200 | 55,700 | |||
Topre Corp. | 6,400 | 53,606 | |||
Toyo Tire & Rubber Co. Ltd. | 16,000 | 41,871 | |||
TS Tech Co. Ltd. | 4,800 | 71,032 | |||
Unipres Corp. | 2,400 | 25,719 | |||
Yokohama Rubber Co. Ltd. (The) | 24,000 | 127,823 | |||
1,372,460 | |||||
BANKS – 10.53% | |||||
Aichi Bank Ltd. (The) | 800 | 55,729 | |||
Akita Bank Ltd. (The) | 24,000 | 93,545 | |||
Awa Bank Ltd. (The) | 24,000 | 128,265 | |||
Bank of Ikeda Ltd. (The)b | 2,400 | 83,815 | |||
Bank of Iwate Ltd. (The) | 1,600 | 91,408 | |||
Bank of Nagoya Ltd. (The) | 16,000 | 88,311 | |||
Bank of Okinawa Ltd. (The) | 2,400 | 85,142 | |||
Bank of Saga Ltd. (The) | 16,000 | 46,588 | |||
Bank of the Ryukyus Ltd. | 4,800 | 38,789 | |||
Chiba Kogyo Bank Ltd. (The)b | 4,000 | 48,800 | |||
Chukyo Bank Ltd. (The) | 16,000 | 44,672 | |||
Daishi Bank Ltd. (The) | 32,000 | 128,855 | |||
Ehime Bank Ltd. (The) | 24,000 | 70,767 | |||
Eighteenth Bank Ltd. (The) | 24,000 | 64,354 | |||
Fukui Bank Ltd. (The) | 32,000 | 101,433 | |||
Higashi-Nippon Bank Ltd. (The) | 16,000 | 52,191 | |||
Higo Bank Ltd. (The) | 16,000 | 93,472 | |||
Hokkoku Bank Ltd. (The) | 32,000 | 118,830 | |||
Hokuetsu Bank Ltd. (The) | 32,000 | 69,588 | |||
Hyakugo Bank Ltd. (The) | 24,000 | 136,890 | |||
Hyakujushi Bank Ltd. (The) | 24,000 | 128,265 | |||
Juroku Bank Ltd. (The) | 32,000 | 134,163 | |||
Kagoshima Bank Ltd. (The) | 16,000 | 107,183 | |||
Kansai Urban Banking Corp. | 16,000 | 22,262 | |||
Kanto Tsukuba Bank Ltd. (The) | 6,400 | 28,307 | |||
Keiyo Bank Ltd. (The) | 24,000 | 113,448 | |||
Kiyo Holdings Inc. | 64,000 | 100,253 | |||
Michinoku Bank Ltd. (The) | 24,000 | 58,604 | |||
Mie Bank Ltd. (The) | 8,000 | 35,015 |
SCHEDULESOF INVESTMENTS | 57 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Minato Bank Ltd. (The) | 16,000 | $ | 24,031 | ||
Miyazaki Bank Ltd. (The) | 24,000 | 62,142 | |||
Musashino Bank Ltd. (The) | 3,200 | 94,356 | |||
Nanto Bank Ltd. (The) | 16,000 | 87,279 | |||
Ogaki Kyoritsu Bank Ltd. (The) | 24,000 | 124,727 | |||
Oita Bank Ltd. (The) | 16,000 | 85,068 | |||
San-in Godo Bank Ltd. (The) | 16,000 | 125,022 | |||
Shiga Bank Ltd. | 24,000 | 159,668 | |||
Shikoku Bank Ltd. (The) | 16,000 | 56,761 | |||
Shonai Bank Ltd. (The) | 8,000 | 17,618 | |||
Tochigi Bank Ltd. (The) | 8,000 | 44,229 | |||
Toho Bank Ltd. (The) | 24,000 | 97,084 | |||
Tokushima Bank Ltd. (The) | 8,000 | 33,688 | |||
Tokyo Tomin Bank Ltd. (The) | 3,200 | 52,338 | |||
Yachiyo Bank Ltd. (The) | 16 | 39,349 | |||
Yamagata Bank Ltd. (The) | 16,000 | 85,363 | |||
Yamanashi Chuo Bank Ltd. (The) | 16,000 | 85,658 | |||
3,643,325 | |||||
BEVERAGES – 0.62% | |||||
Kagome Co. Ltd. | 6,400 | 103,202 | |||
Takara Holdings Inc. | 16,000 | 111,311 | |||
214,513 | |||||
BIOTECHNOLOGY – 0.17% | |||||
AnGes MG Inc.b | 8 | 22,336 | |||
Takara Bio Inc.b | 16 | 36,637 | |||
58,973 | |||||
BUILDING MATERIALS – 1.54% | |||||
Central Glass Co. Ltd. | 24,000 | 94,872 | |||
Chofu Seisakusho Co. Ltd. | 1,600 | 29,118 | |||
Nichias Corp.b | 8,000 | 22,852 | |||
Rinnai Corp. | 4,000 | 145,957 | |||
Sanwa Holdings Corp. | 24,000 | 90,228 | |||
Sumitomo Osaka Cement Co. Ltd. | 40,000 | 68,187 | |||
Takara Standard Co. Ltd. | 16,000 | 80,350 | |||
531,564 | |||||
CHEMICALS – 5.80% | |||||
Adeka Corp. | 9,600 | 70,325 | |||
Aica Kogyo Co. Ltd. | 8,000 | 71,283 | |||
Air Water Inc. | 16,000 | 200,212 | |||
C Uyemura & Co. Ltd. | 800 | 27,422 | |||
Chugoku Marine Paints Ltd. | 8,000 | 59,120 |
Security | Shares | Value | |||
Dainichiseika Color & Chemicals Manufacturing Co. Ltd. | 8,000 | $ | 27,717 | ||
Earth Chemical Co. Ltd. | 1,600 | 41,133 | |||
Fujimi Inc. | 1,600 | 23,014 | |||
Ishihara Sangyo Kaisha Ltd.b | 32,000 | 53,960 | |||
Lintec Corp. | 4,000 | 71,947 | |||
Nihon Nohyaku Co. Ltd.a | 8,000 | 73,568 | |||
Nihon Parkerizing Co. Ltd. | 8,000 | 112,638 | |||
Nippon Carbon Co. Ltd. | 8,000 | 38,037 | |||
Nippon Kayaku Co. Ltd. | 16,000 | 103,055 | |||
Nippon Paint Co. Ltd. | 24,000 | 87,353 | |||
Nippon Shokubai Co. Ltd. | 8,000 | 51,822 | |||
Nippon Soda Co. Ltd. | 16,000 | 79,023 | |||
Nippon Synthetic Chemical Industry Co. Ltd. (The) | 8,000 | 31,550 | |||
NOF Corp. | 16,000 | 67,229 | |||
Sakai Chemical Industry Co. Ltd. | 8,000 | 24,768 | |||
Sumitomo Bakelite Co. Ltd. | 24,000 | 125,169 | |||
Taiyo Ink Manufacturing Co. Ltd. | 1,600 | 31,255 | |||
Takasago International Corp. | 8,000 | 44,893 | |||
Toagosei Co. Ltd. | 24,000 | 91,776 | |||
Tokai Carbon Co. Ltd. | 16,000 | 167,187 | |||
Tokyo Ohka Kogyo Co. Ltd. | 4,800 | 87,928 | |||
Toyo Ink Manufacturing Co. Ltd. | 24,000 | 79,392 | |||
Zeon Corp. | 16,000 | 65,165 | |||
2,007,941 | |||||
COMMERCIAL SERVICES – 2.02% | |||||
Aeon Delight Co. Ltd. | 1,600 | 33,983 | |||
Daiseki Co. Ltd. | 2,460 | 80,470 | |||
Intelligence Ltd. | 16 | 8,993 | |||
Meitec Corp. | 4,000 | 111,311 | |||
Nichii Gakkan Co. | 2,400 | 30,916 | |||
Nishio Rent All Co. Ltd. | 2,400 | 24,348 | |||
Nissha Printing Co. Ltd. | 2,400 | 131,140 | |||
Park 24 Co. Ltd. | 8,800 | 46,220 | |||
Pasona Group Inc. | 32 | 22,881 | |||
Sohgo Security Services Co. Ltd. | 5,600 | 64,243 | |||
So-Net M3 Inc. | 8 | 29,707 | |||
TKC Corp. | 800 | 14,360 | |||
Toppan Forms Co. Ltd. | 6,400 | 77,608 | |||
Zenrin Co. Ltd. | 1,600 | 23,663 | |||
699,843 |
58 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMPUTERS – 0.62% | |||||
DTS Corp. | 3,200 | $ | 45,291 | ||
Hitachi Information Systems Ltd. | 2,400 | 52,854 | |||
Net One Systems Co. Ltd. | 56 | 75,647 | |||
NS Solutions Corp. | 2,400 | 39,099 | |||
212,891 | |||||
COSMETICS & PERSONAL CARE – 1.18% | |||||
Aderans Holdings Co. Ltd. | 4,000 | 63,948 | |||
Fancl Corp. | 4,000 | 47,620 | |||
Kose Corp. | 3,200 | 88,017 | |||
Lion Corp. | 16,000 | 78,286 | |||
Mandom Corp. | 4,800 | 129,592 | |||
407,463 | |||||
DISTRIBUTION & WHOLESALE – 1.87% | |||||
Doshisha Co. Ltd. | 2,400 | 34,256 | |||
Hanwa Co. Ltd. | 24,000 | 108,804 | |||
Inaba Denki Sangyo Co. Ltd. | 3,200 | 81,677 | |||
Itochu Enex Co. Ltd. | 4,000 | 24,953 | |||
Iwatani Corp. | 32,000 | 88,459 | |||
Japan Pulp & Paper Co. Ltd. | 8,000 | 27,791 | |||
Japan Wind Development Co. Ltd. | 8 | 23,958 | |||
JFE Shoji Holdings Inc. | 8,000 | 46,662 | |||
Kanematsu Corp.b | 40,000 | 45,704 | |||
Matsuda Sangyo Co. Ltd. | 1,760 | 39,490 | |||
Nagase & Co. Ltd. | 8,000 | 76,664 | |||
Sumikin Bussan Corp. | 8,000 | 26,538 | |||
Trusco Nakayama Corp. | 1,600 | 22,070 | |||
647,026 | |||||
DIVERSIFIED FINANCIAL SERVICES – 2.81% | |||||
Aizawa Securities Co. Ltd. | 4,800 | 16,674 | |||
Century Leasing System Inc. | 2,400 | 25,034 | |||
Fuyo General Lease Co. Ltd. | 1,600 | 48,063 | |||
Hitachi Credit Corp. | 4,000 | 61,184 | |||
IBJ Leasing Co. Ltd. | 3,200 | 59,710 | |||
Ichiyoshi Securities Co. Ltd. | 4,800 | 47,679 | |||
Jaccs Co. Ltd.b | 16,000 | 39,659 | |||
Japan Securities Finance Co. Ltd. | 8,800 | 62,032 | |||
Marusan Securities Co. Ltd. | 7,200 | 41,598 | |||
Mizuho Investors Securities Co. Ltd. | 32,000 | 33,909 | |||
NIS Group Co. Ltd.b | 11,200 | 13,932 | |||
Okasan Holdings Inc. | 16,000 | 80,792 | |||
OMC Card Inc.b | 12,800 | 33,614 |
Security | Shares | Value | |||
Orient Corp.b | 24,000 | $ | 34,941 | ||
Osaka Securities Exchange Co. Ltd. | 24 | 86,247 | |||
Ricoh Leasing Co. Ltd. | 2,400 | 48,542 | |||
Risa Partners Inc. | 32 | 28,749 | |||
Secured Capital Japan Co. Ltd. | 16 | 13,195 | |||
SFCG Co. Ltd. | 400 | 32,988 | |||
SPARX Group Co. Ltd. | 88 | 19,696 | |||
Tokai Tokyo Securities Co. Ltd. | 24,000 | 86,690 | |||
Tokyo Leasing Co. Ltd. | 3,200 | 30,518 | |||
Toyo Securities Co. Ltd. | 8,000 | 25,284 | |||
970,730 | |||||
ELECTRIC – 0.25% | |||||
Okinawa Electric Power | 1,600 | 85,658 | |||
85,658 | |||||
ELECTRICAL COMPONENTS | |||||
Fujikura Ltd. | 32,000 | 150,970 | |||
Funai Electric Co. Ltd. | 2,400 | 52,412 | |||
GS Yuasa Corp.a | 40,000 | 207,141 | |||
Hitachi Cable Ltd. | 16,000 | 58,383 | |||
Shinko Electric Co. Ltd.a | 16,000 | 41,281 | |||
Toshiba Tec Corp. | 16,000 | 81,530 | |||
591,717 | |||||
ELECTRONICS – 5.60% | |||||
A&D Co. Ltd. | 2,400 | 17,891 | |||
Anritsu Corp. | 16,000 | 44,377 | |||
Chiyoda Integre Co. Ltd. | 2,400 | 33,725 | |||
CMK Corp. | 5,600 | 34,985 | |||
Cosel Co. Ltd. | 4,000 | 36,305 | |||
Dainippon Screen | 24,000 | 103,055 | |||
Eizo Nanao Corp. | 3,200 | 65,902 | |||
Fujitsu General Ltd. | 8,000 | 24,695 | |||
Furuno Electric Co. Ltd. | 3,200 | 37,507 | |||
Futaba Corp. | 4,000 | 67,929 | |||
Hamamatsu Photonics K.K. | 6,400 | 160,111 | |||
HORIBA Ltd. | 3,200 | 64,133 | |||
Hosiden Corp. | 5,600 | 94,688 | |||
JEOL Ltd. | 8,000 | 29,118 | |||
Kaga Electronics Co. Ltd. | 4,000 | 49,942 | |||
Koa Corp. | 6,400 | 37,330 | |||
Kuroda Electric Co. Ltd. | 4,000 | 46,809 | |||
Macnica Inc. | 3,200 | 40,632 | |||
Meiko Electronics Co. Ltd. | 800 | 20,788 |
SCHEDULESOF INVESTMENTS | 59 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Micronics Japan Co. Ltd. | 1,600 | $ | 33,836 | ||
NEC Tokin Corp.b | 8,000 | 27,349 | |||
Nichicon Corp. | 7,200 | 59,179 | |||
Nihon Dempa Kogyo Co. Ltd. | 800 | 17,102 | |||
Nippon Chemi-Con Corp. | 16,000 | 57,498 | |||
Nitto Kogyo Corp. | 2,400 | 22,601 | |||
Ryosan Co. Ltd. | 4,800 | 104,160 | |||
Sanyo Denki Co. Ltd. | 8,000 | 30,445 | |||
Sodick Co. Ltd. | 7,200 | 29,324 | |||
Star Micronics Co. Ltd. | 4,000 | 50,532 | |||
Taiyo Yuden Co. Ltd. | 8,000 | 89,565 | |||
Tamura Corp. | 8,000 | 21,894 | |||
Tokyo Seimitsu Co. Ltd. | 4,000 | 52,670 | |||
Toyo Corp. | 4,800 | 51,837 | |||
ULVAC Inc. | 3,200 | 112,048 | |||
Wacom Co. Ltd. | 32 | 58,825 | |||
Yamatake Corp. | 5,600 | 110,168 | |||
1,938,955 | |||||
ENGINEERING & CONSTRUCTION – 4.22% | |||||
Chiyoda Corp. | 16,000 | 135,342 | |||
Chudenko Corp. | 2,400 | 34,897 | |||
COMSYS Holdings Corp. | 16,000 | 143,598 | |||
Japan Airport Terminal Co. Ltd. | 6,400 | 82,444 | |||
Kandenko Co. Ltd. | 8,000 | 48,579 | |||
Kyowa Exeo Corp. | 8,000 | 79,244 | |||
Maeda Corp. | 24,000 | 73,863 | |||
Maeda Road Construction Co. Ltd. | 8,000 | 51,675 | |||
Nippo Corp. | 8,000 | 42,755 | |||
Nishimatsu Construction Co. Ltd. | 32,000 | 71,357 | |||
Okumura Corp. | 16,000 | 58,088 | |||
Penta-Ocean | 28,000 | 32,509 | |||
Shinko Plantech Co. Ltd. | 4,000 | 41,318 | |||
SHO-BOND Holdings Co. Ltd. | 3,200 | 56,466 | |||
Taihei Kogyo Co. Ltd. | 8,000 | 26,464 | |||
Taikisha Ltd. | 4,800 | 66,079 | |||
Takasago Thermal | 8,000 | 79,171 | |||
Takuma Co. Ltd. | 16,000 | 49,684 | |||
Toda Corp. | 24,000 | 87,353 | |||
Tokyu Construction Co. Ltd. | 8,960 | 26,420 | |||
Toshiba Plant Systems & | 8,000 | 73,716 | |||
Toyo Construction Co. Ltd.b | 32,000 | 13,859 | |||
Toyo Engineering Corp. | 16,000 | 84,773 | |||
1,459,654 |
Security | Shares | Value | |||
ENTERTAINMENT – 0.91% | |||||
Avex Group Holdings Inc. | 3,200 | $ | 33,261 | ||
Resorttrust Inc. | 4,000 | 43,492 | |||
Shochiku Co. Ltd. | 8,000 | 44,598 | |||
Toei Co. Ltd. | 8,000 | 44,156 | |||
Tokyotokeiba Co. Ltd. | 16,000 | 26,095 | |||
USJ Co. Ltd. | 96 | 57,852 | |||
Yomiuri Land Co. Ltd. | 8,000 | 24,621 | |||
Yoshimoto Kogyo Co. Ltd. | 4,000 | 40,028 | |||
314,103 | |||||
ENVIRONMENTAL CONTROL – 0.18% | |||||
Asahi Pretec Corp. | 2,400 | 61,590 | |||
61,590 | |||||
FOOD – 4.41% | |||||
Ariake Japan Co. Ltd. | 2,400 | 45,999 | |||
Ezaki Glico Co. Ltd.a | 8,000 | 81,014 | |||
Fuji Oil Co. Ltd. | 12,000 | 129,150 | |||
House Foods Corp. | 7,200 | 118,093 | |||
Itoham Foods Inc. | 16,000 | 84,036 | |||
J-Oil Mills Inc. | 8,000 | 38,553 | |||
Maruha Nichiro Holdings Inc. | 40,000 | 74,084 | |||
Meiji Seika Kaisha Ltd. | 32,000 | 151,854 | |||
Mitsui Sugar Co. Ltd. | 8,000 | 30,961 | |||
Morinaga & Co. Ltd. | 40,000 | 76,664 | |||
Morinaga Milk Industry Co. Ltd. | 24,000 | 71,209 | |||
Nichirei Corp. | 24,000 | 138,217 | |||
Nippon Beet Sugar | 8,000 | 19,240 | |||
Nippon Flour Mills Co. Ltd. | 24,000 | 115,660 | |||
Nippon Suisan Kaisha Ltd. | 23,200 | 81,449 | |||
Nisshin OilliO Group Ltd. (The) | 16,000 | 89,196 | |||
Q.P. Corp. | 9,600 | 91,466 | |||
Snow Brand Milk | 20,000 | 61,368 | |||
Unicharm Petcare Corp. | 800 | 25,801 | |||
1,524,014 | |||||
FOREST PRODUCTS & PAPER – 1.41% | |||||
Daio Paper Corp. | 8,000 | 69,514 | |||
Hokuetsu Paper Mills Ltd. | 12,000 | 52,744 | |||
Mitsubishi Paper Mills Ltd. | 32,000 | 76,959 | |||
Rengo Co. Ltd. | 24,000 | 174,706 | |||
Sumitomo Forestry Co. Ltd. | 16,000 | 114,997 | |||
488,920 |
60 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
GAS – 0.33% | |||||
Saibu Gas Co. Ltd. | 48,000 | $ | 112,785 | ||
112,785 | |||||
HAND & MACHINE TOOLS – 1.20% | |||||
DISCO Corp. | 2,400 | 90,449 | |||
Hitachi Koki Co. Ltd. | 5,600 | 66,927 | |||
Meidensha Corp. | 16,000 | 43,050 | |||
Mori Seiki Co. Ltd. | 8,000 | 105,192 | |||
OSG Corp.a | 8,000 | 69,293 | |||
Union Tool Co. | 1,600 | 38,922 | |||
413,833 | |||||
HEALTH CARE - PRODUCTS – 1.58% | |||||
Hogy Medical Co. Ltd. | 1,600 | 77,549 | |||
Nakanishi Inc. | 800 | 73,642 | |||
Nihon Kohden Corp. | 3,200 | 70,620 | |||
Nipro Corp. | 8,000 | 147,137 | |||
Sysmex Corp. | 3,200 | 140,944 | |||
Topcon Corp. | 5,600 | 37,824 | |||
547,716 | |||||
HOME BUILDERS – 0.28% | |||||
Misawa Homes Co. Ltd.b | 4,000 | 18,355 | |||
PanaHome Corp. | 8,000 | 47,104 | |||
Token Corp. | 960 | 32,995 | |||
98,454 | |||||
HOME FURNISHINGS – 1.17% | |||||
Alpine Electronics Inc. | 4,800 | 49,006 | |||
Canon Electronics Inc. | 1,600 | 29,560 | |||
Daiwa Industries Ltd. | 8,000 | 28,233 | |||
Foster Electric Co. Ltd. | 2,400 | 48,321 | |||
France Bed Holdings Co. Ltd. | 16,000 | 23,589 | |||
Hitachi Maxell Ltd. | 4,800 | 54,270 | |||
Juki Corp. | 8,000 | 14,964 | |||
Kenwood Corp. | 40,000 | 35,384 | |||
Nidec Sankyo Corp. | 8,000 | 42,976 | |||
Noritz Corp. | 4,000 | 37,779 | |||
Victor Co. of Japan Ltd.b | 24,000 | 40,691 | |||
404,773 | |||||
HOUSEHOLD PRODUCTS & WARES – 0.26% | |||||
Pilot Corp. | 40 | 89,933 | |||
89,933 |
Security | Shares | Value | |||
HOUSEWARES – 0.39% | |||||
Noritake Co. Ltd. | 16,000 | $ | 60,889 | ||
Sangetsu Co. Ltd. | 4,000 | 75,190 | |||
136,079 | |||||
INSURANCE – 0.31% | |||||
Fuji Fire & Marine | 8,000 | 22,041 | |||
Nissay Dowa General | 16,000 | 84,626 | |||
106,667 | |||||
INTERNET – 1.73% | |||||
Access Co. Ltd.b | 24 | 47,326 | |||
CyberAgent Inc.a | 48 | 46,397 | |||
Dwango Co. Ltd. | 8 | 12,679 | |||
eAccess Ltd. | 128 | 75,603 | |||
En-Japan Inc. | 24 | 25,498 | |||
GMO Internet Inc.b | 5,600 | 25,233 | |||
Gourmet Navigator Inc. | 16 | 41,133 | |||
Index Holdings | 104 | 13,033 | |||
Internet Initiative Japan Inc. | 8 | 20,670 | |||
kabu.com Securities Co. Ltd. | 40 | 37,042 | |||
Kakaku.com Inc. | 16 | 47,178 | |||
Matsui Securities Co. Ltd. | 10,400 | 74,460 | |||
Monex Group Inc. | 128 | 64,162 | |||
Opt Inc. | 16 | 29,177 | |||
So-Net Entertainment Corp. | 8 | 22,926 | |||
VeriSign Japan K.K. | 32 | 14,891 | |||
597,408 | |||||
IRON & STEEL – 1.66% | |||||
Aichi Steel Corp. | 16,000 | 66,344 | |||
Godo Steel Ltd. | 16,000 | 48,652 | |||
Kyoei Steel Ltd. | 1,600 | 33,614 | |||
Mitsubishi Steel | 16,000 | 60,594 | |||
Nakayama Steel Works Ltd. | 8,000 | 26,095 | |||
Nippon Metal Industry Co. Ltd. | 16,000 | 38,627 | |||
Nippon Yakin Kogyo Co. Ltd. | 12,000 | 59,931 | |||
Sanyo Special Steel Co. Ltd. | 16,000 | 89,638 | |||
TOPY Industries Ltd. | 24,000 | 68,998 | |||
Yodogawa Steel Works Ltd. | 16,000 | 82,562 | |||
575,055 |
SCHEDULESOF INVESTMENTS | 61 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
LEISURE TIME – 1.71% | |||||
Accordia Golf Co. Ltd. | 64 | $ | 66,049 | ||
Aruze Corp. | 2,400 | 62,695 | |||
Daiichikosho Co. Ltd. | 4,800 | 49,581 | |||
Fields Corp. | 24 | 49,758 | |||
Heiwa Corp. | 4,000 | 36,010 | |||
HIS Co. Ltd. | 4,000 | 49,795 | |||
Mars Engineering Corp. | 1,600 | 33,541 | |||
Mizuno Corp. | 8,000 | 40,396 | |||
Pacific Golf Group International Holdings K.K. | 48 | 44,981 | |||
Roland Corp. | 2,400 | 39,541 | |||
Round One Corp. | 56 | 46,441 | |||
Tokyo Dome Corp. | 16,000 | 74,158 | |||
592,946 | |||||
LODGING – 0.17% | |||||
Fujita Kanko Inc. | 8,000 | 59,415 | |||
59,415 | |||||
MACHINERY – 3.70% | |||||
Aida Engineering Ltd. | 8,000 | 36,268 | |||
Chugai Ro Co. Ltd. | 8,000 | 38,701 | |||
CKD Corp. | 7,200 | 35,760 | |||
Daifuku Co. Ltd. | 8,000 | 66,492 | |||
Daihen Corp. | 16,000 | 63,101 | |||
Fuji Machine Manufacturing Co. Ltd. | 4,000 | 57,867 | |||
Furukawa Co. Ltd. | 32,000 | 55,139 | |||
Harmonic Drive Systems Inc. | 8 | 26,169 | |||
Iseki & Co. Ltd.a,b | 24,000 | 64,354 | |||
Komori Corp. | 5,600 | 82,871 | |||
Makino Milling Machine Co. Ltd. | 8,000 | 37,226 | |||
Max Co. Ltd. | 8,000 | 77,328 | |||
Miura Co. Ltd. | 3,200 | 71,357 | |||
Modec Inc. | 1,600 | 51,306 | |||
Nabtesco Corp. | 8,000 | 83,962 | |||
Nippon Thompson Co. Ltd. | 8,000 | 42,829 | |||
Obara Corp. | 1,600 | 18,974 | |||
Produce Co. Ltd.b | 8 | 27,865 | |||
Shima Seiki Manufacturing Ltd. | 1,600 | 37,742 | |||
Sintokogio Ltd. | 6,400 | 51,188 | |||
Tadano Ltd. | 8,000 | 62,732 | |||
Takeuchi Manufacturing Co. Ltd. | 1,600 | 29,177 | |||
Toshiba Machine Co. Ltd. | 8,000 | 35,605 |
Security | Shares | Value | |||
Toyo Kanetsu K.K. | 24,000 | $ | 44,893 | ||
Tsubakimoto Chain Co. | 16,000 | 82,856 | |||
1,281,762 | |||||
MACHINERY - DIVERSIFIED – 0.27% | |||||
Ebara Corp. | 40,000 | 94,725 | |||
94,725 | |||||
MANUFACTURING – 1.84% | |||||
Amano Corp. | 8,000 | 69,661 | |||
ARRK Corp.b | 8,000 | 16,660 | |||
Glory Ltd. | 5,600 | 121,004 | |||
Kimoto Co. Ltd. | 2,400 | 17,869 | |||
Kureha Corp. | 24,000 | 136,227 | |||
Nikkiso Co. Ltd. | 8,000 | 49,684 | |||
Nitta Corp. | 3,200 | 49,419 | |||
Tamron Co. Ltd. | 1,600 | 29,707 | |||
Tenma Corp. | 4,000 | 61,037 | |||
Tokai Rubber Industries Ltd. | 3,200 | 36,062 | |||
Toyo Tanso Co. Ltd.a | 800 | 49,021 | |||
636,351 | |||||
MEDIA – 0.44% | |||||
Gakken Co. Ltd. | 8,000 | 21,672 | |||
Kadokawa Group Holdings Inc. | 2,400 | 56,945 | |||
SKY Perfect JSAT Holdings Inc. | 152 | 57,915 | |||
Usen Corp.b | 5,360 | 14,718 | |||
151,250 | |||||
METAL FABRICATE & HARDWARE – 1.65% | |||||
Ahresty Corp. | 2,400 | 17,515 | |||
Kitz Corp. | 8,000 | 36,563 | |||
Misumi Group Inc. | 8,000 | 139,986 | |||
Nachi-Fujikoshi Corp. | 24,000 | 77,623 | |||
Neturen Co. Ltd. | 5,600 | 41,797 | |||
Oiles Corp. | 2,400 | 41,952 | |||
Onoken Co. Ltd. | 1,600 | 24,076 | |||
Ryobi Ltd. | 24,000 | 80,276 | |||
Tocalo Co. Ltd. | 2,400 | 36,932 | |||
Toho Zinc Co. Ltd. | 16,000 | 54,107 | |||
Yamezen Corp. | 5,600 | 19,557 | |||
570,384 | |||||
MINING – 1.10% | |||||
Mitsui Mining Co. Ltd. | 16,000 | 55,287 | |||
Nippon Denko Co. Ltd. | 8,000 | 69,809 |
62 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Nippon Light Metal Co. Ltd. | 56,000 | $ | 85,658 | ||
Nittetsu Mining Co. Ltd. | 8,000 | 29,634 | |||
Pacific Metals Co. Ltd. | 16,000 | 104,087 | |||
Sumitomo Light Metal | 32,000 | 34,794 | |||
379,269 | |||||
OFFICE & BUSINESS EQUIPMENT – 0.11% | |||||
Canon Finetech Inc. | 3,200 | 39,158 | |||
39,158 | |||||
OFFICE FURNISHINGS – 0.43% | |||||
Itoki Corp. | 5,600 | 20,589 | |||
Kokuyo Co. Ltd. | 9,600 | 78,198 | |||
Okamura Corp. | 8,000 | 51,527 | |||
150,314 | |||||
OIL & GAS – 0.12% | |||||
AOC Holdings Inc. | 4,000 | 42,055 | |||
42,055 | |||||
PACKAGING & CONTAINERS – 0.21% | |||||
FP Corp. | 1,600 | 43,787 | |||
Fuji Seal International Inc. | 1,600 | 29,486 | |||
73,273 | |||||
PHARMACEUTICALS – 2.98% | |||||
EPS Co. Ltd. | 8 | 30,371 | |||
Kaken Pharmaceutical Co. Ltd. | 8,000 | 72,094 | |||
Kobayashi Pharmaceutical Co. Ltd. | 2,400 | 82,046 | |||
Miraca Holdings Inc. | 4,800 | 108,362 | |||
Mochida Pharmaceutical Co. Ltd. | 8,000 | 97,894 | |||
Nichi-Iko Pharmaceutical Co. Ltd. | 2,400 | 65,238 | |||
Nippon Shinyaku Co. Ltd. | 8,000 | 100,548 | |||
Rohto Pharmaceutical Co. Ltd. | 8,000 | 96,052 | |||
Sawai Pharmaceutical Co. Ltd.a | 1,600 | 70,915 | |||
Seikagaku Corp. | 4,000 | 42,092 | |||
Shin Nippon Biomedical Laboratories Ltd. | 1,600 | 22,144 | |||
Toho Pharmaceutical Co. Ltd. | 3,200 | 56,614 | |||
Towa Pharmaceutical Co. Ltd. | 800 | 30,739 | |||
Tsumura & Co. | 5,600 | 157,383 | |||
1,032,492 | |||||
REAL ESTATE – 1.02% | |||||
Arnest One Corp. | 6,400 | 17,633 | |||
Atrium Co. Ltd. | 1,600 | 8,581 | |||
Cosmos Initia Co. Ltd. | 8,000 | 9,141 |
Security | Shares | Value | |||
Creed Corp. | 16 | $ | 15,230 | ||
Daibiru Corp. | 4,000 | 38,148 | |||
Daikyo Inc. | 32,000 | 45,999 | |||
Goldcrest Co. Ltd. | 1,680 | 27,803 | |||
Heiwa Real Estate Co. Ltd. | 16,000 | 65,017 | |||
Japan General Estate Co. Ltd. (The)a | 4,000 | 8,809 | |||
Sankei Building Co. Ltd. (The) | 3,200 | 15,480 | |||
Shoei Co. Ltd. | 3,200 | 31,963 | |||
Sumitomo Real Estate | 800 | 23,884 | |||
TOC Co. Ltd. | 8,000 | 31,255 | |||
Tokyu Livable Inc. | 2,400 | 15,591 | |||
354,534 | |||||
REAL ESTATE INVESTMENT TRUSTS – 4.17% | |||||
Creed Office Investment Corp. | 8 | 13,564 | |||
DA Office Investment Corp. | 24 | 103,497 | |||
Frontier Real Estate | 8 | 46,441 | |||
Fukuoka REIT Corp. | 8 | 40,175 | |||
Global One Real Estate | 8 | 84,773 | |||
Hankyu REIT Inc. | 8 | 33,172 | |||
Japan Excellent Inc. | 16 | 75,927 | |||
Japan Hotel and Resort Inc. | 16 | 35,384 | |||
Japan Logistics Fund Inc. | 16 | 88,017 | |||
Kenedix Realty Investment Corp. | 16 | 72,536 | |||
LaSalle Japan REIT Inc. | 8 | 14,728 | |||
MID REIT Inc. | 16 | 32,288 | |||
Mori Hills REIT Investment Corp. | 8 | 31,108 | |||
MORI TRUST Sogo REIT Inc. | 16 | 139,175 | |||
Nippon Accommodations Fund Inc. | 16 | 72,979 | |||
Nippon Commercial | 24 | 49,338 | |||
Nippon Residential | 24 | 64,022 | |||
ORIX JREIT Inc. | 24 | 131,361 | |||
Premier Investment Co. | 16 | 70,472 | |||
TOKYU REIT Inc. | 16 | 117,208 | |||
Top REIT Inc. | 16 | 58,973 | |||
United Urban Investment Corp. | 16 | 67,818 | |||
1,442,956 | |||||
RETAIL – 9.25% | |||||
ABC-Mart Inc. | 2,400 | 60,373 | |||
Aoki Holdings Inc. | 2,400 | 31,889 | |||
Aoyama Trading Co. Ltd. | 6,400 | 117,002 | |||
Arcs Co. Ltd. | 3,200 | 45,085 |
SCHEDULESOF INVESTMENTS | 63 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Askul Corp. | 2,400 | $ | 36,047 | ||
Autobacs Seven Co. Ltd. | 4,000 | 112,048 | |||
Best Denki Co. Ltd. | 8,000 | 38,553 | |||
BIC Camera Inc. | 24 | 12,583 | |||
Cawachi Ltd. | 1,600 | 34,278 | |||
Chiyoda Co. Ltd. | 3,200 | 47,296 | |||
Circle K Sunkus Co. Ltd. | 4,800 | 79,480 | |||
Culture Convenience Club Co. Ltd. | 9,600 | 60,771 | |||
Daiei Inc. (The)b | 6,000 | 48,100 | |||
DCM Japan Holdings Co. Ltd. | 7,200 | 53,208 | |||
Don Quijote Co. Ltd. | 4,800 | 85,186 | |||
Doutor Nichires Holdings Co. Ltd. | 4,800 | 79,701 | |||
Duskin Co. Ltd. | 5,600 | 91,179 | |||
EDION Corp. | 7,200 | 57,255 | |||
GEO Corp. | 32 | 31,373 | |||
H2O Retailing Corp. | 16,000 | 99,516 | |||
Heiwado Co. Ltd. | 4,000 | 64,317 | |||
Izumi Co. Ltd. | 5,600 | 82,149 | |||
Izumiya Co. Ltd. | 16,000 | 91,260 | |||
Joshin Denki Co. Ltd. | 8,000 | 64,870 | |||
Keiyo Co. Ltd. | 4,000 | 20,124 | |||
Kisoji Co. Ltd. | 1,600 | 32,140 | |||
Kohnan Shoji Co. Ltd. | 2,400 | 32,487 | |||
Komeri Co. Ltd. | 3,200 | 94,356 | |||
K’s Holdings Corp. | 4,000 | 73,495 | |||
Link Theory Holdings Co. Ltd.b | 8 | 13,121 | |||
Maruetsu Inc. (The)b | 8,000 | 71,431 | |||
Matsumotokiyoshi Co. Ltd. | 4,800 | 101,949 | |||
Matsuya Co. Ltd. | 3,200 | 57,852 | |||
McDonald’s Holdings Co. | 4,800 | 66,565 | |||
Nishimatsuya Chain Co. Ltd. | 5,600 | 50,414 | |||
Nissen Holdings Co. Ltd. | 5,600 | 22,395 | |||
Parco Co. Ltd. | 7,200 | 82,798 | |||
Paris Miki Inc. | 4,000 | 33,946 | |||
Plenus Co. Ltd. | 3,200 | 47,738 | |||
Point Inc. | 1,440 | 48,697 | |||
Right On Co. Ltd. | 2,400 | 26,759 | |||
Ryohin Keikaku Co. Ltd. | 2,400 | 130,256 | |||
Saizeriya Co. Ltd. | 1,600 | 16,070 | |||
San-A & Co. Ltd. | 800 | 24,179 |
Security | Shares | Value | |||
Sankyo-Tateyama Holdings Inc. | 40,000 | $ | 44,967 | ||
Seiko Corp. | 8,000 | 30,150 | |||
Senshukai Co. Ltd. | 4,800 | 28,793 | |||
Shimachu Co. Ltd. | 4,000 | 97,120 | |||
St. Marc Holdings Co. Ltd. | 800 | 28,675 | |||
Sugi Pharmacy Co. Ltd. | 2,400 | 69,883 | |||
Sundrug Co. Ltd. | 3,200 | 66,934 | |||
Tsuruha Holdings Inc. | 1,600 | 53,370 | |||
Valor Co. Ltd. | 4,000 | 35,826 | |||
Watami Co. Ltd. | 3,200 | 52,957 | |||
Xebio Co. Ltd. | 2,400 | 44,782 | |||
Yoshinoya Holdings Co. Ltd. | 48 | 51,395 | |||
Zensho Co. Ltd. | 6,400 | 23,943 | |||
3,199,086 | |||||
SEMICONDUCTORS – 0.49% | |||||
Epson Toyocom Corp. | 8,000 | 26,022 | |||
Megachips Corp. | 1,600 | 24,179 | |||
Mimasu Semiconductor | 2,400 | 35,207 | |||
Sanken Electric Co. Ltd. | 8,000 | 41,649 | |||
Shindengen Electric | 16,000 | 34,204 | |||
United Technology | 16 | 6,811 | |||
168,072 | |||||
SHIPBUILDING – 0.39% | |||||
Hitachi Zosen Corp.a,b | 84,000 | 91,334 | |||
Namura Shipbuilding Co. Ltd. | 2,400 | 9,399 | |||
Sasebo Heavy Industries Co. Ltd. | 16,000 | 33,320 | |||
134,053 | |||||
SOFTWARE – 1.68% | |||||
Capcom Co. Ltd. | 4,800 | 148,611 | |||
Fuji Soft ABC Inc. | 3,200 | 57,852 | |||
Hitachi Software | 3,200 | 65,902 | |||
Koei Co. Ltd. | 2,400 | 34,035 | |||
Nihon Unisys Ltd. | 5,600 | 88,651 | |||
NSD Co. Ltd. | 4,000 | 44,782 | |||
Obic Business Consultants Co. Ltd. | 800 | 30,002 | |||
Sumisho Computer Systems Corp. | 2,400 | 43,190 | |||
Trans Cosmos Inc. | 3,200 | 23,560 | |||
Works Applications Co. Ltd. | 40 | 45,667 | |||
582,252 |
64 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
August 31, 2008
Security | Shares | Value | |||
STORAGE & WAREHOUSING – 0.53% | |||||
Mitsui-Soko Co. Ltd. | 16,000 | $ | 79,613 | ||
Shibusawa Warehouse Co. Ltd. (The) | 8,000 | 43,935 | |||
Sumitomo Warehouse Co. Ltd. (The) | 16,000 | 59,562 | |||
183,110 | |||||
TELECOMMUNICATIONS – 1.24% | |||||
Denki Kogyo Co. Ltd. | 8,000 | 47,104 | |||
Hitachi Kokusai Electric Inc. | 8,000 | 55,803 | |||
IT Holdings Corp.b | 7,348 | 117,473 | |||
Japan Radio Co. Ltd. | 8,000 | 18,503 | |||
Oki Electric Industry Co. Ltd.a,b | 64,000 | 87,869 | |||
Okinawa Cellular Telephone Co. | 16 | 27,570 | |||
Telepark Corp. | 32 | 39,187 | |||
Uniden Corp. | 8,000 | 35,162 | |||
428,671 | |||||
TEXTILES – 1.00% | |||||
Daiwabo Co. Ltd. | 16,000 | 39,954 | |||
Kurabo Industries Ltd. | 24,000 | 41,133 | |||
Nitto Boseki Co. Ltd. | 40,000 | 79,982 | |||
Seiren Co. Ltd. | 6,400 | 34,204 | |||
Toyobo Co. Ltd. | 64,000 | 107,920 | |||
Unitika Ltd.a | 48,000 | 44,229 | |||
347,422 | |||||
TOYS, GAMES & HOBBIES – 0.31% | |||||
Sanrio Co. Ltd. | 4,800 | 55,198 | |||
Tomy Co. Ltd. | 8,000 | 53,075 | |||
108,273 | |||||
TRANSPORTATION – 3.29% | |||||
Daiichi Chuo Kisen Kaisha | 16,000 | 96,862 | |||
Fukuyama Transporting Co. Ltd. | 16,000 | 54,845 | |||
Hitachi Transport System Ltd. | 4,000 | 54,734 | |||
Iino Kaiun Kaisha Ltd. | 8,000 | 62,142 | |||
Inui Steamship Co. Ltd. | 1,600 | 20,758 | |||
Keihan Electric Railway Co. Ltd. | 48,000 | 205,225 | |||
Kintetsu World Express Inc. | 1,600 | 29,383 | |||
Nippon Konpo Unyu Soko Co. Ltd. | 8,000 | 81,603 | |||
Nishi-Nippon Railroad Co. Ltd. | 32,000 | 112,048 | |||
Sagami Railway Co. Ltd. | 40,000 | 149,643 | |||
Sankyu Inc. | 24,000 | 115,218 |
Security | Shares | Value | ||||
Seino Holdings Co. Ltd. | 16,000 | $ | 94,651 | |||
Shinwa Kaiun Kaisha Ltd. | 8,000 | 40,175 | ||||
Yusen Air & Sea Service Co. Ltd. | 1,600 | 19,771 | ||||
1,137,058 | ||||||
VENTURE CAPITAL – 0.08% |
| |||||
Japan Asia Investment Co. Ltd. | 8,000 | 27,496 | ||||
27,496 | ||||||
TOTAL COMMON STOCKS |
| |||||
(Cost: $36,533,026) | 34,536,454 | |||||
SHORT-TERM INVESTMENTS – 1.62% |
| |||||
MONEY MARKET FUNDS – 1.62% |
| |||||
Barclays Global Investors Funds | 2,594 | 2,594 | ||||
BGI Cash Premier Fund LLC | 556,373 | 556,373 | ||||
558,967 | ||||||
TOTAL SHORT-TERM INVESTMENTS | 558,967 | |||||
TOTAL INVESTMENTS IN | 35,095,421 | |||||
Other Assets, Less Liabilities – (1.45)% | (501,489 | ) | ||||
NET ASSETS – 100.00% | $ | 34,593,932 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 65 |
Table of Contents
iSHARES® MSCI MALAYSIA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.71% | |||||
AGRICULTURE – 12.83% | |||||
Asiatic Development Bhd | 1,545,600 | $ | 2,550,570 | ||
British American Tobacco | 1,008,000 | 11,733,019 | |||
IOI Corp. Bhd | 23,184,030 | 34,842,656 | |||
Kuala Lumpur Kepong Bhd | 3,292,800 | 11,546,875 | |||
60,673,120 | |||||
AIRLINES – 1.10% | |||||
AirAsia Bhda | 7,324,800 | 2,331,158 | |||
Malaysian Airline System Bhd | 2,889,600 | 2,878,105 | |||
5,209,263 | |||||
AUTO PARTS & EQUIPMENT – 1.55% | |||||
UMW Holdings Bhd | 4,032,000 | 7,307,146 | |||
7,307,146 | |||||
BANKS – 27.03% | |||||
Alliance Financial Group Bhd | 5,846,400 | 4,668,850 | |||
AMMB Holdings Bhd | 12,096,037 | 10,907,285 | |||
Bumiputra-Commerce Holdings Bhd | 17,337,632 | 42,660,742 | |||
Hong Leong Bank Bhd | 3,225,600 | 5,465,508 | |||
Malayan Banking Bhd | 16,732,800 | 38,707,081 | |||
Public Bank Bhd | 7,257,600 | 21,814,504 | |||
RHB Capital Bhd | 2,956,800 | 3,642,088 | |||
127,866,058 | |||||
BUILDING MATERIALS – 0.67% | |||||
Lafarge Malayan Cement Bhd | 2,352,060 | 3,188,294 | |||
3,188,294 | |||||
COMMERCIAL SERVICES – 1.83% | |||||
PLUS Expressways Bhd | 10,281,600 | 8,634,908 | |||
8,634,908 | |||||
DIVERSIFIED FINANCIAL SERVICES – 1.47% | |||||
Bursa Malaysia Bhd | 2,150,400 | 4,372,406 | |||
Hong Leong Credit Bhd | 1,814,400 | 2,598,492 | |||
6,970,898 | |||||
ELECTRIC – 5.90% | |||||
Tenaga Nasional Bhd | 8,937,650 | 20,806,670 | |||
YTL Power International Bhd | 12,835,213 | 7,110,712 | |||
27,917,382 |
Security | Shares | Value | |||
ENGINEERING & CONSTRUCTION – 6.47% | |||||
Gamuda Bhd | 10,953,600 | $ | 8,327,770 | ||
IJM Corp. Bhda | 5,308,800 | 7,900,233 | |||
MMC Corp. Bhd | 6,249,600 | 3,867,441 | |||
YTL Corp. Bhd | 5,577,688 | 10,519,288 | |||
30,614,732 | |||||
ENTERTAINMENT – 2.61% | |||||
Berjaya Sports Toto Bhd | 5,107,200 | 6,862,776 | |||
Tanjong PLC | 1,411,200 | 5,489,271 | |||
12,352,047 | |||||
FOOD – 2.13% | |||||
PPB Group Bhd | 3,628,866 | 10,051,964 | |||
10,051,964 | |||||
GAS – 2.09% | |||||
Petronas Gas Bhd | 3,360,000 | 9,901,282 | |||
9,901,282 | |||||
HOLDING COMPANIES - DIVERSIFIED – 7.72% | |||||
Sime Darby Bhd | 16,464,025 | 32,991,121 | |||
UEM World Bhda | 4,771,200 | 3,514,955 | |||
36,506,076 | |||||
IRON & STEEL – 0.63% | |||||
Parkson Holdings Bhd | 2,150,400 | 2,965,632 | |||
2,965,632 | |||||
LODGING – 8.94% | |||||
Genting Bhd | 15,254,400 | 26,296,815 | |||
Resorts World Bhd | 20,025,600 | 15,992,154 | |||
42,288,969 | |||||
MEDIA – 0.55% | |||||
Astro All Asia Networks PLC | 2,620,800 | 2,610,374 | |||
2,610,374 | |||||
METAL FABRICATE & HARDWARE – 1.75% | |||||
KNM Group Bhd | 18,883,224 | 8,291,146 | |||
8,291,146 | |||||
OIL & GAS – 0.70% | |||||
Petronas Dagangan Bhd | 1,680,000 | 3,316,929 | |||
3,316,929 | |||||
REAL ESTATE – 2.23% | |||||
IGB Corp. Bhd | 6,115,200 | 2,432,745 | |||
KLCC Property Holdings Bhd | 3,225,600 | 2,575,917 | |||
SP Setia Bhd | 5,577,600 | 5,555,411 | |||
10,564,073 |
66 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI MALAYSIA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
TELECOMMUNICATIONS – 7.41% | |||||
DiGi.Com Bhd | 2,083,200 | $ | 14,119,228 | ||
Telekom Malaysia Bhd | 7,056,000 | 7,443,784 | |||
TM International Sdn Bhda | 7,324,800 | 13,490,497 | |||
35,053,509 | |||||
TRANSPORTATION – 4.10% | |||||
MISC Bhd | 7,660,800 | 19,414,433 | |||
19,414,433 | |||||
TOTAL COMMON STOCKS | 471,698,235 | ||||
WARRANTS – 0.00% | |||||
HOLDING COMPANIES - DIVERSIFIED – 0.00% | |||||
IJM Land Bhdb | 571,960 | 17 | |||
17 | |||||
TOTAL WARRANTS | 17 | ||||
SHORT-TERM INVESTMENTS – 0.00% | |||||
MONEY MARKET FUNDS – 0.00% | |||||
Barclays Global Investors Funds | 318 | 318 | |||
318 | |||||
TOTAL SHORT-TERM INVESTMENTS | 318 | ||||
TOTAL INVESTMENTS IN SECURITIES – 99.71% | 471,698,570 | ||||
Other Assets, Less Liabilities – 0.29% | 1,392,196 | ||||
NET ASSETS – 100.00% | $ | 473,090,766 | |||
a | Non-income earning security. |
b | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 67 |
Table of Contents
iSHARES® MSCI MEXICO INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.88% | |||||
BANKS – 0.41% | |||||
Banco Compartamos SA de CV | 1,214,400 | $ | 3,945,122 | ||
3,945,122 | |||||
BEVERAGES – 8.48% | |||||
Coca-Cola FEMSA | 198,354 | 11,254,606 | |||
Fomento Economico Mexicano | 12,070,408 | 53,467,914 | |||
Grupo Continental SAB de CV | 220,800 | 536,576 | |||
Grupo Modelo SAB de | 3,259,200 | 15,745,616 | |||
81,004,712 | |||||
BUILDING MATERIALS – 9.59% | |||||
Cemex SAB de CV | 45,558,440 | 91,670,891 | |||
91,670,891 | |||||
DIVERSIFIED FINANCIAL SERVICES – 5.81% | |||||
Financiera | 202,400 | 252,423 | |||
Grupo Financiero | 8,868,800 | 35,716,760 | |||
Grupo Financiero | 5,648,800 | 19,580,772 | |||
55,549,955 | |||||
ENGINEERING & CONSTRUCTION – 4.32% | |||||
Carso Infraestructura y | 6,219,200 | 5,434,836 | |||
Empresas ICA SAB de CVb | 2,852,974 | 12,895,644 | |||
Grupo Aeroportuario del Centro | 349,600 | 659,953 | |||
Grupo Aeroportuario del | 3,294,400 | 9,392,488 | |||
Grupo Aeroportuario del | 244,125 | 11,605,703 | |||
Promotora y Operadora de | 460,000 | 1,273,921 | |||
41,262,545 | |||||
ENVIRONMENTAL CONTROL – 0.01% | |||||
Promotora Ambiental | 36,800 | 80,129 | |||
80,129 |
Security | Shares | Value | |||
FOOD – 2.73% | |||||
Alsea SAB de CVb | 993,745 | $ | 1,087,691 | ||
Gruma SAB de CV Class Bb | 178,569 | 504,248 | |||
Grupo Bimbo SAB de CV | 3,680,000 | 24,521,529 | |||
26,113,468 | |||||
FOREST PRODUCTS & PAPER – 1.98% | |||||
Kimberly-Clark de | 4,305,600 | 18,942,639 | |||
18,942,639 | |||||
HOLDING COMPANIES - DIVERSIFIED – 4.18% | |||||
Alfa SAB de CV Series A | 2,318,400 | 12,090,670 | |||
Grupo Carso SA de CV | 7,102,430 | 27,823,020 | |||
Grupo Kuo SAB de CV Class Bb | 5,100 | 3,322 | |||
39,917,012 | |||||
HOME BUILDERS – 3.33% | |||||
Consorcio ARA SAB de CV | 4,802,400 | 3,785,920 | |||
Corporacion Geo SAB de CV | 2,650,200 | 7,741,327 | |||
Desarrolladora Homex | 1,288,930 | 10,897,854 | |||
Sare Holding SAB de | 233,200 | 180,667 | |||
Urbi Desarrollos | 3,312,000 | 9,223,744 | |||
31,829,512 | |||||
HOUSEWARES – 0.04% | |||||
Vitro SAB de CV Series A | 331,200 | 407,905 | |||
407,905 | |||||
IRON & STEEL – 0.17% | |||||
Cia Minera Autlan SAB de CV | 220,800 | 1,571,953 | |||
Grupo Industrial Saltillo | 22,800 | 31,693 | |||
1,603,646 | |||||
MACHINERY – 0.18% | |||||
Industrias CH SA de | 368,000 | 1,706,312 | |||
1,706,312 | |||||
MEDIA – 6.03% | |||||
Grupo Televisa SA Series CPO | 11,538,899 | 53,379,234 | |||
Megacable Holdings | 662,400 | 1,307,099 | |||
TV Azteca SAB de CV | 4,544,800 | 2,955,515 | |||
57,641,848 |
68 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI MEXICO INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
MINING – 5.06% | |||||
Grupo Mexico SA de CV | 22,505,110 | $ | 37,080,289 | ||
Industrias Penoles SAB de CVa | 680,800 | 11,217,786 | |||
48,298,075 | |||||
RETAIL – 7.55% | |||||
Controladora Comercial Mexicana SA de CV | 3,477,600 | 8,677,563 | |||
Grupo Elektra SA de CVa | 418,830 | 15,509,101 | |||
Grupo Famsa SAB de | 570,400 | 1,464,889 | |||
Wal-Mart de Mexico SAB de | 12,751,200 | 46,518,091 | |||
72,169,644 | |||||
TELECOMMUNICATIONS – 40.01% | |||||
America Movil SAB de | 94,293,440 | 241,612,360 | |||
Axtel SAB de CV Series CPOb | 3,845,600 | 4,710,065 | |||
Carso Global | 7,544,031 | 38,426,162 | |||
Grupo Iusacell SA de CVb | 372,800 | 3,623,833 | |||
Maxcom Telecomunicaciones | 478,400 | 556,179 | |||
Telefonos de | 48,134,400 | 59,282,217 | |||
Telmex Internacional | 48,134,400 | 34,156,290 | |||
382,367,106 | |||||
TOTAL COMMON STOCKS | 954,510,521 | ||||
SHORT-TERM INVESTMENTS – 3.23% | |||||
MONEY MARKET FUNDS – 3.23% | |||||
Barclays Global Investors Funds Institutional Money Market | 173,735 | 173,735 | |||
BGI Cash Premier Fund LLC 2.63%c,d,e | 30,750,881 | 30,750,881 | |||
30,924,616 | |||||
TOTAL SHORT-TERM INVESTMENTS | 30,924,616 | ||||
Value | ||||
TOTAL INVESTMENTS IN | $ | 985,435,137 | ||
Other Assets, Less Liabilities – (3.11)% | (29,750,801 | ) | ||
NET ASSETS – 100.00% | $ | 955,684,336 | ||
ADR – American Depositary Receipts
SP ADR – Sponsored American Depositary Receipts
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 69 |
Table of Contents
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.17% | |||||
AUSTRALIA – 65.08% | |||||
AGL Energy Ltd. | 1,275,287 | $ | 16,858,555 | ||
Alumina Ltd. | 3,175,462 | 11,895,979 | |||
Amcor Ltd. | 2,463,521 | 11,668,714 | |||
AMP Ltd. | 5,395,708 | 32,341,615 | |||
Aristocrat Leisure Ltd. | 1,002,293 | 5,092,731 | |||
Asciano Group | 1,661,634 | 7,011,896 | |||
ASX Ltd. | 502,067 | 15,288,960 | |||
Australia and New Zealand | 5,430,950 | 77,687,198 | |||
AXA Asia Pacific Holdings Ltd. | 2,422,756 | 10,828,818 | |||
Bendigo and Adelaide | 753,232 | 7,505,267 | |||
BHP Billiton Ltd. | 9,545,059 | 340,316,479 | |||
Billabong International Ltd. | 498,911 | 5,503,972 | |||
BlueScope Steel Ltd. | 2,130,037 | 16,931,400 | |||
Boart Longyear Group | 3,992,866 | 6,756,959 | |||
Boral Ltd. | 1,764,730 | 9,802,616 | |||
Brambles Ltd. | 4,049,937 | 26,856,104 | |||
Caltex Australia Ltd. | 420,011 | 4,539,504 | |||
CFS Retail Property Trust | 4,180,911 | 7,777,297 | |||
Coca-Cola Amatil Ltd. | 1,558,012 | 11,472,047 | |||
Cochlear Ltd. | 159,904 | 7,580,898 | |||
Commonwealth | 3,758,270 | 137,232,778 | |||
Computershare Ltd. | 1,384,432 | 10,790,069 | |||
Crown Ltd. | 1,337,547 | 10,539,844 | |||
CSL Ltd. | 1,703,451 | 60,220,843 | |||
CSR Ltd.a | 2,650,251 | 6,071,174 | |||
Dexus Property Group | 8,391,804 | 10,695,992 | |||
Fortescue Metals Group Ltd.b | 3,580,482 | 23,588,860 | |||
Foster’s Group Ltd. | 5,464,614 | 26,307,242 | |||
Goodman Fielder Ltd. | 3,713,034 | 4,732,544 | |||
Goodman Group | 4,493,618 | 12,306,294 | |||
GPT Group | 6,220,476 | 9,321,309 | |||
Harvey Norman Holdings Ltd. | 1,646,117 | 5,259,429 | |||
Incitec Pivot Ltd. | 168,583 | 23,174,219 | |||
Insurance Australia Group Ltd. | 5,272,361 | 18,026,012 | |||
James Hardie Industries NV | 1,386,799 | 5,577,434 | |||
John Fairfax Holdings Ltd. | 3,569,962 | 8,669,953 | |||
Leighton Holdings Ltd. | 402,916 | 16,138,563 |
Security | Shares | Value | |||
Leighton Holdings Ltd. Entitlementc | 29,108 | $ | 279,757 | ||
Lend Lease Corp. Ltd. | 1,050,948 | 8,733,987 | |||
Lion Nathan Ltd. | 749,813 | 5,766,449 | |||
Macquarie Airports | 1,919,637 | 5,290,212 | |||
Macquarie Group Ltd.a | 785,581 | 29,794,925 | |||
Macquarie | 6,965,818 | 13,137,728 | |||
Macquarie Office Trust | 7,048,926 | 6,313,356 | |||
Metcash Ltd. | 2,170,687 | 7,365,419 | |||
Mirvac Group | 3,042,910 | 7,573,401 | |||
National Australia Bank Ltd. | 4,651,155 | 98,136,580 | |||
Newcrest Mining Ltd. | 1,284,229 | 30,303,798 | |||
OneSteel Ltd. | 2,328,602 | 13,716,882 | |||
Orica Ltd. | 1,005,481 | 21,578,732 | |||
Origin Energy Ltd. | 2,483,772 | 34,545,245 | |||
OZ Minerals Ltd. | 8,636,951 | 13,016,749 | |||
Paladin Energy Ltd.a,b | 1,574,844 | 7,906,970 | |||
Perpetual Ltd.a | 116,509 | 4,499,136 | |||
Qantas Airways Ltd. | 2,698,906 | 7,856,127 | |||
QBE Insurance Group Ltd. | 2,512,702 | 51,826,338 | |||
Rio Tinto Ltd. | 814,057 | 89,385,901 | |||
Santos Ltd. | 1,673,469 | 28,967,949 | |||
Sims Group Ltd. | 435,002 | 12,887,056 | |||
Sonic Healthcare Ltd. | 911,821 | 11,370,568 | |||
St. George Bank Ltd. | 1,570,636 | 41,092,952 | |||
Stockland Corp. Ltd. | 4,157,504 | 18,868,932 | |||
Suncorp-Metway Ltd. | 2,634,208 | 25,907,183 | |||
Tabcorp Holdings Ltd. | 1,473,852 | 10,865,048 | |||
Tatts Group Ltd. | 3,270,142 | 7,406,728 | |||
Telstra Corp. Ltd. | 12,319,447 | 46,151,359 | |||
Toll Holdings Ltd. | 1,777,880 | 10,656,528 | |||
Transurban Groupa | 3,296,968 | 15,417,664 | |||
Wesfarmers Ltd. | 1,804,969 | 47,876,731 | |||
Wesfarmers Ltd. | 420,800 | 11,447,994 | |||
Westfield Group | 5,030,927 | 74,911,248 | |||
Westpac Banking Corp. | 5,337,059 | 108,242,281 | |||
Woodside Petroleum Ltd. | 1,373,123 | 74,558,739 | |||
Woolworths Ltd. | 3,453,979 | 84,358,712 | |||
WorleyParsons Ltd. | 436,054 | 13,917,131 | |||
2,124,302,063 |
70 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
HONG KONG – 21.79% | |||||
ASM Pacific Technology Ltd. | 657,500 | $ | 4,464,909 | ||
Bank of East Asia Ltd. | 4,208,000 | 16,794,798 | |||
BOC Hong Kong (Holdings) Ltd. | 10,914,500 | 24,472,757 | |||
C C Land Holdings Ltd. | 1,841,000 | 785,487 | |||
Cathay Pacific Airways Ltd.a | 3,419,000 | 6,378,249 | |||
Cheung Kong (Holdings) Ltd.a | 3,945,000 | 56,712,771 | |||
Cheung Kong Infrastructure Holdings Ltd.a | 1,315,000 | 5,728,563 | |||
Chinese Estates Holdings Ltd. | 2,630,000 | 3,699,978 | |||
CITIC International Financial Holdings Ltd.a,b | 6,575,000 | 5,307,345 | |||
CLP Holdings Ltd. | 5,654,500 | 46,005,413 | |||
Esprit Holdings Ltd.a | 3,024,500 | 25,188,827 | |||
Foxconn International Holdings Ltd.b | 5,260,000 | 3,949,339 | |||
Genting International PLCa,b | 8,679,000 | 3,129,779 | |||
Hang Lung Development Co. Ltd. | 2,367,000 | 10,159,774 | |||
