UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09102
iShares, Inc.
(Exact name of Registrant as specified in charter)
c/o: State Street Bank and Trust Company
200 Clarendon Street, Boston, MA 02116
(Address of principal executive offices) (Zip code)
The Corporation Trust Incorporated
351 West Camden Street, Baltimore, MD 21201
(Name and address of agent for service)
Registrant’s telephone number, including area code: (415) 670-2000
Date of fiscal year end: April 30, 2013
Date of reporting period: October 31, 2012
| | |
Item 1. Reports to Stockholders. 
| | October 31, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares Asia/Pacific Dividend 30 Index Fund | DVYA | NYSE Arca
iShares Emerging Markets Dividend Index Fund | DVYE | NYSE Arca
Table of Contents
Fund Performance Overview
iSHARES® ASIA/PACIFIC DIVIDEND 30 INDEX FUND
Performance as of October 31, 2012
| | | | |
| Cumulative Total Returns |
| Inception to 10/31/12 |
| NAV | | MARKET | | INDEX |
| 8.80% | | 8.57% | | 9.30% |
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 2/23/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/24/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares Asia/Pacific Dividend 30 Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Asia/Pacific Select Dividend 30 IndexSM (the “Index”). The Index measures the stock performance of high dividend paying companies in Australia, Hong Kong, Japan, New Zealand and Singapore. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2012, the total return for the Fund was 5.30%, net of fees, while the total return for the Index was 5.73%.
PORTFOLIO ALLOCATION
As of 10/31/12
| | |
| Sector | | Percentage of
Net Assets |
| | | | |
Financial | | | 27.31 | % |
Communications | | | 22.66 | |
Industrial | | | 18.13 | |
Consumer Cyclical | | | 15.08 | |
Consumer Non-Cyclical | | | 7.34 | |
Utilities | | | 4.43 | |
Diversified | | | 2.34 | |
Energy | | | 1.49 | |
Short-Term and Other Net Assets | | | 1.22 | |
| | | | |
TOTAL | | | 100.00 | % |
| | | | |
TEN LARGEST FUND HOLDINGS
As of 10/31/12
| | |
| Security | | Percentage of
Net Assets |
| | | | |
Shimao Property Holdings Ltd. (Hong Kong) | | | 7.43 | % |
Telecom Corp. of New Zealand Ltd. (New Zealand) | | | 6.80 | |
Telstra Corp. Ltd. (Australia) | | | 5.05 | |
SP AusNet (Australia) | | | 4.43 | |
David Jones Ltd. (Australia) | | | 4.37 | |
StarHub Ltd. (Singapore) | | | 4.36 | |
Westpac Banking Corp. (Australia) | | | 4.03 | |
VTech Holdings Ltd. (Hong Kong) | | | 4.01 | |
Australia and New Zealand Banking Group Ltd. (Australia) | | | 3.81 | |
Singapore Post Ltd. (Singapore) | | | 3.64 | |
| | | | |
TOTAL | | | 47.93 | % |
| | | | |
| | | | |
FUND PERFORMANCE OVERVIEWS | | | 5 | |
Fund Performance Overview
iSHARES® EMERGING MARKETS DIVIDEND INDEX FUND
Performance as of October 31, 2012
| | | | |
| Cumulative Total Returns |
| Inception to 10/31/12 |
| NAV | | MARKET | | INDEX |
| (1.58)% | | (1.06)% | | (1.66)% |
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 2/23/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/24/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares Emerging Markets Dividend Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Emerging Markets Select Dividend IndexSM (the “Index”). The Index measures the performance of a group of equity securities issued by companies in emerging market countries that have provided relatively high dividend yields on a consistent basis over time. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2012, the total return for the Fund was 0.71%, net of fees, while the total return for the Index was 0.66%.
PORTFOLIO ALLOCATION
As of 10/31/12
| | |
| Sector | | Percentage of
Net Assets |
| | | | |
Communications | | | 18.14 | % |
Financial | | | 14.67 | |
Consumer Cyclical | | | 14.64 | |
Basic Materials | | | 10.38 | |
Utilities | | | 9.31 | |
Technology | | | 8.67 | |
Consumer Non-Cyclical | | | 8.11 | |
Industrial | | | 6.91 | |
Energy | | | 6.63 | |
Diversified | | | 2.15 | |
Short-Term and Other Net Assets | | | 0.39 | |
| | | | |
TOTAL | | | 100.00 | % |
| | | | |
TEN LARGEST FUND HOLDINGS
As of 10/31/12
| | |
| Security | | Percentage of
Net Assets |
| | | | |
Ford Otomotiv Sanayi AS (Turkey) | | | 3.65 | % |
PT AKR Corporindo Tbk (Indonesia) | | | 3.65 | |
Shin Corp. PCL (Thailand) | | | 2.41 | |
Tofas Turk Otomobil Fabrikasi AS (Turkey) | | | 2.26 | |
Guangzhou R&F Properties Co. Ltd. Class H (China) | | | 2.22 | |
Advanced Information Service PCL NVDR (Thailand) | | | 1.96 | |
Turkiye Petrol Rafinerileri AS (Turkey) | | | 1.94 | |
AmTRAN Technology Co. Ltd. (Taiwan) | | | 1.76 | |
Land and Houses PCL (Thailand) | | | 1.68 | |
Shougang Fushan Resources Group Ltd. (China) | | | 1.67 | |
| | | | |
TOTAL | | | 23.20 | % |
| | | | |
| | |
| 6 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
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 May 1, 2012 to October 31, 2012.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | |
| iShares Index Fund | | Beginning
Account Value
(5/1/12) | | | Ending
Account Value
(10/31/12) | | | Annualized
Expense Ratio | | | Expenses Paid
During Period a | |
Asia/Pacific Dividend 30 | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000.00 | | | $ | 1,053.00 | | | | 0.49 | % | | $ | 2.54 | |
Hypothetical (5% return before expenses) | | | 1,000.00 | | | | 1,022.70 | | | | 0.49 | | | | 2.50 | |
Emerging Markets Dividend | | | | | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,007.10 | | | | 0.49 | | | | 2.48 | |
Hypothetical (5% return before expenses) | | | 1,000.00 | | | | 1,022.70 | | | | 0.49 | | | | 2.50 | |
| 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 (365 days). | |
Schedule of Investments (Unaudited)
iSHARES® ASIA/PACIFIC DIVIDEND 30 INDEX FUND
October 31, 2012
| | | | | | | | |
| Security | | Shares | | | Value | |
| | | | | | | | |
COMMON STOCKS — 98.48% | |
| |
AUSTRALIA — 41.23% | | | | | |
Amcor Ltd. | | | 67,788 | | | $ | 555,313 | |
Australia and New Zealand Banking
Group Ltd. | | | 35,082 | | | | 925,827 | |
Commonwealth Bank of Australia | | | 14,283 | | | | 855,321 | |
David Jones Ltd. | | | 382,725 | | | | 1,059,634 | |
Metcash Ltd. | | | 168,120 | | | | 638,055 | |
National Australia Bank Ltd. | | | 31,455 | | | | 841,199 | |
SP AusNet | | | 977,715 | | | | 1,074,672 | |
Suncorp Group Ltd. | | | 52,857 | | | | 515,214 | |
Sydney Airport | | | 231,408 | | | | 813,459 | |
Telstra Corp. Ltd. | | | 285,507 | | | | 1,225,673 | |
UGL Ltd. | | | 47,286 | | | | 523,674 | |
Westpac Banking Corp. | | | 37,017 | | | | 979,195 | |
| | | | | | | | |
| | | | | | | 10,007,236 | |
HONG KONG — 21.41% | | | | | |
Anta Sports Products Ltd.a | | | 594,000 | | | | 505,855 | |
Esprit Holdings Ltd.a | | | 545,400 | | | | 709,367 | |
Shimao Property Holdings Ltd.a | | | 945,000 | | | | 1,804,634 | |
SOHO China Ltd. | | | 1,039,500 | | | | 706,855 | |