Hang Lung Properties Ltd. | 6,049,736 | 19,378,378 | |||
Hang Seng Bank Ltd.a | 2,182,900 | 43,379,710 | |||
Henderson Land Development Co. Ltd. | 2,893,056 | 17,607,247 | |||
Hong Kong Aircraft Engineering Co. Ltd. | 105,200 | 1,177,388 | |||
Hong Kong and China | 11,598,661 | 26,185,132 | |||
Hong Kong Exchanges and Clearing Ltd.a | 2,923,500 | 38,207,117 | |||
Hongkong Electric Holdings Ltd. | 3,945,000 | 25,146,705 | |||
Hopewell Holdings Ltd.a | 1,841,000 | 7,064,666 | |||
Hutchison Telecommunications International Ltd.b | 5,260,000 | 6,570,999 | |||
Hutchison Whampoa Ltd. | 6,343,000 | 59,287,210 | |||
Hysan Development Co. Ltd. | 1,841,000 | 5,071,463 | |||
Kerry Properties Ltd. | 1,841,000 | 8,869,163 | |||
Kingboard Chemical | 1,709,500 | 7,742,826 | |||
Lee & Man Paper Manufacturing Ltd. | 1,052,000 | 1,058,099 | |||
Li & Fung Ltd.a | 6,313,600 | 19,455,086 |
Security | Shares | Value | |||
Link REIT (The)a | 6,312,000 | $ | 14,896,959 | ||
Mongolia Energy | 9,205,000 | 8,550,722 | |||
MTR Corp. Ltd.a | 4,208,000 | 13,640,719 | |||
New World Development Co. Ltd. | 7,101,941 | 10,919,413 | |||
Noble Group Ltd.a | 4,261,400 | 5,845,583 | |||
NWS Holdings Ltd.a | 2,367,000 | 5,252,755 | |||
Orient Overseas International Ltd.a | 597,000 | 2,061,456 | |||
Pacific Basin Shipping Ltd. | 4,471,000 | 6,129,562 | |||
PCCW Ltd.a | 11,835,845 | 7,430,813 | |||
Shangri-La Asia Ltd. | 3,682,000 | 7,104,766 | |||
Shun Tak Holdings Ltd.a | 3,156,000 | 1,843,923 | |||
Sino Land Co. Ltd. | 4,734,000 | 8,382,572 | |||
Sun Hung Kai Properties Ltd. | 3,945,000 | 54,387,649 | |||
Swire Pacific Ltd. Class Aa | 2,367,000 | 23,807,233 | |||
Television Broadcasts Ltd.a | 1,052,000 | 5,897,050 | |||
Wharf Holdings Ltd. (The) | 3,945,000 | 14,405,650 | |||
Wheelock and Co. Ltd.a | 2,367,000 | 5,653,080 | |||
Wing Hang Bank Ltd. | 526,000 | 6,004,882 | |||
Wing Lung Bank Ltd.a | 236,700 | 4,518,825 | |||
Yue Yuen Industrial Holdings Ltd.a | 1,972,500 | 5,496,893 | |||
711,209,683 | |||||
NEW ZEALAND – 0.96% | |||||
Auckland International Airport Ltd. | 2,816,993 | 4,201,021 | |||
Contact Energy Ltd. | 749,550 | 4,407,985 | |||
Fletcher Building Ltd. | 1,390,218 | 7,315,057 | |||
Sky City Entertainment Group Ltd. | 1,349,716 | 3,418,048 | |||
Telecom Corp. of | 5,142,439 | 11,829,057 | |||
31,171,168 | |||||
SINGAPORE – 11.34% | |||||
Ascendas Real Estate Investment Trusta | 2,894,000 | 4,706,523 | |||
CapitaCommercial Trusta | 2,630,000 | 3,161,393 | |||
CapitaLand Ltd. | 4,997,000 | 15,475,948 | |||
CapitaMall Trust Management Ltd. | 3,156,622 | 6,138,031 | |||
City Developments Ltd. | 1,330,000 | 9,780,449 |
SCHEDULESOF INVESTMENTS | 71 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
ComfortDelGro Corp. Ltd. | 5,523,000 | $ | 5,896,928 | ||
COSCO Corp. (Singapore) Ltd. | 2,631,104 | 4,278,974 | |||
DBS Group Holdings Ltd. | 3,156,000 | 40,346,813 | |||
Fraser and Neave Ltd. | 2,630,150 | 8,164,298 | |||
Golden Agri-Resources Ltd. | 14,202,000 | 6,426,926 | |||
Jardine Cycle & Carriage Ltd. | 369,000 | 4,654,736 | |||
Keppel Corp. Ltd. | 3,419,000 | 24,030,306 | |||
Keppel Land Ltd.a | 1,053,000 | 2,888,909 | |||
Neptune Orient Lines Ltd.a | 1,340,000 | 2,141,347 | |||
Olam International Ltd.a | 3,419,600 | 5,101,896 | |||
Oversea-Chinese Banking Corp. | 7,364,600 | 42,128,064 | |||
Parkway Holdings Ltd.a | 2,564,968 | 4,062,598 | |||
SembCorp Industries Ltd. | 2,893,240 | 8,510,432 | |||
SembCorp Marine Ltd. | 2,421,200 | 6,505,611 | |||
Singapore Airlines Ltd. | 1,578,800 | 16,990,869 | |||
Singapore Exchange Ltd.a | 2,367,000 | 10,627,859 | |||
Singapore Press Holdings Ltd. | 4,471,517 | 13,026,445 | |||
Singapore Technologies Engineering Ltd. | 3,682,000 | 7,341,870 | |||
Singapore Telecommunications Ltd. | 22,881,328 | 57,112,313 | |||
United Overseas Bank Ltd. | 3,419,000 | 45,933,180 | |||
UOL Group Ltd. | 1,315,000 | 2,696,482 | |||
Venture Corp. Ltd.a | 789,695 | 5,606,179 | |||
Wilmar International Ltd.a | 2,367,000 | 6,359,979 | |||
370,095,358 | |||||
TOTAL COMMON STOCKS | 3,236,778,272 | ||||
SHORT-TERM INVESTMENTS – 6.89% | |||||
MONEY MARKET FUNDS – 6.89% | |||||
Barclays Global Investors Funds Institutional Money Market | 148,137 | 148,137 | |||
BGI Cash Premier Fund LLC | 224,812,783 | 224,812,783 | |||
224,960,920 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $224,960,920) | 224,960,920 | ||||
Value | ||||||
TOTAL INVESTMENTS IN | $ | 3,461,739,192 | ||||
Other Assets, Less Liabilities – (6.06)% | (197,768,039 | ) | ||||
NET ASSETS – 100.00% | $ | 3,263,971,153 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
d | Affiliated issuer. See Note 2. |
e | The rate quoted is the annualized seven-day yield of the fund at period end. |
f | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
72 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI SINGAPORE INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.31% | |||||
AGRICULTURE – 3.35% | |||||
Golden Agri-Resources Ltd. | 55,513,000 | $ | 25,121,669 | ||
Wilmar International Ltd.a | 9,037,000 | 24,281,846 | |||
49,403,515 | |||||
AIRLINES – 4.30% | |||||
Singapore Airlines Ltd.a | 5,904,467 | 63,543,212 | |||
63,543,212 | |||||
BANKS – 34.11% | |||||
DBS Group Holdings Ltd. | 12,345,000 | 157,820,470 | |||
Oversea-Chinese Banking Corp. | 27,111,000 | 155,084,313 | |||
United Overseas Bank Ltd. | 14,206,000 | 190,853,102 | |||
503,757,885 | |||||
BEVERAGES – 2.71% | |||||
Fraser and Neave Ltd. | 12,910,000 | 40,074,173 | |||
40,074,173 | |||||
DISTRIBUTION & WHOLESALE – 1.33% | |||||
Jardine Cycle & Carriage Ltd. | 1,551,000 | 19,565,027 | |||
19,565,027 | |||||
DIVERSIFIED FINANCIAL SERVICES – 2.78% | |||||
Singapore Exchange Ltd.a | 9,136,000 | 41,020,753 | |||
41,020,753 | |||||
ELECTRONICS – 1.24% | |||||
Venture Corp. Ltd. | 2,582,522 | 18,333,761 | |||
18,333,761 | |||||
ENGINEERING & CONSTRUCTION – 4.58% | |||||
SembCorp Industries Ltd. | 11,619,000 | 34,177,154 | |||
Singapore Technologies Engineering Ltd.a | 16,783,000 | 33,465,130 | |||
67,642,284 | |||||
FOOD – 1.30% | |||||
Olam International Ltd.a | 12,913,000 | 19,265,639 | |||
19,265,639 | |||||
HEALTH CARE - SERVICES – 1.11% | |||||
Parkway Holdings Ltd. | 10,349,533 | 16,392,402 | |||
16,392,402 |
Security | Shares | Value | |||
HOLDING COMPANIES - DIVERSIFIED – 6.43% | |||||
Keppel Corp. Ltd. | 9,989,000 | $ | 70,207,290 | ||
Noble Group Ltd.a | 18,074,000 | 24,793,042 | |||
95,000,332 | |||||
MEDIA – 3.31% | |||||
Singapore Press Holdings Ltd.a | 16,783,000 | 48,892,317 | |||
48,892,317 | |||||
REAL ESTATE – 9.40% | |||||
CapitaLand Ltd. | 18,344,000 | 56,812,247 | |||
City Developments Ltd. | 5,464,000 | 40,180,732 | |||
Genting International PLCa,b | 32,275,000 | 11,638,855 | |||
Keppel Land Ltd.a | 4,052,000 | 11,116,677 | |||
UOL Group Ltd. | 6,455,000 | 13,236,344 | |||
Yanlord Land Group Ltd. | 5,164,000 | 5,842,249 | |||
138,827,104 | |||||
REAL ESTATE INVESTMENT TRUSTS – 3.82% | |||||
Ascendas Real Estate Investment Trust | 11,619,000 | 18,896,023 | |||
CapitaCommercial Trusta | 10,328,000 | 12,414,778 | |||
CapitaMall Trust Management Ltd. | 12,910,000 | 25,103,412 | |||
56,414,213 | |||||
SHIPBUILDING – 1.64% | |||||
SembCorp Marine Ltd.a | 9,037,000 | 24,281,845 | |||
24,281,845 | |||||
TELECOMMUNICATIONS – 14.62% | |||||
Singapore Telecommunications Ltd. | 86,497,568 | 215,899,887 | |||
215,899,887 | |||||
TRANSPORTATION – 3.28% | |||||
ComfortDelGro Corp. Ltd.a | 21,947,000 | 23,432,894 | |||
COSCO Corp. (Singapore) Ltd. | 10,328,000 | 16,796,464 | |||
Neptune Orient Lines Ltd.a | 5,164,000 | 8,252,176 | |||
48,481,534 | |||||
TOTAL COMMON STOCKS | 1,466,795,883 |
SCHEDULESOF INVESTMENTS | 73 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI SINGAPORE INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
SHORT-TERM INVESTMENTS – 10.16% |
| |||||
MONEY MARKET FUNDS – 10.16% |
| |||||
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 2.58%c,d | 168,843 | $ | 168,843 | |||
BGI Cash Premier Fund LLC | 149,885,088 | 149,885,088 | ||||
150,053,931 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $150,053,931) | 150,053,931 | |||||
TOTAL INVESTMENTS IN | 1,616,849,814 | |||||
Other Assets, Less Liabilities – (9.47)% | (139,881,323 | ) | ||||
NET ASSETS – 100.00% | $ | 1,476,968,491 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
74 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI SOUTH AFRICA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.82% | |||||
BANKS – 12.26% | |||||
Absa Group Ltd. | 602,756 | $ | 8,540,269 | ||
FirstRand Ltd. | 5,583,732 | 11,929,980 | |||
Nedbank Group Ltd. | 414,337 | 5,617,763 | |||
Standard Bank Group Ltd. | 2,268,651 | 26,567,592 | |||
52,655,604 | |||||
BUILDING MATERIALS – 1.09% | |||||
Pretoria Portland Cement Co. Ltd. | 1,061,060 | 4,691,431 | |||
4,691,431 | |||||
DIVERSIFIED FINANCIAL SERVICES – 3.03% | |||||
African Bank Investments Ltd. | 1,486,331 | 5,366,863 | |||
Investec Ltd. | 369,985 | 2,768,178 | |||
RMB Holdings Ltd. | 1,432,123 | 4,876,700 | |||
13,011,741 | |||||
ELECTRONICS – 0.61% | |||||
Reunert Ltd. | 348,733 | 2,636,399 | |||
2,636,399 | |||||
ENGINEERING & CONSTRUCTION – 3.46% | |||||
Aveng Ltd. | 796,873 | 6,864,187 | |||
Murray & Roberts Holdings Ltd. | 589,589 | 7,978,564 | |||
14,842,751 | |||||
FOOD – 2.52% | |||||
Shoprite Holdings Ltd. | 858,473 | 5,138,383 | |||
Tiger Brands Ltd. | 323,400 | 5,703,606 | |||
10,841,989 | |||||
FOREST PRODUCTS & PAPER – 1.04% | |||||
Sappi Ltd. | 426,965 | 4,486,181 | |||
4,486,181 | |||||
HEALTH CARE - PRODUCTS – 0.71% | |||||
Aspen Pharmacare Holdings Ltd.a | 501,655 | 3,051,608 | |||
3,051,608 | |||||
HEALTH CARE - SERVICES – 0.57% | |||||
Network Healthcare Holdings Ltd.a | 2,199,351 | 2,461,133 | |||
2,461,133 | |||||
HOLDING COMPANIES - DIVERSIFIED – 8.31% | |||||
Barloworld Ltd. | 403,711 | 3,587,316 | |||
Bidvest Group Ltd. | 516,054 | 7,654,944 |
Security | Shares | Value | |||
Imperial Holdings Ltd.a | 328,328 | $ | 2,306,979 | ||
Remgro Ltd. | 910,217 | 22,141,774 | |||
35,691,013 | |||||
HOME FURNISHINGS – 1.19% | |||||
Steinhoff International Holdings Ltd. | 2,131,514 | 5,117,131 | |||
5,117,131 | |||||
INSURANCE – 2.76% | |||||
Liberty Group Ltd.a | 228,305 | 2,094,337 | |||
Sanlam Ltd. | 4,224,913 | 9,763,437 | |||
11,857,774 | |||||
IRON & STEEL – 3.39% | |||||
ArcelorMittal South Africa Ltd. | 397,628 | 9,416,518 | |||
Kumba Iron Ore Ltd. | 156,464 | 5,130,468 | |||
14,546,986 | |||||
MEDIA – 4.45% | |||||
Naspers Ltd. | 759,143 | 19,138,474 | |||
19,138,474 | |||||
MINING – 21.72% | |||||
African Rainbow Minerals Ltd. | 229,999 | 7,781,105 | |||
Anglo Platinum Ltd. | 141,295 | 17,907,203 | |||
AngloGold Ashanti Ltd. | 548,779 | 14,888,315 | |||
Exxaro Resources Ltd. | 243,859 | 3,649,040 | |||
Gold Fields Ltd. | 1,229,613 | 11,359,751 | |||
Harmony Gold Mining Co. Ltd.a | 679,756 | 5,970,337 | |||
Impala Platinum Holdings Ltd. | 1,062,446 | 30,130,458 | |||
Northam Platinum Ltd. | 235,312 | 1,644,222 | |||
93,330,431 | |||||
OIL & GAS – 15.29% | |||||
Sasol Ltd. | 1,188,418 | 65,712,661 | |||
65,712,661 | |||||
PHARMACEUTICALS – 0.37% | |||||
Adcock Ingram Holdings Ltd.a | 323,400 | 1,578,023 | |||
1,578,023 | |||||
RETAIL – 3.37% | |||||
Foschini Ltd. | 427,504 | 2,364,129 | |||
Massmart Holdings Ltd. | 397,166 | 4,299,692 | |||
Pick’n Pay Stores Ltd. | 456,456 | 1,751,522 | |||
Truworths International Ltd. | 848,617 | 3,442,943 | |||
Woolworths Holdings Ltd. | 1,597,904 | 2,613,533 | |||
14,471,819 |
SCHEDULESOF INVESTMENTS | 75 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI SOUTH AFRICA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
TELECOMMUNICATIONS – 13.68% | |||||
MTN Group Ltd. | 3,138,289 | $ | 48,446,909 | ||
Telkom South Africa Ltd. | 568,491 | 10,312,394 | |||
58,759,303 | |||||
TOTAL COMMON STOCKS | 428,882,452 | ||||
SHORT-TERM INVESTMENTS – 0.00% | |||||
MONEY MARKET FUNDS – 0.00% | |||||
Barclays Global Investors Funds | 5,654 | 5,654 | |||
5,654 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $5,654) | 5,654 | ||||
TOTAL INVESTMENTS IN | 428,888,106 | ||||
Other Assets, Less Liabilities – 0.18% | 766,470 | ||||
NET ASSETS – 100.00% | $ | 429,654,576 | |||
a | Non-income earning security. |
b | Affiliated issuer. See Note 2. |
c | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
76 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI SOUTH KOREA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 97.57% | |||||
AGRICULTURE – 2.63% | |||||
KT&G Corp. | 620,166 | $ | 52,283,257 | ||
52,283,257 | |||||
AIRLINES – 0.36% | |||||
Korean Air Co. Ltd. | 200,642 | 7,149,334 | |||
7,149,334 | |||||
AUTO MANUFACTURERS – 3.45% | |||||
Hyundai Motor Co. Ltd.a | 848,160 | 55,848,170 | |||
Kia Motors Corp.a,b | 1,057,920 | 12,727,295 | |||
68,575,465 | |||||
AUTO PARTS & EQUIPMENT – 1.72% | |||||
Hankook Tire Co. Ltd.a | 510,720 | 7,504,381 | |||
Hyundai Mobis | 319,206 | 26,676,229 | |||
34,180,610 | |||||
BANKS – 7.57% | |||||
Daegu Bank | 702,240 | 7,835,629 | |||
Industrial Bank of Korea | 1,012,320 | 14,502,886 | |||
Kookmin Bank | 1,860,489 | 102,344,835 | |||
Korea Exchange Bank | 1,431,840 | 18,014,701 | |||
Pusan Bank | 684,000 | 7,663,514 | |||
150,361,565 | |||||
BEVERAGES – 0.28% | |||||
Hite Brewery Co. Ltd.b | 29,184 | 5,601,484 | |||
5,601,484 | |||||
CHEMICALS – 3.38% | |||||
DC Chemical Co. Ltd.a | 67,840 | 18,534,668 | |||
Hanwha Chemical Corp.a | 410,400 | 3,900,854 | |||
Honam Petrochemical Corp. | 82,080 | 4,899,623 | |||
KCC Corp.a | 27,360 | 9,020,332 | |||
Korea Zinc Co. Ltd.a | 45,600 | 5,318,395 | |||
LG Chem Ltd. | 291,845 | 25,488,529 | |||
67,162,401 | |||||
COMMERCIAL SERVICES – 0.25% | |||||
S1 Corp. | 91,200 | 5,025,255 | |||
5,025,255 | |||||
COSMETICS & PERSONAL CARE – 0.55% | |||||
AmorePacific Corp.a | 18,240 | 10,888,052 | |||
10,888,052 |
Security | Shares | Value | |||
DISTRIBUTION & WHOLESALE – 3.20% | |||||
Daewoo International Corp.a | 264,480 | $ | 7,918,127 | ||
Hanwha Corp. | 246,240 | 8,423,584 | |||
Hyosung Corp.a | 127,685 | 8,642,102 | |||
Samsung C&T Corp.a | 738,720 | 32,394,048 | |||
SK Networks Co. Ltd.a,b | 401,280 | 6,191,114 | |||
63,568,975 | |||||
DIVERSIFIED FINANCIAL SERVICES – 9.94% | |||||
Daewoo Securities Co. Ltd.a | 684,000 | 10,364,588 | |||
Hana Financial Group Inc. | 702,241 | 25,022,455 | |||
Hyundai Securities Co. Ltd.a | 756,967 | 7,751,108 | |||
Korea Investment | 218,885 | 7,236,532 | |||
Mirae Asset Securities Co. Ltd.a | 118,564 | 9,799,578 | |||
Samsung Card Co. Ltd.a | 200,645 | 7,370,558 | |||
Samsung Securities Co.a | 273,600 | 15,000,386 | |||
Shinhan Financial Group Ltd. | 1,860,480 | 85,173,044 | |||
Tong Yang Securities Inc.a | 392,164 | 3,558,252 | |||
Woori Finance | 1,323,150 | 17,558,561 | |||
Woori Investment & | 483,360 | 8,478,442 | |||
197,313,504 | |||||
ELECTRIC – 2.18% | |||||
Korea Electric Power Corp.a | 1,422,720 | 43,247,343 | |||
43,247,343 | |||||
ELECTRICAL COMPONENTS & | |||||
LG Electronics Inc.a | 519,846 | 48,456,579 | |||
LS Corp.a | 100,320 | 7,351,948 | |||
Taihan Electric Wire Co. Ltd.a | 136,800 | 4,001,359 | |||
59,809,886 | |||||
ELECTRONICS – 2.46% | |||||
LG Display Co. Ltd.a | 983,510 | 24,431,945 | |||
Samsung Electro-Mechanics Co. Ltd.a | 328,320 | 9,829,399 | |||
Samsung SDI Co. Ltd.a,b | 191,520 | 14,651,131 | |||
48,912,475 | |||||
ENGINEERING & CONSTRUCTION – 3.98% | |||||
Daelim Industrial Co. Ltd. | 155,040 | 9,696,229 | |||
Daewoo Engineering & | 995,034 | 10,691,430 | |||
Doosan Heavy Industries & | 173,280 | 12,476,033 |
SCHEDULESOF INVESTMENTS | 77 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI SOUTH KOREA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
GS Engineering & | 182,400 | $ | 14,238,222 | ||
Hanjin Heavy Industries & | 173,296 | 4,822,177 | |||
Hyundai Engineering & | 273,608 | 14,171,633 | |||
Kumho Industrial Co. Ltd.a | 127,680 | 1,735,388 | |||
Samsung Engineering Co. Ltd. | 173,280 | 11,123,402 | |||
78,954,514 | |||||
ENVIRONMENTAL CONTROL – 0.41% | |||||
Woongjin Coway Co. Ltd.a | 264,480 | 8,088,148 | |||
8,088,148 | |||||
FOOD – 0.66% | |||||
CJ CheilJedang Corp.a,b | 41,040 | 8,970,080 | |||
Lotte Confectionery Co. Ltd.a | 3,500 | 4,210,671 | |||
13,180,751 | |||||
GAS – 0.47% | |||||
Korea Gas Corp. | 127,680 | 9,228,043 | |||
9,228,043 | |||||
HOLDING COMPANIES - DIVERSIFIED – 1.87% | |||||
GS Holdings Corp. | 282,720 | 7,178,995 | |||
LG Corp. | 519,841 | 29,932,988 | |||
37,111,983 | |||||
HOME BUILDERS – 0.65% | |||||
Hyundai Development Co.a | 337,447 | 12,907,216 | |||
12,907,216 | |||||
HOUSEHOLD PRODUCTS & WARES – 0.48% | |||||
LG Household & Health Care Ltd.a | 54,720 | 9,497,732 | |||
9,497,732 | |||||
INSURANCE – 2.20% | |||||
Dongbu Insurance Co. Ltd. | 191,520 | 5,417,225 | |||
Samsung Fire & Marine | 209,535 | 38,293,200 | |||
43,710,425 | |||||
INTERNET – 1.68% | |||||
LG Dacom Corp. | 228,000 | 4,302,875 | |||
NHN Corp.b | 211,584 | 29,146,478 | |||
33,449,353 |
Security | Shares | Value | |||
IRON & STEEL – 8.45% | |||||
Dongkuk Steel Mill Co. Ltd. | 200,641 | $ | 7,223,002 | ||
Hyundai Steel Co.a | 309,575 | 14,470,904 | |||
POSCOa | 337,440 | 146,113,472 | |||
167,807,378 | |||||
LODGING – 0.53% | |||||
Kangwon Land Inc.a | 592,802 | 10,452,565 | |||
10,452,565 | |||||
MACHINERY – 0.41% | |||||
Doosan Infracore Co. Ltd.a | 419,520 | 8,186,978 | |||
8,186,978 | |||||
MANUFACTURING – 0.93% | |||||
Cheil Industries Inc.a | 255,360 | 12,194,618 | |||
Doosan Corp.a,b | 54,720 | 6,206,190 | |||
18,400,808 | |||||
MULTIPLE UTILITIES – 0.57% | |||||
KT Freetel Co. Ltd.b | 428,640 | 11,277,928 | |||
11,277,928 | |||||
OIL & GAS – 3.04% | |||||
SK Corp. | 191,524 | 19,259,691 | |||
SK Energy Co. Ltd.a | 333,522 | 26,341,163 | |||
S-Oil Corp.a | 246,240 | 14,676,257 | |||
60,277,111 | |||||
RETAIL – 3.16% | |||||
Hyundai Department | 82,080 | 6,731,329 | |||
Lotte Shopping Co. Ltd. | 54,725 | 14,976,628 | |||
Shinsegae Co. Ltd.a | 82,080 | 41,006,080 | |||
62,714,037 | |||||
SEMICONDUCTORS – 16.61% | |||||
Hynix Semiconductor Inc.a,b | 1,778,400 | 31,684,232 | |||
Samsung Electronics Co. Ltd. | 611,040 | 289,555,184 | |||
Samsung Techwin Co. Ltd.a | 300,960 | 8,678,615 | |||
329,918,031 | |||||
SHIPBUILDING – 5.36% | |||||
Daewoo Shipbuilding & Marine Engineering Co. Ltd.a | 528,960 | 16,977,823 | |||
Hyundai Heavy | 228,000 | 50,147,856 | |||
Hyundai Mipo | 63,840 | 9,263,220 |
78 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI SOUTH KOREA INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Samsung Heavy | 893,760 | $ | 25,731,817 | ||
STX Shipbuilding Co. Ltd.a | 255,360 | 4,361,921 | |||
106,482,637 | |||||
TELECOMMUNICATIONS – 3.90% | |||||
KT Corp. | 528,291 | 21,735,179 | |||
KT Corp. SP ADR | 456,000 | 9,284,160 | |||
LG Telecom Ltd. | 738,723 | 6,492,404 | |||
SKTelecom Co. Ltd. | 116,500 | 21,451,235 | |||
SKTelecom Co. Ltd. ADR | 902,916 | 18,419,486 | |||
77,382,464 | |||||
TRANSPORTATION – 1.23% | |||||
Hanjin Shipping Co. Ltd.a | 335,660 | 8,631,169 | |||
Korea Line Corp.a | 36,500 | 5,933,052 | |||
STX Pan Ocean Co. Ltd.a | 5,745,600 | 9,893,470 | |||
24,457,691 | |||||
TOTAL COMMON STOCKS | 1,937,565,399 | ||||
PREFERRED STOCKS – 2.34% | |||||
AUTO MANUFACTURERS – 0.26% | |||||
Hyundai Motor Co. Ltd. | 209,760 | 5,201,139 | |||
5,201,139 | |||||
ELECTRICAL COMPONENTS & | |||||
LG Electronics Inc. | 100,326 | 4,597,546 | |||
4,597,546 | |||||
SEMICONDUCTORS – 1.85% | |||||
Samsung Electronics Co. Ltd. | 109,440 | 36,684,360 | |||
36,684,360 | |||||
TOTAL PREFERRED STOCKS | 46,483,045 |
Security | Shares | Value | ||||
SHORT-TERM INVESTMENTS – 22.01% |
| |||||
MONEY MARKET FUNDS – 22.01% |
| |||||
Barclays Global Investors Funds | 4,327,407 | $ | 4,327,407 | |||
BGI Cash Premier Fund LLC | 432,708,302 | 432,708,302 | ||||
437,035,709 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $437,035,709) | 437,035,709 | |||||
TOTAL INVESTMENTS IN | 2,421,084,153 | |||||
Other Assets, Less Liabilities – (21.92)% | (435,321,011 | ) | ||||
NET ASSETS – 100.00% | $ | 1,985,763,142 | ||||
ADR – American Depositary Receipts
SP ADR – Sponsored American Depositary Receipts
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 79 |
Table of Contents
iSHARES® MSCI TAIWAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 98.62% | |||||
AIRLINES – 0.38% | |||||
China Airlinesa | 13,332,588 | $ | 4,544,528 | ||
EVA Airways Corp.a | 17,776,396 | 6,566,523 | |||
11,111,051 | |||||
APPAREL – 0.50% | |||||
Pou Chen Corp. | 18,887,594 | 14,492,985 | |||
14,492,985 | |||||
AUTO MANUFACTURERS – 0.30% | |||||
China Motor Co. Ltd. | 5,555,287 | 3,258,698 | |||
Yulon Motor Co. Ltd. | 6,767,362 | 5,471,740 | |||
8,730,438 | |||||
AUTO PARTS & EQUIPMENT – 0.30% | |||||
Cheng Shin Rubber | |||||
Industry Co. Ltd. | 6,666,084 | 8,919,676 | |||
8,919,676 | |||||
BANKS – 7.43% | |||||
Chang Hwa Commercial | 35,552,446 | 21,193,036 | |||
Chinatrust Financial | 69,993,566 | 45,385,516 | |||
E.Sun Financial | 28,886,913 | 11,174,467 | |||
First Financial | 39,361,187 | 29,953,342 | |||
Hua Nan Financial | 27,775,824 | 20,784,750 | |||
Mega Financial | 76,659,136 | 48,492,287 | |||
Taishin Financial | 37,774,439 | 11,678,001 | |||
Taiwan Business Banka | 18,887,000 | 5,988,649 | |||
Taiwan Cooperative Bank Ltd. | 29,997,650 | 22,209,561 | |||
216,859,609 | |||||
BUILDING MATERIALS – 1.69% | |||||
Asia Cement Corp. | 15,554,618 | 17,311,405 | |||
Taiwan Cement Corp. | 25,553,558 | 25,198,670 | |||
Taiwan Glass Industrial Corp. | 8,888,196 | 6,679,252 | |||
49,189,327 | |||||
CHEMICALS – 7.25% | |||||
Eternal Chemical Co. Ltd. | 6,666,066 | 5,146,766 | |||
Formosa Chemicals & | 25,553,393 | 44,158,156 | |||
Formosa Plastics Corp. | 36,663,111 | 71,959,115 | |||
Nan Ya Plastic Corp. | 45,551,447 | 71,711,248 | |||
Taiwan Fertilizer Co. Ltd. | 5,996,000 | 18,574,710 | |||
211,549,995 |
Security | Shares | Value | |||
COMMERCIAL SERVICES – 0.13% | |||||
Taiwan Secom Co. Ltd. | 2,222,610 | $ | 3,876,072 | ||
3,876,072 | |||||
COMPUTER SYSTEMS – 0.20% | |||||
Mosel Vitelic Inc.a | 8,888,750 | 5,805,956 | |||
5,805,956 | |||||
COMPUTERS – 11.54% | |||||
Acer Inc. | 23,331,516 | 46,976,701 | |||
Advantech Co. Ltd. | 3,156,293 | 7,155,652 | |||
CMC Magnetics Corp.a | 24,442,400 | 6,362,867 | |||
Compal Electronics Inc. | 33,498,348 | 30,271,511 | |||
Firich Enterprises Co. Ltd.a | 1,111,000 | 4,984,669 | |||
Foxconn | 3,729,824 | 18,626,650 | |||
HTC Corp. | 5,786,788 | 108,440,348 | |||
Innolux Display Corp. | 17,116,912 | 28,222,444 | |||
Inotera Memories Inc.a | 7,777,000 | 3,020,745 | |||
Inventec Co. Ltd. | 13,332,652 | 7,884,265 | |||
Lite-On Technology Corp. | 18,887,893 | 18,685,467 | |||
MiTAC International Corp. | 10,404,584 | 5,888,827 | |||
Qisda Corp. | 12,221,211 | 6,219,495 | |||
Quanta Computer Inc. | 17,776,387 | 26,942,460 | |||
Wistron Corp. | 11,659,396 | 17,005,904 | |||
336,688,005 | |||||
DIVERSIFIED FINANCIAL SERVICES – 3.75% | |||||
Fubon Financial | 38,885,000 | 32,981,602 | |||
KGI Securities Co. Ltd. | 19,998,000 | 10,082,066 | |||
Polaris Securities Co. Ltd. | 19,651,991 | 9,097,567 | |||
SinoPac Financial | 55,550,193 | 19,463,176 | |||
Yuanta Financial | 65,549,076 | 37,827,167 | |||
109,451,578 | |||||
ELECTRICAL COMPONENTS & | |||||
Delta Electronics Inc. | 13,609,648 | 36,809,658 | |||
Pacific Electric Wire & | 986 | – | |||
Tatung Co. Ltd.a | 33,330,120 | 12,259,160 | |||
Walsin Lihwa Corp. | 24,442,069 | 8,525,042 | |||
57,593,860 | |||||
ELECTRONICS – 17.82% | |||||
Asia Optical Co. Inc. | 1,123,048 | 2,047,538 | |||
ASUSTeK Computer Inc. | 34,210,243 | 79,293,829 | |||
AU Optronics Corp. | 65,549,884 | 79,084,694 |
80 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI TAIWAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Cheng Uei Precision Industry Co. Ltd. | 2,336,325 | $ | 4,941,115 | ||
Chi Mei Optoelectronics Corp. | 39,996,629 | 33,924,466 | |||
Chunghwa Picture Tubes Ltd. | 65,549,105 | 13,800,687 | |||
HannStar Display Corp. | 39,996,675 | 10,589,519 | |||
Hon Hai Precision Industry Co. Ltd.a | 46,662,860 | 236,732,120 | |||
Kinsus Interconnect Technology Corp. | 2,234,043 | 4,342,280 | |||
Nan Ya Printed Circuit Board Corp. | 1,111,739 | 5,217,115 | |||
Pan-International Industrial Corp.a | 3,333,000 | 6,129,558 | |||
Synnex Technology International Corp. | 7,777,502 | 15,191,012 | |||
Tripod Technology Corp. | 3,539,682 | 7,901,376 | |||
Unimicron Technology Corp. | 7,856,794 | 8,818,901 | |||
Wintek Corp. | 8,888,537 | 5,594,440 | |||
Ya Hsin Industrial Co. Ltd.b | 6,845,461 | 22 | |||
Yageo Corp. | 21,109,100 | 6,291,634 | |||
519,900,306 | |||||
ENERGY - ALTERNATE SOURCES – 0.26% | |||||
Motech Industries Inc. | 1,338,408 | 7,638,831 | |||
7,638,831 | |||||
FOOD – 1.00% | |||||
Uni-President Enterprises Co. | 26,833,908 | 29,183,938 | |||
29,183,938 | |||||
HOME FURNISHINGS – 0.25% | |||||
Teco Electric and | 16,665,092 | 7,371,363 | |||
7,371,363 | |||||
INSURANCE – 4.31% | |||||
Cathay Financial Holding Co. Ltd. | 54,439,200 | 104,949,691 | |||
Shin Kong Financial Holding Co. Ltd. | 37,334,490 | 20,716,392 | |||
125,666,083 | |||||
INVESTMENT COMPANIES – 0.90% | |||||
China Development Financial Holding Co. | 83,141,496 | 26,362,323 | |||
26,362,323 |
Security | Shares | Value | |||
IRON & STEEL – 4.00% | |||||
China Steel Corp. | 82,214,484 | $ | 101,145,348 | ||
Feng Hsin Iron & Steel Co. | 3,436,050 | 6,645,921 | |||
Tung Ho Steel Enterprise Corp. | 6,666,000 | 8,835,018 | |||
116,626,287 | |||||
MANUFACTURING – 0.53% | |||||
Largan Precision Co. Ltd. | 1,134,210 | 15,464,212 | |||
15,464,212 | |||||
METAL FABRICATE & HARDWARE – 0.52% | |||||
CatcherTechnology Co. Ltd. | 4,444,119 | 15,077,707 | |||
15,077,707 | |||||
OIL & GAS – 0.92% | |||||
Formosa Petrochemical Corp. | 11,110,000 | 26,808,009 | |||
26,808,009 | |||||
REAL ESTATE – 0.18% | |||||
Cathay Real Estate Development Co. Ltd. | 7,777,493 | 3,316,865 | |||
Farglory Developers Co. Ltd. | 1,112,000 | 2,073,232 | |||
5,390,097 | |||||
RETAIL – 0.63% | |||||
Far Eastern Department Stores Co. Ltd. | 7,006,500 | 5,176,341 | |||
President Chain Store Corp. | 4,449,640 | 13,163,530 | |||
18,339,871 | |||||
SEMICONDUCTORS – 23.80% | |||||
Advanced Semiconductor Engineering Inc. | 38,885,371 | 28,481,580 | |||
Epistar Corp. | 4,490,047 | 8,115,057 | |||
Everlight Electronics Co. Ltd. | 2,271,592 | 5,438,049 | |||
Macronix International Co. Ltd. | 25,809,636 | 10,352,334 | |||
MediaTek Inc. | 8,137,970 | 94,570,550 | |||
Nanya Technology Corp.a | 23,331,690 | 7,915,819 | |||
Novatek Microelectronics Corp. Ltd. | 4,487,980 | 9,733,586 | |||
Powerchip Semiconductor Corp.a | 67,771,901 | 12,012,332 | |||
Powertech Technology Inc. | 4,899,915 | 15,381,178 | |||
ProMOS Technologies Inc.a | 49,995,000 | 6,864,048 | |||
Realtek Semiconductor Corp. | 3,400,595 | 6,954,733 | |||
RichtekTechnology Corp. | 1,224,700 | 10,212,953 |
SCHEDULESOF INVESTMENTS | 81 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI TAIWAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Siliconware Precision | 25,553,214 | $ | 35,447,812 | ||
Sino-American Silicon | 1,489,045 | 6,775,254 | |||
Taiwan Semiconductor Manufacturing Co. Ltd. | 191,092,323 | 356,881,789 | |||
Transcend Information Inc. | 2,226,000 | 5,872,382 | |||
United Microelectronics Corp. | 121,099,501 | 51,069,293 | |||
Vanguard International Semiconductor Corp. | 7,817,416 | 4,189,052 | |||
Via Technologies Inc.a | 7,777,861 | 5,400,950 | |||
WaferWorks Corp. | 2,289,152 | 7,766,481 | |||
Winbond Electronics Corp.a | 27,775,280 | 5,037,561 | |||
694,472,793 | |||||
TELECOMMUNICATIONS – 6.06% | |||||
Chunghwa Telecom Co. Ltd.a | 43,329,709 | 108,125,059 | |||
Compal Communications Inc. | 2,333,810 | 3,218,997 | |||
D-Link Corp. | 4,535,743 | 5,515,434 | |||
Far EasTone | 14,443,259 | 21,066,330 | |||
Inventec Appliances Corp. | 2,455,080 | 3,884,472 | |||
Taiwan Cellular Corp. | 16,665,677 | 29,962,074 | |||
Zinwell Corp. | 2,635,740 | 5,014,408 | |||
176,786,774 | |||||
TEXTILES – 1.02% | |||||
Far Eastern Textile Ltd. | 24,934,195 | 23,085,754 | |||
Formosa Taffeta Co. Ltd. | 8,888,515 | 6,764,042 | |||
29,849,796 | |||||
TRANSPORTATION – 0.98% | |||||
Evergreen Marine Corp. Ltd. | 9,999,467 | 5,707,096 | |||
U-Ming Marine Transport Corp. | 4,444,800 | 11,810,332 | |||
Wan Hai Lines Ltd. | 10,507,433 | 5,730,479 | |||
Yang Ming Marine | 10,999,305 | 5,370,959 | |||
28,618,866 | |||||
TOTAL COMMON STOCKS | 2,877,825,808 |
Security | Shares | Value | |||
SHORT-TERM INVESTMENTS – 0.29% | |||||
MONEY MARKET FUNDS – 0.29% | |||||
Barclays Global Investors Funds | 8,301,828 | $ | 8,301,828 | ||
8,301,828 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $8,301,828) | 8,301,828 | ||||
TOTAL INVESTMENTS IN | 2,886,127,636 | ||||
Other Assets, Less Liabilities – 1.09% | 31,880,160 | ||||
NET ASSETS – 100.00% | $ | 2,918,007,796 | |||
a | Non-income earning security. |
b | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
82 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.35% | |||||
AGRICULTURE – 0.80% | |||||
Charoen Pokphand Foods PCL NVDR | 4,104,000 | $ | 467,453 | ||
467,453 | |||||
AUTO PARTS & EQUIPMENT – 0.17% | |||||
Thai Stanley Electric | 28,500 | 99,883 | |||
99,883 | |||||
BANKS – 30.15% | |||||
Bangkok Bank PCL NVDR | 1,842,000 | 6,294,217 | |||
Bank of Ayudhya | 3,573,000 | 2,139,209 | |||
Kasikornbank PCL NVDR | 2,133,000 | 4,485,280 | |||
Kiatnakin Bank PCL NVDR | 249,000 | 143,262 | |||
Krung Thai Bank PCL NVDR | 3,375,000 | 749,124 | |||
Siam City Bank PCL NVDRa | 630,000 | 259,433 | |||
Siam Commercial Bank | 1,083,000 | 2,482,929 | |||
Tisco Bank PCL NVDR | 327,000 | 172,859 | |||
TMB Bank PCL NVDRa | 24,477,000 | 836,393 | |||
17,562,706 | |||||
BUILDING MATERIALS – 3.98% | |||||
Siam Cement PCL NVDR | 468,000 | 2,255,257 | |||
TPI Polene PCL NVDR | 528,000 | 64,458 | |||
2,319,715 | |||||
CHEMICALS – 3.65% | |||||
Indorama Polymers | 540,200 | 152,247 | |||
IRPC PCL NVDR | 12,144,000 | 1,454,159 | |||
PTT Chemical PCL NVDR | 24,000 | 52,921 | |||
Thai Plastic & Chemical | 783,000 | 466,507 | |||
2,125,834 | |||||
COAL – 4.05% | |||||
Banpu PCL NVDR | 207,000 | 2,357,769 | |||
2,357,769 | |||||
COMMERCIAL SERVICES – 0.37% | |||||
Bangkok Expressway | 414,000 | 214,013 | |||
214,013 | |||||
COMPUTERS – 0.53% | |||||
CalComp Electronics | 2,334,000 | 310,837 | |||
310,837 |
Security | Shares | Value | |||
DIVERSIFIED FINANCIAL SERVICES – 0.93% | |||||
Kim Eng Securities (Thailand) PCL NVDR | 351,000 | $ | 168,119 | ||
Phatra Securities PCL NVDR | 123,000 | 104,176 | |||
Thanachart Capital PCL NVDR | 789,000 | 271,910 | |||
544,205 | |||||
ELECTRIC – 2.04% | |||||
Glow Energy PCL NVDR | 684,000 | 579,322 | |||
Ratchaburi Electricity Generating Holding PCL NVDR | 543,000 | 606,593 | |||
1,185,915 | |||||
ELECTRONICS – 1.20% | |||||
Delta Electronics Thai | 675,000 | 344,991 | |||
Hana Microelectronics | 675,000 | 352,877 | |||
697,868 | |||||
ENGINEERING & CONSTRUCTION – 1.75% | |||||
Airports of Thailand PCL NVDR | 636,000 | 705,841 | |||
CH Karnchang PCL NVDR | 348,400 | 46,196 | |||
Italian-Thai Development | 2,007,000 | 268,460 | |||
1,020,497 | |||||
ENTERTAINMENT – 0.36% | |||||
Major Cineplex Group | 561,000 | 208,081 | |||
208,081 | |||||
FOOD – 1.29% | |||||
Khon Kaen Sugar Industry | 939,000 | 245,445 | |||
Thai Union Frozen Products | 375,000 | 203,709 | |||
Thai Vegetable Oil PCL NVDR | 486,000 | 302,331 | |||
751,485 | |||||
HEALTH CARE - SERVICES – 1.43% | |||||
Bangkok Dusit Medical Service | 312,000 | 332,593 | |||
Bumrungrad Hospital | 456,000 | 499,416 | |||
832,009 | |||||
HOME BUILDERS – 1.37% | |||||
Asian Property Development PCL NVDR | 1,119,000 | 176,478 | |||
Land and Houses PCL NVDR | 3,210,000 | 623,438 | |||
799,916 |
SCHEDULESOF INVESTMENTS | 83 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
HOME FURNISHINGS – 0.27% | |||||
Live Inc. PCL NVDRa | 1,230,700 | $ | 158,151 | ||
158,151 | |||||
IRON & STEEL – 1.46% | |||||
G Steel PCL NVDR | 8,217,000 | 309,577 | |||
Sahaviriya Steel Industries | 7,329,000 | 203,346 | |||
Tata Steel Thailand | 4,188,300 | 236,081 | |||
Thainox Stainless PCL NVDR | 2,874,700 | 100,749 | |||
849,753 | |||||
MEDIA – 1.51% | |||||
BEC World PCL NVDR | 1,242,000 | 812,523 | |||
MCOT PCL NVDR | 102,000 | 67,623 | |||
880,146 | |||||
OIL & GAS – 25.04% | |||||
PTT Exploration & Production PCL NVDR | 1,307,800 | 5,691,069 | |||
PTT PCL NVDR | 904,900 | 7,029,890 | |||
Thai Oil PCL NVDR | 1,281,000 | 1,861,266 | |||
14,582,225 | |||||
REAL ESTATE – 3.68% | |||||
Amata Corp. PCL NVDR | 663,000 | 212,997 | |||
Bangkok Land PCL NVDRa | 10,482,000 | 137,760 | |||
Central Pattana PCL NVDR | 816,000 | 486,168 | |||
Erawan Group PCL | 417,200 | 41,428 | |||
Hemaraj Land and Development | 5,649,000 | 194,679 | |||
LPN Development | 669,000 | 96,911 | |||
MBK PCL NVDR | 108,000 | 216,063 | |||
Preuksa Real Estate | 1,077,000 | 239,054 | |||
Quality House PCL NVDR | 5,292,000 | 279,747 | |||
Rojana Industrial Park | 210,300 | 73,703 | |||
Ticon Industrial Connection PCL NVDR | 375,000 | 162,091 | |||
2,140,601 | |||||
RETAIL – 4.79% | |||||
CP All PCL NVDR | 2,907,000 | 916,928 | |||
Home Product Center | 248,700 | 34,283 | |||
PTT Aromatics & Refining PCL NVDR | 2,106,000 | 1,328,551 |
Security | Shares | Value | |||
Robinson Department Store PCL NVDR | 591,000 | $ | 176,057 | ||
Siam Makro PCL NVDR | 135,000 | 335,134 | |||
2,790,953 | |||||
TELECOMMUNICATIONS – 7.04% | |||||
Advanced Info Service | 1,047,000 | 2,721,466 | |||
Thaicom PCL NVDRa | 546,000 | 91,691 | |||
Total Access Communication PCL NVDR | 927,200 | 1,117,027 | |||
True Corp. PCL NVDRa | 2,202,000 | 169,780 | |||
4,099,964 | |||||
TRANSPORTATION – 1.49% | |||||
Precious Shipping PCL NVDR | 516,000 | 296,881 | |||
Regional Container Lines | 258,000 | 122,821 | |||
Thoresen Thai Agencies | 408,000 | 449,825 | |||
869,527 | |||||
TOTAL COMMON STOCKS | 57,869,506 | ||||
WARRANTS – 0.00% | |||||
REAL ESTATE – 0.00% | |||||
Bangkok Land PCL NVDR (Expires 5/2/13)b | 1,083,411 | 3 | |||
3 | |||||
TOTAL WARRANTS | 3 | ||||
SHORT-TERM INVESTMENTS – 0.18% | |||||
MONEY MARKET FUNDS – 0.18% | |||||
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 2.58%c,d | 106,946 | 106,946 | |||
106,946 | |||||
TOTAL SHORT-TERM INVESTMENTS | |||||
(Cost: $106,946) | 106,946 | ||||
84 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
August 31, 2008
Value | |||||
TOTAL INVESTMENTS IN | $ | 57,976,455 | |||
Other Assets, Less Liabilities – 0.47% | 271,822 | ||||
NET ASSETS – 100.00% | $ | 58,248,277 | |||
NVDR – Non-Voting Depositary Receipts
a | Non-income earning security. |
b | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
SCHEDULESOF INVESTMENTS | 85 |
Table of Contents
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.88% | |||||
AEROSPACE & DEFENSE – 0.22% | |||||
Aselsan Elektronik Sanayi ve | 79,878 | $ | 326,943 | ||
326,943 | |||||
AIRLINES – 0.71% | |||||
Turk Hava Yollari | 196,513 | 1,080,198 | |||
1,080,198 | |||||
AUTO MANUFACTURERS – 2.03% | |||||
Ford Otomotiv Sanayi AS | 216,053 | 1,680,920 | |||
Otokar Otobus Karoseri | 20,484 | 252,910 | |||
Tofas Turk Otomobil | 342,151 | 1,157,382 | |||
3,091,212 | |||||
BANKS – 38.32% | |||||
Akbank TASa | 2,292,806 | 11,924,530 | |||
Albaraka Turk Katilim | 260,016 | 760,808 | |||
Asya Katilim Bankasi ASb | 1,001,685 | 2,202,436 | |||
Sekerbank TASa | 367,441 | 705,362 | |||
Tekstil Bankasi ASa,b | 253,542 | 381,653 | |||
Tekstil Bankasi AS Newa,c | 22,587 | 34,000 | |||
Turk Ekonomi Bankasi ASb | 422,206 | 535,568 | |||
Turkiye Garanti Bankasi ASa,b | 5,355,500 | 16,123,112 | |||
Turkiye Halk Bankasi ASa | 855,919 | 4,777,222 | |||
Turkiye Is Bankasi ASa | 2,440,294 | 11,762,939 | |||
Turkiye Vakiflar Bankasi TAO | 2,051,353 | 3,920,556 | |||
Yapi ve Kredi Bankasi ASa,b | 2,280,751 | 5,130,484 | |||
58,258,670 | |||||
BEVERAGES – 4.79% | |||||
Anadolu Efes Biracilik ve Malt | 555,707 | 6,015,264 | |||
Coca-Cola Icecek AS | 138,520 | 1,265,130 | |||
7,280,394 | |||||
BUILDING MATERIALS – 1.76% | |||||
Adana Cimento Sanayi | 122,497 | 470,306 | |||
Akcansa Cimento Sanayi ve | 140,656 | 554,298 | |||
Bolu Cimento Sanayii AS | 228,694 | 328,778 | |||
Cimsa Cimento Sanayi ve | 146,285 | 711,322 |
Security | Shares | Value | |||
Mardin Cimento Sanayii ve | 142,509 | $ | 602,575 | ||
2,667,279 | |||||
CHEMICALS – 0.92% | |||||
Aksa Akrilik Kimya Sanayii ASb | 166,866 | 286,459 | |||
Petkim Petrokimya Holding ASa,b | 242,281 | 1,116,644 | |||
1,403,103 | |||||
COMMERCIAL SERVICES – 0.60% | |||||
Ihlas Holding ASa,b | 1,044,696 | 538,913 | |||
Koza Anadolu Metal Madencilik | 95,362 | 370,964 | |||
909,877 | |||||
DISTRIBUTION & WHOLESALE – 0.32% | |||||
Aygaz ASa,b | 178,298 | 479,482 | |||
479,482 | |||||
DIVERSIFIED FINANCIAL SERVICES – 0.47% | |||||
Finans Finansal Kiralama ASb | 55,348 | 203,138 | |||
Turkiye Sinai Kalkinma | 546,258 | 512,766 | |||
715,904 | |||||
ELECTRIC – 0.86% | |||||
Akenerji Elektrik Uretim ASb | 80,330 | 740,463 | |||
Zorlu Enerji Elektrik Uretim ASb | 130,964 | 564,834 | |||
1,305,297 | |||||
ENGINEERING & CONSTRUCTION – 4.66% | |||||
Enka Insaat ve Sanayi AS | 590,093 | 5,289,629 | |||
TAV Havalimanlari Holding ASa,b | 290,812 | 1,795,288 | |||
7,084,917 | |||||
FOOD – 4.50% | |||||
BIM Birlesik Magazalar AS | 113,448 | 4,413,199 | |||
Migros Turk TAS | 80,992 | 1,479,431 | |||
Tat Konserve Sanayii ASa,b | 193,320 | 408,710 | |||
Ulker Biskuvi Sanayi ASa | 209,092 | 541,075 | |||
6,842,415 | |||||
HOLDING COMPANIES - DIVERSIFIED – 8.39% | |||||
Alarko Holding ASa | 391,741 | 874,585 | |||
Dogan Sirketler Grubu | 1,447,407 | 2,117,560 | |||
Haci Omer Sabanci Holding AS | 1,104,379 | 4,669,679 | |||
KOC Holding ASa,b | 575,890 | 2,016,225 |
86 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Tekfen Holding ASa | 319,058 | $ | 2,212,495 | ||
Yazicilar Holding AS | 128,011 | 866,036 | |||
12,756,580 | |||||
HOME FURNISHINGS – 1.28% | |||||
Arcelik ASa | 212,469 | 830,111 | |||
Vestel Beyaz Esya Sanayi ve | 213,218 | 692,395 | |||
Vestel Elektronik Sanayi ve | 260,194 | 426,872 | |||
1,949,378 | |||||
HOUSEWARES – 0.85% | |||||
Anadolu Cam Sanayii ASb | 206,499 | 364,975 | |||
Turk Sise ve Cam | 684,808 | 932,381 | |||
1,297,356 | |||||
INSURANCE – 1.99% | |||||
Aksigorta AS | 303,516 | 1,309,033 | |||
Anadolu Anonim Turk | 487,501 | 523,574 | |||
Anadolu Hayat Emeklilik ASa | 85,383 | 225,281 | |||
Yapi Kredi Sigorta ASa | 75,589 | 965,238 | |||
3,023,126 | |||||
IRON & STEEL – 7.33% | |||||
Eregli Demir ve Celik | 1,419,956 | 9,606,471 | |||
Izmir Demir Celik Sanayi AS | 75,927 | 192,627 | |||
Kardemir Karabuk Demir Celik | 399,513 | 402,047 | |||
Kardemir Karabuk Demir Celik | 992,167 | 939,727 | |||
11,140,872 | |||||
MACHINERY – 0.34% | |||||
Turk Traktor ve Ziraat Makineleri AS | 58,246 | 522,121 | |||
522,121 | |||||
MEDIA – 1.25% | |||||
Dogan Gazetecilik ASa,b | 103,710 | 217,507 | |||
Dogan Yayin Holding ASb | 524,216 | 882,190 | |||
Hurriyet Gazetecilik ve | 564,657 | 802,219 | |||
1,901,916 | |||||
MISCELLANEOUS - MANUFACTURING – 0.35% | |||||
Trakya Cam Sanayii ASa,b | 386,922 | 530,076 | |||
530,076 |
Security | Shares | Value | |||
OIL & GAS – 4.61% | |||||
Tupras-Turkiye Petrol Rafinerileri AS | 295,916 | $ | 7,006,891 | ||
7,006,891 | |||||
PHARMACEUTICALS – 0.95% | |||||
Deva Holding ASa,b | 41,825 | 424,440 | |||
Eczacibasi Ilac Sanayi ve Ticaret AS | 439,533 | 501,792 | |||
Selcuk Ecza Deposu Ticaret ve Sanayi ASa | 368,363 | 513,995 | |||
1,440,227 | |||||
REAL ESTATE INVESTMENT TRUSTS – 0.77% | |||||
Is Gayrimenkul Yatirim Ortakligi ASa | 479,210 | 457,934 | |||
Sinpas Gayrimenkul Yatirim | 187,414 | 713,203 | |||
1,171,137 | |||||
RETAIL – 0.79% | |||||
Dogus Otomotiv Servis ve Ticaret AS | 132,489 | 441,443 | |||
Turcas Petrolculuk ASa | 164,314 | 764,253 | |||
1,205,696 | |||||
TELECOMMUNICATIONS – 10.82% | |||||
Turk Telekomunikasyon ASb | 1,375,300 | 4,931,308 | |||
Turkcell Iletisim Hizmetleri AS | 1,712,392 | 11,512,487 | |||
16,443,795 | |||||
TOTAL COMMON STOCKS | 151,834,862 | ||||
SHORT-TERM INVESTMENTS – 13.57% | |||||
MONEY MARKET FUNDS – 13.57% | |||||
Barclays Global Investors Funds | 122,540 | 122,540 | |||
BGI Cash Premier Fund LLC | 20,506,414 | 20,506,414 | |||
20,628,954 | |||||
TOTAL SHORT-TERM INVESTMENTS | 20,628,954 | ||||
SCHEDULESOF INVESTMENTS | 87 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
August 31, 2008
Value | ||||
TOTAL INVESTMENTS IN | $ | 172,463,816 | ||
Other Assets, Less Liabilities – (13.45)% | (20,442,536 | ) | ||
NET ASSETS – 100.00% | $ | 152,021,280 | ||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
d | Affiliated issuer. See Note 2. |
e | The rate quoted is the annualized seven-day yield of the fund at period end. |
f | This security represents an investment of securities lending collateral. See |
Note 5. |
See notes to financial statements.