VTech Holdings Ltd.a | | | 81,900 | | | | 972,754 | |
Yue Yuen Industrial (Holdings) Ltd. | | | 144,000 | | | | 497,029 | |
| | | | | | | | |
| | | | | | | 5,196,494 | |
JAPAN — 7.77% | | | | | |
Asahi Glass Co. Ltd. | | | 56,000 | | | | 379,732 | |
Eisai Co. Ltd. | | | 13,500 | | | | 600,432 | |
Ono Pharmaceutical Co. Ltd. | | | 9,000 | | | | 542,725 | |
TonenGeneral Sekiyu K.K. | | | 40,000 | | | | 362,317 | |
| | | | | | | | |
| | | | | | | 1,885,206 | |
NEW ZEALAND — 10.16% | | | | | |
SKYCITY Entertainment Group Ltd. | | | 256,113 | | | | 816,936 | |
Telecom Corp. of New Zealand Ltd. | | | 834,849 | | | | 1,650,622 | |
| | | | | | | | |
| | | | | | | 2,467,558 | |
SINGAPORE — 17.91% | | | | | |
Keppel Corp. Ltd. | | | 65,000 | | | | 567,927 | |
SATS Ltd.a | | | 315,000 | | | | 720,339 | |
Singapore Post Ltd.a | | | 945,000 | | | | 882,997 | |
Singapore Telecommunications Ltd. | | | 225,000 | | | | 593,828 | |
SMRT Corp. Ltd. | | | 369,000 | | | | 524,745 | |
| | | | | | | | |
| Security | | Shares | | | Value | |
| | | | | | | | |
StarHub Ltd.a | | | 351,000 | | | $ | 1,058,711 | |
| | | | | | | | |
| | | | | | | 4,348,547 | |
| | | | | | | | |
TOTAL COMMON STOCKS | | | | | |
(Cost: $23,508,302) | | | | 23,905,041 | |
| |
RIGHTS — 0.30% | | | | | |
HONG KONG — 0.30% | | | | | |
Esprit Holdings Ltd.b | | | 272,700 | | | | 73,189 | |
| | | | | | | | |
| | | | | | | 73,189 | |
| | | | | | | | |
TOTAL RIGHTS | | | | | |
(Cost: $0) | | | | 73,189 | |
|
SHORT-TERM INVESTMENTS — 11.71% | |
| |
MONEY MARKET FUNDS — 11.71% | | | | | |
BlackRock Cash Funds: Institutional,
SL Agency Shares | | | | | | | | |
0.27%c,d,e | | | 2,633,219 | | | | 2,633,219 | |
BlackRock Cash Funds: Prime,
SL Agency Shares | | | | | | | | |
0.25%c,d,e | | | 187,986 | | | | 187,986 | |
BlackRock Cash Funds: Treasury,
SL Agency Shares | | | | | | | | |
0.08%c,d | | | 20,142 | | | | 20,142 | |
| | | | | | | | |
| | | | | | | 2,841,347 | |
| | | | | | | | |
TOTAL SHORT-TERM INVESTMENTS | | | | | |
(Cost: $2,841,347) | | | | 2,841,347 | |
| | | | | | | | |
TOTAL INVESTMENTS
IN SECURITIES — 110.49% | | | | | |
(Cost: $26,349,649) | | | | 26,819,577 | |
Other Assets, Less Liabilities — (10.49)% | | | | (2,546,526 | ) |
| | | | | | | | |
NET ASSETS — 100.00% | | | $ | 24,273,051 | |
| | | | | | | | |
| 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 | All or a portion of this security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
| | |
| 8 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Schedule of Investments (Unaudited)
iSHARES® EMERGING MARKETS DIVIDEND INDEX FUND
October 31, 2012
| | | | | | | | |
| Security | | Shares | | | Value | |
| | | | | | | | |
COMMON STOCKS — 97.29% | |
| |
BRAZIL — 7.26% | | | | | |
Banco do Brasil SA | | | 13,300 | | | $ | 141,965 | |
CCR SA | | | 87,400 | | | | 768,891 | |
CPFL Energia SA | | | 55,500 | | | | 645,174 | |
Light SA | | | 66,500 | | | | 715,723 | |
Souza Cruz SA | | | 40,000 | | | | 522,129 | |
Tractebel Energia SA | | | 45,600 | | | | 786,149 | |
| | | | | | | | |
| | | | | | | 3,580,031 | |
CHILE — 0.77% | | | | | |
CAP SA | | | 3,667 | | | | 126,170 | |
Empresa Nacional de Telecomunicaciones SA | | | 12,407 | | | | 253,588 | |
| | | | | | | | |
| | | | | | | 379,758 | |
CHINA — 7.66% | | | | | |
Guangzhou R&F Properties Co. Ltd.
Class Ha | | | 889,200 | | | | 1,093,422 | |
PetroChina Co. Ltd. Class H | | | 304,000 | | | | 415,007 | |
Shenzhen Investment Ltd. | | | 2,622,000 | | | | 696,940 | |
Shougang Fushan Resources Group Ltd. | | | 2,356,000 | | | | 823,835 | |
Zhejiang Expressway Co. Ltd. Class H | | | 1,026,000 | | | | 747,982 | |
| | | | | | | | |
| | | | | | | 3,777,186 | |
CZECH REPUBLIC — 4.24% | | | | | |
CEZ AS | | | 14,858 | | | | 547,247 | |
Komercni Banka AS | | | 3,553 | | | | 724,370 | |
Telefonica O2 Czech Republic AS | | | 41,157 | | | | 818,911 | |
| | | | | | | | |
| | | | | | | 2,090,528 | |
EGYPT — 2.80% | | | | | |
Commercial International Bank Egypt
SAE SP GDR | | | 83,600 | | | | 509,960 | |
Orascom Construction Industries
SAE SP GDR | | | 12,122 | | | | 495,790 | |
Orascom Telecom Holding SAE SP GDRb,c | | | 124,641 | | | | 374,546 | |
| | | | | | | | |
| | | | | | | 1,380,296 | |
HUNGARY — 1.30% | | | | | |
Magyar Telekom Telecommunications PLC | | | 347,491 | | | | 643,766 | |
| | | | | | | | |
| | | | | | | 643,766 | |
INDIA — 0.24% | | | | | |
Reliance Industries Ltd. SP GDRd | | | 3,971 | | | | 117,740 | |
| | | | | | | | |
| | | | | | | 117,740 | |
| | | | | | | | |
| Security | | Shares | | | Value | |
| | | | | | | | |
INDONESIA — 4.52% | | | | | |
PT AKR Corporindo Tbk | | | 3,885,500 | | | $ | 1,800,154 | |
PT Aneka Tambang (Persero) Tbk | | | 1,700,500 | | | | 226,615 | |
PT Indo Tambangraya Megah Tbk | | | 47,500 | | | | 201,028 | |
| | | | | | | | |
| | | | | | | 2,227,797 | |
MALAYSIA — 7.63% | | | | | |
Berjaya Sports Toto Bhd | | | 216,600 | | | | 315,727 | |
British American Tobacco
(Malaysia) Bhd | | | 34,200 | | | | 710,049 | |
Kuala Lumpur Kepong Bhd | | | 38,000 | | | | 267,223 | |
Malayan Banking Bhd | | | 123,500 | | | | 366,121 | |
PPB Group Bhd | | | 38,000 | | | | 167,919 | |
Public Bank Bhd | | | 87,400 | | | | 456,224 | |
Sime Darby Bhd | | | 117,800 | | | | 378,228 | |
Telekom Malaysia Bhd | | | 353,400 | | | | 693,806 | |
YTL Power International Bhd | | | 760,000 | | | | 406,697 | |
| | | | | | | | |
| | | | | | | 3,761,994 | |
PHILIPPINES — 1.51% | | | | | |
Globe Telecom Inc. | | | 26,980 | | | | 746,625 | |
| | | | | | | | |
| | | | | | | 746,625 | |
POLAND — 2.42% | | | | | |
KGHM Polska Miedz SA | | | 13,129 | | | | 660,817 | |
Telekomunikacja Polska SA | | | 141,056 | | | | 532,478 | |
| | | | | | | | |
| | | | | | | 1,193,295 | |
RUSSIA — 1.27% | | | | | |
Mobile Telesystems OJSC | | | 85,500 | | | | 629,051 | |
| | | | | | | | |
| | | | | | | 629,051 | |
SOUTH AFRICA — 10.23% | | | | | |
African Bank Investments Ltd. | | | 95,798 | | | | 322,880 | |
Exxaro Resources Ltd. | | | 8,721 | | | | 173,935 | |
Foschini Group Ltd. (The) | | | 24,491 | | | | 354,420 | |
Grindrod Ltd. | | | 138,681 | | | | 237,214 | |
Impala Platinum Holdings Ltd. | | | 14,117 | | | | 253,156 | |