88 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities
iSHARES®, INC.
August 31, 2008
iShares MSCI | ||||||||||||||||
Australia Index Fund | Brazil Index Fund | BRIC Index Fund | Canada Index Fund | |||||||||||||
ASSETS | ||||||||||||||||
Investments, at cost: | ||||||||||||||||
Unaffiliated issuers | $ | 1,243,314,855 | $ | 4,860,766,047 | $ | 199,151,152 | $ | 2,123,185,356 | ||||||||
Affiliated issuers (Note 2) | 19,277,588 | 12,784,357 | 4,161,538 | 198,232 | ||||||||||||
Total cost of investments | $ | 1,262,592,443 | $ | 4,873,550,404 | $ | 203,312,690 | $ | 2,123,383,588 | ||||||||
Investments in securities, at value | ||||||||||||||||
Unaffiliated issuers | $ | 1,046,706,534 | $ | 7,206,320,412 | $ | 160,590,382 | $ | 2,065,334,298 | ||||||||
Affiliated issuers (Note 2) | 19,277,588 | 12,784,357 | 4,161,538 | 198,232 | ||||||||||||
Total value of investments | 1,065,984,122 | 7,219,104,769 | 164,751,920 | 2,065,532,530 | ||||||||||||
Foreign currencies, at valueb | 1,053,408 | 9,394,847 | 110,012 | 5,461,926 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 4,105,754 | 39,075,653 | 251,051 | 2,182,521 | ||||||||||||
Due from custodian (Note 4) | – | – | 217,794 | – | ||||||||||||
Dividends and interest | 10,038,102 | 21,717,228 | 387,140 | 2,772,063 | ||||||||||||
Total Assets | 1,081,181,386 | 7,289,292,497 | 165,717,917 | 2,075,949,040 | ||||||||||||
LIABILITIES | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 2,351,482 | 39,629,787 | 468,861 | 3,959,480 | ||||||||||||
Collateral for securities on loan (Note 5) | 19,242,020 | 3,430,000 | 4,059,736 | – | ||||||||||||
Investment advisory fees (Note 2) | 495,638 | 3,972,708 | 97,773 | 928,665 | ||||||||||||
Total Liabilities | 22,089,140 | 47,032,495 | 4,626,370 | 4,888,145 | ||||||||||||
NET ASSETS | $ | 1,059,092,246 | $ | 7,242,260,002 | $ | 161,091,547 | $ | 2,071,060,895 | ||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 1,297,104,580 | $ | 4,852,290,569 | $ | 200,457,654 | $ | 2,160,658,810 | ||||||||
Undistributed net investment income | 9,698,082 | 96,234,801 | 873,068 | 9,982,399 | ||||||||||||
Accumulated net realized loss | (50,929,049 | ) | (51,785,513 | ) | (1,678,000 | ) | (41,637,154 | ) | ||||||||
Net unrealized appreciation (depreciation)on investments and translation of assets and liabilities in foreign currencies | (196,781,367 | ) | 2,345,520,145 | (38,561,175 | ) | (57,943,160 | ) | |||||||||
NET ASSETS | $ | 1,059,092,246 | $ | 7,242,260,002 | $ | 161,091,547 | $ | 2,071,060,895 | ||||||||
Shares outstandingc | 44,200,000 | 98,850,000 | 3,650,000 | 67,800,000 | ||||||||||||
Net asset value per share | $ | 23.96 | $ | 73.27 | $ | 44.13 | $ | 30.55 | ||||||||
a | Securities on loan with market values of $18,690,681, $3,252,375, $3,878,420 and $–, respectively. See Note 5. |
b | Cost of foreign currencies: $1,049,314, $9,441,940, $110,075 and $5,551,543, respectively. |
c | $0.001 par value, number of shares authorized: 127.8 million, 500 million, 500 million and 340.2 million, respectively. |
See notes to financial statements.
FINANCIAL STATEMENTS | 89 |
Table of Contents
Statements of Assets and Liabilities (Continued)
iSHARES®, INC.
August 31, 2008
iShares MSCI | ||||||||||||||||
Chile Investable Market Index Fund | Hong Kong Index Fund | Israel Capped Investable Market Index Fund | Japan Small Cap | |||||||||||||
ASSETS | ||||||||||||||||
Investments, at cost: | ||||||||||||||||
Unaffiliated issuers | $ | 83,617,616 | $ | 2,018,674,887 | $ | 228,160,996 | $ | 36,533,026 | ||||||||
Affiliated issuers (Note 2) | 119,715 | 331,854,267 | 10,273,692 | 558,967 | ||||||||||||
Total cost of investments | $ | 83,737,331 | $ | 2,350,529,154 | $ | 238,434,688 | $ | 37,091,993 | ||||||||
Investments in securities, at value | ||||||||||||||||
Unaffiliated issuers | $ | 76,085,142 | $ | 1,668,946,889 | $ | 203,761,297 | $ | 34,536,454 | ||||||||
Affiliated issuers (Note 2) | 119,715 | 331,854,267 | 10,273,692 | 558,967 | ||||||||||||
Total value of investments | 76,204,857 | 2,000,801,156 | 214,034,989 | 35,095,421 | ||||||||||||
Foreign currencies, at valueb | – | 2,059,303 | 206,798 | 29,143 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 1,297,760 | – | 5,605,546 | – | ||||||||||||
Due from custodian (Note 4) | – | – | 696,079 | – | ||||||||||||
Dividends and interest | 12,807 | 3,946,626 | 256,275 | 41,232 | ||||||||||||
Total Assets | 77,515,424 | 2,006,807,085 | 220,799,687 | 35,165,796 | ||||||||||||
LIABILITIES | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 1,315,896 | – | 6,361,271 | – | ||||||||||||
Collateral for securities on loan (Note 5) | – | 330,869,554 | 10,089,250 | 556,373 | ||||||||||||
Capital shares redeemed | – | – | 40,416 | – | ||||||||||||
Investment advisory fees (Note 2) | 41,349 | 753,133 | 107,718 | 15,491 | ||||||||||||
Total Liabilities | 1,357,245 | 331,622,687 | 16,598,655 | 571,864 | ||||||||||||
NET ASSETS | $ | 76,158,179 | $ | 1,675,184,398 | $ | 204,201,032 | $ | 34,593,932 | ||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 85,331,722 | $ | 2,086,014,179 | $ | 229,229,942 | $ | 36,663,666 | ||||||||
Undistributed net investment income | 94,220 | 6,974,052 | 386,993 | 29,166 | ||||||||||||
Accumulated net realized loss | (1,735,545 | ) | (68,078,763 | ) | (1,018,592 | ) | (102,418 | ) | ||||||||
Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies | (7,532,218 | ) | (349,725,070 | ) | (24,397,311 | ) | (1,996,482 | ) | ||||||||
NET ASSETS | $ | 76,158,179 | $ | 1,675,184,398 | $ | 204,201,032 | $ | 34,593,932 | ||||||||
Shares outstandingc | 1,700,000 | 105,525,000 | 4,200,000 | 800,000 | ||||||||||||
Net asset value per share | $ | 44.80 | $ | 15.87 | $ | 48.62 | $ | 43.24 | ||||||||
a | Securities on loan with market values of $–, $314,775,064, $9,515,833 and $527,518, respectively. See Note 5. |
b | Cost of foreign currencies: $–, $2,058,494, $206,863 and $29,298, respectively. |
c | $0.001 par value, number of shares authorized: 200 million, 250 million, 500 million and 500 million, respectively. |
See notes to financial statements.
90 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Continued)
iSHARES®, INC.
August 31, 2008
iShares MSCI | ||||||||||||||||
Malaysia Index Fund | Mexico Investable Market Index Fund | Pacific ex-Japan Index Fund | Singapore Index Fund | |||||||||||||
ASSETS | ||||||||||||||||
Investments, at cost: | ||||||||||||||||
Unaffiliated issuers | $ | 313,156,408 | $ | 1,174,769,257 | $ | 2,879,248,079 | $ | 1,650,731,042 | ||||||||
Affiliated issuers (Note 2) | 318 | 30,924,616 | 224,960,920 | 150,053,931 | ||||||||||||
Total cost of investments | $ | 313,156,726 | $ | 1,205,693,873 | $ | 3,104,208,999 | $ | 1,800,784,973 | ||||||||
Investments in securities, at value | ||||||||||||||||
Unaffiliated issuers | $ | 471,698,252 | $ | 954,510,521 | $ | 3,236,778,272 | $ | 1,466,795,883 | ||||||||
Affiliated issuers (Note 2) | 318 | 30,924,616 | 224,960,920 | 150,053,931 | ||||||||||||
Total value of investments | 471,698,570 | 985,435,137 | 3,461,739,192 | 1,616,849,814 | ||||||||||||
Foreign currencies, at valueb | 2,074,328 | 1,042,547 | 4,009,172 | 7,042,448 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 7,897,146 | 56,546 | 761,675 | – | ||||||||||||
Dividends and interest | 612,073 | 411,377 | 23,979,433 | 8,677,846 | ||||||||||||
Total Assets | 482,282,117 | 986,945,607 | 3,490,489,472 | 1,632,570,108 | ||||||||||||
LIABILITIES | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 1,487,878 | – | – | 5,021,216 | ||||||||||||
Securities related to in-kind transactions (Note 4) | – | 56,546 | – | – | ||||||||||||
Collateral for securities on loan (Note 5) | – | 30,750,881 | 224,812,783 | 149,885,088 | ||||||||||||
Capital shares redeemed | 7,471,625 | – | 316,711 | – | ||||||||||||
Investment advisory fees (Note 2) | 231,848 | 453,844 | 1,388,825 | 695,313 | ||||||||||||
Total Liabilities | 9,191,351 | 31,261,271 | 226,518,319 | 155,601,617 | ||||||||||||
NET ASSETS | $ | 473,090,766 | $ | 955,684,336 | $ | 3,263,971,153 | $ | 1,476,968,491 | ||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 400,864,976 | $ | 1,179,145,003 | $ | 3,004,060,979 | $ | 1,688,882,125 | ||||||||
Undistributed (distributions in excess of) net investment income | 1,897,270 | 6,351,373 | (11,255,053 | ) | 19,330,971 | |||||||||||
Accumulated net realized loss | (88,178,520 | ) | (9,523,626 | ) | (86,032,458 | ) | (47,326,642 | ) | ||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 158,507,040 | (220,288,414 | ) | 357,197,685 | (183,917,963 | ) | ||||||||||
NET ASSETS | $ | 473,090,766 | $ | 955,684,336 | $ | 3,263,971,153 | $ | 1,476,968,491 | ||||||||
Shares outstandingc | 50,400,000 | 18,400,000 | 78,900,000 | d | 129,100,000 | |||||||||||
Net asset value per share | $ | 9.39 | $ | 51.94 | $ | 41.37 | d | $ | 11.44 | |||||||
a | Securities on loan with market values of $–, $28,949,143, $212,081,600 and $143,439,947, respectively. See Note 5. |
b | Cost of foreign currencies: $2,099,641, $1,066,091, $4,005,458 and $7,028,232, respectively. |
c | $0.001 par value, number of shares authorized: 300 million, 255 million, 1 billion and 300 million, respectively. |
d | Shares outstanding and net asset value per share reflect a three-for-one stock split effective July 24, 2008. See Note 4. |
See notes to financial statements.
FINANCIAL STATEMENTS | 91 |
Table of Contents
Statements of Assets and Liabilities (Continued)
iSHARES®, INC.
August 31, 2008
iShares MSCI | ||||||||||||||||
South Africa Index Fund | South Korea Index Fund | Taiwan Index Fund | Thailand Investable Market Index Fund | |||||||||||||
ASSETS | ||||||||||||||||
Investments, at cost: | ||||||||||||||||
Unaffiliated issuers | $ | 510,944,403 | $ | 1,733,901,201 | $ | 2,735,551,224 | $ | 78,922,333 | ||||||||
Affiliated issuers (Note 2) | 5,654 | 437,035,709 | 8,301,828 | 106,946 | ||||||||||||
Total cost of investments | $ | 510,950,057 | $ | 2,170,936,910 | $ | 2,743,853,052 | $ | 79,029,279 | ||||||||
Investments in securities, at value | ||||||||||||||||
Unaffiliated issuers | $ | 428,882,452 | $ | 1,984,048,444 | $ | 2,877,825,808 | $ | 57,869,509 | ||||||||
Affiliated issuers (Note 2) | 5,654 | 437,035,709 | 8,301,828 | 106,946 | ||||||||||||
Total value of investments | 428,888,106 | 2,421,084,153 | 2,886,127,636 | 57,976,455 | ||||||||||||
Foreign currencies, at valueb | 1,508,389 | – | 5,293,983 | – | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 680,552 | 4,143,385 | 6,203,714 | 600,541 | ||||||||||||
Dividends and interest | 385,931 | 526,273 | 29,682,103 | 264,703 | ||||||||||||
Total Assets | 431,462,978 | 2,425,753,811 | 2,927,307,436 | 58,841,699 | ||||||||||||
LIABILITIES | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 1,578,145 | 6,106,923 | 5,424,039 | 561,428 | ||||||||||||
Collateral for securities on loan (Note 5) | – | 432,708,302 | – | – | ||||||||||||
Capital shares redeemed | – | – | 288,755 | – | ||||||||||||
Foreign taxes | – | – | 1,957,839 | – | ||||||||||||
Investment advisory fees (Note 2) | 230,257 | 1,175,444 | 1,629,007 | 31,994 | ||||||||||||
Total Liabilities | 1,808,402 | 439,990,669 | 9,299,640 | 593,422 | ||||||||||||
NET ASSETS | $ | 429,654,576 | $ | 1,985,763,142 | $ | 2,918,007,796 | $ | 58,248,277 | ||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 536,279,801 | $ | 2,071,510,353 | $ | 3,055,272,888 | $ | 79,537,713 | ||||||||
Undistributed net investment income | 2,552,633 | 5,324,787 | 100,550,924 | 411,201 | ||||||||||||
Accumulated net realized loss | (27,124,735 | ) | (341,275,321 | ) | (379,668,120 | ) | (644,789 | ) | ||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | (82,053,123 | ) | 250,203,323 | 141,852,104 | (21,055,848 | ) | ||||||||||
NET ASSETS | $ | 429,654,576 | $ | 1,985,763,142 | $ | 2,918,007,796 | $ | 58,248,277 | ||||||||
Shares outstandingc | 7,700,000 | d | 45,600,000 | 222,200,000 | 1,500,000 | |||||||||||
Net asset value per share | $ | 55.80 | d | $ | 43.55 | $ | 13.13 | $ | 38.83 | |||||||
a | Securities on loan with market values of $–, $407,745,511, $– and $–, respectively. See Note 5. |
b | Cost of foreign currencies: $1,501,242, $–, $5,304,073 and $–, respectively. |
c | $0.001 par value, number of shares authorized: 400 million, 200 million, 400 million and 200 million, respectively. |
d | Shares outstanding and net asset value per share reflect a two-for-one stock split effective July 24, 2008. See Note 4. |
See notes to financial statements.
92 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Continued)
iSHARES®, INC.
August 31, 2008
iShares MSCI | ||||
Turkey Index Fund | ||||
ASSETS | ||||
Investments, at cost: | ||||
Unaffiliated issuers | $ | 150,579,372 | ||
Affiliated issuers (Note 2) | 20,628,954 | |||
Total cost of investments | $ | 171,208,326 | ||
Investments in securities, at value (including securities on loana) (Note 1): | ||||
Unaffiliated issuers | $ | 151,834,862 | ||
Affiliated issuers (Note 2) | 20,628,954 | |||
Total value of investments | 172,463,816 | |||
Foreign currency, at valueb | 60,426 | |||
Receivables: | ||||
Dividends and interest | 75,285 | |||
Total Assets | 172,599,527 | |||
LIABILITIES | ||||
Payables: | ||||
Investment securities purchased | 19,102 | |||
Collateral for securities on loan (Note 5) | 20,506,414 | |||
Investment advisory fees (Note 2) | 52,731 | |||
Total Liabilities | 20,578,247 | |||
NET ASSETS | $ | 152,021,280 | ||
Net assets consist of: | ||||
Paid-in capital | $ | 150,620,335 | ||
Undistributed net investment income | 911,749 | |||
Accumulated net realized loss | (769,522 | ) | ||
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies | 1,258,718 | |||
NET ASSETS | $ | 152,021,280 | ||
Shares outstandingc | 2,900,000 | |||
Net asset value per share | $ | 52.42 | ||
a | Securities on loan with market value of $19,198,623. See Note 5. |
b | Cost of foreign currency: $59,985. |
c | $0.001 par value, number of shares authorized: 200 million. |
See notes to financial statements.
FINANCIAL STATEMENTS | 93 |
Table of Contents
Statements of Operations
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI | ||||||||||||||||
Australia Index Fund | Brazil Index Fund | BRIC Index Funda | Canada Index Fund | |||||||||||||
NET INVESTMENT INCOME | ||||||||||||||||
Dividends from unaffiliated issuersb | $ | 61,252,487 | $ | 223,622,725 | $ | 1,947,097 | $ | 38,254,400 | ||||||||
Interest from affiliated issuers (Note 2) | 118,380 | 643,455 | 3,179 | 51,787 | ||||||||||||
Securities lending income from affiliated issuers (Note 2) | 649,319 | 27,837 | 27,146 | – | ||||||||||||
Total investment income | 62,020,186 | 224,294,017 | 1,977,422 | 38,306,187 | ||||||||||||
EXPENSES | ||||||||||||||||
Investment advisory fees (Note 2) | 8,205,849 | 47,028,502 | 578,683 | 10,043,541 | ||||||||||||
Foreign taxes (Note 1) | – | 124,501 | 116 | – | ||||||||||||
Total expenses | 8,205,849 | 47,153,003 | 578,799 | 10,043,541 | ||||||||||||
Net investment income | 53,814,337 | 177,141,014 | 1,398,623 | 28,262,646 | ||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments in unaffiliated issuers | (46,846,916 | ) | 2,715,271 | (1,679,656 | ) | (26,448,141 | ) | |||||||||
In-kind redemptions | 199,342,020 | – | 194,327 | 253,341,686 | ||||||||||||
Foreign currency transactions | 1,033,585 | 3,826,268 | 5,618 | (126,894 | ) | |||||||||||
Net realized gain (loss) | 153,528,689 | 6,541,539 | (1,479,711 | ) | 226,766,651 | |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments | (365,719,758 | ) | 603,476,913 | (38,560,770 | ) | (314,860,561 | ) | |||||||||
Translation of assets and liabilities in foreign currencies | (87,550 | ) | (412,861 | ) | (405 | ) | (97,552 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (365,807,308 | ) | 603,064,052 | (38,561,175 | ) | (314,958,113 | ) | |||||||||
Net realized and unrealized gain (loss) | (212,278,619 | ) | 609,605,591 | (40,040,886 | ) | (88,191,462 | ) | |||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | (158,464,282 | ) | $ | 786,746,605 | $ | (38,642,263 | ) | $ | (59,928,816 | ) | |||||
a | For the period from November 12, 2007 (commencement of operations) to August 31, 2008. |
b | Net of foreign withholding tax of $1,455,026, $16,272,324, $89,353 and $6,749,470, respectively. |
See notes to financial statements.
94 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Operations (Continued)
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI | ||||||||||||||||
Chile Investable Market Index Funda | Hong Kong Index Fund | Israel Capped Investable Market Index Fundb | Japan Small Cap | |||||||||||||
NET INVESTMENT INCOME | ||||||||||||||||
Dividends from unaffiliated issuersd | $ | 1,301,675 | $ | 60,205,622 | $ | 644,402 | $ | 140,443 | ||||||||
Interest from affiliated issuers (Note 2) | 2,852 | 100,705 | 1,093 | 142 | ||||||||||||
Securities lending income from affiliated issuers (Note 2) | – | 1,600,970 | 10,921 | 2,024 | ||||||||||||
Total investment income | 1,304,527 | 61,907,297 | 656,416 | 142,609 | ||||||||||||
EXPENSES | ||||||||||||||||
Investment advisory fees (Note 2) | 272,532 | 11,183,414 | 265,058 | 51,470 | ||||||||||||
Total expenses | 272,532 | 11,183,414 | 265,058 | 51,470 | ||||||||||||
Net investment income | 1,031,995 | 50,723,883 | 391,358 | 91,139 | ||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments in unaffiliated issuers | (1,735,545 | ) | (50,694,730 | ) | (1,031,715 | ) | (102,418 | ) | ||||||||
In-kind redemptions | – | 282,452,178 | 310,611 | – | ||||||||||||
Foreign currency transactions | (14,157 | ) | (40,998 | ) | (4,365 | ) | (5,031 | ) | ||||||||
Net realized gain (loss) | (1,749,702 | ) | 231,716,450 | (725,469 | ) | (107,449 | ) | |||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments | (7,532,474 | ) | (582,947,285 | ) | (24,399,699 | ) | (1,996,572 | ) | ||||||||
Translation of assets and liabilities in foreign currencies | 256 | 277 | 2,388 | 90 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (7,532,218 | ) | (582,947,008 | ) | (24,397,311 | ) | (1,996,482 | ) | ||||||||
Net realized and unrealized loss | (9,281,920 | ) | (351,230,558 | ) | (25,122,780 | ) | (2,103,931 | ) | ||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (8,249,925 | ) | $ | (300,506,675 | ) | $ | (24,731,422 | ) | $ | (2,012,792 | ) | ||||
a | For the period from November 12, 2007 (commencement of operations) to August 31, 2008. |
b | For the period from March 26, 2008 (commencement of operations) to August 31, 2008. |
c | For the period from December 20, 2007 (commencement of operations) to August 31, 2008. |
d | Net of foreign withholding tax of $488,119, $–, $153,621 and $10,472, respectively. |
See notes to financial statements.
FINANCIAL STATEMENTS | 95 |
Table of Contents
Statements of Operations (Continued)
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI | ||||||||||||||||
Malaysia Index Fund | Mexico Index Fund | Pacific ex-Japan Index Fund | Singapore Index Fund | |||||||||||||
NET INVESTMENT INCOME | ||||||||||||||||
Dividends from unaffiliated issuersa | $ | 32,036,758 | $ | 39,177,241 | $ | 145,517,918 | $ | 73,868,929 | ||||||||
Interest from affiliated issuers (Note 2) | 58,085 | 52,316 | 301,390 | 124,398 | ||||||||||||
Securities lending income from affiliated issuers (Note 2) | – | 930,442 | 1,890,628 | 1,025,137 | ||||||||||||
Total investment income | 32,094,843 | 40,159,999 | 147,709,936 | 75,018,464 | ||||||||||||
EXPENSES | ||||||||||||||||
Investment advisory fees (Note 2) | 4,929,062 | 7,064,281 | 19,183,343 | 9,514,088 | ||||||||||||
Total expenses | 4,929,062 | 7,064,281 | 19,183,343 | 9,514,088 | ||||||||||||
Net investment income | 27,165,781 | 33,095,718 | 128,526,593 | 65,504,376 | ||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments in unaffiliated issuers | (43,051,088 | ) | (22,481,324 | ) | (66,986,279 | ) | (30,234,939 | ) | ||||||||
In-kind redemptions | – | 115,449,116 | 166,799,851 | 162,714,654 | ||||||||||||
Foreign currency transactions | 459,207 | (11,079 | ) | 2,276,201 | 366,619 | |||||||||||
Net realized gain (loss) | (42,591,881 | ) | 92,956,713 | 102,089,773 | 132,846,334 | |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments | (98,373,216 | ) | (246,894,396 | ) | (653,643,767 | ) | (410,235,202 | ) | ||||||||
Translation of assets and liabilities in foreign currencies | (19,662 | ) | (33,584 | ) | (180,446 | ) | 73,037 | |||||||||
Net change in unrealized appreciation (depreciation) | (98,392,878 | ) | (246,927,980 | ) | (653,824,213 | ) | (410,162,165 | ) | ||||||||
Net realized and unrealized loss | (140,984,759 | ) | (153,971,267 | ) | (551,734,440 | ) | (277,315,831 | ) | ||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (113,818,978 | ) | $ | (120,875,549 | ) | $ | (423,207,847 | ) | $ | (211,811,455 | ) | ||||
a | Net of foreign withholding tax of $–, $–, $2,654,838 and $–, respectively. |
See notes to financial statements.
96 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Operations (Continued)
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI | ||||||||||||||||
South Africa Index Fund | South Korea Index Fund | Taiwan Index Fund | Thailand Investable Market Index Funda | |||||||||||||
NET INVESTMENT INCOME | ||||||||||||||||
Dividends from unaffiliated issuersb | $ | 25,448,038 | $ | 50,801,833 | $ | 134,268,961 | $ | 564,840 | ||||||||
Interest from unaffiliated issuers | – | – | 54,080 | – | ||||||||||||
Interest from affiliated issuers (Note 2) | 15,223 | 207,247 | 165,477 | 1,091 | ||||||||||||
Securities lending income from affiliated issuers (Note 2) | 41,405 | 7,774,748 | – | – | ||||||||||||
Total investment income | 25,504,666 | 58,783,828 | 134,488,518 | 565,931 | ||||||||||||
EXPENSES | ||||||||||||||||
Investment advisory fees (Note 2) | 3,789,441 | 18,749,352 | 19,861,527 | 153,669 | ||||||||||||
Foreign taxes (Note 1) | – | 7,611 | 3,142,841 | – | ||||||||||||
Total expenses | 3,789,441 | 18,756,963 | 23,004,368 | 153,669 | ||||||||||||
Net investment income | 21,715,225 | 40,026,865 | 111,484,150 | 412,262 | ||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments in unaffiliated issuers | (29,267,378 | ) | (251,792,198 | ) | (186,309,453 | ) | (960,517 | ) | ||||||||
In-kind redemptions | 48,447,421 | – | – | (6,072,684 | ) | |||||||||||
Foreign currency transactions | (338,054 | ) | (2,417,122 | ) | (1,235,093 | ) | (1,061 | ) | ||||||||
Net realized gain (loss) | 18,841,989 | (254,209,320 | ) | (187,544,546 | ) | (7,034,262 | ) | |||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments | (115,091,393 | ) | (859,436,361 | ) | (548,786,651 | ) | (21,052,824 | ) | ||||||||
Translation of assets and liabilities in foreign currencies | 2,669 | 56,223 | (376,117 | ) | (3,024 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) | (115,088,724 | ) | (859,380,138 | ) | (549,162,768 | ) | (21,055,848 | ) | ||||||||
Net realized and unrealized loss | (96,246,735 | ) | (1,113,589,458 | ) | (736,707,314 | ) | (28,090,110 | ) | ||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (74,531,510 | ) | $ | (1,073,562,593 | ) | $ | (625,223,164 | ) | $ | (27,677,848 | ) | ||||
a | For the period from March 26, 2008 (commencement of operations) to August 31, 2008. |
b | Net of foreign withholding tax of $–, $8,543,012, $29,204,613 and $62,760, respectively. |
See notes to financial statements.
FINANCIAL STATEMENTS | 97 |
Table of Contents
Statements of Operations (Continued)
iSHARES®, INC.
Period ended August 31, 2008
iShares MSCI | ||||
Turkey Investable Market Index Funda | ||||
NET INVESTMENT INCOME | ||||
Dividends from unaffiliated issuersb | $ | 926,436 | ||
Interest from affiliated issuers (Note 2) | 1,133 | |||
Securities lending income from affiliated issuers (Note 2) | 110,377 | |||
Total investment income | 1,037,946 | |||
EXPENSES | ||||
Investment advisory fees (Note 2) | 148,727 | |||
Total expenses | 148,727 | |||
Net investment income | 889,219 | |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) from: | ||||
Investments in unaffiliated issuers | (769,522 | ) | ||
In-kind redemptions | 285,150 | |||
Foreign currency transactions | 22,530 | |||
Net realized loss | (461,842 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 1,255,490 | |||
Translation of assets and liabilities in foreign currencies | 3,228 | |||
Net change in unrealized appreciation (depreciation) | 1,258,718 | |||
Net realized and unrealized gain | 796,876 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,686,095 | ||
a | For the period from March 26, 2008 (commencement of operations) to August 31, 2008. |
b | Net of foreign withholding tax of $117,531. |
See notes to financial statements.
98 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
iShares MSCI Australia Index Fund | iShares MSCI Brazil Index Fund | |||||||||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS |
| |||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 53,814,337 | $ | 36,454,764 | $ | 177,141,014 | $ | 68,668,117 | ||||||||
Net realized gain | 153,528,689 | 123,854,383 | 6,541,539 | 58,944,814 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (365,807,308 | ) | 84,082,950 | 603,064,052 | 1,249,240,919 | |||||||||||
Net increase (decrease) in net assets resulting from operations | (158,464,282 | ) | 244,392,097 | 786,746,605 | 1,376,853,850 | |||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: |
| |||||||||||||||
From net investment income | (81,749,137 | ) | (35,850,508 | ) | (134,522,596 | ) | (59,308,876 | ) | ||||||||
From net realized gain | – | – | (39,856,665 | ) | – | |||||||||||
Total distributions to shareholders | (81,749,137 | ) | (35,850,508 | ) | (174,379,261 | ) | (59,308,876 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: |
| |||||||||||||||
Proceeds from shares sold | 709,635,261 | 964,074,872 | 2,833,440,415 | 1,012,054,259 | ||||||||||||
Cost of shares redeemed | (874,442,072 | ) | (394,910,991 | ) | (637,881,395 | ) | (363,560,519 | ) | ||||||||
Net increase (decrease) in net assets from capital share transactions | (164,806,811 | ) | 569,163,881 | 2,195,559,020 | 648,493,740 | |||||||||||
INCREASE (DECREASE) IN NET ASSETS | (405,020,230 | ) | 777,705,470 | 2,807,926,364 | 1,966,038,714 | |||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 1,464,112,476 | 686,407,006 | 4,434,333,638 | 2,468,294,924 | ||||||||||||
End of year | $ | 1,059,092,246 | $ | 1,464,112,476 | $ | 7,242,260,002 | $ | 4,434,333,638 | ||||||||
Undistributed net investment income included in net assets at end of year | $ | 9,698,082 | $ | 21,502,107 | $ | 96,234,801 | $ | 45,390,560 | ||||||||
SHARES ISSUED AND REDEEMED |
| |||||||||||||||
Shares sold | 23,200,000 | 37,000,000 | 35,200,000 | 16,700,000 | ||||||||||||
Shares redeemed | (32,000,000 | ) | (15,800,000 | ) | (8,350,000 | ) | (7,850,000 | ) | ||||||||
Net increase (decrease) in shares outstanding | (8,800,000 | ) | 21,200,000 | 26,850,000 | 8,850,000 | |||||||||||
See notes to financial statements.
FINANCIAL STATEMENTS | 99 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI BRIC Index Fund | iShares MSCI Canada Index Fund | |||||||||||
Period from August 31, 2008 | Year ended August 31, 2008 | Year ended August 31, 2007 | ||||||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||||||
OPERATIONS: | ||||||||||||
Net investment income | $ | 1,398,623 | $ | 28,262,646 | $ | 15,264,817 | ||||||
Net realized gain (loss) | (1,479,711 | ) | 226,766,651 | 110,183,308 | ||||||||
Net change in unrealized appreciation (depreciation) | (38,561,175 | ) | (314,958,113 | ) | 94,919,801 | |||||||
Net increase (decrease) in net assets resulting from operations | (38,642,263 | ) | (59,928,816 | ) | 220,367,926 | |||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||
From net investment income | (531,173 | ) | (30,808,204 | ) | (12,092,201 | ) | ||||||
Total distributions to shareholders | (531,173 | ) | (30,808,204 | ) | (12,092,201 | ) | ||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||
Proceeds from shares sold | 205,181,301 | 1,696,598,321 | 285,559,364 | |||||||||
Cost of shares redeemed | (4,916,318 | ) | (857,922,549 | ) | (271,873,681 | ) | ||||||
Net increase in net assets from capital share transactions | 200,264,983 | 838,675,772 | 13,685,683 | |||||||||
INCREASE IN NET ASSETS | 161,091,547 | 747,938,752 | 221,961,408 | |||||||||
NET ASSETS | ||||||||||||
Beginning of period | – | 1,323,122,143 | 1,101,160,735 | |||||||||
End of period | $ | 161,091,547 | $ | 2,071,060,895 | $ | 1,323,122,143 | ||||||
Undistributed net investment income included in net assets at end of period | $ | 873,068 | $ | 9,982,399 | $ | 10,427,097 | ||||||
SHARES ISSUED AND REDEEMED | ||||||||||||
Shares sold | 3,750,000 | 51,400,000 | 9,900,000 | |||||||||
Shares redeemed | (100,000 | ) | (27,900,000 | ) | (10,200,000 | ) | ||||||
Net increase (decrease) in shares outstanding | 3,650,000 | 23,500,000 | (300,000 | ) | ||||||||
a | Commencement of operations. |
See notes to financial statements.
100 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Chile Investable Market Index Fund | iShares MSCI Hong Kong Index Fund | |||||||||||
Period from August 31, 2008 | Year ended August 31, 2008 | Year ended August 31, 2007 | ||||||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||||||
OPERATIONS: | ||||||||||||
Net investment income | $ | 1,031,995 | $ | 50,723,883 | $ | 35,062,644 | ||||||
Net realized gain (loss) | (1,749,702 | ) | 231,716,450 | 150,676,987 | ||||||||
Net change in unrealized appreciation (depreciation) | (7,532,218 | ) | (582,947,008 | ) | 128,693,618 | |||||||
Net increase (decrease) in net assets resulting from operations | (8,249,925 | ) | (300,506,675 | ) | 314,433,249 | |||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||
From net investment income | (923,618 | ) | (69,181,586 | ) | (25,623,625 | ) | ||||||
Total distributions to shareholders | (923,618 | ) | (69,181,586 | ) | (25,623,625 | ) | ||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||
Proceeds from shares sold | 85,331,722 | 1,671,011,829 | 828,936,976 | |||||||||
Cost of shares redeemed | – | (1,071,448,062 | ) | (555,149,687 | ) | |||||||
Net increase in net assets from capital share transactions | 85,331,722 | 599,563,767 | 273,787,289 | |||||||||
INCREASE IN NET ASSETS | 76,158,179 | 229,875,506 | 562,596,913 | |||||||||
NET ASSETS | ||||||||||||
Beginning of period | – | 1,445,308,892 | 882,711,979 | |||||||||
End of period | $ | 76,158,179 | $ | 1,675,184,398 | $ | 1,445,308,892 | ||||||
Undistributed net investment income included in net assets at end of period | $ | 94,220 | $ | 6,974,052 | $ | 25,204,852 | ||||||
SHARES ISSUED AND REDEEMED | ||||||||||||
Shares sold | 1,700,000 | 82,050,000 | 51,075,000 | |||||||||
Shares redeemed | – | (55,500,000 | ) | (34,275,000 | ) | |||||||
Net increase in shares outstanding | 1,700,000 | 26,550,000 | 16,800,000 | |||||||||
a | Commencement of operations. |
See notes to financial statements.
FINANCIAL STATEMENTS | 101 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Israel Capped Investable Market Index Fund | iShares MSCI Japan Small Cap Index Fund | |||||||
Period from March 26, 2008a to August 31, 2008 | Period from to August 31, 2008 | |||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||
OPERATIONS: | ||||||||
Net investment income | $ | 391,358 | $ | 91,139 | ||||
Net realized loss | (725,469 | ) | (107,449 | ) | ||||
Net change in unrealized appreciation (depreciation) | (24,397,311 | ) | (1,996,482 | ) | ||||
Net decrease in net assets resulting from operations | (24,731,422 | ) | (2,012,792 | ) | ||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||
From net investment income | – | (56,942 | ) | |||||
Total distributions to shareholders | – | (56,942 | ) | |||||
CAPITAL SHARE TRANSACTIONS: | ||||||||
Proceeds from shares sold | 246,546,176 | 36,663,666 | ||||||
Cost of shares redeemed | (17,613,722 | ) | – | |||||
Net increase in net assets from capital share transactions | 228,932,454 | 36,663,666 | ||||||
INCREASE IN NET ASSETS | 204,201,032 | 34,593,932 | ||||||
NET ASSETS | ||||||||
Beginning of period | – | – | ||||||
End of period | $ | 204,201,032 | $ | 34,593,932 | ||||
Undistributed net investment income included in net assets at end of period | $ | 386,993 | $ | 29,166 | ||||
SHARES ISSUED AND REDEEMED | ||||||||
Shares sold | 4,550,000 | 800,000 | ||||||
Shares redeemed | (350,000 | ) | – | |||||
Net increase in shares outstanding | 4,200,000 | 800,000 | ||||||
a | Commencement of operations. |
See notes to financial statements.
102 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Malaysia Index Fund | iShares MSCI Mexico Investable Market Index Fund | |||||||||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 27,165,781 | $ | 24,085,999 | $ | 33,095,718 | $ | 14,148,585 | ||||||||
Net realized gain (loss) | (42,591,881 | ) | 7,677,288 | 92,956,713 | 288,704,084 | |||||||||||
Net change in unrealized appreciation (depreciation) | (98,392,878 | ) | 151,595,295 | (246,927,980 | ) | 6,648,571 | ||||||||||
Net increase (decrease) in net assets resulting from operations | (113,818,978 | ) | 183,358,582 | (120,875,549 | ) | 309,501,240 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||
From net investment income | (46,957,845 | ) | (11,518,123 | ) | (35,045,653 | ) | (11,694,155 | ) | ||||||||
Total distributions to shareholders | (46,957,845 | ) | (11,518,123 | ) | (35,045,653 | ) | (11,694,155 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Proceeds from shares sold | 714,281,254 | 709,128,181 | 1,921,692,035 | 1,841,107,484 | ||||||||||||
Cost of shares redeemed | (821,853,186 | ) | (513,863,061 | ) | (2,192,896,147 | ) | (1,520,212,071 | ) | ||||||||
Net increase (decrease) in net assets from capital share transactions | (107,571,932 | ) | 195,265,120 | (271,204,112 | ) | 320,895,413 | ||||||||||
INCREASE (DECREASE) IN NET ASSETS | (268,348,755 | ) | 367,105,579 | (427,125,314 | ) | 618,702,498 | ||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 741,439,521 | 374,333,942 | 1,382,809,650 | 764,107,152 | ||||||||||||
End of year | $ | 473,090,766 | $ | 741,439,521 | $ | 955,684,336 | $ | 1,382,809,650 | ||||||||
Undistributed net investment income included in net assets at end of year | $ | 1,897,270 | $ | 18,518,153 | $ | 6,351,373 | $ | 8,312,387 | ||||||||
SHARES ISSUED AND REDEEMED | ||||||||||||||||
Shares sold | 56,250,000 | 68,475,000 | 33,000,000 | 34,500,000 | ||||||||||||
Shares redeemed | (73,425,000 | ) | (49,200,000 | ) | (38,300,000 | ) | (29,300,000 | ) | ||||||||
Net increase (decrease) in shares outstanding | (17,175,000 | ) | 19,275,000 | (5,300,000 | ) | 5,200,000 | ||||||||||
See notes to financial statements.
FINANCIAL STATEMENTS | 103 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Pacific ex-Japan Index Fund | iShares MSCI Singapore Index Fund | |||||||||||||||
Year ended August 31, 2008a | Year ended August 31, 2007a | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 128,526,593 | $ | 98,036,757 | $ | 65,504,376 | $ | 52,154,899 | ||||||||
Net realized gain | 102,089,773 | 107,970,955 | 132,846,334 | 205,458,060 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (653,824,213 | ) | 559,682,124 | (410,162,165 | ) | 154,022,242 | ||||||||||
Net increase (decrease) in net assets resulting from operations | (423,207,847 | ) | 765,689,836 | (211,811,455 | ) | 411,635,201 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||
From net investment income | (199,385,029 | ) | (101,866,512 | ) | (95,160,270 | ) | (29,331,787 | ) | ||||||||
From net realized gain | (4,628,288 | ) | – | – | – | |||||||||||
Total distributions to shareholders | (204,013,317 | ) | (101,866,512 | ) | (95,160,270 | ) | (29,331,787 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Proceeds from shares sold | 726,432,412 | 979,796,715 | 810,998,513 | 1,229,979,919 | ||||||||||||
Cost of shares redeemed | (371,535,398 | ) | (202,255,658 | ) | (696,268,481 | ) | (517,692,912 | ) | ||||||||
Net increase in net assets from capital share transactions | 354,897,014 | 777,541,057 | 114,730,032 | 712,287,007 | ||||||||||||
INCREASE (DECREASE) IN NET ASSETS | (272,324,150 | ) | 1,441,364,381 | (192,241,693 | ) | 1,094,590,421 | ||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 3,536,295,303 | 2,094,930,922 | 1,669,210,184 | 574,619,763 | ||||||||||||
End of year | $ | 3,263,971,153 | $ | 3,536,295,303 | $ | 1,476,968,491 | $ | 1,669,210,184 | ||||||||
Undistributed (distributions in excess of) net investment income included in net assets at end of year | $ | (11,255,053 | ) | $ | 43,439,186 | $ | 19,330,971 | $ | 43,749,612 | |||||||
SHARES ISSUED AND REDEEMED | ||||||||||||||||
Shares sold | 13,800,000 | 21,900,000 | 58,500,000 | 105,300,000 | ||||||||||||
Shares redeemed | (8,100,000 | ) | (4,800,000 | ) | (55,100,000 | ) | (42,700,000 | ) | ||||||||
Net increase in shares outstanding | 5,700,000 | 17,100,000 | 3,400,000 | 62,600,000 | ||||||||||||
a | Share transactions were adjusted to reflect a three-for-one stock split effective July 24, 2008. See Note 4. |
See notes to financial statements.
104 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI South Africa Index Fund | iShares MSCI South Korea Index Fund | |||||||||||||||
Year ended August 31, 2008a | Year ended August 31, 2007a | Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||||||||||
OPERATIONS: | ||||||||||||||||
Net investment income | $ | 21,715,225 | $ | 9,702,180 | $ | 40,026,865 | $ | 17,668,348 | ||||||||
Net realized gain (loss) | 18,841,989 | 9,358,147 | (254,209,320 | ) | (2,170,342 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) | (115,088,724 | ) | 76,042,874 | (859,380,138 | ) | 592,662,779 | ||||||||||
Net increase (decrease) in net assets resulting from operations | (74,531,510 | ) | 95,103,201 | (1,073,562,593 | ) | 608,160,785 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||||||||
From net investment income | (25,634,161 | ) | (9,144,852 | ) | (49,844,649 | ) | (10,954,387 | ) | ||||||||
Total distributions to shareholders | (25,634,161 | ) | (9,144,852 | ) | (49,844,649 | ) | (10,954,387 | ) | ||||||||
CAPITAL SHARE TRANSACTIONS: | ||||||||||||||||
Proceeds from shares sold | 405,639,896 | 151,649,200 | 1,462,000,429 | 471,567,107 | ||||||||||||
Cost of shares redeemed | (342,759,905 | ) | (68,565,161 | ) | (782,282,834 | ) | (260,654,404 | ) | ||||||||
Net increase in net assets from capital share transactions | 62,879,991 | 83,084,039 | 679,717,595 | 210,912,703 | ||||||||||||
INCREASE (DECREASE) IN NET ASSETS | (37,285,680 | ) | 169,042,388 | (443,689,647 | ) | 808,119,101 | ||||||||||
NET ASSETS | ||||||||||||||||
Beginning of year | 466,940,256 | 297,897,868 | 2,429,452,789 | 1,621,333,688 | ||||||||||||
End of year | $ | 429,654,576 | $ | 466,940,256 | $ | 1,985,763,142 | $ | 2,429,452,789 | ||||||||
Undistributed net investment income included in net assets at end of year | $ | 2,552,633 | $ | 6,792,504 | $ | 5,324,787 | $ | 17,559,332 | ||||||||
SHARES ISSUED AND REDEEMED | ||||||||||||||||
Shares sold | 5,800,000 | 2,600,000 | 21,550,000 | 8,200,000 | ||||||||||||
Shares redeemed | (5,600,000 | ) | (1,200,000 | ) | (14,150,000 | ) | (5,250,000 | ) | ||||||||
Net increase in shares outstanding | 200,000 | 1,400,000 | 7,400,000 | 2,950,000 | ||||||||||||
a | Share transactions were adjusted to reflect a two-for-one stock split effective July 24, 2008. See Note 4. |
See notes to financial statements.
FINANCIAL STATEMENTS | 105 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Taiwan Index Fund | iShares MSCI Thailand Investable Market Index Fund | |||||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | Period from March 26, 2008a to August 31, 2008 | ||||||||||
INCREASE (DECREASE) IN NET ASSETS |
| |||||||||||
OPERATIONS: | ||||||||||||
Net investment income | $ | 111,484,150 | $ | 58,686,661 | $ | 412,262 | ||||||
Net realized loss | (187,544,546 | ) | (36,061,860 | ) | (7,034,262 | ) | ||||||
Net change in unrealized appreciation (depreciation) | (549,162,768 | ) | 510,559,095 | (21,055,848 | ) | |||||||
Net increase (decrease) in net assets resulting from operations | (625,223,164 | ) | 533,183,896 | (27,677,848 | ) | |||||||
DISTRIBUTIONS TO SHAREHOLDERS: |
| |||||||||||
From net investment income | (68,184,922 | ) | (44,460,389 | ) | – | |||||||
Total distributions to shareholders | (68,184,922 | ) | (44,460,389 | ) | – | |||||||
CAPITAL SHARE TRANSACTIONS: |
| |||||||||||
Proceeds from shares sold | 1,558,478,632 | 890,014,349 | 147,211,231 | |||||||||
Cost of shares redeemed | (716,827,104 | ) | (502,724,067 | ) | (61,285,106 | ) | ||||||
Net increase in net assets from capital share transactions | 841,651,528 | 387,290,282 | 85,926,125 | |||||||||
INCREASE IN NET ASSETS | 148,243,442 | 876,013,789 | 58,248,277 | |||||||||
NET ASSETS | ||||||||||||
Beginning of period | 2,769,764,354 | 1,893,750,565 | – | |||||||||
End of period | $ | 2,918,007,796 | $ | 2,769,764,354 | $ | 58,248,277 | ||||||
Undistributed net investment income included in net assets at end of period | $ | 100,550,924 | $ | 58,442,597 | $ | 411,201 | ||||||
SHARES ISSUED AND REDEEMED |
| |||||||||||
Shares sold | 98,600,000 | 58,100,000 | 2,900,000 | |||||||||
Shares redeemed | (49,600,000 | ) | (35,550,000 | ) | (1,400,000 | ) | ||||||
Net increase in shares outstanding | 49,000,000 | 22,550,000 | 1,500,000 | |||||||||
a | Commencement of operations. |
See notes to financial statements.
106 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
iShares MSCI Turkey Investable Market Index Fund | ||||
Period from March 26, 2008a to August 31, 2008 | ||||
INCREASE (DECREASE) IN NET ASSETS | ||||
OPERATIONS: | ||||
Net investment income | $ | 889,219 | ||
Net realized loss | (461,842 | ) | ||
Net change in unrealized appreciation (depreciation) | 1,258,718 | |||
Net increase in net assets resulting from operations | 1,686,095 | |||
CAPITAL SHARE TRANSACTIONS: | ||||
Proceeds from shares sold | 152,861,063 | |||
Cost of shares redeemed | (2,525,878 | ) | ||
Net increase in net assets from capital share transactions | 150,335,185 | |||
INCREASE IN NET ASSETS | 152,021,280 | |||
NET ASSETS | ||||
Beginning of period | – | |||
End of period | $ | 152,021,280 | ||
Undistributed net investment income included in net assets at end of period | $ | 911,749 | ||
SHARES ISSUED AND REDEEMED | ||||
Shares sold | 2,950,000 | |||
Shares redeemed | (50,000 | ) | ||
Net increase in shares outstanding | 2,900,000 | |||
a | Commencement of operations. |
See notes to financial statements.
FINANCIAL STATEMENTS | 107 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Australia Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 27.62 | $ | 21.59 | $ | 18.28 | $ | 13.56 | $ | 11.22 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.96 | 0.89 | 0.75 | 0.70 | 0.45 | |||||||||||||||
Net realized and unrealized gain (loss)b | (3.34 | ) | 6.24 | 3.23 | 4.60 | 2.32 | ||||||||||||||
Total from investment operations | (2.38 | ) | 7.13 | 3.98 | 5.30 | 2.77 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.28 | ) | (1.10 | ) | (0.67 | ) | (0.58 | ) | (0.43 | ) | ||||||||||
Total distributions | (1.28 | ) | (1.10 | ) | (0.67 | ) | (0.58 | ) | (0.43 | ) | ||||||||||
Net asset value, end of year | $ | 23.96 | $ | 27.62 | $ | 21.59 | $ | 18.28 | $ | 13.56 | ||||||||||
Total return | (9.25 | )% | 33.97 | % | 22.35 | % | 39.58 | % | 24.95 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 1,059,092 | $ | 1,464,112 | $ | 686,407 | $ | 369,355 | $ | 178,998 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.79 | % | ||||||||||
Ratio of net investment income to average net assets | 3.38 | % | 3.46 | % | 3.75 | % | 4.13 | % | 3.37 | % | ||||||||||
Portfolio turnover ratec | 10 | % | 10 | % | 7 | % | 17 | % | 9 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | 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.
108 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Brazil Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 61.59 | $ | 39.09 | $ | 28.18 | $ | 16.96 | $ | 12.19 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 1.93 | 1.09 | 1.00 | 0.89 | 0.55 | |||||||||||||||
Net realized and unrealized gainb | 11.59 | 22.35 | 10.49 | 10.79 | 4.49 | |||||||||||||||
Total from investment operations | 13.52 | 23.44 | 11.49 | 11.68 | 5.04 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.41 | ) | (0.94 | ) | (0.58 | ) | (0.46 | ) | (0.27 | ) | ||||||||||
Net realized gain | (0.43 | ) | – | – | – | – | ||||||||||||||
Total distributions | (1.84 | ) | (0.94 | ) | (0.58 | ) | (0.46 | ) | (0.27 | ) | ||||||||||
Net asset value, end of year | $ | 73.27 | $ | 61.59 | $ | 39.09 | $ | 28.18 | $ | 16.96 | ||||||||||
Total return | 21.58 | % | 60.82 | % | 41.13 | % | 69.72 | % | 41.42 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 7,242,260 | $ | 4,434,334 | $ | 2,468,295 | $ | 552,285 | $ | 209,504 | ||||||||||
Ratio of expenses to average net assets | 0.63 | % | 0.69 | % | 0.70 | % | 0.74 | % | 0.96 | % | ||||||||||
Ratio of expenses to average net assets exclusive of foreign taxes | 0.63 | % | 0.68 | % | n/a | n/a | n/a | |||||||||||||
Ratio of net investment income to average net assets | 2.37 | % | 2.17 | % | 2.65 | % | 3.94 | % | 3.59 | % | ||||||||||
Portfolio turnover ratec | 30 | % | 22 | % | 15 | % | 48 | % | 106 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the years ended August 31, 2008, August 31, 2007, August 31, 2006 and August 31, 2005 would have been 19%, 6%, 13% and 9%, respectively. See Note 4. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 109 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI BRIC Index Fund | ||||
Period from Nov. 12, 2007a to Aug. 31, 2008 | ||||
Net asset value, beginning of period | $ | 56.50 | ||
Income from investment operations: | ||||
Net investment incomeb | 0.72 | |||
Net realized and unrealized lossc | (12.93 | ) | ||
Total from investment operations | (12.21 | ) | ||
Less distributions from: | ||||
Net investment income | (0.16 | ) | ||
Total distributions | (0.16 | ) | ||
Net asset value, end of period | $ | 44.13 | ||
Total return | (21.65 | )%d | ||
Ratios/Supplemental data: | ||||
Net assets, end of period (000s) | $ | 161,092 | ||
Ratio of expenses to average net assetse | 0.72 | % | ||
Ratio of expenses to average net assets exclusive of foreign taxese | 0.72 | % | ||
Ratio of net investment income to average net assetse | 1.74 | % | ||
Portfolio turnover ratef | 9 | % |
a | Commencement of operations. |
b | Based on average shares outstanding throughout the period. |
c | The amount reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
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 August 31, 2008 would have been 2%. See Note 4. |
See notes to financial statements.
110 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Canada Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 29.87 | $ | 24.69 | $ | 20.30 | $ | 14.33 | $ | 12.25 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.47 | 0.35 | 0.25 | 0.17 | 0.11 | |||||||||||||||
Net realized and unrealized gainb | 0.72 | 5.11 | 4.29 | 6.00 | 2.17 | |||||||||||||||
Total from investment operations | 1.19 | 5.46 | 4.54 | 6.17 | 2.28 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.51 | ) | (0.28 | ) | (0.15 | ) | (0.20 | ) | (0.20 | ) | ||||||||||
Total distributions | (0.51 | ) | (0.28 | ) | (0.15 | ) | (0.20 | ) | (0.20 | ) | ||||||||||
Net asset value, end of year | $ | 30.55 | $ | 29.87 | $ | 24.69 | $ | 20.30 | $ | 14.33 | ||||||||||
Total return | 3.88 | % | 22.33 | % | 22.46 | % | 43.35 | % | 18.70 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 2,071,061 | $ | 1,323,122 | $ | 1,101,161 | $ | 420,301 | $ | 325,298 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.52 | % | 0.54 | % | 0.57 | % | 0.70 | %c | ||||||||||
Ratio of expenses to average net assets | n/a | 0.52 | % | n/a | n/a | n/a | ||||||||||||||
Ratio of net investment income to average net assets | 1.46 | % | 1.32 | % | 1.09 | % | 1.00 | % | 0.81 | % | ||||||||||
Portfolio turnover rated | 11 | % | 8 | % | 20 | % | 9 | % | 10 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Ratio of expenses to average net assets prior to voluntary reimbursed distribution fees for the year ended August 31, 2004 was 0.80%. |
d | 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 | 111 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Chile Investable Market Index Fund | ||||
Period from Nov. 12, 2007a to Aug. 31, 2008 | ||||
Net asset value, beginning of period | $ | 48.84 | ||
Income from investment operations: | ||||
Net investment incomeb | 0.92 | |||
Net realized and unrealized lossc | (4.38 | ) | ||
Total from investment operations | (3.46 | ) | ||
Less distributions from: | ||||
Net investment income | (0.58 | ) | ||
Total distributions | (0.58 | ) | ||
Net asset value, end of period | $ | 44.80 | ||
Total return | (7.15 | )%d | ||
Ratios/Supplemental data: | ||||
Net assets, end of period (000s) | $ | 76,158 | ||
Ratio of expenses to average net assetse | 0.63 | % | ||
Ratio of net investment income to average net assetse | 2.38 | % | ||
Portfolio turnover ratef | 16 | % |
a | Commencement of operations. |
b | Based on average shares outstanding throughout the period. |
c | The amount reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | Not annualized. |
e | Annualized for periods of less than one year. |
f | Portfolio turnover rate includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the period ended August 31, 2008 remained the same. See Note 4. |
See notes to financial statements.
112 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Hong Kong Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 18.30 | $ | 14.20 | $ | 13.01 | $ | 10.91 | $ | 9.03 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.45 | 0.47 | 0.38 | 0.33 | 0.28 | |||||||||||||||
Net realized and unrealized gain (loss)b | (2.25 | ) | 3.94 | 1.17 | 2.04 | 1.75 | ||||||||||||||
Total from investment operations | (1.80 | ) | 4.41 | 1.55 | 2.37 | 2.03 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.63 | ) | (0.31 | ) | (0.36 | ) | (0.27 | ) | (0.15 | ) | ||||||||||
Total distributions | (0.63 | ) | (0.31 | ) | (0.36 | ) | (0.27 | ) | (0.15 | ) | ||||||||||
Net asset value, end of year | $ | 15.87 | $ | 18.30 | $ | 14.20 | $ | 13.01 | $ | 10.91 | ||||||||||
Total return | (10.54 | )% | 31.44 | % | 12.20 | % | 21.96 | % | 22.69 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 1,675,184 | $ | 1,445,309 | $ | 882,712 | $ | 637,985 | $ | 449,923 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.52 | % | 0.54 | % | 0.57 | % | 0.80 | % | ||||||||||
Ratio of net investment income to average | 2.34 | % | 2.92 | % | 2.87 | % | 2.75 | % | 2.78 | % | ||||||||||
Portfolio turnover ratec | 17 | % | 9 | % | 10 | % | 6 | % | 5 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | 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 | 113 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Israel Capped Investable Market Index Fund | ||||
Period from Mar. 26, 2008a to Aug. 31, 2008 | ||||
Net asset value, beginning of period | $ | 50.33 | ||
Income from investment operations: | ||||
Net investment incomeb | 0.21 | |||
Net realized and unrealized lossc | (1.92 | ) | ||
Total from investment operations | (1.71 | ) | ||
Net asset value, end of period | $ | 48.62 | ||
Total return | (3.40 | )%d | ||
Ratios/Supplemental data: | ||||
Net assets, end of period (000s) | $ | 204,201 | ||
Ratio of expenses to average net assetse | 0.63 | % | ||
Ratio of net investment income to average net assetse | 0.93 | % | ||
Portfolio turnover ratef | 8 | % |
a | Commencement of operations. |
b | Based on average shares outstanding throughout the period. |
c | The amount reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | Not annualized. |
e | Annualized for periods of less than one year. |
f | Portfolio turnover rate excludes securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
114 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Japan Small Cap Index Fund | ||||
Period from Dec. 20, 2007a Aug. 31, 2008 | ||||
Net asset value, beginning of period | $ | 48.85 | ||
Income from investment operations: | ||||
Net investment incomeb | 0.29 | |||
Net realized and unrealized lossc | (5.74 | ) | ||
Total from investment operations | (5.45 | ) | ||
Less distributions from: | ||||
Net investment income | (0.16 | ) | ||
Total distributions | (0.16 | ) | ||
Net asset value, end of period | $ | 43.24 | ||
Total return | (11.19 | )%d | ||
Ratios/Supplemental data: | ||||
Net assets, end of period (000s) | $ | 34,594 | ||
Ratio of expenses to average net assetse | 0.53 | % | ||
Ratio of net investment income to average net assetse | 0.93 | % | ||
Portfolio turnover ratef | 7 | % |
a | Commencement of operations. |
b | Based on average shares outstanding throughout the period. |
c | The amount reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | Not annualized. |
e | Annualized for periods of less than one year. |
f | Portfolio turnover rate excludes securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 115 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Malaysia Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 10.97 | $ | 7.75 | $ | 7.19 | $ | 6.54 | $ | 5.99 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.34 | 0.34 | 0.26 | 0.20 | 0.13 | |||||||||||||||
Net realized and unrealized gain (loss)b | (1.31 | ) | 3.08 | 0.59 | 0.61 | 0.52 | ||||||||||||||
Total from investment operations | (0.97 | ) | 3.42 | 0.85 | 0.81 | 0.65 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.61 | ) | (0.20 | ) | (0.29 | ) | (0.16 | ) | (0.10 | ) | ||||||||||
Total distributions | (0.61 | ) | (0.20 | ) | (0.29 | ) | (0.16 | ) | (0.10 | ) | ||||||||||
Net asset value, end of year | $ | 9.39 | $ | 10.97 | $ | 7.75 | $ | 7.19 | $ | 6.54 | ||||||||||
Total return | (9.86 | )% | 44.64 | % | 12.35 | % | 12.39 | % | 11.01 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 473,091 | $ | 741,440 | $ | 374,334 | $ | 387,575 | $ | 224,218 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.79 | % | ||||||||||
Ratio of net investment income to average net assets | 2.84 | % | 3.21 | % | 3.46 | % | 2.85 | % | 1.97 | % | ||||||||||
Portfolio turnover ratec | 92 | % | 87 | % | 60 | % | 15 | % | 39 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the years ended August 31, 2008, August 31, 2007, August 31, 2006 and August 31, 2005 would have been 16%, 3%, 9% and 9%, respectively. See Note 4. |
See notes to financial statements.
116 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Mexico Investable Market Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 58.35 | $ | 41.30 | $ | 29.04 | $ | 19.35 | $ | 15.04 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 1.40 | 0.64 | 0.76 | 0.42 | 0.26 | |||||||||||||||
Net realized and unrealized gain (loss)b | (6.21 | ) | 16.87 | 11.98 | 9.55 | 4.26 | ||||||||||||||
Total from investment operations | (4.81 | ) | 17.51 | 12.74 | 9.97 | 4.52 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.60 | ) | (0.46 | ) | (0.48 | ) | (0.28 | ) | (0.21 | ) | ||||||||||
Total distributions | (1.60 | ) | (0.46 | ) | (0.48 | ) | (0.28 | ) | (0.21 | ) | ||||||||||
Net asset value, end of year | $ | 51.94 | $ | 58.35 | $ | 41.30 | $ | 29.04 | $ | 19.35 | ||||||||||
Total return | (8.44 | )% | 42.58 | % | 44.11 | % | 51.77 | % | 30.28 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 955,684 | $ | 1,382,810 | $ | 764,107 | $ | 255,557 | $ | 129,623 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.78 | % | ||||||||||
Ratio of net investment income to average net assets | 2.42 | % | 1.19 | % | 2.06 | % | 1.70 | % | 1.40 | % | ||||||||||
Portfolio turnover ratec | 13 | % | 14 | % | 12 | % | 9 | % | 12 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | 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 | 117 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Pacific ex-Japan Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008a | Year ended Aug. 31, 2007a | Year ended Aug. 31, 2006a | Year ended Aug. 31, 2005a | Year ended Aug. 31, 2004a | ||||||||||||||||
Net asset value, beginning of year | $ | 48.31 | $ | 37.34 | $ | 32.52 | $ | 25.24 | $ | 20.68 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomeb | 1.64 | 1.52 | 1.28 | 1.23 | 0.89 | |||||||||||||||
Net realized and unrealized gain (loss)c | (6.01 | ) | 11.18 | 4.77 | 7.05 | 4.17 | ||||||||||||||
Total from investment operations | (4.37 | ) | 12.70 | 6.05 | 8.28 | 5.06 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (2.51 | ) | (1.73 | ) | (1.23 | ) | (1.00 | ) | (0.50 | ) | ||||||||||
Net realized gain | (0.06 | ) | – | – | – | – | ||||||||||||||
Total distributions | (2.57 | ) | (1.73 | ) | (1.23 | ) | (1.00 | ) | (0.50 | ) | ||||||||||
Net asset value, end of year | $ | 41.37 | $ | 48.31 | $ | 37.34 | $ | 32.52 | $ | 25.24 | ||||||||||
Total return | (9.87 | )% | 34.86 | % | 19.17 | % | 33.27 | % | 24.74 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 3,263,971 | $ | 3,536,295 | $ | 2,094,931 | $ | 1,522,107 | $ | 651,250 | ||||||||||
Ratio of expenses to average net assets | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||
Ratio of net investment income to average net assets | 3.35 | % | 3.43 | % | 3.67 | % | 4.09 | % | 3.68 | % | ||||||||||
Portfolio turnover rated | 14 | % | 11 | % | 8 | % | 16 | % | 8 | % |
a | Per share amounts were adjusted to reflect a three-for-one stock split effective July 24, 2008. See Note 4. |
b | Based on average shares outstanding throughout each period. |
c | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | 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.
118 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Singapore Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 13.28 | $ | 9.11 | $ | 7.77 | $ | 6.52 | $ | 5.38 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.47 | 0.47 | 0.40 | 0.38 | 0.22 | |||||||||||||||
Net realized and unrealized gain (loss)b | (1.67 | ) | 4.01 | 1.23 | 1.15 | 1.04 | ||||||||||||||
Total from investment operations | (1.20 | ) | 4.48 | 1.63 | 1.53 | 1.26 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.64 | ) | (0.31 | ) | (0.29 | ) | (0.28 | ) | (0.12 | ) | ||||||||||
Total distributions | (0.64 | ) | (0.31 | ) | (0.29 | ) | (0.28 | ) | (0.12 | ) | ||||||||||
Net asset value, end of year | $ | 11.44 | $ | 13.28 | $ | 9.11 | $ | 7.77 | $ | 6.52 | ||||||||||
Total return | (9.55 | )% | 49.92 | % | 21.61 | % | 24.06 | % | 23.47 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 1,476,968 | $ | 1,669,210 | $ | 574,620 | $ | 341,137 | $ | 170,047 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.51 | % | 0.54 | % | 0.57 | % | 0.79 | % | ||||||||||
Ratio of net investment income to average | 3.56 | % | 3.80 | % | 4.74 | % | 5.19 | % | 3.50 | % | ||||||||||
Portfolio turnover ratec | 16 | % | 8 | % | 6 | % | 8 | % | 9 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | 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 | 119 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI South Africa Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008a | Year ended Aug. 31, 2007a | Year ended Aug. 31, 2006a | Year ended Aug. 31, 2005a | Year ended Aug. 31, 2004a | ||||||||||||||||
Net asset value, beginning of year | $ | 62.26 | $ | 48.84 | $ | 41.50 | $ | 29.96 | $ | 23.41 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomeb | 2.28 | 1.50 | 1.44 | 0.96 | 0.62 | |||||||||||||||
Net realized and unrealized gain (loss)c | (6.02 | ) | 13.18 | 6.89 | 11.18 | 6.61 | ||||||||||||||
Total from investment operations | (3.74 | ) | 14.68 | 8.33 | 12.14 | 7.23 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (2.72 | ) | (1.26 | ) | (0.99 | ) | (0.60 | ) | (0.68 | ) | ||||||||||
Total distributions | (2.72 | ) | (1.26 | ) | (0.99 | ) | (0.60 | ) | (0.68 | ) | ||||||||||
Net asset value, end of year | $ | 55.80 | $ | 62.26 | $ | 48.84 | $ | 41.50 | $ | 29.96 | ||||||||||
Total return | (6.18 | )% | 30.34 | % | 20.06 | % | 40.62 | % | 31.30 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 429,655 | $ | 466,940 | $ | 297,898 | $ | 153,530 | $ | 92,882 | ||||||||||
Ratio of expenses to average net assets | 0.63 | % | 0.68 | % | 0.70 | % | 0.74 | % | 0.95 | % | ||||||||||
Ratio of net investment income to average net assets | 3.61 | % | 2.58 | % | 2.79 | % | 2.62 | % | 2.23 | % | ||||||||||
Portfolio turnover rated | 21 | % | 8 | % | 7 | % | 32 | % | 13 | % |
a | Per share amounts were adjusted to reflect a two-for-one stock split effective July 24, 2008. See Note 4. |
b | Based on average shares outstanding throughout each period. |
c | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | 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.
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Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI South Korea Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 63.60 | $ | 46.00 | $ | 34.75 | $ | 24.17 | $ | 23.06 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.80 | 0.51 | 0.31 | 0.46 | 0.22 | |||||||||||||||
Net realized and unrealized gain (loss)b | (19.87 | ) | 17.42 | 11.20 | 10.22 | 1.13 | ||||||||||||||
Total from investment operations | (19.07 | ) | 17.93 | 11.51 | 10.68 | 1.35 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.98 | ) | (0.33 | ) | (0.26 | ) | (0.10 | ) | (0.24 | ) | ||||||||||
Total distributions | (0.98 | ) | (0.33 | ) | (0.26 | ) | (0.10 | ) | (0.24 | ) | ||||||||||
Net asset value, end of year | $ | 43.55 | $ | 63.60 | $ | 46.00 | $ | 34.75 | $ | 24.17 | ||||||||||
Total return | (30.35 | )% | 39.18 | % | 33.16 | % | 44.29 | % | 5.83 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 1,985,763 | $ | 2,429,453 | $ | 1,621,334 | $ | 698,455 | $ | 315,464 | ||||||||||
Ratio of expenses to average net assets | 0.63 | % | 0.68 | % | 0.70 | % | 0.74 | % | 0.94 | % | ||||||||||
Ratio of expenses to average net assets exclusive of foreign taxes | 0.63 | % | 0.68 | % | 0.70 | % | 0.74 | % | 0.94 | % | ||||||||||
Ratio of net investment income to average net assets | 1.35 | % | 0.96 | % | 0.71 | % | 1.49 | % | 0.87 | % | ||||||||||
Portfolio turnover ratec | 42 | % | 20 | % | 47 | % | 30 | % | 29 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the years ended August 31, 2008, August 31, 2007, August 31, 2006 and August 31, 2005 would have been 15%, 6%, 14% and 9%, respectively. See Note 4. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 121 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Taiwan Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 15.99 | $ | 12.57 | $ | 11.57 | $ | 10.66 | $ | 10.79 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.54 | 0.38 | 0.34 | 0.27 | 0.14 | |||||||||||||||
Net realized and unrealized gain (loss)b | (3.01 | ) | 3.34 | 0.80 | 0.72 | (0.25 | ) | |||||||||||||
Total from investment operations | (2.47 | ) | 3.72 | 1.14 | 0.99 | (0.11 | ) | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.39 | ) | (0.30 | ) | (0.14 | ) | (0.08 | ) | (0.02 | ) | ||||||||||
Total distributions | (0.39 | ) | (0.30 | ) | (0.14 | ) | (0.08 | ) | (0.02 | ) | ||||||||||
Net asset value, end of year | $ | 13.13 | $ | 15.99 | $ | 12.57 | $ | 11.57 | $ | 10.66 | ||||||||||
Total return | (15.69 | )% | 29.91 | % | 9.84 | % | 9.28 | % | (1.10 | )% | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 2,918,008 | $ | 2,769,764 | $ | 1,893,751 | $ | 752,640 | $ | 390,228 | ||||||||||
Ratio of expenses to average net assets | 0.73 | % | 0.77 | % | 0.85 | % | 1.03 | % | 1.19 | %c | ||||||||||
Ratio of expenses to average net assets exclusive of foreign taxes | 0.63 | % | 0.68 | % | 0.70 | % | 0.74 | % | 0.92 | % | ||||||||||
Ratio of net investment income to average net assets | 3.54 | % | 2.61 | % | 2.74 | % | 2.34 | % | 1.23 | % | ||||||||||
Portfolio turnover rated | 33 | % | 35 | % | 29 | % | 20 | % | 19 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Ratio of expenses to average net assets prior to voluntary reimbursed distribution fees for the year ended August 31, 2004 was 1.22%. |
d | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the years ended August 31, 2008, August 31, 2007, August 31, 2006 and August 31, 2005 would have been 11%, 12%, 10% and 10%, respectively. See Note 4. |
See notes to financial statements.
122 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Thailand Investable Market Index Fund | ||||
Period from Mar. 26, 2008a to Aug. 31, 2008 | ||||
Net asset value, beginning of period | $ | 50.03 | ||
Income from investment operations: | ||||
Net investment incomeb | 0.32 | |||
Net realized and unrealized lossc | (11.52 | ) | ||
Total from investment operations | (11.20 | ) | ||
Net asset value, end of period | $ | 38.83 | ||
Total return | (22.39 | )%d | ||
Ratios/Supplemental data: | ||||
Net assets, end of period (000s) | $ | 58,248 | ||
Ratio of expenses to average net assetse | 0.63 | % | ||
Ratio of net investment income to average net assetse | 1.68 | % | ||
Portfolio turnover ratef | 19 | % |
a | Commencement of operations. |
b | Based on average shares outstanding throughout the period. |
c | The amount reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | Not annualized. |
e | Annualized for periods of less than one year. |
f | Portfolio turnover rate excludes securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 123 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Turkey Investable Market Index Fund | ||||
Period from Mar. 26, 2008a to Aug. 31, 2008 | ||||
Net asset value, beginning of period | $ | 50.30 | ||
Income from investment operations: | ||||
Net investment incomeb | 0.83 | |||
Net realized and unrealized gainc | 1.29 | |||
Total from investment operations | 2.12 | |||
Net asset value, end of period | $ | 52.42 | ||
Total return | 4.22 | %d | ||
Ratios/Supplemental data: | ||||
Net assets, end of period (000s) | $ | 152,021 | ||
Ratio of expenses to average net assetse | 0.63 | % | ||
Ratio of net investment income to average net assetse | 3.78 | % | ||
Portfolio turnover ratef | 27 | % |
a | Commencement of operations. |
b | Based on average shares outstanding throughout the period. |
c | The amount reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | Not annualized. |
e | Annualized for periods of less than one year. |
f | Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
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Table of Contents
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 iShares MSCI Australia, iShares MSCI Brazil, iShares MSCI BRIC, iShares MSCI Canada, iShares MSCI Chile Investable Market (formerly iShares MSCI Chile Index Fund), iShares MSCI Hong Kong, iShares MSCI Israel Capped Investable Market, iShares MSCI Japan Small Cap, iShares MSCI Malaysia, iShares MSCI Mexico Investable Market (formerly iShares MSCI Mexico Index Fund), iShares MSCI Pacific ex-Japan, iShares MSCI Singapore, iShares MSCI South Africa, iShares MSCI South Korea, iShares MSCI Taiwan, iShares MSCI Thailand Investable Market and iShares MSCI Turkey Investable Market Index Funds (each, a “Fund,” collectively, the “Funds”). The iShares MSCI BRIC and iShares MSCI Chile Investable Market Index Funds commenced operations on November 12, 2007. The iShares MSCI Japan Small Cap Index Fund commenced operations on December 20, 2007. The iShares MSCI Israel Capped Investable Market, iShares MSCI Thailand Investable Market and iShares MSCI Turkey Investable Market Index Funds commenced operations on March 26, 2008.
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 publicly traded equity securities in the aggregate in a particular market, as measured by that market’s equity securities index compiled by MSCI Inc. (“MSCI”). The investment adviser uses a “passive” or index approach to achieve each Fund’s investment objective. Each of the Funds is classified as a non-diversified fund under the 1940 Act. Non-diversified funds generally hold securities of fewer companies than diversified funds and may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.
Each Fund invests in the securities of foreign issuers, which may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets and the risk of war.
Pursuant to the Company’s organizational documents, the 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 Company 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 the 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.
NOTESTO FINANCIAL STATEMENTS | 125 |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
SECURITY VALUATION
The securities and other assets of each Fund are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. The investment adviser may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing service based on such pricing service’s valuation matrix may be considered a market valuation. In the event that current market valuations are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Directors of the Company (the “Board”).
Investments that may be valued using fair value pricing include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (i.e., one that may not be publicly sold without registration under the Securities Act of 1933, as amended); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (i.e., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Fund’s NAV is computed and that may materially affect the value of the Fund’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.
Valuing a Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Accordingly, 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 benchmark index, which, in turn, could result in a difference between the Fund’s performance and the performance of the Fund’s benchmark index.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source, and 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. Any use of a rate different from the rates used by MSCI may adversely affect a Fund’s ability to track its underlying index. 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.
126 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, capital gains on investments or currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign markets in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are disclosed in their Statements of Operations. Foreign taxes payable as of August 31, 2008, if any, are reflected in the Funds’ Statements of Assets and Liabilities.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income, if any, including any net foreign currency gains, are declared and distributed at least annually by each Fund. Distributions of net realized capital gains, if any, generally are declared and distributed once a year. 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.
As of August 31, 2008, the tax year-end of the Funds, the components of net distributable earnings (accumulated losses) on a tax basis were as follows:
iShares MSCI Index Fund | Undistributed Ordinary Income | Unrealized Appreciation (Depreciation) | Capital and Other Losses | Net Distributable Earnings (Accumulated Losses) | |||||||||
Australia | $ 13,904,213 | $ | (219,880,756 | ) | $ (32,035,791) | $ | (238,012,334 | ) | |||||
Brazil | 96,372,353 | 2,322,897,430 | (29,300,350 | ) | 2,389,969,433 | ||||||||
BRIC | 847,229 | (39,450,535 | ) | (762,801 | ) | (39,366,107 | ) | ||||||
Canada | 9,982,399 | (78,039,773 | ) | (21,540,541 | ) | (89,597,915 | ) | ||||||
Chile Investable Market | 94,220 | (8,057,304 | ) | (1,210,459 | ) | (9,173,543 | ) | ||||||
Hong Kong | 8,351,214 | (372,507,265 | ) | (46,673,730 | ) | (410,829,781 | ) | ||||||
Israel Capped Investable Market | 377,416 | (25,086,386 | ) | (319,940 | ) | (25,028,910 | ) | ||||||
Japan Small Cap | 80,189 | (2,047,674 | ) | (102,249 | ) | (2,069,734 | ) | ||||||
Malaysia | 3,318,933 | 134,990,838 | (66,083,981 | ) | 72,225,790 | ||||||||
Mexico Investable Market | 5,787,612 | (221,620,208 | ) | (7,628,071 | ) | (223,460,667 | ) | ||||||
Pacific ex-Japan | 8,647,164 | 315,521,186 | (64,258,176 | ) | 259,910,174 | ||||||||
Singapore | 18,611,717 | (200,863,181 | ) | (29,662,170 | ) | (211,913,634 | ) | ||||||
South Africa | 2,517,487 | (90,809,273 | ) | (18,333,439 | ) | (106,625,225 | ) | ||||||
South Korea | 7,035,789 | 178,558,698 | (271,341,698 | ) | (85,747,211 | ) | |||||||
Taiwan | 101,761,553 | 13,548,283 | (252,574,928 | ) | (137,265,092 | ) | |||||||
Thailand Investable Market | 411,201 | (21,216,118 | ) | (484,519 | ) | (21,289,436 | ) | ||||||
Turkey Investable Market | 916,460 | 624,768 | (140,283 | ) | 1,400,945 |
For the years ended August 31, 2008 and August 31, 2007, as applicable, the tax characterization of distributions paid for each Fund was equal to the book characterization of distributions paid except for the iShares MSCI Brazil and iShares MSCI Pacific ex-Japan Index Funds.
NOTESTO FINANCIAL STATEMENTS | 127 |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
The tax character of distributions paid during the years ended August 31, 2008 and August 31, 2007 for the iShares MSCI Brazil and iShares MSCI Pacific ex-Japan Index Funds were as follows:
iShares MSCI Index Fund | 2008 | 2007 | ||||
Brazil | ||||||
Distributions paid from: | ||||||
Ordinary income | $ | 146,451,597 | $ | 59,308,876 | ||
Long-term capital gain | 27,927,664 | – | ||||
Total Distributions | $ | 174,379,261 | $ | 59,308,876 | ||
Pacific ex-Japan | ||||||
Distributions paid from: | ||||||
Ordinary income | $ | 199,397,032 | $ | 101,866,512 | ||
Long-term capital gain | 4,616,285 | – | ||||
Total Distributions | $ | 204,013,317 | $ | 101,866,512 | ||
The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity 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 carry forwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2008.
From November 1, 2007 to August 31, 2008, the Funds incurred net realized capital losses. As permitted by tax regulations, these Funds have elected to defer these losses and treat them as arising in the year ending August 31, 2009, as follows:
iShares MSCI Index Fund | Deferred Net Realized Capital Losses | |
Australia | $24,270,914 | |
Brazil | 29,300,350 | |
BRIC | 762,801 | |
Canada | 8,138,131 | |
Chile Investable Market | 1,210,459 | |
Hong Kong | 29,521,933 | |
Israel Capped Investable Market | 319,940 | |
Japan Small Cap | 102,249 | |
Malaysia | 39,741,510 |
iShares MSCI Index Fund | Deferred Net Realized | |
Mexico Investable Market | $ 616,456 | |
Pacific ex-Japan | 64,258,176 | |
Singapore | 15,677,851 | |
South Africa | 14,965,219 | |
South Korea | 213,552,002 | |
Taiwan | 114,030,161 | |
Thailand Investable Market | 484,519 | |
Turkey Investable Market | 140,283 |
128 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
Certain Funds had tax basis net capital loss carryforwards as of August 31, 2008, the tax year-end of the Funds, as follows:
iShares MSCI Index Fund | Expiring 2009 | Expiring 2010 | Expiring 2011 | Expiring 2012 | Expiring 2013 | Expiring 2014 | Expiring 2015 | Expiring 2016 | Total | ||||||||||||||||||
Australia | $ | 1,971,994 | $ | 3,625,203 | $ | 650,082 | $ | 596,240 | $ | 384,424 | $ | – | $ | 7,066 | $ | 529,868 | $ | 7,764,877 | |||||||||
Canada | – | – | – | – | 2,931,648 | – | 5,363,291 | 5,107,471 | 13,402,410 | ||||||||||||||||||
Hong Kong | – | 4,971,970 | 2,870,602 | 2,330,414 | 468,716 | 425,440 | 2,899,247 | 3,185,408 | 17,151,797 | ||||||||||||||||||
Malaysia | – | 9,819,029 | 2,898,105 | 775,477 | 6,820,474 | 1,543,708 | 3,357,786 | 1,127,892 | 26,342,471 | ||||||||||||||||||
Mexico Investable Market | – | 47,326 | 2,329,290 | 3,136,171 | 12,912 | 632,766 | – | 853,150 | 7,011,615 | ||||||||||||||||||
Singapore | – | 1,934,119 | 4,428,316 | 4,256,421 | 2,558,348 | – | – | 807,115 | 13,984,319 | ||||||||||||||||||
South Africa | – | – | – | 527,613 | – | 260,738 | 1,607,845 | 972,024 | 3,368,220 | ||||||||||||||||||
South Korea | 395,465 | 666,642 | 504,041 | 3,363,449 | 11,590,303 | 3,172,573 | 38,097,223 | – | 57,789,696 | ||||||||||||||||||
Taiwan | – | 12,532,361 | 8,689,663 | 9,129,874 | 12,022,719 | 14,435,986 | 64,999,586 | 16,734,578 | 138,544,767 |
Net capital loss carry forwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first.
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.
Each Fund reclassifies at the end of its tax year certain amounts to paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset values per share.
As of August 31, 2008, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
iShares MSCI Index Fund | Tax Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized | ||||||||||
Australia | $ | 1,285,691,832 | $ | 37,974,733 | $ | (257,682,443 | ) | $ | (219,707,710 | ) | ||||
Brazil | 4,896,173,119 | 2,516,976,827 | (194,045,177 | ) | 2,322,931,650 | |||||||||
BRIC | 204,202,050 | – | (39,450,130 | ) | (39,450,130 | ) | ||||||||
Canada | 2,143,480,201 | 118,387,425 | (196,335,096 | ) | (77,947,671 | ) | ||||||||
Chile Investable Market | 84,262,417 | 3,870,679 | (11,928,239 | ) | (8,057,560 | ) | ||||||||
Hong Kong | 2,373,311,349 | 12,440,049 | (384,950,242 | ) | (372,510,193 | ) | ||||||||
Israel Capped Investable Market | 239,123,763 | 2,806,928 | (27,895,702 | ) | (25,088,774 | ) | ||||||||
Japan Small Cap | 37,143,185 | 1,015,714 | (3,063,478 | ) | (2,047,764 | ) | ||||||||
Malaysia | 336,672,928 | 146,458,663 | (11,433,021 | ) | 135,025,642 |
NOTESTO FINANCIAL STATEMENTS | 129 |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
iShares MSCI Index Fund | Tax Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||||||||
Mexico Investable Market | $ | 1,207,025,667 | $ | 8,468,413 | $ | (230,058,943 | ) | $(221,590,530 | ) | ||||
Pacific ex-Japan | 3,145,885,498 | 576,571,277 | (260,717,583 | ) | 315,853,694 | ||||||||
Singapore | 1,817,730,191 | 4,185,693 | (205,066,070 | ) | (200,880,377 | ) | |||||||
South Africa | 519,706,207 | 9,886,418 | (100,704,519 | ) | (90,818,101 | ) | |||||||
South Korea | 2,242,581,535 | 350,674,683 | (172,172,065 | ) | 178,502,618 | ||||||||
Taiwan | 2,872,156,873 | 271,085,149 | (257,114,386 | ) | 13,970,763 | ||||||||
Thailand Investable Market | 79,189,549 | – | (21,213,094 | ) | (21,213,094 | ) | |||||||
Turkey Investable Market | 171,842,276 | 4,318,128 | (3,696,588 | ) | 621,540 |
The Funds adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in a tax position taken or expected to be taken in a tax return. FIN 48 provides guidance on the measurement, recognition, classification and disclosures of tax positions, along with accounting for the related interest and penalties. Management has reviewed the tax positions as of August 31, 2008, inclusive of the prior three open tax return years, as applicable, and has determined that the implementation of FIN 48 did not have a material impact on the Funds’ financial statements.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement with the Company, Barclays Global Fund Advisors (“BGFA”) manages the investment of each Fund’s assets. BGFA is a California corporation indirectly owned by Barclays Bank PLC. Under the Investment Advisory Agreement, BGFA is responsible for all expenses (“Covered Expenses”) of the Company, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees and extraordinary expenses.
For its investment advisory services to the iShares MSCI Australia, iShares MSCI Canada, iShares MSCI Hong Kong, iShares MSCI Japan Small Cap, iShares MSCI Malaysia, iShares MSCI Mexico Investable Market and iShares MSCI Singapore Index Funds, BGFA 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 these Funds 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 |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
The Board approved a change to the investment advisory fee structure for the iShares MSCI Australia, iShares MSCI Canada, iShares MSCI Hong Kong, iShares MSCI Japan Small Cap, iShares MSCI Malaysia, iShares MSCI Mexico Investable Market and iShares MSCI Singapore Index Funds effective September 1, 2008. For its investment advisory services to each Fund, BGFA will be entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of these Funds and certain other iShares Funds, as follows:
Investment Advisory Fee | Aggregate Average Daily Net Assets | |
0.59% | First $7 billion | |
0.54 | Over $7 billion, up to and including $11 billion | |
0.49 | Over $11 billion, up to and including $24 billion | |
0.44 | Over $24 billion, up to and including $48 billion | |
0.40 | Over $48 billion |
For its investment advisory services to the iShares MSCI Brazil, iShares MSCI Chile Investable Market, iShares MSCI Israel Capped Investable Market, iShares MSCI South Africa, iShares MSCI South Korea, iShares MSCI Taiwan, iShares MSCI Thailand Investable Market and iShares MSCI Turkey Investable Market Index Funds, BGFA 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 these eight 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 |
The Board approved a change to the investment advisory fee structure for the iShares MSCI Brazil, iShares MSCI Chile Investable Market, iShares MSCI Israel Capped Investable Market, iShares MSCI South Africa, iShares MSCI South Korea, iShares MSCI Taiwan, iShares MSCI Thailand Investable Market and iShares MSCI Turkey Investable Market Index Funds effective September 1, 2008. For its investment advisory services to each Fund, BGFA will be entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of these eight 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 |
NOTESTO FINANCIAL STATEMENTS | 131 |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
For its investment advisory services to the iShares MSCI BRIC Index Fund, BGFA 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 (iShares MSCI All Country Asia ex Japan and iShares MSCI Emerging Markets Index 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 |
For its investment advisory services to the iShares MSCI Pacific ex-Japan Index Fund, BGFA is entitled to an annual investment advisory fee of 0.50% of the average daily net assets of the Fund.
State Street Bank and Trust Company (“State Street”) serves as administrator, custodian and transfer agent for the Company. As compensation for its services, State Street receives certain out-of-pocket costs, transaction fees and asset-based fees which are accrued daily and paid monthly. These fees and expenses are Covered Expenses as defined above.
SEI Investments Distribution Co. (“SEI”) serves as each Fund’s underwriter and distributor of the shares of each Fund, pursuant to a Distribution Agreement with the Company. SEI does not receive a fee from the Funds for its distribution services.
Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Funds are permitted to lend portfolio securities to Barclays Capital Inc. (“BarCap”). Pursuant to the same exemptive order, Barclays Global Investors, N.A. (“BGI”) serves as securities lending agent for the Funds. BarCap and BGI are affiliates of BGFA, the Funds’ investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2008, BGI earned securities lending agent fees as follows:
iShares MSCI Index Fund | Securities Lending Agent Fees | |
Australia | $ 649,319 | |
Brazil | 27,837 | |
BRIC | 27,146 | |
Hong Kong | 1,600,970 | |
Israel Capped Investable Market | 10,921 | |
Japan Small Cap | 2,024 |
iShares MSCI Index Fund | Securities Lending Agent Fees | |
Mexico Investable Market | $ 930,442 | |
Pacific ex-Japan | 1,890,628 | |
Singapore | 1,025,137 | |
South Africa | 41,405 | |
South Korea | 7,774,748 | |
Turkey Investable Market | 110,377 |
Cross trades for the year ended August 31, 2008, 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 BGFA (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 in the Institutional Shares of certain money market funds managed by BGFA, the Funds’ investment adviser, including the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”), Prime Money Market Fund (“PMMF”)
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Notes to Financial Statements (Continued)
iSHARES®, INC.
and Treasury Money Market Fund (“TMMF”) of Barclays Global Investors Funds. The GMMF, IMMF, PMMF and TMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio, Prime Money Market Master Portfolio and Treasury Money Market Master Portfolio (collectively, the “Money Market Master Portfolios”), respectively, which are also managed by BGFA. While the GMMF, IMMF, PMMF and TMMF do not directly charge an investment advisory fee, the Money Market Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF, PMMF and TMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Funds from temporary cash investments are recorded as interest from affiliated issuers in the accompanying Statements of Operations. Income distributions earned by the Funds from the investment of securities lending collateral, if any, are included in securities lending income in the accompanying Statements of Operations.
Each Fund may invest its securities lending cash collateral, if any, in the BGI Cash Premier Fund LLC (“Premier Fund”), an affiliated private money market fund managed by BGFA. Although the Premier Fund is not registered as an investment company under the 1940 Act, it intends to operate as a money market fund in compliance with Rule 2a-7 under the 1940 Act. See Note 5 for additional information regarding the Premier Fund.
Certain directors and officers of the Company are also officers of BGI and/or BGFA.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2008, were as follows:
iShares MSCI Index Fund | Purchases | Sales | ||||
Australia | $ | 159,811,945 | $ | 186,383,585 | ||
Brazil | 4,338,213,807 | 2,185,018,559 | ||||
BRIC | 74,757,843 | 8,810,140 | ||||
Canada | 216,697,528 | 206,249,390 | ||||
Chile Investable Market | 93,660,907 | 8,307,746 | ||||
Hong Kong | 364,562,441 | 368,240,653 | ||||
Israel Capped Investable Market | 7,758,458 | 7,217,619 | ||||
Japan Small Cap | 1,226,440 | 1,015,468 | ||||
Malaysia | 856,426,480 | 979,857,427 | ||||
Mexico Investable Market | 182,677,435 | 186,079,203 | ||||
Pacific ex-Japan | 518,837,055 | 537,507,396 | ||||
Singapore | 295,074,114 | 302,516,454 | ||||
South Africa | 123,518,327 | 128,213,071 | ||||
South Korea | 1,889,151,387 | 1,221,537,887 | ||||
Taiwan | 1,917,823,347 | 1,049,553,926 | ||||
Thailand Investable Market | 9,835,909 | 8,928,704 | ||||
Turkey Investable Market | 23,299,769 | 15,092,040 |
NOTESTO FINANCIAL STATEMENTS | 133 |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
In-kind transactions (see Note 4) for the year ended August 31, 2008, were as follows:
iShares MSCI Index Fund | In-kind Purchases | In-kind Sales | ||||
Australia | $ | 703,271,454 | $ | 865,659,708 | ||
BRIC | 137,631,809 | 3,224,854 | ||||
Canada | 1,686,052,226 | 849,321,285 | ||||
Hong Kong | 1,636,568,934 | 1,052,607,314 | ||||
Israel Capped Investable Market | 245,810,148 | 17,468,887 | ||||
Japan Small Cap | 36,424,472 | – | ||||
Mexico Investable Market | 1,917,253,632 | 2,186,317,929 | ||||
Pacific ex-Japan | 650,042,505 | 364,824,760 | ||||
Singapore | 781,256,907 | 676,992,504 | ||||
South Africa | 404,972,318 | 341,408,954 | ||||
Thailand Investable Market | 146,270,347 | 61,222,018 | ||||
Turkey Investable Market | 145,410,699 | 2,554,684 |
4. CAPITAL SHARE TRANSACTIONS
The Company issues and redeems capital shares of each Fund only in aggregations of a specified number of shares (each, a “Creation Unit”) 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 generally consists of the in-kind deposit of a designated portfolio of equity securities, which constitutes a substantial replication, or a portfolio sampling representation, of the corresponding MSCI Index and an amount of cash (except for the iShares MSCI Brazil, iShares MSCI BRIC, iShares MSCI Chile Investable Market, iShares MSCI Malaysia, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds which are offered in Creation Units solely or partially for cash in U.S. dollars). Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee directly to State Street, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant Fund for brokerage and market impact expenses relating to investing in portfolio securities.
From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Statements of Assets and Liabilities.
The Board authorized a three-for-one stock split for the iShares MSCI Pacific ex-Japan Index Fund and a two-for-one stock split for the iShares MSCI South Africa Index Fund, effective July 24, 2008, for the shareholders of record on July 21, 2008. The impact of the stock split was to increase the number of shares outstanding by a factor of three and two, respectively, while decreasing the net asset value per share by the same factors, resulting in no effect to total net assets of these Funds. The financial statements for these Funds have been adjusted to reflect the stock splits.
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Notes to Financial Statements (Continued)
iSHARES®, INC.
5. LOANS OF PORTFOLIO SECURITIES
Each Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Fund is required to have a value of at least 102% of the market 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 market value of the securities on loan. The risks to the Funds of securities lending are that the borrower may not provide additional collateral when required or may not return the securities when due.
As of August 31, 2008, certain Funds had loaned securities which were collateralized by cash. The cash collateral received was invested in the Premier Fund. The Premier Fund seeks to achieve its investment objective by investing in a portfolio of high-quality, short-term fixed-income instruments, including money market funds (which may be managed by BGFA or its affiliate) and other instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition.
The market value of the securities on loan as of August 31, 2008 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Funds’ Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.
6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), “Fair Value Measurements.” FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. Management does not believe that the adoption of this standard will have a material impact on the Funds’ financial statements.
NOTESTO FINANCIAL STATEMENTS | 135 |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
iShares, Inc.
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Australia Index Fund, iShares MSCI Brazil Index Fund, iShares MSCI BRIC Index Fund, iShares MSCI Canada Index Fund, iShares MSCI Chile Investable Market Index Fund (formerly iShares MSCI Chile Index Fund), iShares MSCI Hong Kong Index Fund, iShares MSCI Israel Capped Investable Market Index Fund, iShares MSCI Japan Small Cap Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund (formerly iShares MSCI Mexico Index Fund), iShares MSCI Pacific ex-Japan Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, iShares MSCI Taiwan Index Fund, iShares MSCI Thailand Investable Market Index Fund and iShares MSCI Turkey Investable Market Index Fund (the “Funds”), at August 31, 2008, the results of each of their operations, the changes in each of their net assets and their financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 23, 2008
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iSHARES®, INC.
Under Section 852(b)(3)(C) of the Internal Revenue Code (the “Code”), the iShares MSCI Brazil and iShares MSCI Pacific ex-Japan Index Funds designate $27,927,664 and $4,616,285, respectively, as long-term capital gain dividends for the fiscal year ended August 31, 2008.
Under Section 871(k)(2)(C) of the Code, the iShares MSCI Brazil and iShares MSCI Pacific ex-Japan Index Funds designate $11,929,001 and $12,003, respectively, as short-term capital gain dividends for the fiscal year ended August 31, 2008.