Kumba Iron Ore Ltd.a | | | 11,837 | | | | 737,499 | |
Lewis Group Ltd.a | | | 42,408 | | | | 336,370 | |
Nampak Ltd. | | | 142,158 | | | | 472,270 | |
PPC Ltd. | | | 187,283 | | | | 624,119 | |
RMB Holdings Ltd. | | | 107,217 | | | | 468,840 | |
Tiger Brands Ltd. | | | 12,521 | | | | 396,679 | |
Truworths International Ltd. | | | 28,405 | | | | 308,239 | |
Woolworths Holdings Ltd. | | | 48,070 | | | | 361,387 | |
| | | | | | | | |
| | | | | | | 5,047,008 | |
| | | | |
SCHEDULESOF INVESTMENTS | | | 9 | |
Schedule of Investments (Unaudited) (Continued)
iSHARES® EMERGING MARKETS DIVIDEND INDEX FUND
October 31, 2012
| | | | | | | | |
| Security | | Shares | | | Value | |
| | | | | | | | |
SOUTH KOREA — 4.09% | | | | | |
Daishin Securities Co. Ltd. | | | 52,250 | | | $ | 416,333 | |
Hyundai Marine & Fire Insurance
Co. Ltd. | | | 5,890 | | | | 190,374 | |
Korea Exchange Bankb | | | 68,400 | | | | 474,146 | |
Korea Gas Corp. | | | 4,940 | | | | 346,969 | |
KT Corp. | | | 3,420 | | | | 115,871 | |
KT Corp. SP ADR | | | 27,881 | | | | 472,583 | |
| | | | | | | | |
| | | | | | | 2,016,276 | |
TAIWAN — 22.29% | | | | | |
Ability Enterprise Co. Ltd. | | | 437,000 | | | | 393,431 | |
AmTRAN Technology Co. Ltd. | | | 1,026,000 | | | | 867,512 | |
China Steel Corp. | | | 325,295 | | | | 279,500 | |
Chung Hsin Electric & Machinery Manufacturing Corp. | | | 646,000 | | | | 339,447 | |
Chunghwa Telecom Co. Ltd. | | | 76,000 | | | | 238,309 | |
Far EasTone Telecommunications Co. Ltd. | | | 152,000 | | | | 350,699 | |
Farglory Land Development Co. Ltd. | | | 247,000 | | | | 415,155 | |
Feng Hsin Iron & Steel Co. Ltd. | | | 152,000 | | | | 240,390 | |
Formosa Chemicals & Fibre Corp. | | | 133,000 | | | | 315,057 | |
Formosa Petrochemical Corp. | | | 76,000 | | | | 221,138 | |
Formosa Plastics Corp. | | | 133,000 | | | | 362,407 | |
Formosan Rubber Group Inc. | | | 684,000 | | | | 462,439 | |
Gigabyte Technology Co. Ltd. | | | 456,000 | | | | 376,195 | |
Highwealth Construction Corp. | | | 285,000 | | | | 415,122 | |
Holtek Semiconductor Inc. | | | 494,000 | | | | 488,715 | |
Hung Sheng Construction Co. Ltd. | | | 1,007,000 | | | | 544,650 | |
Infortrend Technology Inc. | | | 342,000 | | | | 179,122 | |
Inventec Corp. | | | 1,216,475 | | | | 416,006 | |
Lite-On Technology Corp. | | | 419,100 | | | | 533,694 | |
Macronix International Co. Ltd. | | | 1,729,764 | | | | 450,020 | |
Nan Ya Plastics Corp. | | | 133,000 | | | | 234,472 | |
Novatek Microelectronics Corp. Ltd. | | | 152,000 | | | | 572,358 | |
Oriental Union Chemical Corp. | | | 159,000 | | | | 168,729 | |
Phihong Technology Co. Ltd. | | | 323,000 | | | | 211,740 | |
Sincere Navigation Corp. | | | 437,000 | | | | 366,504 | |
Taiwan Mobile Co. Ltd. | | | 95,000 | | | | 331,707 | |
TSRC Corp. | | | 99,500 | | | | 203,002 | |
U-Ming Marine Transport Corp. | | | 304,000 | | | | 461,008 | |
UPC Technology Corp. | | | 1,083,453 | | | | 558,185 | |
| | | | | | | | |
| | | | | | | 10,996,713 | |
| | | | | | | | |
| Security | | Shares | | | Value | |
| | | | | | | | |
THAILAND — 9.42% | | | | | | | | |
Advanced Information Service PCL NVDR | | | 150,100 | | | $ | 967,202 | |
Airports of Thailand PCL NVDR | | | 74,100 | | | | 198,245 | |
Charoen Pokphand Foods PCL NVDR | | | 364,800 | | | | 419,550 | |
Land and Houses PCL NVDR | | | 2,950,700 | | | | 827,929 | |
PTT Global Chemical PCL NVDR | | | 146,300 | | | | 291,168 | |
Shin Corp. PCL NVDR | | | 579,900 | | | | 1,187,234 | |
Siam Cement PCL NVDR | | | 32,300 | | | | 394,134 | |
Thai Oil PCL NVDR | | | 165,300 | | | | 359,992 | |
| | | | | | | | |
| | | | | | | 4,645,454 | |
TURKEY — 9.64% | | | | | | | | |
Ford Otomotiv Sanayi AS | | | 175,693 | | | | 1,801,477 | |
Haci Omer Sabanci Holding AS | | | 54,473 | | | | 287,163 | |
Tofas Turk Otomobil Fabrikasi AS | | | 200,431 | | | | 1,116,918 | |
Turk Telekomunikasyon AS | | | 152,114 | | | | 593,368 | |
Turkiye Petrol Rafinerileri AS | | | 39,216 | | | | 957,181 | |
| | | | | | | | |
| | | | | | | 4,756,107 | |
| | | | | | | | |
TOTAL COMMON STOCKS | | | | | |
(Cost: $47,976,620) | | | | 47,989,625 | |
| |
PREFERRED STOCKS — 2.32% | | | | | |
| |
BRAZIL — 2.32% | | | | | |
AES Tiete SA | | | 57,000 | | | | 647,730 | |
Eletropaulo Metropolitana Eletricidade de Sao Paulo SA | | | 62,700 | | | | 498,166 | |
| | | | | | | | |
| | | | | | | 1,145,896 | |
| | | | | | | | |
TOTAL PREFERRED STOCKS | | | | | |
(Cost: $1,591,482) | | | | 1,145,896 | |
|
SHORT-TERM INVESTMENTS — 4.11% | |
|
MONEY MARKET FUNDS — 4.11% | |
BlackRock Cash Funds: Institutional,
SL Agency Shares | | | | | | | | |
0.27%e,f,g | | | 1,849,030 | | | | 1,849,030 | |
BlackRock Cash Funds: Prime,
SL Agency Shares | | | | | | | | |
0.25%e,f,g | | | 132,002 | | | | 132,002 | |
| | |
| 10 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Schedule of Investments (Unaudited) (Continued)
iSHARES® EMERGING MARKETS DIVIDEND INDEX FUND
October 31, 2012
| | | | | | | | |
| Security | | Shares | | | Value | |
| | | | | | | | |
BlackRock Cash Funds: Treasury,
SL Agency Shares | | | | | | | | |
0.08%e,f | | | 47,720 | | | $ | 47,720 | |
| | | | | | | | |
| | | | | | | 2,028,752 | |
| | | | | | | | |
TOTAL SHORT-TERM INVESTMENTS | | | | | |
(Cost: $2,028,752) | | | | 2,028,752 | |
| | | | | | | | |
TOTAL INVESTMENTS
IN SECURITIES —103.72% | | | | | |
(Cost: $51,596,854) | | | | 51,164,273 | |
Other Assets, Less Liabilities — (3.72)% | | | | (1,835,195 | ) |
| | | | | | | | |
NET ASSETS —100.00% | | | $ | 49,329,078 | |
| | | | | | | | |
NVDR — Non-Voting 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 | 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 | All or a portion of this security represents an investment of securities lending collateral. See Note 5. |
See notes to financial statements.