For the fiscal year ended August 31, 2008, certain Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders pursuant to Section 853 of the Code as follows:
iShares MSCI Index Fund | Foreign Source Income Earned | Foreign Taxes Paid | ||
Australia | $ 62,707,513 | $ 1,452,472 | ||
Brazil | 239,895,049 | 16,142,866 | ||
BRIC | 2,031,290 | 89,026 | ||
Canada | 44,990,761 | 6,683,223 | ||
Chile Investable Market | 1,789,794 | 486,237 | ||
Israel Capped Investable Market | 798,023 | 151,840 |
iShares MSCI Index Fund | Foreign Source Income Earned | Foreign Taxes Paid | ||
Japan Small Cap | $ 150,915 | $ 10,449 | ||
Pacific ex-Japan | 148,172,756 | 2,654,599 | ||
South Korea | 59,344,846 | 8,547,715 | ||
Taiwan | 163,473,574 | 32,340,302 | ||
Thailand Investable Market | 627,600 | 62,760 | ||
Turkey Investable Market | 1,043,967 | 117,434 |
Under Section 854(b)(2) of the Code, certain Funds hereby designate the following maximum amounts as qualified dividend income for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended August 31, 2008:
iShares MSCI Index Fund | Qualified Dividend Income | |
Australia | $51,442,841 | |
Brazil | 9,508,733 | |
BRIC | 531,173 | |
Canada | 30,808,204 | |
Japan Small Cap | 56,942 |
iShares MSCI Index Fund | Qualified Dividend Income | |
Malaysia | $ 577,544 | |
Mexico Investable Market | 32,520,878 | |
Pacific ex-Japan | 87,944,732 | |
South Africa | 25,634,161 | |
South Korea | 45,537,252 |
In January 2009, shareholders will receive Form 1099-DIV which will include their share of qualified dividend income distributed during the calendar year 2008. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.
TAX INFORMATION | 137 |
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Board Review and Approval of Investment Advisory Contract (Unaudited)
iSHARES®, INC.
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BGFA (the “Advisory Contract”) on behalf of the Funds. As required by Section 15(c), the Board requested and BGFA provided such information as the Board deemed reasonably necessary to evaluate the terms of the Advisory Contract. At a meeting held on June 18-19, 2008, the Board approved the selection of BGFA and the continuance of the Advisory Contract, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contract for the Funds, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, no one of which was controlling, and made the following conclusions: |
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA
The Board anticipated that there would be no diminution in the scope of services required of BGFA under the Advisory Contract for the coming year as compared to the scope of services provided by BGFA over the past year. In reviewing the scope of these services, the Board considered BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including over the past year, including investment in technology and increasing the number of their employees supporting the Funds. The Board also considered BGFA’s compliance program and its compliance record with respect to the Funds. In that regard, the Board noted that BGFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and has 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 Funds. In addition to the above considerations, the Board considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as any of the Funds; therefore, comparative performance information was generally not available. However, the Board also noted that the Funds had met their investment objectives consistently since their respective inception dates. Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Funds under the Advisory Contract were appropriate and mitigated in favor of the Board’s approval of the Advisory Contract for the coming year.
FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS
The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other registered investment companies objectively selected by Lipper as comprising such Fund’s applicable peer group pursuant to Lipper’s proprietary methodology and any registered investment companies that would otherwise have been excluded from Lipper’s comparison group due to certain differentiating factors, but were nonetheless included at the request of BGFA (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track indexes similar to those tracked by the Funds, the Lipper Groups included in part mutual funds, closed-end funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the various Lipper Groups, the statistical information may or may not provide meaningful direct comparisons to the Funds. In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three-, five- and ten-year periods, as applicable, and the “last quarter” period ended March 31, 2008, and a comparison of each 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 any particular Fund, Lipper also provided, and the Board reviewed, a comparison
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Board Review and Approval of Investment Advisory Contract
(Unaudited) (Continued)
iSHARES®, INC.
of such Fund’s performance to that of such relevant comparison funds for the same periods. The Board noted that the Funds generally performed in line with their respective performance benchmark indexes over the relevant periods. In considering this information, the Board noted that the Lipper Groups include funds that may have different investment objectives and/or benchmarks from the Funds. In addition, the Board noted that each Fund seeks to track its benchmark index and that during the prior year the Board received periodic reports on the Funds’ performance in comparison with their relevant benchmark indexes. Such comparative performance information was also considered by the Board.
The Board also noted that the investment advisory fees and overall expense components for the Funds were generally lower than (or in the case of the iShares MSCI South Korea Index Fund not appreciably higher than) the median or average investment advisory fee rates and overall expenses of the funds in their respective Lipper Groups. The Board also reviewed statistical information from Lipper displaying the effects of the proposed extension of breakpoints in the investment advisory fee rates for certain of the Funds (as discussed below) at various assets levels of such Funds as compared to their respective Lipper Groups. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of each Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the relevant Lipper Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.
COSTS OF SERVICES PROVIDED TO FUNDS AND PROFITS REALIZED BY BGFA AND AFFILIATES
The Board reviewed information about the profitability to BGFA of the Funds based on the fees payable to BGFA and its affiliates (including fees under the Advisory Contract), and all other sources of revenue and expense to BGFA and its affiliates from the Funds’ operations for the last calendar year. The Board discussed the sources of direct and ancillary revenue with management, including the revenues to BGI from securities lending by the Company (including any securities lending by the Funds). The Board also discussed BGFA’s profit margin as reflected in the Funds’ profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits realized by BGFA and its affiliates under the Advisory Contract and from other relationships between the Funds and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.
ECONOMIES OF SCALE
In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board was also presented with materials regarding the proposed extension of breakpoints in the investment advisory fee rates at certain asset levels for all of the Funds, except for the iShares MSCI BRIC and iShares MSCI Pacific ex-Japan Index Funds (effective September 1, 2008). The Board noted that the Advisory Contract already provided for breakpoints in the investment advisory fee rates for most of the Funds as the assets of such Funds, on an aggregated basis with the assets of certain other iShares funds, increase, but also noted that the Advisory Contract did not currently provide for any breakpoints in the investment advisory fee rates for the iShares MSCI Pacific ex-Japan Index Fund as possible future economies of scale for that Fund had been taken into consideration by fixing the investment advisory fees at rates at the lower end of the marketplace, effectively giving Fund shareholders, from inception, the benefits of the lower average fee shareholders would have received from a fee structure with declining breakpoints where the initial fee was higher. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had continued to make significant investments in the iShares funds, that expenses had grown at a pace similar to the growth in revenue, and that BGFA had incurred operating losses during earlier years when the iShares funds, including the Funds, had not yet reached scale. In light of this history, the Board determined that the proposed extension of breakpoints was appropriate and warranted at this juncture for the identified Funds but that reductions in fee rates for the iShares MSCI Pacific ex-Japan Index Fund or further extensions of breakpoints for the iShares MSCI BRIC Index Fund were not warranted at this juncture. Based on this review, as well as the discussions described above in connection with the Lipper Group and performance
BOARD REVIEWAND APPROVALOF INVESTMENT ADVISORY CONTRACT | 139 |
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Board Review and Approval of Investment Advisory Contract
(Unaudited) (Continued)
iSHARES®, INC.
benchmark index comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees, with the proposed extension of breakpoints for certain of the Funds, reflects appropriate sharing of economies of scale with the Funds’ shareholders.
FEES AND SERVICES PROVIDED FOR OTHER COMPARABLE FUNDS/ACCOUNTS MANAGED BY BGFA AND ITS AFFILIATES
The Board received and considered certain information regarding the Funds’ annual investment advisory fee rates under the Advisory Contract in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts (together, the “Other Accounts”). The Board noted that comparative investment advisory/management fee information was available for the iShares MSCI Australia and iShares MSCI Canada Index Funds but not for the other Funds, as BGFA and its affiliates do not manage any Other Accounts with substantially similar investment objectives and strategies as any of those Funds. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the Other Accounts differed from the level of services provided to the Funds. In reviewing the comparative investment advisory/management fee information for the Funds for which such information was available, the Board considered the general structure of investment advisory/management fees in relation to the nature and extent of services provided to the Funds in comparison with the nature and extent of services provided to the Other Accounts, including, among other things, the level of complexity in managing the Funds and the Other Accounts under differing regulatory requirements and client guidelines. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contracts, with the proposed extension of breakpoints for all the Funds except for the iShares MSCI Pacific ex-Japan and iShares MSCI BRIC Index Funds, do not constitute fees that are 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 the investment advisory fee rates under the Advisory Contracts are fair and reasonable.
OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES
The Board reviewed any ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Funds by BGFA, such as any payment of revenue to BGI, the Company’s securities lending agent, for loaning any portfolio securities, and payment of advisory fees and/or administration fees to BGFA and BGI in connection with any investments by the Funds in other funds for which BGFA provides investment advisory services and/or BGI provides administration services. The Board noted that BGFA does not use soft dollars or consider the value of research or other services that may be provided to BGFA (including its affiliates) in selecting brokers for portfolio transactions for the Funds. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BGFA affiliate or purchased from an underwriting syndicate in which a BGFA affiliate participates, are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Funds’ shareholders.
Based on this analysis, the Board determined that the Advisory Contract, including the investment advisory fee rates there under, with the proposed extension of breakpoints, is fair and reasonable in light of all relevant circumstances, and concluded that it is in the best interest of the Funds and their shareholders to approve the Advisory Contract, with the fee schedule to the Advisory Contract as proposed to be amended to reflect the extension of breakpoints, for the coming year.
140 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
The tables that follow present information about the differences between the daily market price on secondary markets for shares of a Fund and that Fund’s net asset value. Net asset value, or ”NAV”, is the price per share at which each Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. The “Market Price” of each Fund generally is determined using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of such Fund is listed for trading (the “Exchange”), as of the time that the Fund’s NAV is calculated. In the case of the iShares MSCI Malaysia, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds, the NAVs of which are determined prior to the opening of the regular trading day on the Exchange, the Market Price is determined using the midpoint of the bid/ask spread as of the opening of regular trading on the Exchange. Each Fund���s Market Price may be at, above or below its NAV. The NAV of each Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of each Fund will fluctuate in accordance with changes in its NAV, as well as market supply and demand.
Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of a Fund on a given day, generally at the time NAV is calculated. A premium is the amount that a Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that a Fund is trading below the reported NAV, expressed as a percentage of the NAV.
The following information shows the frequency distributions of premiums and discounts for each of the Funds included in this report. The information shown for each Fund is for five calendar years (or for each full calendar quarter completed after the inception date of such Fund if less than five years) through the date of the most recent calendar quarter-end. The specific periods covered for each Fund are disclosed in the table for such Fund.
Each line in the table shows the number of trading days in which the Fund traded within the premium/discount range indicated. The number of trading days in each premium/discount range is also shown as a percentage of the total number of trading days in the period covered by each table. All data presented here represents past performance, which cannot be used to predict future results.
iShares MSCI Australia Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.0% | 2 | 0.14 | % | ||
Greater than 3.5% and Less than 4.0% | 1 | 0.07 | |||
Greater than 3.0% and Less than 3.5% | 3 | 0.22 | |||
Greater than 2.5% and Less than 3.0% | 7 | 0.51 | |||
Greater than 2.0% and Less than 2.5% | 11 | 0.80 | |||
Greater than 1.5% and Less than 2.0% | 43 | 3.11 | |||
Greater than 1.0% and Less than 1.5% | 127 | 9.20 | |||
Greater than 0.5% and Less than 1.0% | 324 | 23.46 | |||
Between 0.5% and –0.5% | 652 | 47.21 | |||
Less than –0.5% and Greater than –1.0% | 115 | 8.33 | |||
Less than –1.0% and Greater than –1.5% | 50 | 3.62 | |||
Less than –1.5% and Greater than –2.0% | 21 | 1.52 | |||
Less than –2.0% and Greater than –2.5% | 8 | 0.58 | |||
Less than –2.5% and Greater than –3.0% | 12 | 0.87 | |||
Less than –3.0% and Greater than –3.5% | 4 | 0.29 | |||
Less than –3.5% and Greater than –4.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
SUPPLEMENTAL INFORMATION | 141 |
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Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Brazil Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.0% | 1 | 0.07 | % | ||
Greater than 3.5% and Less than 4.0% | 1 | 0.07 | |||
Greater than 3.0% and Less than 3.5% | 1 | 0.07 | |||
Greater than 2.5% and Less than 3.0% | 1 | 0.07 | |||
Greater than 2.0% and Less than 2.5% | 8 | 0.58 | |||
Greater than 1.5% and Less than 2.0% | 11 | 0.80 | |||
Greater than 1.0% and Less than 1.5% | 49 | 3.55 | |||
Greater than 0.5% and Less than 1.0% | 145 | 10.50 | |||
Between 0.5% and –0.5% | 988 | 71.55 | |||
Less than –0.5% and Greater than –1.0% | 123 | 8.91 | |||
Less than –1.0% and Greater than –1.5% | 26 | 1.88 | |||
Less than –1.5% and Greater than –2.0% | 15 | 1.09 | |||
Less than –2.0% and Greater than –2.5% | 4 | 0.29 | |||
Less than –2.5% and Greater than –3.0% | 2 | 0.14 | |||
Less than –3.0% and Greater than –3.5% | 2 | 0.14 | |||
Less than –3.5% and Greater than –4.0% | 3 | 0.22 | |||
Less than –4.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
iShares MSCI BRIC Index Fund
Period Covered: January 1, 2008 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.5% | 1 | 0.80 | % | ||
Greater than 4.0% and Less than 4.5% | 1 | 0.80 | |||
Greater than 3.5% and Less than 4.0% | 1 | 0.80 | |||
Greater than 3.0% and Less than 3.5% | 1 | 0.80 | |||
Greater than 2.5% and Less than 3.0% | 3 | 2.40 | |||
Greater than 2.0% and Less than 2.5% | 7 | 5.60 | |||
Greater than 1.5% and Less than 2.0% | 8 | 6.40 | |||
Greater than 1.0% and Less than 1.5% | 11 | 8.80 | |||
Greater than 0.5% and Less than 1.0% | 25 | 20.00 | |||
Between 0.5% and –0.5% | 53 | 42.40 | |||
Less than –0.5% and Greater than –1.0% | 11 | 8.80 | |||
Less than –1.0% and Greater than –1.5% | 1 | 0.80 | |||
Less than –1.5% and Greater than –2.0% | 1 | 0.80 | |||
Less than –2.0% and Greater than –2.5% | 1 | 0.80 | |||
125 | 100.00 | % | |||
142 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Canada Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.0% | 1 | 0.07 | % | ||
Greater than 1.5% and Less than 2.0% | 2 | 0.14 | |||
Greater than 1.0% and Less than 1.5% | 18 | 1.30 | |||
Greater than 0.5% and Less than 1.0% | 153 | 11.08 | |||
Between 0.5% and –0.5% | 1,137 | 82.35 | |||
Less than –0.5% and Greater than –1.0% | 63 | 4.56 | |||
Less than –1.0% and Greater than –1.5% | 6 | 0.43 | |||
Less than –1.5% and Greater than –2.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
iShares MSCI Chile Investable Market Index Fund
Period Covered: January 1, 2008 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.0% and Less than 2.5% | 1 | 0.80 | % | ||
Greater than 1.5% and Less than 2.0% | 6 | 4.80 | |||
Greater than 1.0% and Less than 1.5% | 20 | 16.00 | |||
Greater than 0.5% and Less than 1.0% | 51 | 40.80 | |||
Between 0.5% and –0.5% | 40 | 32.00 | |||
Less than –0.5% and Greater than –1.0% | 6 | 4.80 | |||
Less than –1.0% | 1 | 0.80 | |||
125 | 100.00 | % | |||
SUPPLEMENTAL INFORMATION | 143 |
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Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Hong Kong Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 5.0% | 1 | 0.07 | % | ||
Greater than 4.5% and Less than 5.0% | 2 | 0.14 | |||
Greater than 4.0% and Less than 4.5% | 2 | 0.14 | |||
Greater than 3.5% and Less than 4.0% | 2 | 0.14 | |||
Greater than 3.0% and Less than 3.5% | 4 | 0.29 | |||
Greater than 2.5% and Less than 3.0% | 8 | 0.58 | |||
Greater than 2.0% and Less than 2.5% | 19 | 1.38 | |||
Greater than 1.5% and Less than 2.0% | 50 | 3.62 | |||
Greater than 1.0% and Less than 1.5% | 123 | 8.91 | |||
Greater than 0.5% and Less than 1.0% | 259 | 18.75 | |||
Between 0.5% and –0.5% | 633 | 45.86 | |||
Less than –0.5% and Greater than –1.0% | 131 | 9.49 | |||
Less than –1.0% and Greater than –1.5% | 64 | 4.63 | |||
Less than –1.5% and Greater than –2.0% | 40 | 2.90 | |||
Less than –2.0% and Greater than –2.5% | 22 | 1.59 | |||
Less than –2.5% and Greater than –3.0% | 7 | 0.51 | |||
Less than –3.0% and Greater than –3.5% | 8 | 0.58 | |||
Less than –3.5% and Greater than –4.0% | 2 | 0.14 | |||
Less than –4.0% and Greater than –4.5% | 2 | 0.14 | |||
Less than –4.5% and Greater than –5.0% | 1 | 0.07 | |||
Less than –5.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
iShares MSCI Israel Capped Investable Market Index Fund
Period Covered: April 1, 2008 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.0% and Less than 2.5% | 2 | 3.13 | % | ||
Greater than 1.5% and Less than 2.0% | 3 | 4.69 | |||
Greater than 1.0% and Less than 1.5% | 8 | 12.50 | |||
Greater than 0.5% and Less than 1.0% | 13 | 20.31 | |||
Between 0.5% and –0.5% | 32 | 49.99 | |||
Less than –0.5% and Greater than –1.0% | 3 | 4.69 | |||
Less than –1.0% and Greater than –1.5% | 2 | 3.13 | |||
Less than –1.5% | 1 | 1.56 | |||
64 | 100.00 | % | |||
144 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Japan Small Cap Index Fund
Period Covered: January 1, 2008 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 3.5% | 4 | 3.20 | % | ||
Greater than 3.0% and Less than 3.5% | 4 | 3.20 | |||
Greater than 2.5% and Less than 3.0% | 5 | 4.00 | |||
Greater than 2.0% and Less than 2.5% | 6 | 4.80 | |||
Greater than 1.5% and Less than 2.0% | 19 | 15.20 | |||
Greater than 1.0% and Less than 1.5% | 16 | 12.80 | |||
Greater than 0.5% and Less than 1.0% | 20 | 16.00 | |||
Between 0.5% and –0.5% | 34 | 27.20 | |||
Less than –0.5% and Greater than –1.0% | 11 | 8.80 | |||
Less than –1.0% and Greater than –1.5% | 1 | 0.80 | |||
Less than –1.5% and Greater than –2.0% | 3 | 2.40 | |||
Less than –2.0% and Greater than –2.5% | 1 | 0.80 | |||
Less than –2.5% | 1 | 0.80 | |||
125 | 100.00 | % | |||
iShares MSCI Malaysia Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.0% | 4 | 0.29 | % | ||
Greater than 3.5% and Less than 4.0% | 1 | 0.07 | |||
Greater than 3.0% and Less than 3.5% | 5 | 0.36 | |||
Greater than 2.5% and Less than 3.0% | 5 | 0.36 | |||
Greater than 2.0% and Less than 2.5% | 39 | 2.82 | |||
Greater than 1.5% and Less than 2.0% | 68 | 4.92 | |||
Greater than 1.0% and Less than 1.5% | 134 | 9.70 | |||
Greater than 0.5% and Less than 1.0% | 194 | 14.05 | |||
Between 0.5% and –0.5% | 476 | 34.49 | |||
Less than –0.5% and Greater than –1.0% | 191 | 13.83 | |||
Less than –1.0% and Greater than –1.5% | 132 | 9.56 | |||
Less than –1.5% and Greater than –2.0% | 55 | 3.98 | |||
Less than –2.0% and Greater than –2.5% | 48 | 3.48 | |||
Less than –2.5% and Greater than –3.0% | 16 | 1.16 | |||
Less than –3.0% and Greater than –3.5% | 6 | 0.43 | |||
Less than –3.5% and Greater than –4.0% | 2 | 0.14 | |||
Less than –4.0% and Greater than –4.5% | 3 | 0.22 | |||
Less than –4.5% | 2 | 0.14 | |||
1,381 | 100.00 | % | |||
SUPPLEMENTAL INFORMATION | 145 |
Table of Contents
Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Mexico Investable Market Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.0% | 1 | 0.07 | % | ||
Greater than 1.5% and Less than 2.0% | 8 | 0.58 | |||
Greater than 1.0% and Less than 1.5% | 26 | 1.88 | |||
Greater than 0.5% and Less than 1.0% | 162 | 11.73 | |||
Between 0.5% and –0.5% | 978 | 70.82 | |||
Less than –0.5% and Greater than –1.0% | 156 | 11.30 | |||
Less than –1.0% and Greater than –1.5% | 42 | 3.04 | |||
Less than –1.5% and Greater than –2.0% | 5 | 0.36 | |||
Less than –2.0% | 3 | 0.22 | |||
1,381 | 100.00 | % | |||
iShares MSCI Pacific ex-Japan Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.5% | 1 | 0.07 | % | ||
Greater than 4.0% and Less than 4.5% | 2 | 0.14 | |||
Greater than 3.5% and Less than 4.0% | 3 | 0.22 | |||
Greater than 3.0% and Less than 3.5% | 2 | 0.14 | |||
Greater than 2.5% and Less than 3.0% | 7 | 0.51 | |||
Greater than 2.0% and Less than 2.5% | 14 | 1.01 | |||
Greater than 1.5% and Less than 2.0% | 59 | 4.27 | |||
Greater than 1.0% and Less than 1.5% | 185 | 13.40 | |||
Greater than 0.5% and Less than 1.0% | 314 | 22.74 | |||
Between 0.5% and –0.5% | 610 | 44.18 | |||
Less than –0.5% and Greater than –1.0% | 90 | 6.52 | |||
Less than –1.0% and Greater than –1.5% | 48 | 3.48 | |||
Less than –1.5% and Greater than –2.0% | 22 | 1.59 | |||
Less than –2.0% and Greater than –2.5% | 8 | 0.58 | |||
Less than –2.5% and Greater than –3.0% | 8 | 0.58 | |||
Less than –3.0% and Greater than –3.5% | 5 | 0.36 | |||
Less than –3.5% and Greater than –4.0% | 1 | 0.07 | |||
Less than –4.0% and Greater than –4.5% | 2 | 0.14 | |||
1,381 | 100.00 | % | |||
146 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Singapore Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.5% | 2 | 0.14 | % | ||
Greater than 4.0% and Less than 4.5% | 2 | 0.14 | |||
Greater than 3.5% and Less than 4.0% | 3 | 0.22 | |||
Greater than 3.0% and Less than 3.5% | 1 | 0.07 | |||
Greater than 2.5% and Less than 3.0% | 10 | 0.72 | |||
Greater than 2.0% and Less than 2.5% | 26 | 1.88 | |||
Greater than 1.5% and Less than 2.0% | 72 | 5.21 | |||
Greater than 1.0% and Less than 1.5% | 180 | 13.03 | |||
Greater than 0.5% and Less than 1.0% | 271 | 19.62 | |||
Between 0.5% and –0.5% | 549 | 39.79 | |||
Less than –0.5% and Greater than –1.0% | 112 | 8.11 | |||
Less than –1.0% and Greater than –1.5% | 76 | 5.50 | |||
Less than –1.5% and Greater than –2.0% | 38 | 2.75 | |||
Less than –2.0% and Greater than –2.5% | 21 | 1.52 | |||
Less than –2.5% and Greater than –3.0% | 11 | 0.80 | |||
Less than –3.0% and Greater than –3.5% | 3 | 0.22 | |||
Less than –3.5% and Greater than –4.0% | 1 | 0.07 | |||
Less than –4.0% and Greater than –4.5% | 2 | 0.14 | |||
Less than –4.5% and Greater than –5.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
iShares MSCI South Africa Index Fund
Period Covered: April 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.0% and Less than 4.5% | 1 | 0.08 | % | ||
Greater than 3.5% and Less than 4.0% | 3 | 0.23 | |||
Greater than 3.0% and Less than 3.5% | 4 | 0.30 | |||
Greater than 2.5% and Less than 3.0% | 7 | 0.53 | |||
Greater than 2.0% and Less than 2.5% | 21 | 1.59 | |||
Greater than 1.5% and Less than 2.0% | 41 | 3.11 | |||
Greater than 1.0% and Less than 1.5% | 112 | 8.48 | |||
Greater than 0.5% and Less than 1.0% | 238 | 18.03 | |||
Between 0.5% and –0.5% | 664 | 50.29 | |||
Less than –0.5% and Greater than –1.0% | 104 | 7.88 | |||
Less than –1.0% and Greater than –1.5% | 54 | 4.09 | |||
Less than –1.5% and Greater than –2.0% | 33 | 2.50 | |||
Less than –2.0% and Greater than –2.5% | 17 | 1.29 | |||
Less than –2.5% and Greater than –3.0% | 8 | 0.61 | |||
Less than –3.0% and Greater than –3.5% | 8 | 0.61 | |||
Less than –3.5% | 5 | 0.38 | |||
1,320 | 100.00 | % | |||
SUPPLEMENTAL INFORMATION | 147 |
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Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI South Korea Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 5.0% | 1 | 0.07 | % | ||
Greater than 4.5% and Less than 5.0% | 2 | 0.14 | |||
Greater than 4.0% and Less than 4.5% | 1 | 0.07 | |||
Greater than 3.5% and Less than 4.0% | 4 | 0.29 | |||
Greater than 3.0% and Less than 3.5% | 5 | 0.36 | |||
Greater than 2.5% and Less than 3.0% | 8 | 0.58 | |||
Greater than 2.0% and Less than 2.5% | 39 | 2.82 | |||
Greater than 1.5% and Less than 2.0% | 75 | 5.43 | |||
Greater than 1.0% and Less than 1.5% | 148 | 10.72 | |||
Greater than 0.5% and Less than 1.0% | 238 | 17.23 | |||
Between 0.5% and –0.5% | 510 | 36.95 | |||
Less than –0.5% and Greater than –1.0% | 154 | 11.15 | |||
Less than –1.0% and Greater than –1.5% | 92 | 6.66 | |||
Less than –1.5% and Greater than –2.0% | 45 | 3.26 | |||
Less than –2.0% and Greater than –2.5% | 24 | 1.74 | |||
Less than –2.5% and Greater than –3.0% | 17 | 1.23 | |||
Less than –3.0% and Greater than –3.5% | 6 | 0.43 | |||
Less than –3.5% and Greater than –4.0% | 7 | 0.51 | |||
Less than –4.0% | 5 | 0.36 | |||
1,381 | 100.00 | % | |||
iShares MSCI Taiwan Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 5.0% | 2 | 0.14 | % | ||
Greater than 4.5% and Less than 5.0% | 4 | 0.29 | |||
Greater than 4.0% and Less than 4.5% | 1 | 0.07 | |||
Greater than 3.5% and Less than 4.0% | 12 | 0.87 | |||
Greater than 3.0% and Less than 3.5% | 14 | 1.01 | |||
Greater than 2.5% and Less than 3.0% | 22 | 1.59 | |||
Greater than 2.0% and Less than 2.5% | 42 | 3.04 | |||
Greater than 1.5% and Less than 2.0% | 94 | 6.81 | |||
Greater than 1.0% and Less than 1.5% | 126 | 9.12 | |||
Greater than 0.5% and Less than 1.0% | 228 | 16.51 | |||
Between 0.5% and –0.5% | 435 | 31.52 | |||
Less than –0.5% and Greater than –1.0% | 182 | 13.18 | |||
Less than –1.0% and Greater than –1.5% | 96 | 6.95 | |||
Less than –1.5% and Greater than –2.0% | 58 | 4.20 | |||
Less than –2.0% and Greater than –2.5% | 25 | 1.81 | |||
Less than –2.5% and Greater than –3.0% | 22 | 1.59 | |||
Less than –3.0% and Greater than –3.5% | 12 | 0.87 | |||
Less than –3.5% and Greater than –4.0% | 3 | 0.22 | |||
Less than –4.0% and Greater than –4.5% | 1 | 0.07 | |||
Less than –4.5% and Greater than –5.0% | 2 | 0.14 | |||
1,381 | 100.00 | % | |||
148 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Supplemental Information (Unaudited) (Continued)
iSHARES®, INC.
iShares MSCI Thailand Investable Market Index Fund
Period Covered: April 1, 2008 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.0% | 1 | 1.56 | % | ||
Greater than 1.5% and Less than 2.0% | 5 | 7.81 | |||
Greater than 1.0% and Less than 1.5% | 13 | 20.31 | |||
Greater than 0.5% and Less than 1.0% | 17 | 26.56 | |||
Between 0.5% and –0.5% | 13 | 20.31 | |||
Less than –0.5% and Greater than –1.0% | 3 | 4.69 | |||
Less than –1.0% and Greater than –1.5% | 6 | 9.38 | |||
Less than –1.5% and Greater than –2.0% | 2 | 3.13 | |||
Less than –2.0% and Greater than –2.5% | 2 | 3.13 | |||
Less than –2.5% and Greater than –3.0% | 1 | 1.56 | |||
Less than –3.0% and Greater than –3.5% | 1 | 1.56 | |||
64 | 100.00 | % | |||
iShares MSCI Turkey Investable Market Index Fund
Period Covered: April 1, 2008 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.5% and Less than 3.0% | 1 | 1.56 | % | ||
Greater than 2.0% and Less than 2.5% | 2 | 3.13 | |||
Greater than 1.5% and Less than 2.0% | 3 | 4.69 | |||
Greater than 1.0% and Less than 1.5% | 8 | 12.50 | |||
Greater than 0.5% and Less than 1.0% | 7 | 10.94 | |||
Between 0.5% and –0.5% | 29 | 45.30 | |||
Less than –0.5% and Greater than –1.0% | 7 | 10.94 | |||
Less than –1.0% and Greater than –1.5% | 4 | 6.25 | |||
Less than –1.5% and Greater than –2.0% | 3 | 4.69 | |||
64 | 100.00 | % | |||
SUPPLEMENTAL INFORMATION | 149 |
Table of Contents
Director and Officer Information (Unaudited)
iSHARES®, INC.
The Board of Directors has responsibility for the overall management and operations of the Company, including general supervision of the duties performed by BGFA and other service providers. Each Director serves until his or her successor is duly elected or appointed and qualified.
iShares, Inc., iShares Trust, Barclays Global Investors Funds (“BGIF”) and Master Investment Portfolio (“MIP”) are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 161 portfolios within the fund complex. In addition, Lee T. Kranefuss serves as a Trustee for BGIF and MIP and oversees an additional 26 portfolios within the fund complex.
Unless otherwise noted in the tables below, the address of each Director and Officer is c/o Barclays Global Investors, N.A., 400 Howard Street, San Francisco, California 94105. The Board has designated George G.C. Parker as its Lead Independent Director. Additional information about the Funds’ Directors and Officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.
Interested Directors and Officers
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
*Lee T. Kranefuss, 46 | Director and Chairman (since 2003). | Global Chief Executive Officer, iShares/Intermediary Groups of BGI (since 2008); Chief Executive Officer, iShares Intermediary Index and Market Group of BGI (2005-2008); Chief Executive Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2005); Director of BGFA (since 2005); Director, President and Chief Executive Officer of Barclays Global Investors International, Inc. (since 2005); Director and Chairman of Barclays Global Investors Services (since 2005). | Trustee of iShares Trust (since 2003); Trustee of BGlF and MIP (since 2001). | |||
*John E. Martinez, 47 | Director (since 2003). | Co-Chief Executive Officer of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003); Director, Barclays Global Investors UK Holdings, Inc. (2000-2003); Director of Real Estate Equity Exchange (since 2005). | Trustee of iShares Trust (since 2003); Chairman, Independent Review Committee, Canadian iShares Funds (since 2007). |
* | Lee T. Kranefuss and John E. Martinez are deemed to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser; BGI, the parent company of BGFA; and Barclays Global Investors Services, an affiliate of BGFA and BGI. |
150 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Independent Directors
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
George G.C. Parker, 69 | Director (since 2002); Lead Independent Director (since 2006). | Dean Witter Distinguished Professor of Finance, Emeritus, Stanford University: Graduate School of Business (since 1994). | Trustee of iShares Trust (since 2000); Director of Continental Airlines, Inc. (since 1996); Director of Community First Financial Group (since 1995); Director of Tejon Ranch Company (since 1999); Director of Threshold Pharmaceuticals (since 2004); Director of NETGEAR, Inc. (since 2007). | |||
Cecilia H. Herbert, 59 | Director (since 2005). | Chair of Investment Committee, Archdiocese of San Francisco (1994-2005); Director (since 1998) and President (since 2007) of the Board of Directors, Catholic Charities CYO; Trustee of Pacific Select Funds (2004-2005); Trustee of the Montgomery Funds (1992-2003); Trustee (since 2005) and Chair of the Finance and Investment Committees (since 2006) of the Thacher School. | Trustee of iShares Trust (since 2005). | |||
Charles A. Hurty, 64 | Director (since 2005). | Retired; Partner, KPMG LLP (1968-2001). | Trustee of iShares Trust (since 2005); Director of GMAM Absolute Return Strategy Fund (1 portfolio) (since 2002); Director of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (1 portfolio) (since 2002); Director of CSFB Alternative Investments Fund (6 portfolios) (since 2005). | |||
John E. Kerrigan, 53 | Director (since 2005). | Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002). | Trustee of iShares Trust (since 2005); Member of Advisory Council for Common fund Distressed Debt Partners II (since 2004). |
DIRECTORAND OFFICER INFORMATION | 151 |
Table of Contents
Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Independent Directors (Continued)
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Robert H. Silver, 53 | Director (since 2007). | President and Co-Founder of The Bravitas Group, Inc. (since 2006); Member, Non-Investor Advisory Board of Russia Partners II, LP (since 2006); President and Chief Operating Officer (2003-2005) and Director (1999-2005) of UBS Financial Services, Inc.; President and Chief Executive Officer of UBS Services USA, LLC (1999-2005); Managing Director, UBS America, Inc. (2000-2005); Director and Chairman of the YMCA of Greater NYC (since 2001); Broadway Producer (since 2006). | Trustee of iShares Trust (since 2007); Director and Member of the Audit and Compensation Committee of EPAM Systems, Inc. (since 2006). | |||
Darrell Duffie, 54 | Director (since 2008). | Professor, Stanford University: Graduate School of Business (since 1984). | Trustee of iShares Trust (since 2008). | |||
Officers
| ||||||
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Michael A. Latham, 42 | President (since 2007). | Head of Americas iShares (since 2007); Chief Operating Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2007); Director and Chief Financial Officer of Barclays Global Investors International, Inc. (since 2005). | None. | |||
Geoffrey D. Flynn, 51 | Treasurer and Chief Financial Officer (since 2007). | Chief Operating Officer, U.S. iShares, BGI (since 2008); Director, Mutual Fund Operations of BGI (2007-2008); President, Van Kampen Investors Services (2003-2007); Managing Director, Morgan Stanley (2002-2007); President, Morgan Stanley Trust, FSB (2002-2007). | None. |
152 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Officers (Continued)
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Eilleen M. Clavere, 56 | Secretary (since 2007). | Head of Legal Administration of Intermediary Investors Business of BGI (since 2006); Legal Counsel and Vice President of Atlas Funds, Atlas Advisers, Inc. and Atlas Securities, Inc. (2005-2006); Counsel of Kirkpatrick & Lockhart LLP (2001-2005). | None. | |||
Ira P. Shapiro, 45 | Vice President and Chief Legal Officer (since 2007). | Associate General Counsel, BGI (since 2004); First Vice President of Merrill Lynch Investment Managers (1993-2004). | None. | |||
Amy Schioldager, 45 | Executive Vice President (since 2007). | Head of U.S. Indexing, BGI (since 2006); Head of Domestic Equity Portfolio Management, BGI (2001-2006). | None. | |||
H. Michael Williams, 48 | Executive Vice President (since 2007). | Vice Chairman – Capital Markets, BGI (since 2008); Head of Global Index and Markets Group of BGI (2006-2008); Global Head of Securities Lending, BGI (2002-2006). | Trustee of BGIF and MIP (since 2007); Trustee, University of California, Berkeley Foundation; Executive Board, College of Letters and Science, University of California, Berkeley. | |||
Patrick O’Connor, 41 | Vice President (since 2007). | Head of iShares Portfolio Management, BGI (since 2006); Senior Portfolio Manager, BGI (1999-2006). | None. | |||
Lee Sterne, 43 | Vice President (since 2007). | Head of U.S. Fixed Income Index and iShares, BGI (since 2007); Senior Portfolio Manager, BGI (2004-2007); Portfolio Manager, BGI (2001-2004). | None. | |||
Matt Tucker, 36 | Vice President (since 2007). | Head of U.S. Fixed Income Investment Solutions, BGI (since 2005); Fixed Income Investment Strategist, BGI (2003-2005); Fixed Income Portfolio Manager, BGI (1997-2003). | None. |
DIRECTORAND OFFICER INFORMATION | 153 |
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Notes:
154 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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The following is a list of iShares Funds being offered, along with their respective exchange trading symbols. Please call 1-800-iShares (1-800-474-2737) to obtain a prospectus for any iShares Fund. The prospectus contains more complete information, including charges, expenses, investment objectives and risk factors that should be carefully considered to determine if the Fund(s) are an appropriate investment for you. Read the prospectus(es) carefully before investing. Investing involves risk, including possible loss of principal.
iShares S&P Domestic Index Funds
iShares S&P 1500 (ISI)
iShares S&P 100 (OEF)
iShares S&P 500 (IVV)
iShares S&P 500 Growth (IVW)
iShares S&P 500 Value (IVE)
iShares S&P MidCap 400 (IJH)
iShares S&P MidCap 400 Growth (IJK)
iShares S&P MidCap 400 Value (IJJ)
iShares S&P SmallCap 600 (IJR)
iShares S&P SmallCap 600 Growth (IJT)
iShares S&P SmallCap 600 Value (IJS)
iShares S&P North American Natural Resources Sector (IGE)
iShares S&P North American Technology- Multimedia Networking (IGN)
iShares S&P North American
Technology- Semiconductors (IGW)
iShares S&P North American
Technology- Software (IGV)
iShares S&P North American Technology Sector (IGM)
iShares Domestic Sector Index Funds
iShares Cohen & Steers Realty Majors (ICF)
iShares Dow Jones U.S. Basic Materials Sector (IYM)
iShares Dow Jones U.S. Consumer Services Sector (IYC)
iShares Dow Jones U.S. Consumer Goods Sector (IYK)
iShares Dow Jones U.S. Energy Sector (IYE)
iShares Dow Jones U.S. Financial Sector (IYF)
iShares Dow Jones U.S. Financial Services (IYG)
iShares Dow Jones U.S. Healthcare Sector (IYH)
iShares Dow Jones U.S. Industrial Sector (IYJ)
iShares Dow Jones U.S. Real Estate (IYR)
iShares Dow Jones U.S. Technology Sector (IYW)
iShares Dow Jones U.S. Telecommunications Sector (IYZ)
iShares Dow Jones Transportation Average (IYT)
iShares Dow Jones U.S. Utilities Sector (IDU)
iShares Dow Jones U.S. (IYY)
iShares Nasdaq Biotechnology (IBB)
iShares Domestic Subsector Index Funds
iShares Dow Jones U.S. Aerospace & Defense (ITA)
iShares Dow Jones U.S. Broker-Dealers (IAI)
iShares Dow Jones U.S. Healthcare Providers (IHF)
iShares Dow Jones U.S. Home Construction (ITB)
iShares Dow Jones U.S. Insurance (IAK)
iShares Dow Jones U.S. Medical Devices (IHI)
iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO)
iShares Dow Jones U.S. Oil Equipment & Services (IEZ)
iShares Dow Jones U.S. Pharmaceuticals (IHE)
iShares Dow Jones U.S. Regional Banks (IAT)
iShares FTSE NAREIT Industrial/Office (FIO)
iShares FTSE NAREIT Mortgage REITs (REM)
iShares FTSE NAREIT Real Estate 50 (FTY)
iShares FTSE NAREIT Residential (REZ)
iShares FTSE NAREIT Retail (RTL)
iShares Global Index Funds
iShares S&P Global 100 (IOO)
iShares S&P Global Clean Energy (ICLN)
iShares S&P Global Consumer Discretionary
Sector (RXI)
iShares S&P Global Consumer Staples Sector (KXI)
iShares S&P Global Energy Sector (IXC)
iShares S&P Global Financials Sector (IXG)
iShares S&P Global Healthcare Sector (IXJ)
iShares S&P Global Industrials Sector (EXI)
iShares S&P Global Infrastructure (IGF)
iShares S&P Global Materials Sector (MXI)
iShares S&P Global Nuclear Energy (NUCL)
iShares S&P Global Technology Sector (IXN)
iShares S&P Global Telecommunications Sector (IXP)
iShares S&P Global Timber & Forestry (WOOD)
iShares S&P Global Utilities Sector (JXI)
iShares Russell Index Funds
iShares Russell 3000 (IWV)
iShares Russell 3000 Growth (IWZ)
iShares Russell 3000 Value (IWW)
iShares Russell 1000 (IWB)
iShares Russell 1000 Growth (IWF)
iShares Russell 1000 Value (IWD)
iShares Russell Midcap (IWR)
iShares Russell Midcap Growth (IWP)
iShares Russell Midcap Value (IWS)
iShares Russell 2000 (IWM)
iShares Russell 2000 Growth (IWO)
iShares Russell 2000 Value (IWN)
iShares Russell Microcap (IWC)
iShares International Country Index Funds
iShares FTSE China (HK Listed) (FCHI)
iShares FTSE/Xinhua China 25 (FXI)
iShares MSCI Australia (EWA)
iShares MSCI Austria Investable Market (EWO)
iShares MSCI Belgium Investable Market (EWK)
iShares MSCI Brazil (EWZ)
iShares MSCI Canada (EWC)
iShares MSCI Chile Investable Market (ECH)
iShares MSCI France (EWQ)
iShares MSCI Germany (EWG)
iShares MSCI Hong Kong (EWH)
iShares MSCI Israel Capped Investable Market (EIS)
iShares MSCI Italy (EWI)
iShares MSCI Japan (EWJ)
iShares MSCI Japan Small Cap (SCJ)
iShares MSCI Malaysia (EWM)
iShares MSCI Mexico Investable Market (EWW)
iShares MSCI Netherlands Investable Market (EWN)
iShares MSCI Singapore (EWS)
iShares MSCI South Africa (EZA)
iShares MSCI South Korea (EWY)
iShares MSCI Spain (EWP)
iShares MSCI Sweden (EWD)
iShares MSCI Switzerland (EWL)
iShares MSCI Taiwan (EWT)
iShares MSCI Thailand Investable Market (THD)
iShares MSCI Turkey Investable Market (TUR)
iShares MSCI United Kingdom (EWU)
iShares S&P/TOPIX 150 (ITF)
iShares Bond Funds
iShares Lehman Aggregate (AGG)
iShares Lehman MBS (MBB)
iShares Lehman Short Treasury (SHV)
iShares Lehman 1-3 Year Treasury (SHY)
iShares Lehman 3-7 Year Treasury (IEI)
iShares Lehman 7-10 Year Treasury (IEF)
iShares Lehman 10-20 Year Treasury (TLH)
iShares Lehman 20+ Year Treasury (TLT)
iShares Lehman TIPS (TIP)
iShares Lehman Credit (CFT)
iShares Lehman 1-3 Year Credit (CSJ)
iShares Lehman Intermediate Credit (CIU)
iShares iBoxx $ Investment Grade Corporate (LQD)
iShares iBoxx $ High Yield Corporate (HYG)
iShares Lehman Government/Credit (GBF)
iShares Lehman Intermediate Government/Credit (GVI)
iShares S&P National Municipal (MUB)
iShares S&P California Municipal (CMF)
iShares S&P New York Municipal (NYF)
iShares JPMorgan USD Emerging Markets (EMB)
iShares Specialty Index Funds
iShares KLD 400 Social (DSI)
iShares KLD Select SocialSM (KLD)
iShares Dow Jones Select Dividend (DVY)
iShares Dow Jones EPAC Select Dividend (IDV)
iShares S&P U.S. Preferred Stock (PFF)
iShares International Index Funds
iShares FTSE Developed Small Cap ex-North America (IFSM)
iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. (IFGL)
iShares FTSE EPRA/NAREIT North America (IFNA)
iShares FTSE EPRA/NAREIT Europe (IFEU)
iShares FTSE EPRA/NAREIT Asia (IFAS)
iShares MSCI ACWI (ACWI)
iShares MSCI ACWI ex US (ACWX)
iShares MSCI All Country Asia ex Japan (AAXJ)
iShares MSCI BRIC (BKF)
iShares MSCI EAFE (EFA)
iShares MSCI EAFE Growth (EFG)
iShares MSCI EAFE Value (EFV)
iShares MSCI EAFE Small Cap (SCZ)
iShares MSCI Emerging Markets (EEM)
iShares MSCI EMU (EZU)
iShares MSCI Kokusai (TOK)
iShares MSCI Pacific ex-Japan (EPP)
iShares S&P Asia 50 (AIA)
iShares S&P Europe 350 (IEV)
iShares S&P Latin America 40 (ILF)
iShares S&P World ex-U.S. Property (WPS)
iSHARES FAMILYOF FUNDS | 155 |
Table of Contents
The iShares® Family of Funds (Continued)
iShares Morningstar Index Funds
iShares Morningstar Large Core (JKD)
iShares Morningstar Large Growth (JKE)
iShares Morningstar Large Value (JKF)
iShares Morningstar Mid Core (JKG)
iShares Morningstar Mid Growth (JKH)
iShares Morningstar Mid Value (JKI)
iShares Morningstar Small Core (JKJ)
iShares Morningstar Small Growth (JKK)
iShares Morningstar Small Value (JKL)
iShares NYSE Index Funds
iShares NYSE Composite (NYC)
iShares NYSE 100 (NY)
iShares® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., European Public Real Estate Association (“EPRA®”), FTSE International Limited (“FTSE”), FTSE/Xinhua Index Limited (“FXI”), iBoxx®, J.P. Morgan Securities Inc., KLD Research & Analytics, Inc., MSCI Inc., MorningstarInc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50/Residential/Retail/Mortgage REITs or Industrial/Office Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Global Real Estate ex-US/North America/Europe/Asia Index; all rights vest in FTSE, NAREIT, and EPRA. All rights in the FTSE Developed Small Cap ex-North America Index vest in FTSE. “FTSE” is a trade- and servicemark of London Stock Exchange and The Financial Times Limited; “Xinhua” is a trade- and servicemark of Xinhua Financial Network Limited. “NAREIT®” is a trademark of NAREIT; “EPRA®” is a trademark of EPRA.
An investment in the Fund(s) is not a deposit of a bank and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
This advertising section does not constitute part of the 2008 Annual Report.
7821-iS-0908
156 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
For more information:
WWW.iSHARES.COM
1-800-iShares (1-800-474-2737)
The ishares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as an advisor to the iShares Funds. BGFA is a subsidiary of Barclays Global Investors, NA., neither of which is affiliated with SEI.
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. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the company listed above.
©2008 Barclays Global Investors. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, NA. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. Investing involves risk, including possible loss of principal.
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 ended 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 monthly basis on the Funds’ website. Certain financial information required by regulations or listing exchange rules in jurisdictions outside the U.S. in which iShares Funds are cross-listed may be publicly filed in those jurisdictions. This information is available upon request by calling 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.
iShares®
LET’S BUILD A BETTER INVESTMENT WORLD.SM BARCLAYS GLOBAL INVESTORS
BGI-F-005-10008
Table of Contents
2008 ANNUAL REPORT TO SHAREHOLDERS
iSHARES® MSCI SERIES
AUGUST 31, 2008
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iShares MSCI Japan Index Fund
iShares®
Table of Contents
iShares®
Dear iShares Shareholder:
Electronic delivery is the easiest, most convenient way to receive reporting on your iShares holdings. In addition, it’s a way we can all care for our environment. To that end, we are pleased to offer shareholder reports and prospectuses online.
To sign up for electronic delivery, please follow these simple steps:
1. Go to www.icsdelivery.com.
2. From the main page, select the first letter of your brokerage firm’s name.
3. Select your brokerage institution from the list that follows. If your brokerage firm is not listed, electronic delivery may not be available. Please contact your brokerage firm or financial adviser.
4. Fill out the appropriate information and provide the e-mail address where you would like your information sent.
Your information and email address will be kept confidential and only used to deliver documents to you. If at any time you are not satisfied, you can cancel electronic delivery at www.icsdelivery.com and once again receive physical delivery of your materials. If you have any questions, please contact your brokerage firm or financial adviser.
Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail. Instead, you will receive e-mail notifications announcing that the shareholder report or prospectus has been posted on the iShares website at www.iShares.com.
Table of Contents
iShares®
iShares, Inc.
Supplements dated October 30, 2008
to the Prospectus dated January 1, 2008
for the iShares MSCI Japan Index Fund (the “Fund”).
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the Fund.
Effective September 1, 2008, the third and fourth paragraphs under the heading “Management” beginning on page 9 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI Australia Index Fund, iShares MSCI Austria Investable Market Index Fund, iShares MSCI Belgium Investable Market Index Fund, iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Small Cap Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Investable Market Index Fund, iShares MSCI Netherlands Investable Market Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, which are offered in separate prospectuses) as follows: 0.59% per annum of the aggregate net assets less than or equal to $7.0 billion, plus 0.54% per annum of the aggregate net assets over $7.0 billion, up to and including $11.0 billion, plus 0.49% per annum of the aggregate net assets over $11.0 billion, up to and including $24.0 billion, plus 0.44% per annum of the aggregate net assets over $24.0 billion, up to and including $48.0 billion, plus 0.40% per annum of the aggregate net assets in excess of $48.0 billion.
Prior to September 1, 2008, for its investment advisory services to the Fund, BGFA was entitled to receive management fees from the Fund, based on the Fund’s allocable portion of aggregate average daily net assets, at an annual rate of 0.52%.
Also, all references to 45 Fremont Street in the Prospectus are changed to 400 Howard Street.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A. | BGI-A-115-09008 |
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
1 | ||
3 | ||
4 | ||
11 | ||
14 | ||
15 | ||
21 | ||
22 | ||
Board Review and Approval of Investment Advisory Contract (Unaudited) | 23 | |
26 | ||
27 | ||
31 |
Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI JAPAN INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(16.13)% | (17.49)% | (15.81)% | 7.65% | 7.19% | 8.28% | 4.08% | 4.47% | 4.78% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Ten Years Ended 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(16.13)% | (17.49)% | (15.81)% | 44.57% | 41.52% | 48.84% | 49.14% | 54.79% | 59.52% |
“Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE | 1 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI JAPAN INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector | Percentage of Net Assets | ||
Consumer Cyclical | 26.30 | % | |
Industrial | 21.20 | ||
Financial | 17.83 | ||
Consumer Non-Cyclical | 10.89 | ||
Basic Materials | 7.56 | ||
Utilities | 5.38 | ||
Technology | 4.77 | ||
Communications | 4.71 | ||
Energy | 1.26 | ||
Short-Term and Other Net Assets | 0.10 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
Toyota Motor Corp. | 5.08 | % | |
Mitsubishi UFJ Financial Group Inc. | 3.23 | ||
Honda Motor Co. Ltd. | 2.18 | ||
Nintendo Co. Ltd. | 2.05 | ||
Canon Inc. | 1.96 | ||
Takeda Pharmaceutical Co. Ltd. | 1.82 | ||
Mizuho Financial Group Inc. | 1.75 | ||
Sumitomo Mitsui Financial Group Inc. | 1.66 | ||
Sony Corp. | 1.62 | ||
Mitsubishi Corp. | 1.56 | ||
TOTAL | 22.91 | % | |
The iShares MSCI Japan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Japanese market, as measured by the MSCI Japan IndexSM (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 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (16.13)%, while the total return for the Index was (15.81)%.
The Japanese equity market declined for the reporting period amid signs of a slowing domestic economy. Industrial production fell for the first two quarters of 2008 and Gross Domestic Product (GDP) contracted, bringing an end to the longest period of growth for Japan since World War II. Inflation topped 2% for the first time in a decade, unemployment crept to a two-year high of 4.1%, and export levels fell during the period. Retail sales suffered their sharpest decline in more than two years in July 2008, underlining the weakness of household spending. In response to the public’s discontent over the economy, the Japanese government announced a stimulus package worth US$105.7 billion, including an income tax cut, fuel subsidies, and government loans to companies.
The ten largest Fund holdings represented approximately 23% of the net assets of the Fund as of August 31, 2008. For the reporting period, seven of the Fund’s ten largest holdings declined. Leading decliners, Mizuho Financial Group Inc. was one of three financial companies to deliver negative returns for the reporting period. Takeda Pharmaceutical Co. Ltd. and the Fund’s largest holding, car manufacturer Toyota Motor Corp., also declined notably. On the positive side, Nintendo Co. Ltd., Honda Motor Co. Ltd., and Mitsubishi Corp. posted modest gains.
2 | 2008 iSHARES ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2008 to August 31, 2008.