| | | | |
SCHEDULESOF INVESTMENTS | | | 11 | |
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
October 31, 2012
| | | | | | | | |
| | | iShares Asia/Pacific
Dividend 30
Index Fund | | | iShares Emerging
Markets Dividend
Index Fund | |
| | |
ASSETS | | | | | | | | |
Investments, at cost: | | | | | | | | |
Unaffiliated | | $ | 23,508,302 | | | $ | 49,568,102 | |
Affiliated (Note 2) | | | 2,841,347 | | | | 2,028,752 | |
| | | | | | | | |
Total cost of investments | | $ | 26,349,649 | | | $ | 51,596,854 | |
| | | | | | | | |
Investments in securities, at fair value (including securities on loana) (Note 1): | | | | | | | | |
Unaffiliated | | $ | 23,978,230 | | | $ | 49,135,521 | |
Affiliated (Note 2) | | | 2,841,347 | | | | 2,028,752 | |
| | | | | | | | |
Total fair value of investments | | | 26,819,577 | | | | 51,164,273 | |
Foreign currencies, at valueb | | | 241,820 | | | | 48,124 | |
Receivables: | | | | | | | | |
Dividends and interest | | | 41,611 | | | | 116,464 | |
| | | | | | | | |
Total Assets | | | 27,103,008 | | | | 51,328,861 | |
| | | | | | | | |
| | |
LIABILITIES | | | | | | | | |
Payables: | | | | | | | | |
Collateral for securities on loan (Note 5) | | | 2,821,205 | | | | 1,981,032 | |
Foreign taxes (Note 1) | | | — | | | | 64 | |
Investment advisory fees (Note 2) | | | 8,752 | | | | 18,687 | |
| | | | | | | | |
Total Liabilities | | | 2,829,957 | | | | 1,999,783 | |
| | | | | | | | |
| | |
NET ASSETS | | $ | 24,273,051 | | | $ | 49,329,078 | |
| | | | | | | | |
| | |
Net assets consist of: | | | | | | | | |
Paid-in capital | | $ | 23,367,935 | | | $ | 49,972,604 | |
Distributions in excess of net investment income | | | (30,299 | ) | | | (58,458 | ) |
Undistributed net realized gain (accumulated net realized loss) | | | 465,626 | | | | (153,917 | ) |
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | | | 469,789 | | | | (431,151 | ) |
| | | | | | | | |
NET ASSETS | | $ | 24,273,051 | | | $ | 49,329,078 | |
| | | | | | | | |
| | |
Shares outstandingc | | | 450,000 | | | | 950,000 | |
| | | | | | | | |
| | |
Net asset value per share | | $ | 53.94 | | | $ | 51.93 | |
| | | | | | | | |
| a | Securities on loan with values of $2,645,175 and $1,878,814, respectively. See Note 5. |
| b | Cost of foreign currencies: $241,851 and $48,129, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to financial statements.
| | |
| 12 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended October 31, 2012
| | | | | | | | |
| | | iShares Asia/Pacific
Dividend 30
Index Fund | | | iShares Emerging
Markets Dividend
Index Fund | |
| | |
NET INVESTMENT INCOME | | | | | | | | |
Dividends — unaffiliateda | | $ | 489,847 | | | $ | 831,156 | |
Interest — affiliated (Note 2) | | | 4 | | | | 14 | |
Securities lending income — affiliated (Note 2) | | | 16,607 | | | | 13,680 | |
| | | | | | | | |
| | | 506,458 | | | | 844,850 | |
Less: Other foreign taxes (Note 1) | | | — | | | | (6,173 | ) |
| | | | | | | | |
Total investment income | | | 506,458 | | | | 838,677 | |
| | | | | | | | |
| | |
EXPENSES | | | | | | | | |
Investment advisory fees (Note 2) | | | 40,465 | | | | 93,889 | |
| | | | | | | | |
Total expenses | | | 40,465 | | | | 93,889 | |
Less investment advisory fees waived (Note 2) | | | — | | | | (26,234 | ) |
| | | | | | | | |
Net expenses | | | 40,465 | | | | 67,655 | |
| | | | | | | | |
Net investment income | | | 465,993 | | | | 771,022 | |
| | | | | | | | |
| | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | | | | | | |
Net realized gain (loss) from: | | | | | | | | |
Investments — unaffiliated | | | (507,475 | ) | | | (98,971 | ) |
In-kind redemptions — unaffiliated | | | 978,477 | | | | — | |
Foreign currency transactions | | | (730 | ) | | | (19,964 | ) |
| | | | | | | | |
Net realized gain (loss) | | | 470,272 | | | | (118,935 | ) |
| | | | | | | | |
Net change in unrealized appreciation/depreciation on: | | | | | | | | |
Investments | | | 264,786 | | | | 91,850 | |
Translation of assets and liabilities in foreign currencies | | | (815 | ) | | | 2,768 | |
| | | | | | | | |
Net change in unrealized appreciation/depreciation | | | 263,971 | | | | 94,618 | |
| | | | | | | | |
Net realized and unrealized gain (loss) | | | 734,243 | | | | (24,317 | ) |
| | | | | | | | |
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 1,200,236 | | | $ | 746,705 | |
| | | | | | | | |
| a | Net of foreign withholding tax of $16,301 and $127,646, respectively. |
See notes to financial statements.