ACTUAL EXPENSES
The first line in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of fund shares. Therefore, the second line in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value (3/1/08) | Ending Account Value (8/31/08) | Annualized Expense Ratio | Expenses Paid During Perioda (3/1/08 to 8/31/08) | ||||||
Actual | $1,000.00 | $ 910.00 | 0.52 | % | $2.50 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,022.50 | 0.52 | 2.64 |
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 (184 days) and divided by the number of days in the year (366 days). |
SHAREHOLDER EXPENSES | 3 |
Table of Contents
iSHARES® MSCI JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 99.90% | |||||
ADVERTISING – 0.20% | |||||
Dentsu Inc. | 5,380 | $ | 10,940,944 | ||
Hakuhodo DY Holdings Inc. | 75,320 | 3,886,588 | |||
14,827,532 | |||||
AGRICULTURE – 0.89% | |||||
Japan Tobacco Inc. | 13,988 | 66,766,036 | |||
66,766,036 | |||||
AIRLINES – 0.16% | |||||
All Nippon Airways Co. Ltd.a | 2,076,000 | 7,728,210 | |||
Japan Airlines Corp.a,b | 2,152,000 | 4,600,452 | |||
12,328,662 | |||||
APPAREL – 0.22% | |||||
ASICS Corp. | 461,000 | 4,107,689 | |||
Onward Holdings Co. Ltd. | 1,108,000 | 12,129,039 | |||
16,236,728 | |||||
AUTO MANUFACTURERS – 9.14% | |||||
Fuji Heavy Industries Ltd. | 2,152,000 | 12,492,605 | |||
Hino Motors Ltd. | 1,076,000 | 5,314,314 | |||
Honda Motor Co. Ltd. | 4,949,600 | 163,276,369 | |||
Isuzu Motors Ltd. | 4,304,000 | 16,379,194 | |||
Mazda Motor Corp. | 2,152,000 | 11,639,935 | |||
Mitsubishi Motors Corp.a,b | 10,760,000 | 16,260,217 | |||
Nissan Motor Co. Ltd. | 7,209,500 | 55,869,058 | |||
Suzuki Motor Corp.a | 1,076,000 | 22,952,684 | |||
Toyota Motor Corp. | 8,393,300 | 381,285,128 | |||
685,469,504 | |||||
AUTO PARTS & EQUIPMENT – 1.85% | |||||
Aisin Seiki Co. Ltd. | 645,800 | 17,257,038 | |||
Bridgestone Corp. | 1,936,800 | 33,194,637 | |||
Denso Corp. | 1,506,400 | 39,629,320 | |||
JTEKT Corp. | 322,800 | 4,179,074 | |||
NGK Spark Plug Co. Ltd. | 629,000 | 7,030,426 | |||
NHK Spring Co. Ltd. | 406,000 | 2,775,877 | |||
NOK Corp. | 322,800 | 4,675,804 | |||
Sumitomo Rubber | 322,800 | 2,611,549 | |||
Tokai Rika Co. Ltd. | 107,600 | 1,580,414 |
Security | Shares | Value | |||
Toyoda Gosei Co. Ltd. | 215,200 | $ | 4,868,150 | ||
Toyota Boshoku Corp. | 107,600 | 1,764,828 | |||
Toyota Industries Corp. | 645,600 | 18,857,885 | |||
138,425,002 | |||||
BANKS – 9.72% | |||||
Aozora Bank Ltd. | 1,076,000 | 2,121,760 | |||
Bank of Kyoto Ltd. (The) | 1,076,000 | 11,372,237 | |||
Bank of Yokohama | 4,304,000 | 23,398,848 | |||
Chiba Bank Ltd. (The) | 2,152,000 | 11,977,038 | |||
Chuo Mitsui Trust | 2,157,000 | 12,104,243 | |||
Fukuoka Financial Group Inc. | 2,158,000 | 7,695,425 | |||
Gunma Bank Ltd. | 1,076,000 | 6,127,325 | |||
Hachijuni Bank Ltd. (The) | 1,076,000 | 6,315,706 | |||
Hiroshima Bank Ltd. (The) | 1,076,000 | 4,084,884 | |||
Hokuhoku Financial | 4,309,000 | 10,442,451 | |||
Iyo Bank Ltd. (The) | 1,076,000 | 11,550,703 | |||
Joyo Bank Ltd. (The) | 2,152,000 | 10,053,573 | |||
Mitsubishi UFJ Financial Group Inc. | 31,311,680 | 242,068,643 | |||
Mizuho Financial Group Inc. | 30,244 | 130,980,696 | |||
Mizuho Trust & | 4,304,000 | 6,305,791 | |||
Nishi-Nippon City | 2,152,000 | 5,710,905 | |||
Resona Holdings Inc.a | 16,140 | 19,095,840 | |||
Sapporo Hokuyo | 1,076 | 5,879,456 | |||
77 Bank Ltd. (The) | 1,076,000 | 6,216,558 | |||
Shinsei Bank Ltd. | 4,304,000 | 14,832,490 | |||
Shizuoka Bank Ltd. (The) | 2,152,000 | 21,832,315 | |||
Sumitomo Mitsui Financial Group Inc. | 20,144 | 124,362,866 | |||
Sumitomo Trust and | 4,304,000 | 26,174,983 | |||
Suruga Bank Ltd. | 776,000 | 8,430,352 | |||
729,135,088 | |||||
BEVERAGES – 0.92% | |||||
Asahi Breweries Ltd. | 1,076,000 | 20,077,402 | |||
Coca-Cola West Japan Co. Ltd. | 215,200 | 5,026,786 | |||
ITO EN Ltd.a | 215,200 | 3,323,430 | |||
Kirin Holdings Co. Ltd. | 2,152,000 | 32,441,115 | |||
Sapporo Holdings Ltd. | 1,076,000 | 7,931,813 | |||
68,800,546 |
4 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
BUILDING MATERIALS – 1.32% | |||||
Asahi Glass Co. Ltd. | 3,228,000 | $ | 34,711,597 | ||
Daikin Industries Ltd. | 760,200 | 26,057,996 | |||
JS Group Corp. | 860,800 | 11,786,674 | |||
Matsushita Electric Works Ltd. | 1,076,000 | 10,093,232 | |||
Nippon Sheet Glass Co. Ltd. | 2,152,000 | 11,203,686 | |||
Taiheiyo Cement Corp. | 3,228,000 | 5,383,718 | |||
99,236,903 | |||||
CHEMICALS – 3.34% | |||||
Asahi Kasei Corp. | 3,228,000 | 15,348,058 | |||
Daicel Chemical | 1,076,000 | 5,532,439 | |||
Denki Kagaku Kogyo Kabushiki Kaisha | 2,152,000 | 6,147,155 | |||
DIC Corp. | 2,152,000 | 4,838,406 | |||
Hitachi Chemical Co. Ltd. | 215,200 | 3,965,906 | |||
JSR Corp. | 538,000 | 9,384,326 | |||
Kaneka Corp. | 1,076,000 | 6,841,189 | |||
Mitsubishi Chemical | 3,766,000 | 21,549,744 | |||
Mitsubishi Gas Chemical | 1,076,000 | 6,157,070 | |||
Mitsui Chemicals Inc. | 2,152,000 | 10,747,606 | |||
Nitto Denko Corp. | 538,000 | 16,359,364 | |||
Shin-Etsu Chemical Co. Ltd. | 1,291,200 | 72,933,020 | |||
Showa Denko K.K. | 3,228,000 | 8,685,335 | |||
Sumitomo Chemical Co. Ltd. | 4,304,000 | 26,690,550 | |||
Taiyo Nippon Sanso Corp. | 1,076,000 | 9,706,556 | |||
Tokuyama Corp. | 908,000 | 6,241,585 | |||
Tosoh Corp. | 2,152,000 | 7,931,813 | |||
Ube Industries Ltd. | 3,236,000 | 11,718,480 | |||
250,778,602 | |||||
COMMERCIAL SERVICES – 0.91% | |||||
Benesse Corp. | 215,200 | 9,498,346 | |||
Dai Nippon Printing Co. Ltd. | 2,152,000 | 30,735,775 | |||
Kamigumi Co. Ltd. | 1,076,000 | 8,397,807 | |||
Toppan Printing Co. Ltd. | 2,152,000 | 19,651,067 | |||
68,282,995 |
Security | Shares | Value | |||
COMPUTERS – 0.93% | |||||
CSK Holdings Corp. | 215,200 | $ | 3,444,390 | ||
Fujitsu Ltd. | 5,380,000 | 37,725,686 | |||
Itochu Techno-Solutions Corp. | 107,600 | 2,994,259 | |||
OBIC Co. Ltd. | 10,760 | 1,923,465 | |||
Otsuka Corp. | 62,000 | 4,501,820 | |||
TDK Corp. | 322,800 | 19,036,351 | |||
69,625,971 | |||||
COSMETICS & PERSONAL CARE – 1.07% | |||||
Kao Corp. | 1,646,000 | 47,017,738 | |||
Shiseido Co. Ltd. | 1,076,000 | 25,480,949 | |||
Uni-Charm Corp. | 107,600 | 8,060,705 | |||
80,559,392 | |||||
DISTRIBUTION & WHOLESALE – 4.54% | |||||
Canon Marketing Japan Inc. | 107,600 | 1,780,692 | |||
Hitachi High-Technologies Corp. | 107,600 | 2,012,698 | |||
ITOCHU Corp. | 4,304,000 | 35,256,908 | |||
Marubeni Corp. | 4,458,000 | 28,056,337 | |||
Mitsubishi Corp. | 4,196,400 | 117,162,792 | |||
Mitsui & Co. Ltd. | 5,380,000 | 93,198,802 | |||
Sojitz Corp. | 3,766,000 | 10,931,030 | |||
Sumitomo Corp. | 3,228,000 | 40,928,155 | |||
Toyota Tsusho Corp. | 645,700 | 11,251,036 | |||
340,578,450 | |||||
DIVERSIFIED FINANCIAL SERVICES – 2.49% | |||||
Acom Co. Ltd. | 225,960 | 6,371,229 | |||
AEON Credit Service Co. Ltd. | 430,470 | 4,985,956 | |||
AIFUL Corp. | 161,400 | 1,320,647 | |||
Credit Saison Co. Ltd. | 538,000 | 11,005,391 | |||
Daiwa Securities Group Inc. | 4,304,000 | 33,829,182 | |||
Mitsubishi UFJ Lease & Finance Co. Ltd. | 150,640 | 5,344,059 | |||
Nomura Holdings Inc. | 5,595,200 | 75,530,689 | |||
ORIX Corp. | 269,000 | 33,387,975 | |||
Promise Co. Ltd. | 269,000 | 6,097,581 | |||
Shinko Securities Co. Ltd. | 1,076,000 | 3,182,640 | |||
Takefuji Corp. | 398,120 | 5,337,614 | |||
186,392,963 |
SCHEDULEOF INVESTMENTS | 5 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
ELECTRIC – 4.56% | |||||
Chubu Electric Power | 2,044,400 | $ | 49,073,135 | ||
Chugoku Electric Power Co. Inc. (The) | 538,100 | 12,197,429 | |||
Electric Power Development Co. Ltd. | 538,000 | 19,928,680 | |||
Hokkaido Electric Power | 538,000 | 12,096,015 | |||
Hokuriku Electric Power Co. | 430,400 | 10,787,266 | |||
Kansai Electric Power Co. Inc. (The) | 2,367,200 | 58,457,461 | |||
Kyushu Electric Power | 1,183,600 | 26,229,514 | |||
Shikoku Electric Power | 430,400 | 11,560,617 | |||
Tohoku Electric Power | 1,398,900 | 33,514,305 | |||
Tokyo Electric Power Co. Inc. (The) | 3,766,000 | 108,269,247 | |||
342,113,669 | |||||
ELECTRICAL COMPONENTS & | |||||
Brother Industries Ltd. | 430,600 | 4,876,364 | |||
Casio Computer Co. Ltd. | 753,200 | 8,488,031 | |||
Furukawa Electric Co. Ltd. (The) | 2,152,000 | 11,263,174 | |||
Hitachi Ltd. | 10,760,000 | 80,210,459 | |||
Mitsubishi Electric Corp. | 6,456,000 | 55,562,349 | |||
SANYO Electric Co. Ltd.a,b | 4,611,000 | 9,347,339 | |||
Sharp Corp. | 3,228,000 | 41,642,018 | |||
Stanley Electric Co. Ltd. | 431,600 | 8,808,975 | |||
Sumitomo Electric | 2,367,200 | 27,592,794 | |||
Toshiba Corp. | 9,684,000 | 54,788,998 | |||
Ushio Inc. | 322,800 | 4,949,451 | |||
307,529,952 | |||||
ELECTRONICS – 4.39% | |||||
Advantest Corp. | 430,400 | 9,181,074 | |||
Alps Electric Co. Ltd. | 538,000 | 4,932,596 | |||
Fanuc Ltd. | 538,000 | 40,749,689 | |||
Hirose Electric Co. Ltd. | 107,600 | 10,579,056 | |||
Hoya Pentax HD Corp. | 1,291,200 | 26,710,380 | |||
IBIDEN Co. Ltd. | 430,400 | 12,889,196 | |||
Keyence Corp. | 107,692 | 22,079,217 | |||
Kyocera Corp. | 538,000 | 45,756,646 |
Security | Shares | Value | |||
Mabuchi Motor Co. Ltd.a | 107,600 | $ | 5,066,445 | ||
Minebea Co. Ltd. | 1,076,000 | 4,798,747 | |||
Mitsumi Electric Co. Ltd. | 215,200 | 5,839,797 | |||
Murata Manufacturing | 645,600 | 28,792,481 | |||
NEC Corp. | 6,456,000 | 30,339,185 | |||
NGK Insulators Ltd. | 1,076,000 | 13,127,150 | |||
Nippon Electric Glass Co. Ltd. | 1,076,500 | 14,561,640 | |||
Omron Corp. | 645,600 | 11,469,401 | |||
Secom Co. Ltd. | 645,600 | 30,160,719 | |||
Yaskawa Electric Corp. | 1,076,000 | 7,624,455 | |||
Yokogawa Electric Corp. | 645,600 | 4,759,088 | |||
329,416,962 | |||||
ENGINEERING & CONSTRUCTION – 0.77% | |||||
JGC Corp. | 1,076,000 | 20,870,583 | |||
Kajima Corp. | 3,228,000 | 10,113,062 | |||
Obayashi Corp. | 2,152,000 | 10,073,403 | |||
Shimizu Corp. | 2,152,000 | 9,200,904 | |||
Taisei Corp. | 3,228,000 | 7,465,819 | |||
57,723,771 | |||||
ENTERTAINMENT – 0.31% | |||||
Oriental Land Co. Ltd. | 215,200 | 14,217,775 | |||
Toho Co. Ltd. | 431,600 | 9,206,671 | |||
23,424,446 | |||||
ENVIRONMENTAL CONTROL – 0.14% | |||||
Kurita Water Industries Ltd. | 322,800 | 10,648,459 | |||
10,648,459 | |||||
FOOD – 1.09% | |||||
Ajinomoto Co. Inc. | 2,152,000 | 19,770,044 | |||
Kikkoman Corp. | 1,076,000 | 13,484,081 | |||
Meiji Dairies Corp. | 1,076,000 | 6,206,644 | |||
Nippon Meat Packers Inc.a | 1,076,000 | 17,648,284 | |||
Nisshin Seifun Group Inc. | 540,000 | 7,533,379 | |||
Nissin Food Products Co. Ltd. | 323,600 | 10,764,303 | |||
Yakult Honsha Co. Ltd. | 215,200 | 6,166,985 | |||
81,573,720 | |||||
FOREST PRODUCTS & PAPER – 0.28% | |||||
Nippon Paper Group Inc. | 3,228 | 9,339,710 | |||
Oji Paper Co. Ltd. | 2,152,000 | 11,362,322 | |||
20,702,032 |
6 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
GAS – 0.82% | |||||
Osaka Gas Co. Ltd. | 6,456,000 | $ | 23,676,462 | ||
Toho Gas Co. Ltd. | 1,076,000 | 6,097,581 | |||
Tokyo Gas Co. Ltd. | 7,532,000 | 31,717,337 | |||
61,491,380 | |||||
HAND & MACHINE TOOLS – 0.87% | |||||
Fuji Electric Holdings Co. Ltd. | 2,152,000 | 5,135,849 | |||
Makita Corp. | 322,800 | 8,477,125 | |||
Nidec Corp. | 322,800 | 21,981,037 | |||
SMC Corp. | 215,200 | 22,387,542 | |||
THK Co. Ltd. | 431,000 | 7,104,897 | |||
65,086,450 | |||||
HEALTH CARE - PRODUCTS – 0.40% | |||||
Terumo Corp. | 538,000 | 30,289,610 | |||
30,289,610 | |||||
HOME BUILDERS – 0.42% | |||||
Daiwa House Industry Co. Ltd. | 1,076,000 | 10,707,948 | |||
Haseko Corp.a | 3,766,000 | 3,886,588 | |||
Sekisui Chemical Co. Ltd. | 1,076,000 | 6,751,956 | |||
Sekisui House Ltd. | 1,076,000 | 10,341,101 | |||
31,687,593 | |||||
HOME FURNISHINGS – 3.32% | |||||
Matsushita Electric Industrial Co. Ltd. | 5,380,015 | 112,780,780 | |||
Pioneer Corp. | 645,600 | 4,991,093 | |||
Sony Corp. | 3,120,400 | 121,911,965 | |||
Yamaha Corp. | 538,000 | 9,557,835 | |||
249,241,673 | |||||
HOUSEWARES – 0.11% | |||||
TOTO Ltd.a | 1,076,000 | 8,070,620 | |||
8,070,620 | |||||
INSURANCE – 2.57% | |||||
Aioi Insurance Co. Ltd. | 1,076,000 | 5,393,633 | |||
Mitsui Sumitomo Insurance Group Holdings Inc.b | 1,216,100 | 40,452,624 | |||
Nipponkoa Insurance Co. Ltd.a | 1,076,000 | 7,168,376 | |||
Sompo Japan Insurance Inc. | 2,152,000 | 19,730,385 | |||
Sony Financial Holdings Inc. | 2,152 | 8,050,790 | |||
T&D Holdings Inc. | 645,600 | 34,503,386 | |||
Tokio Marine Holdings Inc. | 2,259,600 | 77,662,363 | |||
192,961,557 |
Security | Shares | Value | |||
INTERNET – 1.35% | |||||
Dena Co. Ltd.a | 1,076 | $ | 5,324,229 | ||
Rakuten Inc. | 21,650 | 12,169,085 | |||
SBI Holdings Inc. | 49,730 | 9,036,403 | |||
SoftBank Corp. | 2,259,600 | 37,810,952 | |||
Trend Micro Inc.a | 541,500 | 18,561,438 | |||
Yahoo! Japan Corp. | 47,344 | 18,344,300 | |||
101,246,407 | |||||
IRON & STEEL – 3.26% | |||||
Daido Steel Co. Ltd. | 1,076,000 | 6,057,922 | |||
JFE Holdings Inc. | 1,614,250 | 69,314,951 | |||
Kobe Steel Ltd. | 8,608,000 | 20,939,986 | |||
Nippon Steel Corp. | 16,140,000 | 77,781,341 | |||
Nisshin Steel Co. Ltd. | 3,236,000 | 8,766,496 | |||
Sumitomo Metal | 11,836,000 | 53,113,403 | |||
Tokyo Steel Manufacturing | 431,000 | 4,606,865 | |||
Yamato Kogyo Co. Ltd. | 107,600 | 3,975,821 | |||
244,556,785 | |||||
LEISURE TIME – 0.54% | |||||
Namco Bandai Holdings Inc. | 645,698 | 8,020,280 | |||
Sankyo Co. Ltd. | 215,200 | 10,271,698 | |||
Sega Sammy Holdings Inc. | 322,800 | 3,099,356 | |||
Shimano Inc. | 215,200 | 8,804,312 | |||
Yamaha Motor Co. Ltd. | 645,800 | 10,128,096 | |||
40,323,742 | |||||
MACHINERY – 0.40% | |||||
Hitachi Construction Machinery Co. Ltd. | 325,800 | 7,775,370 | |||
Japan Steel Works Ltd. (The) | 1,076,000 | 18,838,056 | |||
Okuma Corp. | 493,000 | 3,611,472 | |||
30,224,898 | |||||
MACHINERY - CONSTRUCTION & MINING – 0.80% | |||||
Komatsu Ltd. | 2,797,600 | 59,676,978 | |||
59,676,978 | |||||
MACHINERY - DIVERSIFIED – 0.54% | |||||
Amada Co. Ltd. | 1,076,000 | 6,613,149 | |||
Kubota Corp. | 3,228,000 | 23,051,832 | |||
Sumitomo Heavy | 2,152,000 | 10,648,459 | |||
40,313,440 |
SCHEDULEOF INVESTMENTS | 7 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
MANUFACTURING – 2.66% | |||||
FUJIFILM Holdings Corp. | 1,506,400 | $ | 42,058,438 | ||
IHI Corp. | 4,310,000 | 7,466,298 | |||
Kawasaki Heavy | 4,304,000 | 9,637,153 | |||
Konica Minolta Holdings Inc. | 1,614,000 | 22,590,795 | |||
Mitsubishi Heavy | 9,684,000 | 46,936,503 | |||
Nikon Corp.a | 1,076,000 | 35,395,715 | |||
Olympus Corp. | 1,076,000 | 35,395,715 | |||
199,480,617 | |||||
MEDIA – 0.10% | |||||
Fuji Television Network Inc. | 1,655 | 2,400,341 | |||
Jupiter Telecommunications Co. Ltd. | 4,304 | 3,295,668 | |||
Tokyo Broadcasting | 107,600 | 1,783,666 | |||
7,479,675 | |||||
METAL FABRICATE & HARDWARE – 0.23% | |||||
Maruichi Steel Tube Ltd. | 107,600 | 3,242,129 | |||
NSK Ltd. | 1,076,000 | 7,822,751 | |||
NTN Corp. | 1,076,000 | 6,057,922 | |||
17,122,802 | |||||
MINING – 0.68% | |||||
Dowa Holdings Co. Ltd. | 1,076,000 | 6,107,496 | |||
Mitsubishi Materials Corp. | 3,228,000 | 11,630,021 | |||
Mitsui Mining & Smelting | 2,152,000 | 5,810,053 | |||
OSAKA Titanium technologies Co. Ltd.a | 78,400 | 3,055,812 | |||
Sumitomo Metal Mining | 1,740,000 | 22,478,507 | |||
Toho Titanium Co. Ltd.a | 107,600 | 1,617,098 | |||
50,698,987 | |||||
OFFICE & BUSINESS EQUIPMENT – 2.61% | |||||
Canon Inc. | 3,228,050 | 147,236,559 | |||
Ricoh Co. Ltd. | 2,152,000 | 36,129,408 | |||
Seiko Epson Corp. | 430,400 | 12,571,924 | |||
195,937,891 | |||||
OIL & GAS – 1.26% | |||||
Cosmo Oil Co. Ltd. | 2,152,000 | 6,385,109 | |||
Idemitsu Kosan Co. Ltd. | 34,000 | 3,051,463 | |||
INPEX Holdings Inc. | 2,152 | 23,597,144 |
Security | Shares | Value | |||
Japan Petroleum Exploration Co. Ltd. | 38,000 | $ | 2,542,087 | ||
Nippon Mining Holdings Inc. | 2,690,000 | 15,243,953 | |||
Nippon Oil Corp. | 4,304,500 | 27,209,279 | |||
Showa Shell Sekiyu K.K. | 645,700 | 7,395,578 | |||
TonenGeneral Sekiyu K.K. | 1,076,000 | 8,734,910 | |||
94,159,523 | |||||
PACKAGING & CONTAINERS – 0.13% | |||||
Toyo Seikan Kaisha Ltd. | 538,000 | 9,885,022 | |||
9,885,022 | |||||
PHARMACEUTICALS – 5.61% | |||||
Alfresa Holdings Corp. | 107,600 | 7,069,228 | |||
Astellas Pharma Inc. | 1,506,430 | 68,849,507 | |||
Chugai Pharmaceutical | 645,600 | 10,743,641 | |||
Daiichi Sankyo Co. Ltd. | 2,152,069 | 65,439,555 | |||
Eisai Co. Ltd. | 753,200 | 30,259,866 | |||
Hisamitsu Pharmaceutical | 107,600 | 4,818,576 | |||
Kyowa Hakko Kogyo Co. Ltd. | 754,000 | 8,337,249 | |||
Mediceo Paltac Holdings | 430,400 | 6,523,916 | |||
Mitsubishi Tanabe | 1,076,000 | 15,229,081 | |||
Ono Pharmaceutical Co. Ltd. | 215,200 | 11,362,322 | |||
Santen Pharmaceutical | 107,600 | 2,929,813 | |||
Shionogi & Co. Ltd. | 1,076,000 | 24,539,047 | |||
Suzuken Co. Ltd. | 215,200 | 7,773,177 | |||
Taisho Pharmaceutical | 944,000 | 20,180,419 | |||
Takeda Pharmaceutical | 2,582,400 | 136,347,864 | |||
420,403,261 | |||||
REAL ESTATE – 2.53% | |||||
AEON Mall Co. Ltd. | 107,600 | 3,133,066 | |||
Daito Trust Construction | 215,200 | 9,022,437 | |||
Leopalace21 Corp. | 430,400 | 4,425,952 | |||
Mitsubishi Estate Co. Ltd. | 3,527,000 | 79,136,098 | |||
Mitsui Fudosan Co. Ltd. | 2,628,000 | 55,817,001 | |||
Nomura Real Estate | 107,600 | 2,240,737 | |||
NTT Urban | 3,228 | 4,372,412 | |||
Sumitomo Realty & Development Co. Ltd. | 1,076,000 | 21,862,060 |
8 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Tokyo Tatemono Co. Ltd. | 1,076,000 | $ | 5,264,741 | ||
Tokyu Land Corp. | 1,076,000 | 4,630,196 | |||
189,904,700 | |||||
REAL ESTATE INVESTMENT TRUSTS – 0.47% | |||||
Japan Prime Realty | 1,076 | 2,357,731 | |||
Japan Real Estate | 1,076 | 10,152,720 | |||
Japan Retail Fund | 1,076 | 4,511,219 | |||
Nippon Building Fund Inc. | 1,318 | 14,427,865 | |||
Nomura Real Estate Office Fund Inc. | 520 | 3,761,345 | |||
35,210,880 | |||||
RETAIL – 2.84% | |||||
AEON Co. Ltd. | 1,829,200 | 21,271,139 | |||
Citizen Watch Co. Ltd. | 1,183,600 | 8,277,838 | |||
FamilyMart Co. Ltd. | 215,200 | 8,804,313 | |||
Fast Retailing Co. Ltd. | 107,600 | 11,035,135 | |||
Isetan Mitsukoshi Holdings Ltd. Class La,b | 1,023,460 | 11,561,962 | |||
J. Front Retailing Co. Ltd. | 1,216,000 | 6,678,056 | |||
Lawson Inc. | 215,200 | 9,914,766 | |||
Marui Group Co. Ltd. | 968,400 | 7,156,478 | |||
Nitori Co. Ltd. | 107,600 | 6,028,178 | |||
Seven & I Holdings Co. Ltd. | 2,582,480 | 76,147,763 | |||
Shimamura Co. Ltd. | 47,700 | 2,698,715 | |||
Takashimaya Co. Ltd. | 1,076,000 | 9,280,221 | |||
UNY Co. Ltd. | 1,078,000 | 12,019,166 | |||
USS Co. Ltd. | 75,320 | 5,219,133 | |||
Yamada Denki Co. Ltd. | 236,720 | 17,253,676 | |||
213,346,539 | |||||
SEMICONDUCTORS – 0.92% | |||||
Elpida Memory Inc.b | 322,800 | 7,079,143 | |||
NEC Electronics Corp.a,b | 107,600 | 2,761,262 | |||
Rohm Co. Ltd. | 323,200 | 18,821,691 | |||
Shinko Electric Industries | 215,200 | 3,041,850 | |||
Sumco Corp. | 322,800 | 6,528,874 | |||
Tokyo Electron Ltd. | 538,052 | 30,937,060 | |||
69,169,880 |
Security | Shares | Value | |||
SHIPBUILDING – 0.06% | |||||
Mitsui Engineering & Shipbuilding Co. Ltd. | 2,152,000 | $ | 4,402,156 | ||
4,402,156 | |||||
SOFTWARE – 0.31% | |||||
Konami Corp. | 323,600 | 10,018,852 | |||
Nomura Research | 215,200 | 4,937,554 | |||
Oracle Corp. | 107,600 | 4,729,343 | |||
Square Enix Co. Ltd. | 107,600 | 3,579,231 | |||
23,264,980 | |||||
STORAGE & WAREHOUSING – 0.05% | |||||
Mitsubishi Logistics Corp. | 319,000 | 3,674,269 | |||
3,674,269 | |||||
TELECOMMUNICATIONS – 3.06% | |||||
Hikari Tsushin Inc. | 107,600 | 2,766,220 | |||
KDDI Corp. | 8,608 | 50,763,603 | |||
Nippon Telegraph and Telephone Corp. | 16,140 | 80,607,049 | |||
NTT Data Corp. | 4,304 | 17,886,238 | |||
NTT DoCoMo Inc. | 48,420 | 77,320,304 | |||
229,343,414 | |||||
TEXTILES – 0.75% | |||||
Kuraray Co. Ltd. | 1,076,000 | 11,382,152 | |||
Mitsubishi Rayon Co. Ltd. | 1,076,000 | 2,944,686 | |||
Nisshinbo Industries Inc. | 1,076,000 | 12,026,611 | |||
Teijin Ltd. | 3,228,000 | 10,469,993 | |||
Toray Industries Inc.a | 4,304,000 | 19,194,988 | |||
56,018,430 | |||||
TOYS, GAMES & HOBBIES – 2.05% | |||||
Nintendo Co. Ltd. | 322,800 | 154,075,467 | |||
154,075,467 | |||||
TRANSPORTATION – 4.79% | |||||
Central Japan Railway Co. | 5,132 | 53,767,187 | |||
East Japan Railway Co. | 10,760 | 86,258,466 | |||
Hankyu Hanshin Holdings Inc. | 3,233,800 | 14,392,310 | |||
Kawasaki Kisen Kaisha Ltd. | 2,152,000 | 15,506,695 | |||
Keihin Electric Express Railway Co. Ltd.a | 1,080,000 | 6,946,234 | |||
Keio Corp. | 2,152,000 | 12,076,185 | |||
Kintetsu Corp.a | 5,384,000 | 16,818,023 | |||
Mitsui O.S.K. Lines Ltd. | 3,228,000 | 38,905,543 |
SCHEDULEOF INVESTMENTS | 9 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI JAPAN INDEX FUND
August 31, 2008
Security | Shares | Value | ||||
Nippon Express Co. Ltd. | 2,152,000 | $ | 10,172,550 | |||
Nippon Yusen | 3,228,000 | 26,115,494 | ||||
Odakyu Electric Railway | 1,076,000 | 7,475,734 | ||||
Tobu Railway Co. Ltd. | 3,228,000 | 14,782,917 | ||||
Tokyu Corp. | 3,228,000 | 16,716,296 | ||||
West Japan Railway Co. | 5,380 | 26,224,556 | ||||
Yamato Holdings Co. Ltd. | 1,076,000 | 12,799,963 | ||||
358,958,153 | ||||||
VENTURE CAPITAL – 0.05% |
| |||||
JAFCO Co. Ltd. | 107,600 | 3,747,782 | ||||
3,747,782 | ||||||
TOTAL COMMON STOCKS | 7,492,032,946 | |||||
SHORT-TERM INVESTMENTS – 2.27% |
| |||||
MONEY MARKET FUNDS – 2.27% |
| |||||
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares | 86,309 | 86,309 | ||||
BGI Cash Premier Fund LLC | 169,869,850 | 169,869,850 | ||||
169,956,159 | ||||||
TOTAL SHORT-TERM INVESTMENTS | 169,956,159 | |||||
TOTAL INVESTMENTS IN | 7,661,989,105 | |||||
Other Assets, Less Liabilities – (2.17)% | (162,452,787 | ) | ||||
NET ASSETS – 100.00% | $ | 7,499,536,318 | ||||
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | The rate quoted is the annualized seven-day yield of the fund at period end. |
e | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
10 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statement of Assets and Liabilities
iSHARES®, INC.
August 31, 2008
iShares MSCI Japan Index Fund | ||||
ASSETS | ||||
Investments, at cost: | ||||
Unaffiliated issuers | $ | 8,102,377,852 | ||
Affiliated issuers (Note 2) | 169,956,159 | |||
Total cost of investments | $ | 8,272,334,011 | ||
Investments in securities, at value (including securities on loana) (Note 1): | ||||
Unaffiliated issuers | $ | 7,492,032,946 | ||
Affiliated issuers (Note 2) | 169,956,159 | |||
Total value of investments | 7,661,989,105 | |||
Foreign currency, at valueb | 6,242,738 | |||
Receivables: | ||||
Investment securities sold | 10,924,360 | |||
Dividends and interest | 4,008,992 | |||
Total Assets | 7,683,165,195 | |||
LIABILITIES | ||||
Payables: | ||||
Investment securities purchased | 10,341,621 | |||
Collateral for securities on loan (Note 5) | 169,869,850 | |||
Investment advisory fees (Note 2) | 3,417,406 | |||
Total Liabilities | 183,628,877 | |||
NET ASSETS | $ | 7,499,536,318 | ||
Net assets consist of: | ||||
Paid-in capital | $ | 8,500,941,687 | ||
Distributions in excess of net investment income | (4,799,303 | ) | ||
Accumulated net realized loss | (386,283,037 | ) | ||
Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies | (610,323,029 | ) | ||
NET ASSETS | $ | 7,499,536,318 | ||
Shares outstandingc | 645,600,000 | |||
Net asset value per share | $ | 11.62 | ||
a | Securities on loan with market value of $160,778,138. See Note 5. |
b | Cost of foreign currency: $6,228,132. |
c | $0.001 par value, number of shares authorized: 2,124,600,000. |
See notes to financial statements.
FINANCIAL STATEMENTS | 11 |
Table of Contents
Statement of Operations
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI Japan Index Fund | ||||
NET INVESTMENT INCOME | ||||
Dividends from unaffiliated issuersa | $ | 146,219,790 | ||
Interest from affiliated issuers (Note 2) | 212,444 | |||
Securities lending income from affiliated issuers (Note 2) | 1,757,400 | |||
Total investment income | 148,189,634 | |||
EXPENSES | ||||
Investment advisory fees (Note 2) | 47,063,599 | |||
Total expenses | 47,063,599 | |||
Net investment income | 101,126,035 | |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) from: | ||||
Investments in unaffiliated issuers | (129,657,730 | ) | ||
In-kind redemptions | 763,155,865 | |||
Foreign currency transactions | (1,256,713 | ) | ||
Net realized gain | 632,241,422 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (2,458,674,368 | ) | ||
Translation of assets and liabilities in foreign currencies | (61,579 | ) | ||
Net change in unrealized appreciation (depreciation) | (2,458,735,947 | ) | ||
Net realized and unrealized loss | (1,826,494,525 | ) | ||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (1,725,368,490 | ) | |
a | Net of foreign withholding tax of $10,900,502. |
See notes to financial statements.
12 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
iShares MSCI Japan Index Fund | ||||||||
Year ended August 31, 2008 | Year ended August 31, 2007 | |||||||
INCREASE (DECREASE) IN NET ASSETS |
| |||||||
OPERATIONS: | ||||||||
Net investment income | $ | 101,126,035 | $ | 94,180,315 | ||||
Net realized gain | 632,241,422 | 1,158,734,665 | ||||||
Net change in unrealized appreciation (depreciation) | (2,458,735,947 | ) | (877,641,765 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (1,725,368,490 | ) | 375,273,215 | |||||
DISTRIBUTIONS TO SHAREHOLDERS: |
| |||||||
From net investment income | (145,335,547 | ) | (97,091,876 | ) | ||||
Total distributions to shareholders | (145,335,547 | ) | (97,091,876 | ) | ||||
CAPITAL SHARE TRANSACTIONS: |
| |||||||
Proceeds from shares sold | 1,033,469,389 | 1,146,746,106 | ||||||
Cost of shares redeemed | (3,443,234,963 | ) | (3,369,511,925 | ) | ||||
Net decrease in net assets from capital share transactions | (2,409,765,574 | ) | (2,222,765,819 | ) | ||||
DECREASE IN NET ASSETS | (4,280,469,611 | ) | (1,944,584,480 | ) | ||||
NET ASSETS | ||||||||
Beginning of year | 11,780,005,929 | 13,724,590,409 | ||||||
End of year | $ | 7,499,536,318 | $ | 11,780,005,929 | ||||
Undistributed (distributions in excess of) net investment income included in net assets at end of year | $ | (4,799,303 | ) | $ | 30,074,213 | |||
SHARES ISSUED AND REDEEMED | ||||||||
Shares sold | 79,200,000 | 79,800,000 | ||||||
Shares redeemed | (270,600,000 | ) | (237,000,000 | ) | ||||
Net decrease in shares outstanding | (191,400,000 | ) | (157,200,000 | ) | ||||
See notes to financial statements.
FINANCIAL STATEMENTS | 13 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Japan Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008 | Year ended Aug. 31, 2007 | Year ended Aug. 31, 2006 | Year ended Aug. 31, 2005 | Year ended Aug. 31, 2004 | ||||||||||||||||
Net asset value, beginning of year | $ | 14.07 | $ | 13.80 | $ | 10.99 | $ | 9.89 | $ | 8.29 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomea | 0.14 | 0.10 | 0.06 | 0.06 | 0.03 | |||||||||||||||
Net realized and unrealized gain (loss)b | (2.39 | ) | 0.27 | 2.81 | 1.08 | 1.57 | ||||||||||||||
Total from investment operations | (2.25 | ) | 0.37 | 2.87 | 1.14 | 1.60 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.20 | ) | (0.10 | ) | (0.06 | ) | (0.04 | ) | (0.00 | )c | ||||||||||
Total distributions | (0.20 | ) | (0.10 | ) | (0.06 | ) | (0.04 | ) | (0.00 | )c | ||||||||||
Net asset value, end of year | $ | 11.62 | $ | 14.07 | $ | 13.80 | $ | 10.99 | $ | 9.89 | ||||||||||
Total return | (16.13 | )% | 2.68 | % | 26.10 | % | 11.58 | % | 19.32 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 7,499,536 | $ | 11,780,006 | $ | 13,724,590 | $ | 7,248,107 | $ | 5,863,332 | ||||||||||
Ratio of expenses to average net assets | 0.52 | % | 0.52 | % | 0.54 | % | 0.57 | % | 0.64 | %d | ||||||||||
Ratio of net investment income to average net assets | 1.11 | % | 0.68 | % | 0.48 | % | 0.59 | % | 0.28 | % | ||||||||||
Portfolio turnover ratee | 4 | % | 3 | % | 8 | % | 6 | % | 5 | % |
a | Based on average shares outstanding throughout each period. |
b | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
c | Rounds to less than $0.01. |
d | Ratio of expenses to average net assets prior to voluntarily reimbursed distribution fees for the year ended August 31, 2004 was 0.78%. |
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.
14 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
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 iShares MSCI Japan Index Fund (the “Fund”).
The Fund’s investment objective is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded equity securities in the aggregate in the Japanese equity market, as measured by the MSCI Japan Index compiled by MSCI Inc. (“MSCI”). The investment adviser uses a “passive” or index approach to achieve the Fund’s investment objective. The Fund is classified as a non-diversified fund under the 1940 Act. Non-diversified funds generally hold securities of fewer companies than diversified funds and may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.
The Fund invests in the securities of foreign issuers of a single country, which may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets and the risk of war.
Pursuant to the Company’s organizational documents, the Fund’s officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
1. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the Company in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
The securities and other assets of the Fund are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. The investment adviser may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing service based on such pricing service’s valuation matrix may be considered a market valuation. In the event that current market valuations are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Directors of the Company (the “Board”).
NOTESTO FINANCIAL STATEMENTS | 15 |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
Investments that may be valued using fair value pricing include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (i.e., one that may not be publicly sold without registration under the Securities Act of 1933, as amended); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (i.e., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Fund’s NAV is computed and that may materially affect the value of the Fund’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.
Valuing the Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Accordingly, 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 benchmark index, which, in turn, could result in a difference between the Fund’s performance and the performance of the Fund’s benchmark index.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source, and 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. Any use of a rate different from the rates used by MSCI may adversely affect the Fund’s ability to track its underlying index. 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.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income, if any, including any net foreign currency gains, are declared and distributed at least annually by the Fund. Distributions of net realized capital gains, if any, generally are declared and distributed once a year. 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.
As of August 31, 2008, the tax year-end of the Fund, the components of net accumulated losses on a tax basis consisted of undistributed ordinary income of $1,704,867, unrealized depreciation of $666,724,525, and capital and other losses of $336,385,711, for net accumulated losses of $1,001,405,369.
For the years ended August 31, 2008 and August 31, 2007, the tax characterization of distributions paid for the Fund represents ordinary income. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for the Fund.
16 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
FEDERAL INCOME TAXES
The Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of the Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2008.
From November 1, 2007 to August 31, 2008, the Fund incurred net realized capital losses of $112,520,757. As permitted by tax regulations, the Fund has elected to defer those losses and treat them as arising in the year ending August 31, 2009.
As of August 31, 2008, the tax year-end of the Fund, the Fund had tax basis net capital loss carryforwards of $2,959,030, $62,572,173, $3,621,148, $5,594,562, $8,733,802, $68,122,871, $27,817,841 and $44,443,527 expiring in 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016, respectively. Such losses may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first.
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.
The Fund reclassifies at the end of its tax year certain amounts to paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset value per share.
As of August 31, 2008, the cost of investments for federal income tax purposes was $8,328,735,507. Net unrealized depreciation was $666,746,402, of which $579,750,317 represented gross unrealized appreciation on securities and $1,246,496,719 represented gross unrealized depreciation on securities.
The Fund adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in a tax position taken or expected to be taken in a tax return. FIN 48 provides guidance on the measurement, recognition, classification and disclosures of tax positions, along with accounting for the related interest and penalties. Management has reviewed the tax positions as of August 31, 2008, inclusive of the prior three open tax return years, and has determined that the implementation of FIN 48 did not have a material impact on the Fund’s financial statements.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement with the Company, Barclays Global Fund Advisors (“BGFA”) manages the investment of the Fund’s assets. BGFA is a California corporation indirectly owned by Barclays Bank PLC. Under the Investment Advisory Agreement, BGFA is responsible for all expenses (“Covered Expenses”) of the Company, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees and extraordinary expenses.
NOTESTO FINANCIAL STATEMENTS | 17 |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
For its investment advisory services to the Fund, BGFA is entitled to an annual investment advisory fee based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares Funds, as follows:
Investment Advisory Fee | Aggregate Average Daily Net Assets | |
0.59% | First $7 billion | |
0.54 | Over $7 billion, up to and including $11 billion | |
0.49 | Over $11 billion, up to and including $24 billion | |
0.44 | Over $24 billion |
The Board approved a change to the investment advisory fee structure for the Fund effective September 1, 2008. For its investment advisory services to the Fund, BGFA will be entitled to an annual investment advisory fee based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares Funds, as follows:
Investment Advisory Fee | Aggregate Average Daily Net Assets | |
0.59% | First $7 billion | |
0.54 | Over $7 billion, up to and including $11 billion | |
0.49 | Over $11 billion, up to and including $24 billion | |
0.44 | Over $24 billion, up to and including $48 billion | |
0.40 | Over $48 billion |
State Street Bank and Trust Company (“State Street”) serves as administrator, custodian and transfer agent for the Company. As compensation for its services, State Street receives certain out-of-pocket costs, transaction fees and asset-based fees which are accrued daily and paid monthly. These fees and expenses are Covered Expenses as defined above.
SEI Investments Distribution Co. (“SEI”) serves as the Fund’s underwriter and distributor of the shares of the Fund, pursuant to a Distribution Agreement with the Company. SEI does not receive a fee from the Fund for its distribution services.
Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Fund is permitted to lend portfolio securities to Barclays Capital Inc. (“BarCap”). Pursuant to the same exemptive order, Barclays Global Investors, N.A. (“BGI”) serves as securities lending agent for the Fund. BarCap and BGI are affiliates of BGFA, the Fund’s investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2008, BGI earned securities lending agent fees of $1,757,400.
Cross trades for the year ended August 31, 2008 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 BGFA (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 in the Institutional Shares of certain money market funds managed by BGFA, the Fund’s investment adviser, including the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”), Prime Money Market Fund (“PMMF”) and Treasury Money Market Fund (“TMMF”) of Barclays Global Investors Funds. The GMMF, IMMF, PMMF and TMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio, Prime Money Market Master Portfolio and Treasury Money Market Master Portfolio (collectively, the “Money Market Master Portfolios”), respectively, which are also managed by BGFA. While the GMMF, IMMF, PMMF and TMMF do not directly charge an investment
18 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
advisory fee, the Money Market Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF, PMMF and TMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Fund from temporary cash investments are recorded as interest from affiliated issuers in the accompanying Statement of Operations. Income distributions earned by the Fund from the investment of securities lending collateral, if any, are included in securities lending income in the accompanying Statement of Operations.
The Fund may invest its securities lending cash collateral, if any, in the BGI Cash Premier Fund LLC (“Premier Fund”), an affiliated private money market fund managed by BGFA. Although the Premier Fund is not registered as an investment company under the 1940 Act, it intends to operate as a money market fund in compliance with Rule 2a-7 under the 1940 Act. See Note 5 for additional information regarding the Premier Fund.
Certain directors and officers of the Company are also officers of BGI and/or BGFA.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2008, aggregated $379,737,187 and $503,759,318, respectively.
In-kind purchases and sales (see Note 4) for the year ended August 31, 2008, aggregated $1,000,551,278 and $3,328,260,294, respectively.
4. CAPITAL SHARE TRANSACTIONS
The Company issues and redeems capital shares of the Fund only in aggregations of a specified number of shares (each, a “Creation Unit”) at net asset value. Except when aggregated in Creation Units, shares of the Fund are not redeemable. Transactions in capital shares for the Fund are disclosed in detail in the Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of the Fund generally consists of the in-kind deposit of a designated portfolio of equity securities, which constitutes a substantial replication, or a portfolio sampling representation of the securities involved in the MSCI Japan Index and an amount of cash. Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee directly to State Street, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.
5. LOANS OF PORTFOLIO SECURITIES
The Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by the Fund is required to have a value of at least 102% of the market 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 market value of the securities on loan. The risks to the Fund of securities lending are that the borrower may not provide additional collateral when required or may not return the securities when due.
As of August 31, 2008, the Fund had loaned securities which were collateralized by cash. The cash collateral received was invested in the Premier Fund. The Premier Fund seeks to achieve its investment objective by investing in a portfolio of high-quality, short-term fixed-income instruments, including money market funds (which may be managed by BGFA or its affiliate) and other instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition.
NOTESTO FINANCIAL STATEMENTS | 19 |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
The market value of the securities on loan as of August 31, 2008 and the value of the related collateral are disclosed in the Statement of Assets and Liabilities. Securities lending income, as disclosed in the Fund’s Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.
6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), “Fair Value Measurements.” FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. Management does not believe that the adoption of this standard will have a material impact on the Fund’s financial statements.
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Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
iShares, Inc.
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Japan Index Fund (the “Fund”) at August 31, 2008, the results of its operations, the changes in its net assets and its financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at August 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 23, 2008
REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 21 |
Table of Contents
iSHARES®, INC.
For the fiscal year ended August 31, 2008, the Fund earned foreign source income of $157,120,292 and paid foreign taxes of $10,799,226 which it intends to pass through to its shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”).
Under Section 854(b)(2) of the Code, the Fund hereby designates the maximum amount of $103,928,863 as qualified dividend income for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended August 31, 2008.
In January 2009, shareholders will receive Form 1099-DIV which will include their share of qualified dividend income distributed during the calendar year 2008. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.
22 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory Contract (Unaudited)
iSHARES®, INC.
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BGFA (the “Advisory Contract”) on behalf of the Fund. As required by Section 15(c), the Board requested and BGFA provided such information as the Board deemed reasonably necessary to evaluate the terms of the Advisory Contract. At a meeting held on June 18-19, 2008, the Board approved the selection of BGFA and the continuance of the Advisory Contract, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contract for the Fund, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, no one of which was controlling, and made the following conclusions:
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA
The Board anticipated that there would be no diminution in the scope of services required of BGFA under the Advisory Contract for the coming year as compared to the scope of services provided by BGFA over the past year. In reviewing the scope of these services, the Board considered BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including over the past year, including investment in technology and increasing the number of their employees supporting the Fund. The Board also considered BGFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BGFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and has 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. In addition to the above considerations, the Board considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as the Fund; therefore, comparative performance information was generally not available. However, the Board also noted that the Fund had met its investment objective consistently since its inception date. Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Fund under the Advisory Contract were appropriate and mitigated in favor of the Board’s approval of the Advisory Contract for the coming year.
FUND’S 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 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 peer group pursuant to Lipper’s proprietary methodology and any registered investment companies that would otherwise have been excluded from Lipper’s comparison group due to certain differentiating factors, but were nonetheless included at the request of BGFA (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track indexes similar to that tracked by the Fund, the Lipper Group included in part mutual funds, closed-end funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the Lipper Group and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Fund. In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of the Fund for the one-, three-, five- and ten-year, and “last quarter” periods ended March 31, 2008, 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 provided, and the Board reviewed, a comparison of the Fund’s performance to that of its relevant performance benchmark index.
BOARD REVIEWAND APPROVALOF INVESTMENT ADVISORY CONTRACT | 23 |
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Board Review and Approval of Investment Advisory Contract (Unaudited) (Continued)
iSHARES® , INC.
The Board noted that the Fund performed in line with its performance benchmark index over relevant periods. In considering this information, the Board noted that the Lipper Group includes funds that may have different investment objectives and/or benchmarks from the Fund. In addition, the Board noted that the Fund seeks to track its 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 comparative performance information was also considered by the Board.
The Board also noted that the investment advisory fees and overall expense components for the Fund were generally lower than the median or average investment advisory fee rates and overall expenses of the funds in its respective Lipper Group. The Board also reviewed statistical information from Lipper displaying the effects of the current breakpoints in the investment advisory fee rates for the Fund (as discussed below) at various assets levels of the Fund as compared to the Lipper Group. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of the Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in its Lipper Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.
COSTS OF SERVICES PROVIDED TO THE FUND AND PROFITS REALIZED BY BGFA AND AFFILIATES
The Board reviewed information about the profitability to BGFA of the Fund based on the fees payable to BGFA and its affiliates (including fees under the Advisory Contract), and all other sources of revenue and expense to BGFA and its affiliates from the Fund’s operations for the last calendar year. The Board discussed the sources of direct and ancillary revenue with management, including the revenues to BGI from securities lending by the Company (including any securities lending by the Fund). The Board also discussed BGFA’s profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits realized by BGFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.
ECONOMIES OF SCALE
In connection with its review of the Fund’s profitability analysis, 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 already provided for breakpoints (effective September 1, 2008) in the Fund’s investment advisory fee rates as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board was also presented with materials regarding the proposed extension of breakpoints in the investment advisory fee rates at certain asset levels for the Fund. The Board also discussed the substantial growth in assets of certain iShares funds, including the Fund, over the last few years. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had continued to make significant investments in the iShares funds, that expenses had grown at a pace similar to the growth in revenue, and the BGFA had incurred operating losses during earlier years when the iShares funds, including the Fund, had not yet reached scale. In light of this history, the Board determined that the proposed extension of breakpoints were appropriate and warranted at this juncture for the Fund. Based on this review, as well as the discussions described above in connection with the Lipper Group and performance benchmark comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees, with the proposed extension of breakpoints, reflects appropriate sharing of economies of scale with the Fund’s shareholders.
FEES AND SERVICES PROVIDED FOR OTHER COMPARABLE FUNDS/ACCOUNTS MANAGED BY BGFA AND ITS AFFILIATES
The Board received and considered certain information regarding the Fund’s annual investment advisory fee rates under the Advisory Contract in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate
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Board Review and Approval of Investment Advisory Contract (Unaudited) (Continued)
iSHARES®, INC.
of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts (together, the “Other Accounts”). In reviewing the comparative investment advisory/management fee information, the Board considered the general structure of investment advisory/management fees in relation to the nature and extent of services provided to the Fund in comparison with the nature and extent of services provided to the Other Accounts, including, among other things, the level of complexity in managing the Fund and the Other Accounts under differing regulatory requirements and client guidelines. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contract are fair and reasonable.
OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES
The Board reviewed any ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Fund by BGFA, such as any payment of revenue to BGI, the Company’s securities lending agent, for loaning any portfolio securities, and payment of advisory fees and/or administration fees to BGFA and BGI in connection with any investments by the Fund in other funds for which BGFA provides investment advisory services and/or BGI provides administration services. The Board noted that BGFA does not use soft dollars or consider the value of research or other services that may be provided to BGFA (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 BGFA affiliate or purchased from an underwriting syndicate in which a BGFA 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.
Based on this analysis, the Board determined that the Advisory Contract, including the investment advisory fee rates thereunder, is fair and reasonable in light of all relevant circumstances, and concluded that it is in the best interest of the Fund and its shareholders to approve the Advisory Contract, with the fee schedule to the Advisory Contract as proposed to be amended to reflect the extension of breakpoints, for the coming year.
BOARD REVIEWAND APPROVALOF INVESTMENT ADVISORY CONTRACT | 25 |
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Supplemental Information (Unaudited)
iSHARES®, INC.
The table that follows presents information about the differences between the daily market price on secondary markets for shares of the Fund and the Fund’s net asset value. Net asset value, or “NAV,” is the price per share at which the Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. The “Market Price” of the Fund generally is determined using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund is listed for trading, as of the time that the Fund’s NAV is calculated. The Fund’s Market Price may be at, above or below its NAV. The NAV of the Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of the Fund will fluctuate in accordance with changes in its NAV, as well as market supply and demand.
Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of the Fund on a given day, generally at the time NAV is calculated. A premium is the amount that the Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that the Fund is trading below the reported NAV, expressed as a percentage of the NAV.
The following information shows the frequency distributions of premiums and discounts for the Fund. The information shown for the Fund is for five calendar years through the date of the most recent calendar quarter-end.
Each line in the table shows the number of trading days in which the Fund traded within the premium/discount range indicated. The number of trading days in each premium/discount range is also shown as a percentage of the total number of trading days in the period covered by the table. All data presented here represents past performance, which cannot be used to predict future results.
iShares MSCI Japan Index Fund
Period Covered: January 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 4.0% and Less than 4.5% | 3 | 0.22 | % | ||
Greater than 3.5% and Less than 4.0% | 1 | 0.07 | |||
Greater than 3.0% and Less than 3.5% | 5 | 0.36 | |||
Greater than 2.5% and Less than 3.0% | 5 | 0.36 | |||
Greater than 2.0% and Less than 2.5% | 15 | 1.09 | |||
Greater than 1.5% and Less than 2.0% | 41 | 2.97 | |||
Greater than 1.0% and Less than 1.5% | 124 | 8.98 | |||
Greater than 0.5% and Less than 1.0% | 258 | 18.68 | |||
Between 0.5% and –0.5% | 657 | 47.58 | |||
Less than –0.5% and Greater than –1.0% | 147 | 10.64 | |||
Less than –1.0% and Greater than –1.5% | 64 | 4.63 | |||
Less than –1.5% and Greater than –2.0% | 34 | 2.46 | |||
Less than –2.0% and Greater than –2.5% | 16 | 1.16 | |||
Less than –2.5% and Greater than –3.0% | 7 | 0.51 | |||
Less than –3.0% and Greater than –3.5% | 3 | 0.22 | |||
Less than –3.5% and Greater than –4.0% | 1 | 0.07 | |||
1,381 | 100.00 | % | |||
26 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Director and Officer Information (Unaudited)
iSHARES®, INC.
The Board of Directors has responsibility for the overall management and operations of the Company, including general supervision of the duties performed by BGFA and other service providers. Each Director serves until his or her successor is duly elected or appointed and qualified.
iShares, Inc., iShares Trust, Barclays Global Investors Funds (“BGIF”) and Master Investment Portfolio (“MIP”) are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 161 portfolios within the fund complex. In addition, Lee T. Kranefuss serves as a Trustee for BGIF and MIP and oversees an additional 26 portfolios within the fund complex.
Unless otherwise noted in the tables below, the address of each Director and Officer is c/o Barclays Global Investors, N.A., 400 Howard Street, San Francisco, California 94105. The Board has designated George G.C. Parker as its Lead Independent Director. Additional information about the Funds’ Directors and Officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.
Interested Directors and Officers
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
*Lee T. Kranefuss, 46 | Director and Chairman (since 2003). | Global Chief Executive Officer, iShares/Intermediary Groups of BGI (since 2008); Chief Executive Officer, iShares Intermediary Index and Market Group of BGI (2005-2008); Chief Executive Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2005); Director of BGFA (since 2005); Director, President and Chief Executive Officer of Barclays Global Investors International, Inc. (since 2005); Director and Chairman of Barclays Global Investors Services (since 2005). | Trustee of iShares Trust (since 2003); Trustee of BGlF and MIP (since 2001). | |||
*John E. Martinez, 47 | Director (since 2003). | Co-Chief Executive Officer of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003); Director, Barclays Global Investors UK Holdings, Inc. (2000-2003); Director of Real Estate Equity Exchange (since 2005). | Trustee of iShares Trust (since 2003); Chairman, Independent Review Committee, Canadian iShares Funds (since 2007). |
* | Lee T. Kranefuss and John E. Martinez are deemed to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser; BGI, the parent company of BGFA; and Barclays Global Investors Services, an affiliate of BGFA and BGI. |
DIRECTORAND OFFICER INFORMATION | 27 |
Table of Contents
Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Independent Directors
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
George G.C. Parker, 69 | Director (since 2002); Lead Independent Director (since 2006). | Dean Witter Distinguished Professor of Finance, Emeritus, Stanford University: Graduate School of Business (since 1994). | Trustee of iShares Trust (since 2000); Director of Continental Airlines, Inc. (since 1996); Director of Community First Financial Group (since 1995); Director of Tejon Ranch Company (since 1999); Director of Threshold Pharmaceuticals (since 2004); Director of NETGEAR, Inc. (since 2007). | |||
Cecilia H. Herbert, 59 | Director (since 2005). | Chair of Investment Committee, Archdiocese of San Francisco (1994-2005); Director (since 1998) and President (since 2007) of the Board of Directors, Catholic Charities CYO; Trustee of Pacific Select Funds (2004-2005); Trustee of the Montgomery Funds (1992-2003); Trustee (since 2005) and Chair of the Finance and Investment Committees (since 2006) of the Thacher School. | Trustee of iShares Trust (since 2005). | |||
Charles A. Hurty, 64 | Director (since 2005). | Retired; Partner, KPMG LLP (1968-2001). | Trustee of iShares Trust (since 2005); Director of GMAM Absolute Return Strategy Fund (1 portfolio) (since 2002); Director of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (1 portfolio) (since 2002); Director of CSFB Alternative Investments Fund (6 portfolios) (since 2005). | |||
John E. Kerrigan, 53 | Director (since 2005). | Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002). | Trustee of iShares Trust (since 2005); Member of Advisory Council for Commonfund Distressed Debt Partners II (since 2004). |
28 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Independent Directors (Continued)
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Robert H. Silver, 53 | Director (since 2007). | President and Co-Founder of The Bravitas Group, Inc. (since 2006); Member, Non-Investor Advisory Board of Russia Partners II, LP (since 2006); President and Chief Operating Officer (2003-2005) and Director (1999-2005) of UBS Financial Services, Inc.; President and Chief Executive Officer of UBS Services USA, LLC (1999-2005); Managing Director, UBS America, Inc. (2000-2005); Director and Chairman of the YMCA of Greater NYC (since 2001); Broadway Producer (since 2006). | Trustee of iShares Trust (since 2007); Director and Member of the Audit and Compensation Committee of EPAM Systems, Inc. (since 2006). | |||
Darrell Duffie, 54 | Director (since 2008). | Professor, Stanford University: Graduate School of Business (since 1984). | Trustee of iShares Trust (since 2008). | |||
Officers
| ||||||
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Michael A. Latham, 42 | President (since 2007). | Head of Americas iShares (since 2007); Chief Operating Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2007); Director and Chief Financial Officer of Barclays Global Investors International, Inc. (since 2005). | None. | |||
Geoffrey D. Flynn, 51 | Treasurer and Chief Financial Officer (since 2007). | Chief Operating Officer, U.S. iShares, BGI (since 2008); Director, Mutual Fund Operations of BGI (2007-2008); President, Van Kampen Investors Services (2003-2007); Managing Director, Morgan Stanley (2002-2007); President, Morgan Stanley Trust, FSB (2002-2007). | None. |
DIRECTORAND OFFICER INFORMATION | 29 |
Table of Contents
Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Officers (Continued)
| ||||||
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Eilleen M. Clavere, 56 | Secretary (since 2007). | Head of Legal Administration of Intermediary Investors Business of BGI (since 2006); Legal Counsel and Vice President of Atlas Funds, Atlas Advisers, Inc. and Atlas Securities, Inc. (2005-2006); Counsel of Kirkpatrick & Lockhart LLP (2001-2005). | None. | |||
Ira P. Shapiro, 45 | Vice President and Chief Legal Officer (since 2007). | Associate General Counsel, BGI (since 2004); First Vice President of Merrill Lynch Investment Managers (1993-2004). | None. | |||
Amy Schioldager, 45 | Executive Vice President (since 2007). | Head of U.S. Indexing, BGI (since 2006); Head of Domestic Equity Portfolio Management, BGI (2001-2006). | None. | |||
H. Michael Williams, 48 | Executive Vice President (since 2007). | Vice Chairman – Capital Markets, BGI (since 2008); Head of Global Index and Markets Group of BGI (2006-2008); Global Head of Securities Lending, BGI (2002-2006). | Trustee of BGIF and MIP (since 2007); Trustee, University of California, Berkeley Foundation; Executive Board, College of Letters and Science, University of California, Berkeley. | |||
Patrick O’Connor, 41 | Vice President (since 2007). | Head of iShares Portfolio Management, BGI (since 2006); Senior Portfolio Manager, BGI (1999-2006). | None. | |||
Lee Sterne, 43 | Vice President (since 2007). | Head of U.S. Fixed Income Index and iShares, BGI (since 2007); Senior Portfolio Manager, BGI (2004-2007); Portfolio Manager, BGI (2001-2004). | None. | |||
Matt Tucker, 36 | Vice President (since 2007). | Head of U.S. Fixed Income Investment Solutions, BGI (since 2005); Fixed Income Investment Strategist, BGI (2003-2005); Fixed Income Portfolio Manager, BGI (1997-2003). | None. |
30 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
The following is a list of iShares Funds being offered, along with their respective exchange trading symbols. Please call 1-800-iShares (1-800-474-2737) to obtain a prospectus for any iShares Fund. The prospectus contains more complete information, including charges, expenses, investment objectives and risk factors that should be carefully considered to determine if the Fund(s) are an appropriate investment for you. Read the prospectus(es) carefully before investing. Investing involves risk, including possible loss of principal.
iShares S&P Domestic Index Funds
iShares S&P 1500 (ISI)
iShares S&P 100 (OEF)
iShares S&P 500 (IVV)
iShares S&P 500 Growth (IVW)
iShares S&P 500 Value (IVE)
iShares S&P MidCap 400 (IJH)
iShares S&P MidCap 400 Growth (IJK)
iShares S&P MidCap 400 Value (IJJ)
iShares S&P SmallCap 600 (IJR)
iShares S&P SmallCap 600 Growth (IJT)
iShares S&P SmallCap 600 Value (IJS)
iShares S&P North American Natural Resources Sector (IGE)
iShares S&P North American
Technology-Multimedia Networking (IGN)
iShares S&P North American
Technology-Semiconductors (IGW)
iShares S&P North American
Technology-Software (IGV)
iShares S&P North American Technology
Sector (IGM)
iShares Domestic Sector Index Funds
iShares Cohen & Steers Realty Majors (ICF)
iShares Dow Jones U.S. Basic Materials
Sector (IYM)
iShares Dow Jones U.S. Consumer Services
Sector (IYC)
iShares Dow Jones U.S. Consumer Goods
Sector (IYK)
iShares Dow Jones U.S. Energy Sector (IYE)
iShares Dow Jones U.S. Financial Sector (IYF)
iShares Dow Jones U.S. Financial Services (IYG)
iShares Dow Jones U.S. Healthcare Sector (IYH)
iShares Dow Jones U.S. Industrial Sector (IYJ)
iShares Dow Jones U.S. Real Estate (IYR)
iShares Dow Jones U.S. Technology Sector (IYW)
iShares Dow Jones U.S. Telecommunications
Sector (IYZ)
iShares Dow Jones Transportation Average (IYT)
iShares Dow Jones U.S. Utilities Sector (IDU)
iShares Dow Jones U.S. (IYY)
iShares Nasdaq Biotechnology (IBB)
iShares Domestic Subsector Index Funds
iShares Dow Jones U.S. Aerospace & Defense (ITA)
iShares Dow Jones U.S. Broker-Dealers (IAI)
iShares Dow Jones U.S. Healthcare Providers (IHF)
iShares Dow Jones U.S. Home Construction (ITB)
iShares Dow Jones U.S. Insurance (IAK)
iShares Dow Jones U.S. Medical Devices (IHI)
iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO)
iShares Dow Jones U.S. Oil Equipment &
Services (IEZ)
iShares Dow Jones U.S. Pharmaceuticals (IHE)
iShares Dow Jones U.S. Regional Banks (IAT)
iShares FTSE NAREIT Industrial/Office (FIO)
iShares FTSE NAREIT Mortgage REITs (REM)
iShares FTSE NAREIT Real Estate 50 (FTY)
iShares FTSE NAREIT Residential (REZ)
iShares FTSE NAREIT Retail (RTL)
iShares Global Index Funds
iShares S&P Global 100 (IOO)
iShares S&P Global Clean Energy (ICLN)
iShares S&P Global Consumer Discretionary
Sector (RXI)
iShares S&P Global Consumer Staples Sector (KXI)
iShares S&P Global Energy Sector (IXC)
iShares S&P Global Financials Sector (IXG)
iShares S&P Global Healthcare Sector (IXJ)
iShares S&P Global Industrials Sector (EXI)
iShares S&P Global Infrastructure (IGF)
iShares S&P Global Materials Sector (MXI)
iShares S&P Global Nuclear Energy (NUCL)
iShares S&P Global Technology Sector (IXN)
iShares S&P Global Telecommunications
Sector (IXP)
iShares S&P Global Timber & Forestry (WOOD)
iShares S&P Global Utilities Sector (JXI)
iShares Russell Index Funds
iShares Russell 3000 (IWV)
iShares Russell 3000 Growth (IWZ)
iShares Russell 3000 Value (IWW)
iShares Russell 1000 (IWB)
iShares Russell 1000 Growth (IWF)
iShares Russell 1000 Value (IWD)
iShares Russell Midcap (IWR)
iShares Russell Midcap Growth (IWP)
iShares Russell Midcap Value (IWS)
iShares Russell 2000 (IWM)
iShares Russell 2000 Growth (IWO)
iShares Russell 2000 Value (IWN)
iShares Russell Microcap (IWC)
iShares International Country Index Funds
iShares FTSE China (HK Listed) (FCHI)
iShares FTSE/Xinhua China 25 (FXI)
iShares MSCI Australia (EWA)
iShares MSCI Austria Investable Market (EWO)
iShares MSCI Belgium Investable Market (EWK)
iShares MSCI Brazil (EWZ)
iShares MSCI Canada (EWC)
iShares MSCI Chile Investable Market (ECH)
iShares MSCI France (EWQ)
iShares MSCI Germany (EWG)
iShares MSCI Hong Kong (EWH)
iShares MSCI Israel Capped Investable Market (EIS)
iShares MSCI Italy (EWI)
iShares MSCI Japan (EWJ)
iShares MSCI Japan Small Cap (SCJ)
iShares MSCI Malaysia (EWM)
iShares MSCI Mexico Investable Market (EWW)
iShares MSCI Netherlands Investable Market (EWN)
iShares MSCI Singapore (EWS)
iShares MSCI South Africa (EZA)
iShares MSCI South Korea (EWY)
iShares MSCI Spain (EWP)
iShares MSCI Sweden (EWD)
iShares MSCI Switzerland (EWL)
iShares MSCI Taiwan (EWT)
iShares MSCI Thailand Investable Market (THD)
iShares MSCI Turkey Investable Market (TUR)
iShares MSCI United Kingdom (EWU)
iShares S&P/TOPIX 150 (ITF)
iShares Bond Funds
iShares Lehman Aggregate (AGG)
iShares Lehman MBS (MBB)
iShares Lehman Short Treasury (SHV)
iShares Lehman 1-3 Year Treasury (SHY)
iShares Lehman 3-7 Year Treasury (IEI)
iShares Lehman 7-10 Year Treasury (IEF)
iShares Lehman 10-20 Year Treasury (TLH)
iShares Lehman 20+ Year Treasury (TLT)
iShares Lehman TIPS (TIP)
iShares Lehman Credit (CFT)
iShares Lehman 1-3 Year Credit (CSJ)
iShares Lehman Intermediate Credit (CIU)
iShares iBoxx $ Investment Grade Corporate (LQD)
iShares iBoxx $ High Yield Corporate (HYG)
iShares Lehman Government/Credit (GBF)
iShares Lehman Intermediate
Government/Credit (GVI)
iShares S&P National Municipal (MUB)
iShares S&P California Municipal (CMF)
iShares S&P New York Municipal (NYF)
iShares JPMorgan USD Emerging Markets (EMB)
iShares Specialty Index Funds
iShares KLD 400 Social (DSI)
iShares KLD Select SocialSM (KLD)
iShares Dow Jones Select Dividend (DVY)
iShares Dow Jones EPAC Select Dividend (IDV)
iShares S&P U.S. Preferred Stock (PFF)
iShares International Index Funds
iShares FTSE Developed Small Cap ex-North America (IFSM)
iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. (IFGL)
iShares FTSE EPRA/NAREIT North
America (IFNA)
iShares FTSE EPRA/NAREIT Europe (IFEU)
iShares FTSE EPRA/NAREIT Asia (IFAS)
iShares MSCI ACWI (ACWI)
iShares MSCI ACWI ex US (ACWX)
iShares MSCI All Country Asia ex Japan (AAXJ)
iShares MSCI BRIC (BKF)
iShares MSCI EAFE (EFA)
iShares MSCI EAFE Growth (EFG)
iShares MSCI EAFE Value (EFV)
iShares MSCI EAFE Small Cap (SCZ)
iShares MSCI Emerging Markets (EEM)
iShares MSCI EMU (EZU)
iShares MSCI Kokusai (TOK)
iShares MSCI Pacific ex-Japan (EPP)
iShares S&P Asia 50 (AIA)
iShares S&P Europe 350 (IEV)
iShares S&P Latin America 40 (ILF)
iShares S&P World ex-U.S. Property (WPS)
iSHARES FAMILYOF FUNDS | 31 |
Table of Contents
The iShares® Family of Funds (Continued)
iShares Morningstar Index Funds
iShares Morningstar Large Core (JKD)
iShares Morningstar Large Growth (JKE)
iShares Morningstar Large Value (JKF)
iShares Morningstar Mid Core (JKG)
iShares Morningstar Mid Growth (JKH)
iShares Morningstar Mid Value (JKI)
iShares Morningstar Small Core (JKJ)
iShares Morningstar Small Growth (JKK)
iShares Morningstar Small Value (JKL)
iShares NYSE Index Funds
iShares NYSE Composite (NYC)
iShares NYSE 100 (NY)
iShares® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., European Public Real Estate Association (“EPRA®”), FTSE International Limited (“FTSE”), FTSE/Xinhua Index Limited (“FXI”), iBoxx®, J.P. Morgan Securities Inc., KLD Research & Analytics, Inc., MSCI Inc., Morningstar Inc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50/Residential/Retail/Mortgage REITs or Industrial/Office Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Global Real Estate ex-US/North America/Europe/Asia Index; all rights vest in FTSE, NAREIT, and EPRA. All rights in the FTSE Developed Small Cap ex-North America Index vest in FTSE. “FTSE” is a trade- and servicemark of London Stock Exchange and The Financial Times Limited; “Xinhua” is a trade- and servicemark of Xinhua Financial Network Limited. “NAREIT®” is a trademark of NAREIT; “EPRA®” is a trademark of EPRA.
An investment in the Fund(s) is not a deposit of a bank and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
This advertising section does not constitute part of the 2008 Annual Report.
7821-iS-0908
32 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
For more information:
WWW.iSHARES.COM
1-800-iShares (1-800-474-2737)
The iShares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as an advisor to the iShares Funds. BGFA is a subsidiary of Barclays Global Investors, NA., neither of which is affiliated with SEI.
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. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the company listed above.
©2008 Barclays Global Investors. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.
Investing involves risk, including possible loss of principal.
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 ended 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 monthly basis on the Fund’s website.
Certain financial information required by regulations or listing exchange rules in jurisdictions outside the U.S. in which iShares Funds are cross-listed may be publicly filed in those jurisdictions. This information is available upon request by calling 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.
BGI-F-004-10008
iShares®
LET’S BUILD A BETTER INVESTMENT WORLDSM.
BARCLAYS
GLOBAL INVESTORS
Table of Contents
2008 ANNUAL REPORT TO SHAREHOLDERS
iSHARES® MSCI SERIES
AUGUST 31, 2008
>> Would you prefer to receive materials like this electronically?
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iShares MSCI Emerging Markets Index Fund
iShares®
Table of Contents
iShares®
Dear iShares Shareholder:
Electronic delivery is the easiest, most convenient way to receive reporting on your iShares holdings. In addition, it’s a way we can all care for our environment. To that end, we are pleased to offer shareholder reports and prospectuses online.
To sign up for electronic delivery, please follow these simple steps:
1. Go to www.icsdelivery.com.
2. From the main page, select the first letter of your brokerage firm’s name.
3. Select your brokerage institution from the list that follows. If your brokerage firm is not listed, electronic delivery may not be available. Please contact your brokerage firm or financial adviser.
4. Fill out the appropriate information and provide the e-mail address where you would like
your information sent.
Your information and email address will be kept confidential and only used to deliver documents to you. If at any time you are not satisfied, you can cancel electronic delivery at www.icsdelivery.com and once again receive physical delivery of your materials. If you have any questions, please contact your brokerage firm or financial adviser.
Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail. Instead, you will receive e-mail notifications announcing that the shareholder report or prospectus has been posted on the iShares website at www.iShares.com.
Table of Contents
iShares®
iShares, Inc.
Supplement dated October 30, 2008
to the Prospectus dated January 1, 2008
for the iShares MSCI Emerging Markets Index Fund (the “Fund”)
The information in this Supplement updates information in, and should be read in conjunction with, the Prospectus for the Fund.
Effective August 12, 2008, the second and fourth paragraphs under the heading “Management” beginning on page 12 of the Prospectus are hereby deleted in their entirety and replaced with the following:
For its investment advisory services to the Fund, BGFA is entitled to receive a management fee from the Fund based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (iShares MSCI All Country Asia ex Japan Index Fund and iShares MSCI BRIC Index Fund, which are offered in separate prospectuses) as follows: 0.75% per annum of the aggregate net assets less than or equal to $14.0 billion, plus 0.68% per annum of the aggregate net assets over $14.0 billion, up to and including $28.0 billion, plus 0.61% per annum of the aggregate net assets in excess of $28.0 billion.
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of Barclays Global Investors, N.A.
| BGI-A-119-0908
|
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
Table of Contents
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Board Review and Approval of Investment Advisory Contract (Unaudited) | 25 | |
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Table of Contents
Management’s Discussion of Fund Performance
iSHARES® MSCI EMERGING MARKETS INDEX FUND
Performance as of August 31, 2008
Average Annual Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(8.36)% | (8.16)% | (10.09)% | 23.27% | 22.95% | 23.50% | 28.07% | 28.02% | 28.04% | ||||||||
Cumulative Total Returns | ||||||||||||||||
Year Ended 8/31/08 | Five Years Ended 8/31/08 | Inception to 8/31/08 | ||||||||||||||
NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
(8.36)% | (8.16)% | (10.09)% | 184.69% | 180.97% | 187.29% | 280.60% | 279.88% | 279.88% |
Total returns for the period since inception are calculated from the inception date of the Fund (4/7/03). “Average Annual Total Returns” represent the average annual change in value of an investment over the period(s) indicated. “Cumulative Total Returns” represent the total change in value of an investment over the period(s) indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (4/11/03), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table(s) above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
Performance figures 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 the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE | 1 |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
PORTFOLIO ALLOCATION As of 8/31/08 | |||
Sector/Investment Type | Percentage of Net Assets | ||
Financial | 20.28 | % | |
Energy | 17.63 | ||
Basic Materials | 14.49 | ||
Communications | 14.23 | ||
Technology | 11.08 | ||
Industrial | 7.58 | ||
Consumer Non-Cyclical | 4.40 | ||
Utilities | 4.27 | ||
Consumer Cyclical | 3.30 | ||
Diversified | 1.62 | ||
Exchange-Traded Funds | 0.44 | ||
Short-Term and Other Net Assets | 0.68 | ||
TOTAL | 100.00 | % | |
TEN LARGEST FUND HOLDINGS As of 8/31/08 | |||
Security | Percentage of Net Assets | ||
OAO Gazprom SP ADR (Russia) | 3.16 | % | |
Samsung Electronics Co. Ltd. | 2.90 | ||
Taiwan Semiconductor Manufacturing Co. Ltd. | 2.79 | ||
Petroleo Brasileiro SA Preferred | 2.61 | ||
Petroleo Brasileiro SA ADR (Brazil) | 2.50 | ||
Chunghwa Telecom Co. Ltd. | 2.49 | ||
POSCO ADR (South Korea) | 2.39 | ||
China Mobile Ltd. (China) | 2.07 | ||
Companhia Vale do Rio Doce Preferred SP ADR (Brazil) | 1.84 | ||
Banco Itau Holding Financiera SA | 1.66 | ||
TOTAL | 24.41 | % | |
The iShares MSCI Emerging Markets Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets IndexSM (the “Index”). The Index is designed to measure equity market performance in the global emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2008 (the “reporting period”), the total return for the Fund was (8.36)%, while the total return for the Index was (10.09)%.
Emerging markets stocks fell for the reporting period, with the entire decline occurring in the last six months. The negative performance ended a five-year rally in emerging equity markets (as represented by the Index) that produced average annual returns of more than 35% between March 2003 and March 2008.
Emerging market stock markets advanced during the first half of the reporting period thanks to solid economic growth in many developing nations. Most notably, China – the world’s fourth-largest economy – generated double-digit economic growth in 2007, and economic activity was also robust in India and Latin America. Continued strength in demand for commodities – which are the primary exports of many developing countries – also contributed to the gains in emerging country stock markets.
However, emerging markets fell sharply in the second half of the reporting period as the main supporting factors reversed course. Global economic activity began to weaken as an economic slowdown in the U.S. spread to Europe and other developed regions. The sluggish economic environment dampened demand for exported goods, curtailing economic growth in developing countries. In addition, prices for energy and other commodities eased after peaking in mid-2008, putting further downward pressure on emerging economies.
Emerging markets in Asia suffered the largest declines during the reporting period. China and India – two of the top-performing equity markets worldwide in 2007 – were among the biggest decliners in the first eight months of 2008 as a sharp decline in exports to developed nations weighed on economic growth in both countries. The South Korean stock market also slumped as inflation reached a
2 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Management’s Discussion of Fund Performance (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
seven-year high, squeezing profit margins and undermining the country’s economy and currency. The lone exception to the stock market weakness in emerging Asia was Indonesia, which posted a positive return for the reporting period as an increase in domestic consumption helped offset weaker export growth.
In Eastern Europe and the Middle East, market performance was generally negative but better than Index performance as a whole. The best performers included Israel and the Czech Republic, both of which maintained robust economic growth rates despite the challenging global environment. Russia, the largest market in this region, and Turkey were the weakest performers.
Latin American markets bucked the trend in emerging markets, generating double-digit gains for the reporting period. Brazil, the largest market in Latin America, was the best performer, benefiting from a combination of strong raw materials exports, a recent offshore oil discovery, and healthy domestic demand. Markets in Colombia and Argentina also advanced during the reporting period. The weaker performers in the region included Mexico and Peru, though even these markets held up better than the overall Index.
Looking at the Fund’s ten largest holdings as of August 31, 2008, the strongest performer for the reporting period was Brazilian energy producer Petroleo Brasileiro SA, whose shares benefited from a 56% increase in the price of crude oil. Other top performers included Brazilian nickel and iron-ore producer Companhia Vale do Rio Doce and Chinese telecommunications company Chunghwa Telecom Co. Ltd. On the downside, the largest decliners among the Fund’s top ten holdings were South Korean electronics manufacturer Samsung Electronics Co. Ltd., as well as POSCO, a South Korean steel producer.
MANAGEMENT’S DISCUSSIONOF FUND PERFORMANCE | 3 |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2008 to August 31, 2008.
ACTUAL EXPENSES
The first line in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of fund shares. Therefore, the second line in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value (3/1/08) | Ending Account Value (8/31/08) | Annualized Expense Ratio | Expenses Paid During Perioda (3/1/08 to 8/31/08) | ||||||
Actual | $1,000.00 | $ 858.10 | 0.72 | % | $3.36 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,021.50 | 0.72 | 3.66 |
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 (184 days) and divided by the number of days in the year (366 days). |
4 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI EMERGING MARKETS INDEX FUND
August 31, 2008
Security | Shares | Value | |||
COMMON STOCKS – 88.99% | |||||
ARGENTINA – 0.84% | |||||
Petrobras Energia Participaciones | 2,127,014 | $ | 24,120,339 | ||
Tenaris SA ADR | 2,673,124 | 146,193,152 | |||
170,313,491 | |||||
BRAZIL – 5.79% | |||||
Centrais Eletricas Brasileiras SA SP ADR | 450,400 | 8,108,371 | |||
Companhia de Saneamento Basico do Estado de Sao Paulo ADR | 337,800 | 15,133,440 | |||
Companhia Siderurgica Nacional SP ADRa | 2,550,390 | 88,524,037 | |||
Companhia Vale do Rio | 11,258,874 | 298,923,105 | |||
CPFL Energia SA ADRa | 225,200 | 14,167,332 | |||
Empresa Brasileira de Aeronautica SA ADR | 2,589,800 | 87,923,710 | |||
Gafisa SA ADRa | 819,728 | 23,509,799 | |||
Petroleo Brasileiro SA ADR | 9,618,292 | 507,268,720 | |||
TAM SA ADRa | 1,086,353 | 21,140,429 | |||
Unibanco - Uniao de Bancos Brasileiros SA Units GDR | 869,272 | 103,930,160 | |||
Vivo Participacoes SA ADR | 1,126,000 | 5,888,980 | |||
1,174,518,083 | |||||
CHILE – 2.46% | |||||
Banco Santander Chile | 2,142,778 | 94,303,660 | |||
Compania de Telecomunicaciones de Chile SA SP ADR | 2,652,858 | 14,723,362 | |||
Enersis SA SP ADR | 6,377,294 | 109,306,819 | |||
LAN Airlines SA SP ADRa | 2,856,441 | 33,506,053 | |||
Sociedad Quimica y Minera de Chile SA SP ADR | 6,484,195 | 248,474,352 | |||
500,314,246 | |||||
CHINA – 14.68% | |||||
Agile Property Holdings Ltd. | 15,764,000 | 11,755,211 | |||
Air China Ltd. Class Ha | 29,276,000 | 15,154,238 |
Security | Shares | Value | |||
Aluminum Corp. of China Ltd. | 6,756,000 | $ | 6,076,699 | ||
Angang New Steel Co. Ltd. Class H | 15,765,320 | 21,654,022 | |||
Anhui Conch Cement Co. Ltd. Class Ha,b | 2,252,000 | 11,772,523 | |||
Bank of China Ltd. Class Ha | 159,892,000 | 69,449,231 | |||
Bank of Communications Co. Ltd. Class Ha | 53,028,000 | 61,624,519 | |||
Beijing Capital International Airport Co. Ltd. Class Ha | 18,020,000 | 14,314,872 | |||
Beijing Enterprises | 4,504,000 | 16,879,721 | |||
Belle International | 16,904,000 | 17,110,298 | |||
Chaoda Modern Agriculture (Holdings) Ltd. | 2,280,175 | 2,430,706 | |||
China Agri-Industries | 15,764,000 | 10,704,917 | |||
China Coal Energy Co. | 14,638,000 | 24,831,945 | |||
China Communications Construction Co. Ltd. | 30,402,000 | 52,041,477 | |||
China Construction Bank | 217,710,000 | 178,525,128 | |||
China COSCO Holdings Co. Ltd. Class H | 15,764,000 | 30,377,726 | |||
China Eastern Airlines Corp. Ltd. Class Ha,b | 77,268,000 | 16,236,205 | |||
China Everbright Ltd.a | 25,000,000 | 45,485,121 | |||
China High Speed Transmission Equipment Group Co. Ltd. | 2,252,000 | 4,420,467 | |||
China Life Insurance Co. Ltd. Class Ha | 58,552,000 | 223,937,628 | |||
China Mengniu Dairy Co. Ltd. | 4,504,000 | 13,705,756 | |||
China Merchants Bank Co. Ltd. | 18,016,000 | 60,940,120 | |||
China Merchants Holdings (International) Co. Ltd. | 9,008,000 | 33,586,316 | |||
China Mobile Ltd.a | 36,595,000 | 420,117,493 |
SCHEDULEOF INVESTMENTS | 5 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
August 31, 2008
Security | Shares | Value | |||
China National Building Material Co. Ltd. Class Ha | 11,260,000 | $ | 17,629,931 | ||
China Overseas Land & Investment Ltd.a | 31,528,000 | 52,918,646 | |||
China Petroleum & Chemical Corp. Class H | 117,104,000 | 112,831,555 | |||
China Railway Construction Corp. Class Hb | 10,697,000 | 14,802,217 | |||
China Railway Group Ltd. Class Ha,b | 22,520,000 | 17,456,805 | |||
China Resources | 15,778,000 | 43,160,934 | |||
China Resources Land Ltd.a | 36,064,000 | 42,695,968 | |||
China Resources Power Holdings Co. Ltd.a | 6,756,000 | 16,793,158 | |||
China Shenhua Energy Co. Ltd. Class H | 11,823,000 | 40,900,862 | |||
China Shipping Development Co. Ltd. Class Ha | 20,286,000 | 48,552,802 | |||
China Southern Airlines Co. Ltd. Class Ha,b | 22,520,000 | 7,126,993 | |||
China Telecom Corp. Ltd. Class H | 29,324,000 | 14,991,225 | |||
China Travel International | 77,562,951 | 17,093,216 | |||
CITIC Pacific Ltd.a | 12,386,000 | 43,403,966 | |||
CITIC Resources | 39,453,000 | 9,452,847 | |||
CNOOC Ltd. | 129,490,000 | 200,089,612 | |||
COSCO Pacific Ltd. | 6,756,000 | 10,352,895 | |||
Datang International Power Generation Co. Ltd. | 18,032,000 | 12,014,017 | |||
Denway Motors Ltd. | 42,788,000 | 15,350,447 | |||
Dongfang Electric Co. Ltd. Class H | 4,504,000 | 14,023,153 | |||
Dongfeng Motor Group Co. Ltd. Class Ha | 11,260,000 | 4,804,228 | |||
GOME Electrical Appliances | 54,048,000 | 22,367,794 | |||
Guangdong Investment Ltd. | 15,768,110 | 5,394,260 | |||
Guangshen Railway Co. Ltd. Class Ha,c | 72,134,363 | 32,625,555 |
Security | Shares | Value | |||
Guangzhou Investment | 34,834,000 | $ | 4,686,339 | ||
Guangzhou R&F Properties Co. Ltd. Class Ha | 900,800 | 1,581,211 | |||
Harbin Power Equipment Co. Ltd. Class Ha | 6,756,000 | 8,431,204 | |||
Hidili Industry International Development Ltd.a | 7,882,000 | 9,230,466 | |||
Hopson Development Holdings Ltd. | 6,756,000 | 6,751,888 | |||
Huaneng Power International Inc. Class Ha | 24,772,000 | 18,472,474 | |||
Industrial and Commercial Bank of China Class Ha | 233,100,000 | 161,577,372 | |||
Jiangsu Expressway Co. Ltd. Class H | 6,762,000 | 5,215,701 | |||
Jiangxi Copper Co. Ltd. | 22,538,000 | 36,212,117 | |||
KWG Property Holding Ltd.a | 5,630,000 | 2,596,880 | |||
Lenovo Group Ltd.a | 47,292,000 | 32,114,751 | |||
Li Ning Co. Ltd.a | 4,504,000 | 11,264,689 | |||
Maanshan Iron & Steel Co. Ltd. Class Ha | 24,772,000 | 11,235,835 | |||
Nine Dragons Paper | 24,772,000 | 15,298,509 | |||
Parkson Retail Group Ltd.a | 2,815,000 | 4,068,446 | |||
PetroChina Co. Ltd. Class H | 137,372,000 | 176,714,805 | |||
Ping An Insurance (Group) Co. of China Ltd. Class Ha | 12,389,500 | 91,594,753 | |||
Shanghai Industrial | 4,508,000 | 12,245,056 | |||
Shimao Property | 2,252,000 | 2,550,713 | |||
Shui On Land Ltd. | 12,949,000 | 9,888,342 | |||
Sinofert Holdings Ltd.a | 37,526,000 | 24,569,379 | |||
Sino-Ocean Land | 10,697,000 | 5,317,833 | |||
Sinopec Shanghai Petrochemical Co. Ltd. | 27,048,000 | 8,594,643 | |||
Tencent Holdings Ltd.a | 5,630,000 | 48,330,824 | |||
Yanzhou Coal Mining Co. Ltd. Class Ha | 24,772,800 | 43,421,238 |
6 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
August 31, 2008
Security | Shares | Value | |||
Zhejiang Expressway Co. Ltd. Class H | 24,772,000 | $ | 16,726,793 | ||
Zijin Mining Group Co. Ltd. Class H | 45,040,000 | 30,816,311 | |||
2,979,473,997 | |||||
COLOMBIA – 0.22% | |||||
Bancolombia SA SP ADR | 1,351,200 | 44,994,960 | |||
44,994,960 | |||||
CZECH REPUBLIC – 2.23% | |||||
Central European Media Enterprises Ltd. Class Ab | 21,104 | 1,678,260 | |||
CEZ AS | 4,077,246 | 309,234,225 | |||
Komercni Banka AS | 314,873 | 70,092,616 | |||
Unipetrol ASa | 5,175,206 | 63,667,343 | |||
Zentiva NV | 137,460 | 8,826,599 | |||
453,499,043 | |||||
EGYPT – 0.80% | |||||
Orascom Construction Industries Co. GDR | 805,395 | 103,694,606 | |||
Orascom Telecom Holding SAE GDRa,d | 1,145,284 | 59,325,711 | |||
163,020,317 | |||||
HUNGARY – 1.56% | |||||
Magyar Telekom PLCa | 3,187,706 | 16,473,979 | |||
MOL Magyar Olaj-es | 660,962 | 71,588,470 | |||
OTP Bank Rta,b | 2,932,704 | 132,753,138 | |||
Richter Gedeon Rta | 479,676 | 95,574,079 | |||
316,389,666 | |||||
INDIA – 6.12% | |||||
HDFC Bank Ltd. ADRa | 2,854,410 | 258,295,561 | |||
ICICI Bank Ltd. SP ADRa | 5,058,706 | 156,921,060 | |||
Infosys Technologies Ltd. | 5,359,095 | 221,223,442 | |||
Mahanagar Telephone Nigam Ltd. ADRa | 6,872,700 | 32,026,782 | |||
Reliance Industries | 2,422,026 | 233,241,104 | |||
Satyam Computer Services Ltd. ADRa | 6,775,146 | 150,814,750 | |||
Tata Communications | 6,151,208 | 114,473,981 | |||
Wipro Ltd. ADRa | 6,509,406 | 75,378,921 | |||
1,242,375,601 |
Security | Shares | Value | |||
INDONESIA – 1.81% | |||||
PT Aneka Tambang Tbk | 101,903,000 | $ | 21,048,817 | ||
PT Astra Agro Lestari Tbk | 2,815,000 | 5,522,322 | |||
PT Astra International Tbk | 17,460,000 | 39,690,492 | |||
PT Bank Central Asia Tbk | 101,410,000 | 35,188,716 | |||
PT Bank Danamon | 19,070,487 | 11,254,714 | |||
PT Bank Internasional Indonesia Tbk | 117,226,000 | 5,893,329 | |||
PT Bank Mandiri Tbk | 37,721,000 | 11,646,101 | |||
PT Bank Rakyat | 45,369,061 | 29,006,449 | |||
PT Bumi Resources Tbk | 150,321,000 | 90,356,886 | |||
PT Indosat Tbk | 1,689,000 | 1,135,229 | |||
PT Perusahaan Gas | 106,972,500 | 29,812,008 | |||
PT Semen Gresik | 5,790,000 | 2,562,787 | |||
PT Telekomunikasi | 69,812,500 | 61,038,251 | |||
PT Truba Alam Manunggal Engineering Tbkb | 1,126,000 | 58,454 | |||
PT United Tractors Tbk | 20,915,271 | 23,658,257 | |||
367,872,812 | |||||
ISRAEL – 3.62% | |||||
Africa Israel | 275,417 | 10,591,470 | |||
Bank Hapoalim Ltd. | 12,042,570 | 47,668,153 | |||
Bank Leumi le-Israela | 15,972,310 | 66,823,159 | |||
Check Point Software Technologies Ltd.b | 1,382,728 | 33,863,009 | |||
Discount Investment | 66,434 | 1,506,486 | |||
Elbit Systems Ltd. | 824,232 | 45,908,062 | |||
Israel Chemicals Ltd.a | 7,507,464 | 126,904,589 | |||
Israel Corp. Ltd. (The)b | 22,520 | 23,094,182 | |||
Israel Discount Bank Ltd. | 18,745,648 | 31,222,502 | |||
Koor Industries Ltd. | 357,155 | 15,948,463 | |||
Makhteshim-Agan | 3,657,248 | 25,037,647 | |||
Mizrahi Tefahot Bank Ltd.a | 6,034,234 | 38,930,542 | |||
NICE Systems Ltd.a,b | 200,428 | 6,154,853 | |||
Teva Pharmaceutical | 5,440,832 | 260,430,302 | |||
734,083,419 |
SCHEDULEOF INVESTMENTS | 7 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
August 31, 2008
Security | Shares | Value | |||
MALAYSIA – 0.47% | |||||
AMMB Holdings Bhd | 9,752,175 | $ | 8,793,769 | ||
Bumiputra-Commerce | 2,034,000 | 5,004,833 | |||
Bursa Malaysia Bhd | 2,930,800 | 5,959,193 | |||
Gamuda Bhd | 12,166,000 | 9,249,530 | |||
Genting Bhd | 3,359,400 | 5,791,216 | |||
IGB Corp. Bhd | 4,577,800 | 1,821,137 | |||
IJM Corp. Bhdb | 3,701,200 | 5,507,900 | |||
IOI Corp. Bhd | 5,265,000 | 7,912,627 | |||
MMC Corp. Bhd | 3,896,000 | 2,410,962 | |||
Resorts World Bhd | 19,905,500 | 15,896,244 | |||
Sime Darby Bhd | 1,501,673 | 3,009,099 | |||
SP Setia Bhd | 4,821,300 | 4,802,120 | |||
Tenaga Nasional Bhd | 3,152,700 | 7,339,422 | |||
UEM World Bhdb | 3,896,000 | 2,870,193 | |||
YTL Corp. Bhd | 4,480,400 | 8,449,848 | |||
YTL Power International Bhd | 298,693 | 165,476 | |||
94,983,569 | |||||
MEXICO – 5.64% | |||||
Alfa SAB de CV Series Aa | 4,644,700 | 24,222,539 | |||
America Movil SAB de | 111,248,800 | 285,057,849 | |||
Axtel SAB de | 1,126,000 | 1,379,117 | |||
Cemex SAB de | 53,314,403 | 107,277,133 | |||
Controladora Comercial Mexicana SA de | 12,171,900 | 30,372,218 | |||
Corporacion Geo SAB de | 6,114,100 | 17,859,499 | |||
Desarrolladora Homex | 1,158,300 | 9,793,383 | |||
Empresas ICA SAB de CVa,b | 7,769,400 | 35,118,236 | |||
Fomento Economico Mexicano SAB de | 19,615,400 | 86,889,732 | |||
Grupo Carso SA de | 1,015,041 | 3,976,316 | |||
Grupo Financiero Banorte | 11,946,856 | 48,112,821 | |||
Grupo Mexico SA de | 34,685,292 | 57,148,827 |
Security | Shares | Value | |||
Grupo Modelo SAB de | 13,849,898 | $ | 66,910,646 | ||
Grupo Televisa SA | 21,957,000 | 101,573,629 | |||
Industrias Penoles SAB | 1,126,088 | 18,554,955 | |||
Kimberly-Clark de Mexico SAB de CV Series Aa | 8,004,300 | 35,215,201 | |||
Telefonos de Mexico SAB de CV Series L | 48,305,400 | 59,492,820 | |||
Telmex Internacional SAB de CV Class L | 51,589,200 | 36,607,824 | |||
Urbi Desarrollos Urbanos SA de CVa,b | 3,873,800 | 10,788,327 | |||
Wal-Mart de Mexico SAB de CV Series Va | 29,839,000 | 108,856,682 | |||
1,145,207,754 | |||||
PERU – 0.64% | |||||
Compania de Minas Buenaventura SA ADR | 3,603,200 | 83,594,240 | |||
Southern Copper Corp. | 1,837,632 | 46,914,745 | |||
130,508,985 | |||||
PHILIPPINE ISLANDS – 1.08% | |||||
Ayala Corp. | 4,910,993 | 32,087,507 | |||
Ayala Land Inc. | 38,696,200 | 8,638,485 | |||
Bank of the Philippine Islands | 31,463,040 | 31,863,908 | |||
Globe Telecom Inc. | 517,960 | 12,408,929 | |||
Jollibee Foods Corp. | 40,672,700 | 38,533,430 | |||
Manila Electric Co. | 13,384,802 | 16,324,707 | |||
Metropolitan Bank & | 40 | 33 | |||
Philippine Long Distance Telephone Co. | 653,080 | 38,688,394 | |||
SM Investments Corp. | 2,163,211 | 13,309,531 | |||
SM Prime Holdings Inc. | 155,844,820 | 27,493,043 | |||
219,347,967 | |||||
RUSSIA – 8.63% | |||||
Comstar United | 253,390 | 1,748,391 | |||
JSC MMC Norilsk | 6,835,961 | 135,078,589 | |||
LUKOIL SP ADR | 3,251,888 | 241,615,278 | |||
Mechel OAO ADRa | 1,084,338 | 29,645,801 | |||
Mobile TeleSystems | 1,351,200 | 91,881,600 | |||
Novolipetsk Steel GDRd | 546,110 | 21,008,852 | |||
OAO Gazprom SP ADR | 16,468,876 | 642,286,164 |
8 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
August 31, 2008
Security | Shares | Value | |||
OAO NOVATEK SP GDRd | 541,606 | $ | 38,995,632 | ||
OAO Rosneft Oil Co. GDRd | 6,935,172 | 59,157,017 | |||
OAO Tatneft SP ADRd | 378,336 | 39,157,776 | |||
PIK Group GDRd | 675,600 | 13,471,464 | |||
Polyus Gold SP ADRa | 1,353,124 | 21,568,797 | |||
Rostelecom SP ADR | 806,219 | 55,427,556 | |||
Sberbank GDRa,d | 441,538 | 121,885,185 | |||
Surgutneftegaz SP ADR | 3,834,030 | 27,605,016 | |||
Uralkali SP GDR | 1,042,676 | 44,835,068 | |||
Vimpel-Communications | 4,979,172 | 119,649,503 | |||
VTB Bank OJSC GDRa,d | 5,010,700 | 27,809,385 | |||
Wimm-Bill-Dann Foods | 285,411 | 19,841,773 | |||
1,752,668,847 | |||||
SOUTH AFRICA – 8.35% | |||||
Adcock Ingram | 1,559,108 | 7,607,632 | |||
African Bank | 11,678,883 | 42,170,262 | |||
African Rainbow | 280,374 | 9,485,344 | |||
Anglo Platinum Ltd. | 475,907 | 60,314,683 | |||
AngloGold Ashanti Ltd.a | 1,467,889 | 39,823,670 | |||
ArcelorMittal South | 3,630,224 | 85,969,977 | |||
Aveng Ltd. | 1,623,431 | 13,984,078 | |||
Barloworld Ltd. | 2,285,914 | 20,312,295 | |||
Bidvest Group Ltd. | 2,497,486 | 37,046,733 | |||
Exxaro Resources Ltd. | 1,637,204 | 24,498,677 | |||
FirstRand Ltd. | 29,395,810 | 62,805,920 | |||
Foschini Ltd. | 5,519,708 | 30,524,393 | |||
Gold Fields Ltd. | 4,656,010 | 43,014,438 | |||
Harmony Gold Mining | 2,541,382 | 22,321,107 | |||
Impala Platinum | 4,054,726 | 114,990,083 | |||
Imperial Holdings Ltd.b | 2,434,140 | 17,103,355 | |||
Investec Ltd. | 3,823,247 | 28,605,016 | |||
Kumba Iron Ore Ltd. | 418,872 | 13,734,848 | |||
Liberty Group Ltd.b | 824,828 | 7,566,491 | |||
MTN Group Ltd. | 11,019,036 | 170,104,867 | |||
Murray & Roberts | 2,125,888 | 28,768,401 | |||
Naspers Ltd. | 3,875,787 | 97,711,035 | |||
Nedbank Group Ltd. | 3,218,443 | 43,637,066 | |||
Network Healthcare | 17,818,960 | 19,939,892 | |||
Northam Platinum Ltd. | 288,437 | 2,015,428 |
Security | Shares | Value | |||
Pick’n Pay Stores Ltd. | 5,097,902 | $ | 19,561,775 | ||
Pretoria Portland Cement | 4,093,343 | 18,098,539 | |||
Remgro Ltd. | 337,800 | 8,217,262 | |||
Reunert Ltd. | 1,590,510 | 12,024,154 | |||
Sanlam Ltd. | 17,981,533 | 41,553,889 | |||
Sappi Ltd. | 461,028 | 4,844,086 | |||
Sasol Ltd. | 4,653,758 | 257,325,977 | |||
Shoprite Holdings Ltd. | 11,752,062 | 70,341,869 | |||
Standard Bank Group Ltd. | 8,933,696 | 104,620,232 | |||
Steinhoff International Holdings Ltd. | 1,892,806 | 4,544,064 | |||
Telkom South Africa Ltd. | 1,363,737 | 24,738,112 | |||
Tiger Brands Ltd. | 1,559,108 | 27,497,023 | |||
Truworths International Ltd. | 9,379,671 | 38,054,473 | |||
Woolworths Holdings Ltd. | 12,683,759 | 20,745,565 | |||
1,696,222,711 | |||||
SOUTH KOREA – 11.21% | |||||
Daelim Industrial Co. Ltd. | 199,100 | 12,451,749 | |||
Doosan Heavy Industries & Construction Co. Ltd. | 231,790 | 16,688,710 | |||
Hyundai Development Co. | 212,800 | 8,139,517 | |||
Hyundai Engineering & Construction Co. Inc. | 325,410 | 16,854,738 | |||
Hyundai Heavy Industries Co. Ltd. | 375,500 | 82,589,999 | |||
Kookmin Bank SP ADRa | 6,105,175 | 334,563,590 | |||
Korea Electric Power Corp. | 14,765,972 | 222,227,879 | |||
KT Corp. SP ADRa | 7,849,740 | 159,820,706 | |||
LG Display Co. Ltd. ADRa | 6,890,753 | 84,894,077 | |||
NHN Corp.b | 187,575 | 25,839,150 | |||
POSCO ADR | 4,523,142 | 484,428,508 | |||
Samsung Electronics | 2,505,350 | 588,757,250 | |||
Samsung Engineering | 187,990 | 12,067,684 | |||
Samsung Heavy Industries Co. Ltd. | 2,036,070 | 58,619,519 | |||
Shinhan Financial Group | 224,657 | 20,252,829 | |||
SK Telecom Co. Ltd. ADR | 7,220,068 | 147,289,387 | |||
2,275,485,292 |
SCHEDULEOF INVESTMENTS | 9 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
August 31, 2008
Security | Shares | Value | |||
TAIWAN – 9.91% | |||||
Asia Cement Corp. | 3,234,060 | $ | 3,599,325 | ||
AU Optronics Corp. | 15,909,124 | 189,954,941 | |||
Catcher Technology | 3,201,000 | 10,860,137 | |||
Cheng Shin Rubber | 3,508,650 | 4,694,814 | |||
Chunghwa Telecom Co. Ltd. SP ADRa,b | 20,445,908 | 505,831,764 | |||
CMC Magnetics Corp.b | 8,136,000 | 2,117,971 | |||
Compal Communications Inc. | 2,598,750 | 3,584,426 | |||
D-Link Corp. | 1,401,888 | 1,704,687 | |||
Epistar Corp. | 2,314,345 | 4,182,816 | |||
Evergreen Marine | 10,170,000 | 5,804,426 | |||
Far Eastern Textile Ltd. | 5,186,700 | 4,802,195 | |||
Foxconn Technology | 1,068,000 | 5,333,566 | |||
HannStar Display Corp. | 11,767,963 | 3,115,686 | |||
Hon Hai Precision Industry | 5,085,000 | 25,797,451 | |||
HTC Corp. | 4,063,800 | 76,152,762 | |||
Macronix International | 22,176,448 | 8,895,049 | |||
MediaTek Inc. | 3,176,450 | 36,913,213 | |||
MiTAC International Corp. | 7,403,727 | 4,190,390 | |||
Mosel Vitelic Inc.b | 10,545,000 | 6,887,786 | |||
Siliconware Precision Industries Co. SP ADRa,c | 40,207,832 | 276,629,884 | |||
Synnex Technology International Corp. | 4,474,800 | 8,740,176 | |||
Taiwan Cement Corp. | 7,190,190 | 7,090,333 | |||
Taiwan Semiconductor Manufacturing Co. Ltd. SP ADRa | 58,378,684 | 566,857,022 | |||
Tatung Co. Ltd.b | 14,763,000 | 5,429,983 | |||
U-Ming Marine | 2,034,000 | 5,404,566 | |||
Uni-President | 6,407,100 | 6,968,214 | |||
United Microelectronics Corp. SP ADRa | 83,688,012 | 194,993,068 | |||
Wintek Corp. | 9,378,000 | 5,902,508 | |||
Yang Ming Marine Transport Corp. | 16,238,978 | 7,929,490 | |||
Yuanta Financial Holding Co. Ltd. | 38,829,000 | 22,407,502 | |||
2,012,776,151 |
Security | Shares | Value | |||
THAILAND – 1.73% | |||||
Bangkok Bank PCL | 7,972,800 | $ | 27,476,355 | ||
Banpu PCL | 2,511,000 | 28,747,430 | |||
IRPC PCL | 73,112,500 | 8,754,709 | |||
Kasikornbank PCL | 16,172,200 | 34,006,963 | |||
Krung Thai Bank PCL | 17,375,600 | 3,856,734 | |||
PTT Aromatics & | 15,996,886 | 10,091,494 | |||
PTT Chemical PCL | 6,823,968 | 15,047,009 | |||
PTT Exploration & | 17,280,800 | 73,685,654 | |||
PTT PCL | 10,039,000 | 77,403,505 | |||
Ratchaburi Electricity Generating Holding PCL | 36,614,900 | 40,903,035 | |||
Siam Cement PCL | 2,544,600 | 12,559,503 | |||
Siam Makro PCL | 6,280,300 | 15,590,698 | |||
United Broadcasting | 5,658,800 | 2,974,837 | |||
351,097,926 | |||||
TURKEY – 1.20% | |||||
Akbank TASa | 5,204,805 | 27,069,388 | |||
Arcelik ASa | 1,654,094 | 6,462,507 | |||
Asya Katilim | 7,431,690 | 16,340,291 | |||
Dogan Yayin Holding ASb | 2,068,462 | 3,480,964 | |||
Enka Insaat ve Sanayi AS | 112,600 | 1,009,353 | |||
Eregli Demir ve Celik Fabrikalari TASa | 4,509,369 | 30,507,357 | |||
Migros Turk TASa | 699,041 | 12,768,945 | |||
Petkim Petrokimya | 1,325,966 | 6,111,218 | |||
Tofas Turk Otomobil Fabrikasi ASa | 6,803,292 | 23,013,250 | |||
Tupras-Turkiye Petrol Rafinerileri ASa | 872,464 | 20,658,767 | |||
Turk Sise ve Cam Fabrikalari ASa,b | 12,018,924 | 16,364,032 | |||
Turkiye Garanti | 10,126,368 | 30,486,148 | |||
Turkiye Vakiflar | 11,835,386 | 22,619,850 | |||
Yapi ve Kredi | 11,596,731 | 26,086,516 | |||
242,978,586 | |||||
TOTAL COMMON STOCKS | 18,068,133,423 |
10 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
August 31, 2008
Security | Shares | Value | |||
PREFERRED STOCKS – 9.88% | |||||
BRAZIL – 9.88% | |||||
Aracruz Celulose SA | 746,956 | $ | 41,299,197 | ||
Banco Bradesco SA SP ADR | 17,678,200 | 325,455,662 | |||
Banco Itau Holding Financiera SA ADR | 17,790,800 | 338,025,200 | |||
Brasil Telecom Participacoes SA ADR | 631,692 | 41,401,094 | |||
Companhia Brasileira de Distribuicao Grupo Pao de Acucar SP ADRa | 969,144 | 40,384,230 | |||
Companhia de Bebidas das Americas ADR | 1,392,862 | 86,204,229 | |||
Companhia Energetica de Minas Gerais SP ADRa | 1,887,214 | 40,726,078 | |||
Companhia Paranaense de Energia SP ADR | 337,800 | 5,806,782 | |||
Companhia Vale do Rio Doce SP ADR | 15,744,858 | 374,255,275 | |||
Gerdau SA SP ADR | 4,865,528 | 91,034,029 | |||
Net Servicos de Comunicacao SA ADRa | 1,689,084 | 19,458,248 | |||
Petroleo Brasileiro SA SP ADR | 12,336,456 | 530,097,514 | |||
Tele Norte Leste Participacoes SA ADR | 2,117,112 | 49,159,341 | |||
Votorantim Celulose e Papel SA SP ADR | 1,037,178 | 21,905,199 | |||
2,005,212,078 | |||||
TOTAL PREFERRED STOCKS | 2,005,212,078 | ||||
RIGHTS – 0.01% | |||||
INDONESIA – 0.01% | |||||
PT United Tractors Tbkf | 3,485,878 | 1,085,765 | |||
1,085,765 | |||||
TOTAL RIGHTS | 1,085,765 |
Security | Shares | Value | ||||
WARRANTS – 0.00% | ||||||
MALAYSIA – 0.00% | ||||||
IJM Land Bhdf | 370,120 | $ | 11 | |||
11 | ||||||
TOTAL WARRANTS | 11 | |||||
EXCHANGE-TRADED FUNDS – 0.44% |
| |||||
iShares MSCI Malaysia Index Funda,c | 1,208,557 | 11,263,751 | ||||
iShares MSCI South Korea Index Fundc | 750,109 | 32,457,217 | ||||
iShares MSCI Taiwan Index Fundc | 3,463,576 | 45,130,395 | ||||
TOTAL EXCHANGE-TRADED FUNDS |
| |||||
(Cost: $107,852,126) | 88,851,363 | |||||
SHORT-TERM INVESTMENTS – 9.22% |
| |||||
MONEY MARKET FUNDS – 9.22% |
| |||||
Barclays Global Investors | 39,718,676 | 39,718,676 | ||||
BGI Cash Premier Fund LLC | 1,832,671,421 | 1,832,671,421 | ||||
1,872,390,097 | ||||||
TOTAL SHORT-TERM INVESTMENTS |
| |||||
(Cost: $1,872,390,097) | 1,872,390,097 | |||||
TOTAL INVESTMENTS IN | 22,035,672,737 | |||||
Other Assets, Less Liabilities – (8.54)% | (1,732,916,294 | ) | ||||
NET ASSETS – 100.00% | $ | 20,302,756,443 | ||||
SCHEDULEOF INVESTMENTS | 11 |
Table of Contents
Schedule of Investments (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
August 31, 2008
ADR – American Depositary Receipts
GDR – Global Depositary Receipts
SP ADR – Sponsored American Depositary Receipts
SP GDR – Sponsored Global Depositary Receipts
a | All or a portion of this security represents a security on loan. See Note 5. |
b | Non-income earning security. |
c | Affiliated issuer. See Note 2. |
d | This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933. |
e | This security may be resold to qualified institutional buyers under Rule 144A of the Securities Act of 1933. |
f | Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1. |
g | The rate quoted is the annualized seven-day yield of the fund at period end. |
h | This security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
12 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statement of Assets and Liabilities
iSHARES®, INC.
August 31, 2008
iShares MSCI Emerging Markets Index Fund | ||||
ASSETS | ||||
Investments, at cost: | ||||
Unaffiliated issuers | $ | 22,973,417,149 | ||
Affiliated issuers (Note 2) | 2,393,060,955 | |||
Total cost of investments | $ | 25,366,478,104 | ||
Investments in securities, at value (including securities on loana) (Note 1): | ||||
Unaffiliated issuers | $ | 19,765,175,838 | ||
Affiliated issuers (Note 2) | 2,270,496,899 | |||
Total value of investments | 22,035,672,737 | |||
Foreign currencies, at valueb | 26,067,058 | |||
Receivables: | ||||
Investment securities sold | 4,307,452 | |||
Due from custodian (Note 4) | 26,576,735 | |||
Dividends and interest | 82,394,732 | |||
Total Assets | 22,175,018,714 | |||
LIABILITIES | ||||
Payables: | ||||
Investment securities purchased | 26,576,735 | |||
Collateral for securities on loan (Note 5) | 1,832,671,421 | |||
Foreign taxes | 202,615 | |||
Investment advisory fees (Note 2) | 12,811,500 | |||
Total Liabilities | 1,872,262,271 | |||
NET ASSETS | $ | 20,302,756,443 | ||
Net assets consist of: | ||||
Paid-in capital | $ | 23,931,231,574 | ||
Undistributed net investment income | 167,889,884 | |||
Accumulated net realized loss | (464,724,177 | ) | ||
Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies | (3,331,640,838 | ) | ||
NET ASSETS | $ | 20,302,756,443 | ||
Shares outstandingc,d | 506,700,000 | |||
Net asset value per shared | $ | 40.07 | ||
a | Securities on loan with market value of $1,761,842,050. See Note 5. |
b | Cost of foreign currencies: $26,416,662. |
c | $0.001 par value, number of shares authorized: 1,000,000,000. |
d | Shares outstanding and net asset value per share reflect a three-for-one stock split effective July 24, 2008. See Note 4. |
See notes to financial statements.
FINANCIAL STATEMENTS | 13 |
Table of Contents
Statement of Operations
iSHARES®, INC.
Year ended August 31, 2008
iShares MSCI Emerging Markets Index Fund | ||||
NET INVESTMENT INCOME | ||||
Dividends from unaffiliated issuersa | $ | 686,336,104 | ||
Dividends from affiliated issuers (Note 2) | 28,924,208 | |||
Interest from affiliated issuers (Note 2) | 2,069,210 | |||
Securities lending income from affiliated issuers (Note 2) | 21,377,425 | |||
Total investment income | 738,706,947 | |||
EXPENSES | ||||
Investment advisory fees (Note 2) | 174,932,398 | |||
Foreign taxes (Note 1) | 390,736 | |||
Total expenses | 175,323,134 | |||
Less investment advisory fees waived (Note 2) | (703,566 | ) | ||
Net expenses | 174,619,568 | |||
Net investment income | 564,087,379 | |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) from: | ||||
Investments in unaffiliated issuers | (455,506,583 | ) | ||
Investments in affiliated issuers (Note 2) | 64,909,373 | |||
In-kind redemptions | 4,584,575,487 | |||
Foreign currency transactions | (1,876,980 | ) | ||
Net realized gain | 4,192,101,297 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (7,411,483,369 | ) | ||
Translation of assets and liabilities in foreign currencies | (946,740 | ) | ||
Net change in unrealized appreciation (depreciation) | (7,412,430,109 | ) | ||
Net realized and unrealized loss | (3,220,328,812 | ) | ||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (2,656,241,433 | ) | |
a | Net of foreign withholding tax of $41,876,285. |
See notes to financial statements.
14 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
iShares MSCI Emerging Markets Index Fund | ||||||||
Year ended August 31, 2008a | Year ended August 31, 2007a | |||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||
OPERATIONS: | ||||||||
Net investment income | $ | 564,087,379 | $ | 250,914,401 | ||||
Net realized gain | 4,192,101,297 | 2,359,691,063 | ||||||
Net change in unrealized appreciation (depreciation) | (7,412,430,109 | ) | 2,303,383,261 | |||||
Net increase (decrease) in net assets resulting from operations | (2,656,241,433 | ) | 4,913,988,725 | |||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||
From net investment income | (602,951,708 | ) | (209,458,860 | ) | ||||
Total distributions to shareholders | (602,951,708 | ) | (209,458,860 | ) | ||||
CAPITAL SHARE TRANSACTIONS: | ||||||||
Proceeds from shares sold | 19,099,692,233 | 7,873,614,616 | ||||||
Cost of shares redeemed | (13,736,113,781 | ) | (6,349,153,507 | ) | ||||
Net increase in net assets from capital share transactions | 5,363,578,452 | 1,524,461,109 | ||||||
INCREASE IN NET ASSETS | 2,104,385,311 | 6,228,990,974 | ||||||
NET ASSETS | ||||||||
Beginning of year | 18,198,371,132 | 11,969,380,158 | ||||||
End of year | $ | 20,302,756,443 | $ | 18,198,371,132 | ||||
Undistributed net investment income included in net assets at end of year | $ | 167,889,884 | $ | 203,060,062 | ||||
SHARES ISSUED AND REDEEMED | ||||||||
Shares sold | 393,300,000 | 201,600,000 | ||||||
Shares redeemed | (292,950,000 | ) | (163,800,000 | ) | ||||
Net increase in shares outstanding | 100,350,000 | 37,800,000 | ||||||
a | Share transactions were adjusted to reflect a three-for-one stock split effective July 24, 2008. See Note 4. |
See notes to financial statements.
FINANCIAL STATEMENTS | 15 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Emerging Markets Index Fund | ||||||||||||||||||||
Year ended Aug. 31, 2008a | Year ended Aug. 31, 2007a | Year ended Aug. 31, 2006a | Year ended Aug. 31, 2005a | Year ended Aug. 31, 2004a | ||||||||||||||||
Net asset value, beginning of year | $ | 44.78 | $ | 32.48 | $ | 25.97 | $ | 17.99 | $ | 15.04 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment incomeb | 1.10 | 0.63 | 0.55 | 0.55 | 0.38 | |||||||||||||||
Net realized and unrealized gain (loss)c | (4.64 | ) | 12.19 | 6.29 | 8.23 | 2.66 | ||||||||||||||
Total from investment operations | (3.54 | ) | 12.82 | 6.84 | 8.78 | 3.04 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.17 | ) | (0.52 | ) | (0.33 | ) | (0.80 | ) | (0.09 | ) | ||||||||||
Total distributions | (1.17 | ) | (0.52 | ) | (0.33 | ) | (0.80 | ) | (0.09 | ) | ||||||||||
Net asset value, end of year | $ | 40.07 | $ | 44.78 | $ | 32.48 | $ | 25.97 | $ | 17.99 | ||||||||||
Total return | (8.36 | )% | 39.86 | % | 26.44 | % | 46.17 | % | 20.21 | % | ||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||
Net assets, end of year (000s) | $ | 20,302,756 | $ | 18,198,371 | $ | 11,969,380 | $ | 7,000,858 | $ | 1,958,596 | ||||||||||
Ratio of expenses to average net assets prior to waived fees | 0.72 | % | 0.74 | % | 0.77 | % | 0.78 | % | 0.77 | % | ||||||||||
Ratio of expenses to average net assets after waived fees | 0.72 | % | 0.74 | % | 0.77 | % | 0.77 | % | 0.76 | % | ||||||||||
Ratio of expenses to average net assets after waived fees and exclusive of foreign taxes | 0.72 | % | 0.74 | % | 0.75 | % | 0.74 | % | 0.74 | % | ||||||||||
Ratio of net investment income to average net assets | 2.32 | % | 1.63 | % | 1.77 | % | 2.40 | % | 2.10 | % | ||||||||||
Portfolio turnover rated | 11 | % | 5 | % | 12 | % | 9 | % | 8 | % |
a | Per share amounts were adjusted to reflect a three-for-one stock split effective July 24, 2008. See Note 4. |
b | Based on average shares outstanding throughout each period. |
c | The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions. |
d | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
16 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
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 iShares MSCI Emerging Markets Index Fund (the “Fund”).
The Fund’s investment objective is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded equity securities in the aggregate in global emerging markets, as measured by the MSCI Emerging Markets Index compiled by MSCI Inc. (“MSCI”). The investment adviser uses a “passive” or index approach to achieve the Fund’s investment objective. The Fund is classified as a non-diversified fund under the 1940 Act. Non-diversified funds generally hold securities of fewer companies than diversified funds and may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.
The Fund invests in the securities of foreign issuers of certain emerging markets, which may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets and the risk of war.
Pursuant to the Company’s organizational documents, the Fund’s officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
1. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the Company in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
The securities and other assets of the Fund are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. The investment adviser may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing service based on such pricing service’s valuation matrix may be considered a market valuation. In the event that current market valuations are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Directors of the Company (the “Board”).
NOTESTO FINANCIAL STATEMENTS | 17 |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
Investments that may be valued using fair value pricing include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (i.e., one that may not be publicly sold without registration under the Securities Act of 1933, as amended); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (i.e., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Fund’s NAV is computed and that may materially affect the value of the Fund’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.
Valuing the Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Accordingly, 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 benchmark index, which, in turn, could result in a difference between the Fund’s performance and the performance of the Fund’s benchmark index.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source, and 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. Any use of a rate different from the rates used by MSCI may adversely affect the Fund’s ability to track its underlying index. 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, corporate events, capital gains on investments or currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign markets in which the Fund invests. These foreign taxes, if any, are paid by the Fund and are disclosed in the Statement of Operations. Foreign taxes payable as of August 31, 2008, if any, are reflected in the Fund’s Statement of Assets and Liabilities.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income, if any, including any net foreign currency gains, are declared and distributed at least annually by the Fund. Distributions of net realized capital gains, if any, generally are declared and distributed once a year. 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.
18 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
As of August 31, 2008, the tax year-end of the Fund, the components of net distributable earnings on a tax basis consisted of undistributed ordinary income of $153,378,787, unrealized depreciation of $3,496,822,553, and capital and other losses of $285,031,365, for net accumulated losses of $3,628,475,131.
For the years ended August 31, 2008 and August 31, 2007, the tax characterization of distributions paid for the Fund represents ordinary income. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for the Fund.
FEDERAL INCOME TAXES
The Fund is treated as a separate entity 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 carry forwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2008.
From November 1, 2007 to August 31, 2008, the Fund incurred net realized capital losses of $208,836,563. As permitted by tax regulations, the Fund has elected to defer those losses and treat them as arising in the year ending August 31, 2009.
As of August 31, 2008, the tax year-end of the Fund, the Fund had tax basis net capital loss carry forwards of $840,778, $20,296,564, $11,239,258, $29,973,301 and $13,844,901 expiring in 2012, 2013, 2014, 2015 and 2016, respectively. Such losses may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first.
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.
The Fund reclassifies at the end of its tax year certain amounts to paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset value per share.
As of August 31, 2008, the cost of investments for federal income tax purposes was $25,531,659,819. Net unrealized depreciation was $3,495,987,082, of which $541,142,622 represented gross unrealized appreciation on securities and $4,037,129,704 represented gross unrealized depreciation on securities.
The Fund adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in a tax position taken or expected to be taken in a tax return. FIN 48 provides guidance on the measurement, recognition, classification and disclosures of tax positions, along with accounting for the related interest and penalties. Management has reviewed the tax positions as of August 31, 2008, inclusive of the prior three open tax return years, and has determined that the implementation of FIN 48 did not have a material impact on the Fund’s financial statements.
NOTESTO FINANCIAL STATEMENTS | 19 |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement with the Company, Barclays Global Fund Advisors (“BGFA”) manages the investment of the Fund’s assets. BGFA is a California corporation indirectly owned by Barclays Bank PLC. Under the Investment Advisory Agreement, BGFA is responsible for all expenses (“Covered Expenses”) of the Company, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees and extraordinary expenses.
For its investment advisory services to the Fund, BGFA 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 (iShares MSCI All Country Asia ex Japan and iShares MSCI BRIC Index 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 |
Effective August 11, 2008, BGFA has contractually agreed to waive a portion of its advisory fees for the Fund through December 31, 2009 in an amount equal to the investment advisory fees payable on the amount of the Fund’s investment in other iShares Funds. Prior to August 11, 2008, the advisory fee waiver was voluntary.
State Street Bank and Trust Company (“State Street”) serves as administrator, custodian and transfer agent for the Company. As compensation for its services, State Street receives certain out-of-pocket costs, transaction fees and asset-based fees which are accrued daily and paid monthly. These fees and expenses are Covered Expenses as defined above.
SEI Investments Distribution Co. (“SEI”) serves as the Fund’s underwriter and distributor of the shares of the Fund, pursuant to a Distribution Agreement with the Company. SEI does not receive a fee from the Fund for its distribution services.
Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Fund is permitted to lend portfolio securities to Barclays Capital Inc. (“BarCap”). Pursuant to the same exemptive order, Barclays Global Investors, N.A. (“BGI”) serves as securities lending agent for the Fund. BarCap and BGI are affiliates of BGFA, the Fund’s investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2008, BGI earned securities lending agent fees of $21,377,425.
The Fund may invest in the Institutional Shares of certain money market funds managed by BGFA, the Fund’s investment adviser, including the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”), Prime Money Market Fund (“PMMF”) and Treasury Money Market Fund (“TMMF”) of Barclays Global Investors Funds. The GMMF, IMMF, PMMF and TMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio, Prime Money Market Master Portfolio and Treasury Money Market Master Portfolio (collectively, the “Money Market Master Portfolios”), respectively, which are also managed by BGFA. While the GMMF, IMMF, PMMF and TMMF do not directly charge an investment advisory fee, the Money Market Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF, PMMF and TMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Fund from temporary cash investments are recorded as interest from affiliated issuers in the accompanying Statement of Operations. Income distributions earned by the Fund from the investment of securities lending collateral, if any, are included in securities lending income in the accompanying Statement of Operations.
20 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Notes to Financial Statements (Continued)
iSHARES®, INC.
The Fund may invest its securities lending cash collateral, if any, in the BGI Cash Premier Fund LLC (“Premier Fund”), an affiliated private money market fund managed by BGFA. Although the Premier Fund is not registered as an investment company under the 1940 Act, it intends to operate as a money market fund in compliance with Rule 2a-7 under the 1940 Act. See Note 5 for additional information regarding the Premier Fund.
The Fund, in order to improve its portfolio liquidity and its ability to track the MSCI Emerging Markets Index, may invest in shares of other iShares Funds that invest in securities in the Fund’s benchmark index. As of August 31, 2008, the Fund held shares of the iShares MSCI Malaysia, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds.
For the year ended August 31, 2008, the Fund had direct investment (exclusive of short-term investments) in issuers of which BGFA is an affiliate or issuers of which the Fund owns 5% or more of the outstanding voting securities as follows:
Name of Affiliated Issuer | Number of Shares Held Beginning (in 000s) | Gross Additions (in 000s) | Gross Reductions (in 000s) | Number of Shares Held End of Year (in 000s) | Value at End of Year | Dividend Income | Net (Loss) | |||||||||||
iShares MSCI Malaysia | 1,100 | 404 | 295 | 1,209 | $ | 11,263,751 | $ | 691,500 | $ | (269,139 | ) | |||||||
iShares MSCI South Korea | 602 | 582 | 434 | 750 | 32,457,217 | 727,821 | 5,772,348 | |||||||||||
iShares MSCI Taiwan | 3,100 | 2,852 | 2,488 | 3,464 | 45,130,395 | 1,481,837 | 2,477,833 | |||||||||||
Guangshen Railway Co. Ltd. | 57,862 | 55,936 | 41,664 | 72,134 | 32,625,555 | 898,759 | 8,115,036 | |||||||||||
Siliconware Precision | 37,664 | 32,509 | 29,965 | 40,208 | 276,629,884 | 25,124,291 | 48,813,295 |
Certain directors and officers of the Company are also officers of BGI and/or BGFA.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2008, aggregated $2,860,607,210 and $2,755,780,444, respectively.
In-kind purchases and sales (see Note 4) for the year ended August 31, 2008, aggregated $18,237,399,117 and $13,070,004,023, respectively.
4. CAPITAL SHARE TRANSACTIONS
The Company issues and redeems capital shares of the Fund only in aggregations of a specified number of shares (each, a “Creation Unit”) at net asset value. Except when aggregated in Creation Units, shares of the Fund are not redeemable. Transactions in capital shares for the Fund are disclosed in detail in the Statements of Changes in Net Assets.
NOTESTO FINANCIAL STATEMENTS | 21 |
Table of Contents
Notes to Financial Statements (Continued)
iSHARES®, INC.
The consideration for the purchase of Creation Units of the Fund generally consists of the in-kind deposit of a designated portfolio of equity securities, which constitutes a substantial replication, or a portfolio sampling representation, of the securities involved in the MSCI Emerging Markets Index and an amount of cash. Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee directly to State Street, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.
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 Statement of Assets and Liabilities.
The Board authorized a three-for-one stock split for the Fund, effective July 24, 2008, for the shareholders of record on July 21, 2008. The impact of the stock split was to increase the number of shares outstanding by a factor of three, while decreasing the net asset value per share by a factor of three, resulting in no effect to total net assets of the Fund. The financial statements for the Fund have been adjusted to reflect the stock split.
5. LOANS OF PORTFOLIO SECURITIES
The Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by the Fund is required to have a value of at least 102% of the market 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 market value of the securities on loan. The risks to the Fund of securities lending are that the borrower may not provide additional collateral when required or may not return the securities when due.
As of August 31, 2008, the Fund had loaned securities which were collateralized by cash. The cash collateral received was invested in the Premier Fund. The Premier Fund seeks to achieve its investment objective by investing in a portfolio of high-quality, short-term fixed-income instruments, including money market funds (which may be managed by BGFA or its affiliate) and other instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition.
The market value of the securities on loan as of August 31, 2008 and the value of the related collateral are disclosed in the Statement of Assets and Liabilities. Securities lending income, as disclosed in the Fund’s Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.
6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), “Fair Value Measurements.” FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. Management does not believe that the adoption of this standard will have a material impact on the Fund’s financial statements.
22 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
iShares, Inc.
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Emerging Markets Index Fund (the “Fund”), at August 31, 2008, the results of its operations, the changes in its net assets and its financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at August 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 23, 2008
REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 23 |
Table of Contents
iSHARES®, INC.
For the fiscal year ended August 31, 2008, the Fund earned foreign source income of $750,930,981 and paid foreign taxes of $42,252,576 which it intends to pass through to its shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”).
Under Section 854(b)(2) of the Code, the Fund hereby designates the maximum amount of $589,951,878 as qualified dividend income for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended August 31, 2008.
In January 2009, shareholders will receive Form 1099-DIV which will include their share of qualified dividend income distributed during the calendar year 2008. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.
24 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory Contract (Unaudited)
iSHARES®, INC.
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BGFA (the “Advisory Contract”) on behalf of the Fund. As required by Section 15(c), the Board requested and BGFA provided such information as the Board deemed reasonably necessary to evaluate the terms of the Advisory Contract. At a meeting held on June 18-19, 2008, the Board approved the selection of BGFA and the continuance of the Advisory Contract, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contract for the Fund, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, no one of which was controlling, and made the following conclusions:
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA
The Board anticipated that there would be no diminution in the scope of services required of BGFA under the Advisory Contract for the coming year as compared to the scope of services provided by BGFA over the past year. In reviewing the scope of these services, the Board considered BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including over the past year, including investment in technology and increasing the number of their employees supporting the Fund. The Board also considered BGFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BGFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and has 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. In addition to the above considerations, the Board considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as the Fund; therefore, comparative performance information was generally not available. However, the Board also noted that the Fund had met its investment objective consistently since its inception date. Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Fund under the Advisory Contract were appropriate and mitigated in favor of the Board’s approval of the Advisory Contract for the coming year.
FUND’S 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 advisory fees, waivers/reimbursements, and gross and net total expenses of the Fund in comparison with the same information for other funds registered under the 1940 Act objectively selected by Lipper as comprising the Fund’s peer group pursuant to Lipper’s proprietary methodology and any registered investment companies that would otherwise have been excluded from Lipper’s comparison group due to certain differentiating factors, but were nonetheless included at the request of BGFA (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track indexes similar to that tracked by the Fund, the Lipper Group included in part mutual funds, closed-end funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the Lipper Group and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Fund. In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of the Fund for the one-, three-, and five-year periods, and “last quarter” period ended March 31, 2008 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
BOARD REVIEWAND APPROVALOF INVESTMENT ADVISORY CONTRACTS | 25 |
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Board Review and Approval of Investment Advisory Contract (Unaudited) (Continued)
iSHARES® , INC.
funds. The Board noted that the Fund generally performed in line with its performance benchmark index over relevant periods. In considering this information, the Board noted that the Lipper Group includes funds that may have different investment objectives and/or benchmarks from the Fund. In addition, the Board noted that the Fund seeks to track its 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 comparative performance information was also considered by the Board.
The Board also noted that the investment advisory fees and overall expense components for the Fund were generally lower than the median or average investment advisory fee rates and overall expenses of the funds in the Lipper Group. The Board also reviewed statistical information from Lipper displaying the effects of the current breakpoints in the investment advisory fee rates for the Fund (as discussed below) at various assets levels of the Fund as compared to its Lipper Group. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of the Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in its Lipper Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.
COSTS OF SERVICES PROVIDED TO THE FUND AND PROFITS REALIZED BY BGFA AND AFFILIATES
The Board reviewed information about the profitability to BGFA of the Fund based on the fees payable to BGFA and its affiliates (including fees under the Advisory Contract), and all other sources of revenue and expense to BGFA and its affiliates from the Fund’s operations for the last calendar year. The Board discussed the sources of direct and ancillary revenue with management, including the revenues to BGI from securities lending by the Company (including any securities lending by the Fund). The Board also discussed BGFA’s profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits realized by BGFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.
ECONOMIES OF SCALE
In connection with its review of the Fund’s profitability analysis, 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 already provided for breakpoints in the Fund’s investment advisory fee rates as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board also discussed the substantial growth in assets of certain iShares funds, including the Fund, over the last few years. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had continued to make significant investments in the iShares funds, that expenses had grown at a pace similar to the growth in revenue, and that BGFA had incurred operating losses during earlier years when the iShares funds, including the Fund, had not yet reached scale. In light of this history, the Board determined that the current breakpoints were appropriate and warranted at this juncture for the Fund. Based on this review, as well as the discussions described above in connection with the Lipper Group and performance benchmark comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees reflects appropriate sharing of economies of scale with the Fund’s shareholders.
FEES AND SERVICES PROVIDED FOR OTHER COMPARABLE FUNDS/ACCOUNTS MANAGED BY BGFA AND ITS AFFILIATES
The Board received and considered certain information regarding the Fund’s annual investment advisory fee rates under the Advisory Contract in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and
26 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Board Review and Approval of Investment Advisory Contract (Unaudited) (Continued)
iSHARES® , INC.
separate accounts (together, the “Other Accounts”). The Board noted that comparative investment advisory/management fee information was not available, as BGFA and its affiliates do not manage any Other Accounts with substantially similar investment objectives and strategies as the Fund. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the Other Accounts differed from the level of services provided to the Fund. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contract, do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contract are fair and reasonable.
OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES
The Board reviewed any ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Fund by BGFA, such as any payment of revenue to BGI, the Company’s securities lending agent, for loaning any portfolio securities, and payment of advisory fees and/or administration fees to BGFA and BGI in connection with any investments by the Fund in other funds for which BGFA provides investment advisory services and/or BGI provides administration services. The Board noted that BGFA does not use soft dollars or consider the value of research or other services that may be provided to BGFA (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 BGFA affiliate or purchased from an underwriting syndicate in which a BGFA 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.
Based on this analysis, the Board determined that the Advisory Contract, including the investment advisory fee rates thereunder, is fair and reasonable in light of all relevant circumstances, and concluded that it is in the best interest of the Fund and its shareholders to approve the Advisory Contract for the coming year.
BOARD REVIEWAND APPROVALOF INVESTMENT ADVISORY CONTRACT | 27 |
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Supplemental Information (Unaudited)
iSHARES®, INC.
The table that follows presents information about the differences between the daily market price on secondary markets for shares of the Fund and the Fund’s net asset value. Net asset value, or “NAV,” is the price per share at which the Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. The “Market Price” of the Fund generally is determined using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the Fund is listed for trading, as of the time that the Fund’s NAV is calculated. The Fund’s Market Price may be at, above or below its NAV. The NAV of the Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of the Fund will fluctuate in accordance with changes in its NAV, as well as market supply and demand.
Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of the Fund on a given day, generally at the time NAV is calculated. A premium is the amount that the Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that the Fund is trading below the reported NAV, expressed as a percentage of the NAV.
The following information shows the frequency distributions of premiums and discounts for the Fund. The information shown for the Fund is for each full calendar quarter completed after the inception date of the Fund through the date of the most recent calendar quarter-end.
Each line in the table shows the number of trading days in which the Fund traded within the premium/discount range indicated. The number of trading days in each premium/discount range is also shown as a percentage of the total number of trading days in the period covered by the table. All data presented here represents past performance, which cannot be used to predict future results.
iShares MSCI Emerging Markets Index Fund
Period Covered: July 1, 2003 through June 30, 2008
Premium/Discount Range | Number of Days | Percentage of Total Days | |||
Greater than 2.5% and Less than 3.0% | 4 | 0.32 | % | ||
Greater than 2.0% and Less than 2.5% | 3 | 0.24 | |||
Greater than 1.5% and Less than 2.0% | 24 | 1.91 | |||
Greater than 1.0% and Less than 1.5% | 68 | 5.41 | |||
Greater than 0.5% and Less than 1.0% | 289 | 22.97 | |||
Between 0.5% and –0.5% | 652 | 51.82 | |||
Less than –0.5% and Greater than –1.0% | 130 | 10.33 | |||
Less than –1.0% and Greater than –1.5% | 56 | 4.45 | |||
Less than –1.5% and Greater than –2.0% | 22 | 1.75 | |||
Less than –2.0% and Greater than –2.5% | 8 | 0.64 | |||
Less than –2.5% | 2 | 0.16 | |||
1,258 | 100.00 | % | |||
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Director and Officer Information (Unaudited)
iSHARES®, INC.
The Board of Directors has responsibility for the overall management and operations of the Company, including general supervision of the duties performed by BGFA and other service providers. Each Director serves until his or her successor is duly elected or appointed and qualified.
iShares, Inc., iShares Trust, Barclays Global Investors Funds (“BGIF”) and Master Investment Portfolio (“MIP”) are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 161 portfolios within the fund complex. In addition, Lee T. Kranefuss serves as a Trustee for BGIF and MIP and oversees an additional 26 portfolios within the fund complex.
Unless otherwise noted in the tables below, the address of each Director and Officer is c/o Barclays Global Investors, N.A., 400 Howard Street, San Francisco, California 94105. The Board has designated George G.C. Parker as its Lead Independent Director. Additional information about the Funds’ Directors and Officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.
Interested Directors and Officers
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
*Lee T. Kranefuss, 46 | Director and Chairman (since 2003). | Global Chief Executive Officer, iShares/Intermediary Groups of BGI (since 2008); Chief Executive Officer, iShares Intermediary Index and Market Group of BGI (2005-2008); Chief Executive Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2005); Director of BGFA (since 2005); Director, President and Chief Executive Officer of Barclays Global Investors International, Inc. (since 2005); Director and Chairman of Barclays Global Investors Services (since 2005). | Trustee of iShares Trust (since 2003); Trustee of BGlF and MIP (since 2001). | |||
*John E. Martinez, 47 | Director (since 2003). | Co-Chief Executive Officer of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003); Director, Barclays Global Investors UK Holdings, Inc. (2000-2003); Director of Real Estate Equity Exchange (since 2005). | Trustee of iShares Trust (since 2003); Chairman, Independent Review Committee, Canadian iShares Funds (since 2007). |
* | Lee T. Kranefuss and John E. Martinez are deemed to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser; BGI, the parent company of BGFA; and Barclays Global Investors Services, an affiliate of BGFA and BGI. |
DIRECTORAND OFFICER INFORMATION | 29 |
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Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Independent Directors
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
George G.C. Parker, 69 | Director (since 2002); Lead Independent Director (since 2006). | Dean Witter Distinguished Professor of Finance, Emeritus, Stanford University: Graduate School of Business (since 1994). | Trustee of iShares Trust (since 2000); Director of Continental Airlines, Inc. (since 1996); Director of Community First Financial Group (since 1995); Director of Tejon Ranch Company (since 1999); Director of Threshold Pharmaceuticals (since 2004); Director of NETGEAR, Inc. (since 2007). | |||
Cecilia H. Herbert, 59 | Director (since 2005). | Chair of Investment Committee, Archdiocese of San Francisco (1994-2005); Director (since 1998) and President (since 2007) of the Board of Directors, Catholic Charities CYO; Trustee of Pacific Select Funds (2004-2005); Trustee of the Montgomery Funds (1992-2003); Trustee (since 2005) and Chair of the Finance and Investment Committees (since 2006) of the Thacher School. | Trustee of iShares Trust (since 2005). | |||
Charles A. Hurty, 64 | Director (since 2005). | Retired; Partner, KPMG LLP (1968-2001). | Trustee of iShares Trust (since 2005); Director of GMAM Absolute Return Strategy Fund (1 portfolio) (since 2002); Director of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (1 portfolio) (since 2002); Director of CSFB Alternative Investments Fund (6 portfolios) (since 2005). | |||
John E. Kerrigan, 53 | Director (since 2005). | Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002). | Trustee of iShares Trust (since 2005); Member of Advisory Council for Commonfund Distressed Debt Partners II (since 2004). |
30 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Independent Directors (Continued)
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Robert H. Silver, 53 | Director (since 2007). | President and Co-Founder of The Bravitas Group, Inc. (since 2006); Member, Non-Investor Advisory Board of Russia Partners II, LP (since 2006); President and Chief Operating Officer (2003-2005) and Director (1999-2005) of UBS Financial Services, Inc.; President and Chief Executive Officer of UBS Services USA, LLC (1999-2005); Managing Director, UBS America, Inc. (2000-2005); Director and Chairman of the YMCA of Greater NYC (since 2001); Broadway Producer (since 2006). | Trustee of iShares Trust (since 2007); Director and Member of the Audit and Compensation Committee of EPAM Systems, Inc. (since 2006). | |||
Darrell Duffie, 54 | Director (since 2008). | Professor, Stanford University: Graduate School of Business (since 1984). | Trustee of iShares Trust (since 2008). | |||
Officers
| ||||||
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Michael A. Latham, 42 | President (since 2007). | Head of Americas iShares (since 2007); Chief Operating Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2007); Director and Chief Financial Officer of Barclays Global Investors International, Inc. (since 2005). | None. | |||
Geoffrey D. Flynn, 51 | Treasurer and Chief Financial Officer (since 2007). | Chief Operating Officer, U.S. iShares, BGI (since 2008); Director, Mutual Fund Operations of BGI (2007-2008); President, Van Kampen Investors Services (2003-2007); Managing Director, Morgan Stanley (2002-2007); President, Morgan Stanley Trust, FSB (2002-2007). | None. |
DIRECTORAND OFFICER INFORMATION | 31 |
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Director and Officer Information (Unaudited) (Continued)
iSHARES®, INC.
Officers (Continued)
Name, Age | Position(s), Length of Service | Principal Occupation(s) During Past 5 Years | Other Directorships Held | |||
Eilleen M. Clavere, 56 | Secretary (since 2007). | Head of Legal Administration of Intermediary Investors Business of BGI (since 2006); Legal Counsel and Vice President of Atlas Funds, Atlas Advisers, Inc. and Atlas Securities, Inc. (2005-2006); Counsel of Kirkpatrick & Lockhart LLP (2001-2005). | None. | |||
Ira P. Shapiro, 45 | Vice President and Chief Legal Officer (since 2007). | Associate General Counsel, BGI (since 2004); First Vice President of Merrill Lynch Investment Managers (1993-2004). | None. | |||
Amy Schioldager, 45 | Executive Vice President (since 2007). | Head of U.S. Indexing, BGI (since 2006); Head of Domestic Equity Portfolio Management, BGI (2001-2006). | None. | |||
H. Michael Williams, 48 | Executive Vice President (since 2007). | Vice Chairman – Capital Markets, BGI (since 2008); Head of Global Index and Markets Group of BGI (2006-2008); Global Head of Securities Lending, BGI (2002-2006). | Trustee of BGIF and MIP (since 2007); Trustee, University of California, Berkeley Foundation; Executive Board, College of Letters and Science, University of California, Berkeley. | |||
Patrick O’Connor, 41 | Vice President (since 2007). | Head of iShares Portfolio Management, BGI (since 2006); Senior Portfolio Manager, BGI (1999-2006). | None. | |||
Lee Sterne, 43 | Vice President (since 2007). | Head of U.S. Fixed Income Index and iShares, BGI (since 2007); Senior Portfolio Manager, BGI (2004-2007); Portfolio Manager, BGI (2001-2004). | None. | |||
Matt Tucker, 36 | Vice President (since 2007). | Head of U.S. Fixed Income Investment Solutions, BGI (since 2005); Fixed Income Investment Strategist, BGI (2003-2005); Fixed Income Portfolio Manager, BGI (1997-2003). | None. |
32 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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Notes:
NOTES | 33 |
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Notes:
34 NOTES | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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The following is a list of iShares Funds being offered, along with their respective exchange trading symbols. Please call 1-800-iShares (1-800-474-2737) to obtain a prospectus for any iShares Fund. The prospectus contains more complete information, including charges, expenses, investment objectives and risk factors that should be carefully considered to determine if the Fund(s) are an appropriate investment for you. Read the prospectus(es) carefully before investing. Investing involves risk, including possible loss of principal.
iShares S&P Domestic Index Funds
iShares S&P 1500 (ISI)
iShares S&P 100 (OEF)
iShares S&P 500 (IVV)
iShares S&P 500 Growth (IVW)
iShares S&P 500 Value (IVE)
iShares S&P MidCap 400 (IJH)
iShares S&P MidCap 400 Growth (IJK)
iShares S&P MidCap 400 Value (IJJ)
iShares S&P SmallCap 600 (IJR)
iShares S&P SmallCap 600 Growth (IJT)
iShares S&P SmallCap 600 Value (IJS)
iShares S&P North American Natural Resources Sector (IGE)
iShares S&P North American
Technology-Multimedia Networking (IGN)
iShares S&P North American
Technology-Semiconductors (IGW)
iShares S&P North American
Technology-Software (IGV)
iShares S&P North American
Technology Sector (IGM)
iShares Domestic Sector Index Funds
iShares Cohen & Steers Realty Majors (ICF)
iShares Dow Jones U.S. Basic Materials
Sector (IYM)
iShares Dow Jones U.S. Consumer Services
Sector (IYC)
iShares Dow Jones U.S. Consumer Goods
Sector (IYK)
iShares Dow Jones U.S. Energy Sector (IYE)
iShares Dow Jones U.S. Financial Sector (IYF)
iShares Dow Jones U.S. Financial Services (IYG)
iShares Dow Jones U.S. Healthcare Sector (IYH)
iShares Dow Jones U.S. Industrial Sector (IYJ)
iShares Dow Jones U.S. Real Estate (IYR)
iShares Dow Jones U.S. Technology Sector (IYW)
iShares Dow Jones U.S. Telecommunications
Sector (IYZ)
iShares Dow Jones Transportation Average (IYT)
iShares Dow Jones U.S. Utilities Sector (IDU)
iShares Dow Jones U.S. (IYY)
iShares Nasdaq Biotechnology (IBB)
iShares Domestic Subsector Index Funds
iShares Dow Jones U.S. Aerospace & Defense (ITA)
iShares Dow Jones U.S. Broker-Dealers (IAI)
iShares Dow Jones U.S. Healthcare Providers (IHF)
iShares Dow Jones U.S. Home Construction (ITB)
iShares Dow Jones U.S. Insurance (IAK)
iShares Dow Jones U.S. Medical Devices (IHI)
iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO)
iShares Dow Jones U.S. Oil Equipment &
Services (IEZ)
iShares Dow Jones U.S. Pharmaceuticals (IHE)
iShares Dow Jones U.S. Regional Banks (IAT)
iShares FTSE NAREIT Industrial/Office (FIO)
iShares FTSE NAREIT Mortgage REITs (REM)
iShares FTSE NAREIT Real Estate 50 (FTY)
iShares FTSE NAREIT Residential (REZ)
iShares FTSE NAREIT Retail (RTL)
iShares Global Index Funds
iShares S&P Global 100 (IOO)
iShares S&P Global Clean Energy (ICLN)
iShares S&P Global Consumer Discretionary
Sector (RXI)
iShares S&P Global Consumer Staples Sector (KXI)
iShares S&P Global Energy Sector (IXC)
iShares S&P Global Financials Sector (IXG)
iShares S&P Global Healthcare Sector (IXJ)
iShares S&P Global Industrials Sector (EXI)
iShares S&P Global Infrastructure (IGF)
iShares S&P Global Materials Sector (MXI)
iShares S&P Global Nuclear Energy (NUCL)
iShares S&P Global Technology Sector (IXN)
iShares S&P Global Telecommunications
Sector (IXP)
iShares S&P Global Timber & Forestry (WOOD)
iShares S&P Global Utilities Sector (JXI)
iShares Russell Index Funds
iShares Russell 3000 (IWV)
iShares Russell 3000 Growth (IWZ)
iShares Russell 3000 Value (IWW)
iShares Russell 1000 (IWB)
iShares Russell 1000 Growth (IWF)
iShares Russell 1000 Value (IWD)
iShares Russell Midcap (IWR)
iShares Russell Midcap Growth (IWP)
iShares Russell Midcap Value (IWS)
iShares Russell 2000 (IWM)
iShares Russell 2000 Growth (IWO)
iShares Russell 2000 Value (IWN)
iShares Russell Microcap (IWC)
iShares International Country Index Funds
iShares FTSE China (HK Listed) (FCHI)
iShares FTSE/Xinhua China 25 (FXI)
iShares MSCI Australia (EWA)
iShares MSCI Austria Investable Market (EWO)
iShares MSCI Belgium Investable Market (EWK)
iShares MSCI Brazil (EWZ)
iShares MSCI Canada (EWC)
iShares MSCI Chile Investable Market (ECH)
iShares MSCI France (EWQ)
iShares MSCI Germany (EWG)
iShares MSCI Hong Kong (EWH)
iShares MSCI Israel Capped Investable Market (EIS)
iShares MSCI Italy (EWI)
iShares MSCI Japan (EWJ)
iShares MSCI Japan Small Cap (SCJ)
iShares MSCI Malaysia (EWM)
iShares MSCI Mexico Investable Market (EWW)
iShares MSCI Netherlands Investable Market (EWN)
iShares MSCI Singapore (EWS)
iShares MSCI South Africa (EZA)
iShares MSCI South Korea (EWY)
iShares MSCI Spain (EWP)
iShares MSCI Sweden (EWD)
iShares MSCI Switzerland (EWL)
iShares MSCI Taiwan (EWT)
iShares MSCI Thailand Investable Market (THD)
iShares MSCI Turkey Investable Market (TUR)
iShares MSCI United Kingdom (EWU)
iShares S&P/TOPIX 150 (ITF)
iShares Bond Funds
iShares Lehman Aggregate (AGG)
iShares Lehman MBS (MBB)
iShares Lehman Short Treasury (SHV)
iShares Lehman 1-3 Year Treasury (SHY)
iShares Lehman 3-7 Year Treasury (IEI)
iShares Lehman 7-10 Year Treasury (IEF)
iShares Lehman 10-20 Year Treasury (TLH)
iShares Lehman 20+ Year Treasury (TLT)
iShares Lehman TIPS (TIP)
iShares Lehman Credit (CFT)
iShares Lehman 1-3 Year Credit (CSJ)
iShares Lehman Intermediate Credit (CIU)
iShares iBoxx $ Investment Grade Corporate (LQD)
iShares iBoxx $ High Yield Corporate (HYG)
iShares Lehman Government/Credit (GBF)
iShares Lehman Intermediate
Government/Credit (GVI)
iShares S&P National Municipal (MUB)
iShares S&P California Municipal (CMF)
iShares S&P New York Municipal (NYF)
iShares JPMorgan USD Emerging Markets (EMB)
iShares Specialty Index Funds
iShares KLD 400 Social (DSI)
iShares KLD Select SocialSM (KLD)
iShares Dow Jones Select Dividend (DVY)
iShares Dow Jones EPAC Select Dividend (IDV)
iShares S&P U.S. Preferred Stock (PFF)
iShares International Index Funds
iShares FTSE Developed Small Cap ex-North America (IFSM)
iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. (IFGL)
iShares FTSE EPRA/NAREIT North
America (IFNA)
iShares FTSE EPRA/NAREIT Europe (IFEU)
iShares FTSE EPRA/NAREIT Asia (IFAS)
iShares MSCI ACWI (ACWI)
iShares MSCI ACWI ex US (ACWX)
iShares MSCI All Country Asia ex Japan (AAXJ)
iShares MSCI BRIC (BKF)
iShares MSCI EAFE (EFA)
iShares MSCI EAFE Growth (EFG)
iShares MSCI EAFE Value (EFV)
iShares MSCI EAFE Small Cap (SCZ)
iShares MSCI Emerging Markets (EEM)
iShares MSCI EMU (EZU)
iShares MSCI Kokusai (TOK)
iShares MSCI Pacific ex-Japan (EPP)
iShares S&P Asia 50 (AIA)
iShares S&P Europe 350 (IEV)
iShares S&P Latin America 40 (ILF)
iShares S&P World ex-U.S. Property (WPS)
iSHARES FAMILYOF FUNDS | 35 |
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The iShares® Family of Funds (Continued)
iShares Morningstar Index Funds
iShares Morningstar Large Core (JKD)
iShares Morningstar Large Growth (JKE)
iShares Morningstar Large Value (JKF)
iShares Morningstar Mid Core (JKG)
iShares Morningstar Mid Growth (JKH)
iShares Morningstar Mid Value (JKI)
iShares Morningstar Small Core (JKJ)
iShares Morningstar Small Growth (JKK)
iShares Morningstar Small Value (JKL)
iShares NYSE Index Funds
iShares NYSE Composite (NYC)
iShares NYSE 100 (NY)
iShares® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., European Public Real Estate Association (“EPRA®”), FTSE International Limited (“FTSE”), FTSE/Xinhua Index Limited (“FXI”), iBoxx®, J.P. Morgan Securities Inc., KLD Research & Analytics, Inc., MSCI Inc., Morningstar Inc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50/Residential/Retail/Mortgage REITs or Industrial/Office Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Global Real Estate ex-US/North America/Europe/Asia Index; all rights vest in FTSE, NAREIT, and EPRA. All rights in the FTSE Developed Small Cap ex-North America Index vest in FTSE. “FTSE” is a trade- and servicemark of London Stock Exchange and The Financial Times Limited; “Xinhua” is a trade- and servicemark of Xinhua Financial Network Limited. “NAREIT®” is a trademark of NAREIT; “EPRA®” is a trademark of EPRA.
An investment in the Fund(s) is not a deposit of a bank and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
This advertising section does not constitute part of the 2008 Annual Report.
7821-iS-0908
36 | 2008 iSHARES ANNUAL REPORTTO SHAREHOLDERS |
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For more information:
WWW.iSHARES.COM
1-800-iShares (1-800-474-2737)
The iShares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as an advisor to the iShares Funds. BGFA is a subsidiary of Barclays Global Investors, N.A., neither of which is affiliated with SEI.
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. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the company listed above.
©2008 Barclays Global Investors. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.
Investing involves risk, including possible loss of principal.
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 ended 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 monthly basis on the Fund’s website.
Certain financial information required by regulations or listing exchange rules in jurisdictions outside the U.S. in which iShares Funds are cross-listed may be publicly filed in those jurisdictions. This information is available upon request by calling 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.
BCI-F-054-10008 iShares® LET’S BUILD A BETTER INVESTMENT WORLDSM. BARCLAYS GLOBAL INVESTORS
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Item 2. | Code of Ethics. |
iShares, Inc. (the “Registrant”) has adopted a code of ethics that applies to persons appointed by the Registrant’s Board of Directors as the President and/or Chief Financial Officer, and any persons performing similar functions. For the fiscal year ended August 31, 2008, there were no amendments to any provision of this code of ethics, nor were there any waivers granted from any provision of this code of ethics. A copy of this code of ethics is filed with this Form N-CSR under Item 12(a)(1).
Item 3. | Audit Committee Financial Expert. |
The Registrant’s Board of Directors has determined that the Registrant has more than one audit committee financial expert, as that term is defined under Item 3(b) and 3(c), serving on its audit committee. The audit committee financial experts serving on the Registrant’s audit committee are Charles A. Hurty, John E. Kerrigan, George G.C. Parker and Robert H. Silver, all of whom are independent, as that term is defined under Item 3(a)(2).
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Item 4. | Principal Accountant Fees and Services. |
(a) | Audit Fees – The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years, were $392,808 for the fiscal year ended August 31, 2007 and $476,772 for the fiscal year ended August 31, 2008. |
(b) | Audit-Related Fees – There were no fees billed for the fiscal years ended August 31, 2007 and August 31, 2008 for assurance and related services by the principal accountant that were reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under (a) of this Item. |
(c) | Tax Fees – The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for the review of the Registrant’s tax returns and excise tax calculations, were $188,280 for the fiscal year ended August 31, 2007 and $107,520 for the fiscal year ended August 31, 2008. |
(d) | All Other Fees – There were no other fees billed for the fiscal years ended August 31, 2007 and August 31, 2008 for products and services provided by the principal accountant, other than the services reported in (a) through (c) of this Item. |
(e) | (1) The Registrant’s audit committee charter, as amended, provides that the audit committee is responsible for the approval, prior to appointment, of the engagement of the principal accountant to annually audit and provide their opinion on the Registrant’s financial statements. The audit committee must also approve, prior to appointment, the engagement of the principal accountant to provide non-audit services to the Registrant or to any entity controlling, controlled by or under common control with the Registrant’s investment adviser (“Adviser Affiliate”) that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. |
(2) There were no services described in (b) through (d) above (including services required by the audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) | None of the hours expended on the principal accountant’s engagement to audit the Registrant’s financial statements for the fiscal year ended August 31, 2008 were attributable to work performed by persons other than the principal accountant’s full-time, permanent employees. |
(g) | The aggregate non-audit fees billed by the Registrant’s principal accountant for services rendered to the Registrant’s, and rendered to the Registrant’s investment adviser, and any Adviser Affiliate that provides ongoing services to the Registrant for the last two fiscal years, were $2,459,117 for the fiscal year ended August 31, 2007 and $2,833,229 for the fiscal year ended August 31, 2008. |
(h) | The Registrant’s audit committee has considered whether the provision of non-audit services rendered to the Registrant’s investment adviser and any Adviser Affiliate that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, if any, are compatible with maintaining the principal accountant’s independence, and has determined that the provision of these services do not compromise the principal accountant’s independence. |
Item 5. | Audit Committee of Listed Registrants. |
The Registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act and has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Registrant’s audit committee members are George G.C. Parker, Cecilia H. Herbert, Charles A. Hurty, John E. Kerrigan, Robert H. Silver and Darrell Duffie.
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Item 6. | Schedule of Investments. |
The Registrant’s full schedules of investments are included as part of the reports to shareholders filed under Item 1 of this Form.
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 Registrant’s 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) Code of Ethics for Senior Officers that is the subject of Item 2 is attached.
(a) (2) Section 302 Certifications are attached.
(a) (3) Not applicable to the Registrant.
(b) Section 906 Certifications are attached.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
iShares, Inc. | ||
By: | /s/ Michael A. Latham | |
Michael A. Latham, President (Principal Executive Officer) | ||
Date: October 28, 2008 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Michael A. Latham | |
Michael A. Latham, President (Principal Executive Officer) | ||
Date: October 28, 2008 |
By: | /s/ Geoffrey D. Flynn | |
Geoffrey D. Flynn, Treasurer and Chief Financial Officer (Principal Financial Officer) | ||
Date: October 28, 2008 |