Statements of Changes in Net Assets
iSHARES®, INC.
| | | | | | | | | | | | | | | | |
| | | iShares Asia/Pacific
Dividend 30
Index Fund | | | iShares Emerging
Markets Dividend
Index Fund | |
| | | Six months ended
October 31, 2012
(Unaudited) | | | Period from
February 23, 2012a to April 30, 2012 | | | Six months
ended
October 31, 2012
(Unaudited) | | | Period from February 23, 2012a
to April 30, 2012 | |
| | | | |
INCREASE (DECREASE) IN NET ASSETS | | | | | | | | | | | | | | | | |
| | | | |
OPERATIONS: | | | | | | | | | | | | | | | | |
Net investment income | | $ | 465,993 | | | $ | 102,610 | | | $ | 771,022 | | | $ | 164,052 | |
Net realized gain (loss) | | | 470,272 | | | | (3,568 | ) | | | (118,935 | ) | | | (42,401 | ) |
Net change in unrealized appreciation/depreciation | | | 263,971 | | | | 205,818 | | | | 94,618 | | | | (525,769 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | 1,200,236 | | | | 304,860 | | | | 746,705 | | | | (404,118 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
DISTRIBUTIONS TO SHAREHOLDERS: | | | | | | | | | | | | | | | | |
From net investment income | | | (489,685 | ) | | | (108,951 | ) | | | (957,617 | ) | | | (28,496 | ) |
From net realized gain | | | — | | | | (1,344 | ) | | | — | | | | — | |
Return of capital | | | — | | | | (3,727 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Total distributions to shareholders | | | (489,685 | ) | | | (114,022 | ) | | | (957,617 | ) | | | (28,496 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
CAPITAL SHARE TRANSACTIONS: | | | | | | | | | | | | | | | | |
Proceeds from shares sold | | | 18,475,420 | | | | 12,994,965 | | | | 33,569,813 | | | | 16,402,791 | |
Cost of shares redeemed | | | (8,098,723 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Net increase in net assets from capital share transactions | | | 10,376,697 | | | | 12,994,965 | | | | 33,569,813 | | | | 16,402,791 | |
| | | | | | | | | | | | | | | | |
INCREASE IN NET ASSETS | | | 11,087,248 | | | | 13,185,803 | | | | 33,358,901 | | | | 15,970,177 | |
| | | | |
NET ASSETS | | | | | | | | | | | | | | | | |
Beginning of period | | | 13,185,803 | | | | — | | | | 15,970,177 | | | | — | |
| | | | | | | | | | | | | | | | |
End of period | | $ | 24,273,051 | | | $ | 13,185,803 | | | $ | 49,329,078 | | | $ | 15,970,177 | |
| | | | | | | | | | | | | | | | |
Undistributed (distributions in excess of) net investment income included in net assets at end of period | | $ | (30,299 | ) | | $ | (6,607 | ) | | $ | (58,458 | ) | | $ | 128,137 | |
| | | | | | | | | | | | | | | | |
| | | | |
SHARES ISSUED AND REDEEMED | | | | | | | | | | | | | | | | |
Shares sold | | | 350,000 | | | | 250,000 | | | | 650,000 | | | | 300,000 | |
Shares redeemed | | | (150,000 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Net increase in shares outstanding | | | 200,000 | | | | 250,000 | | | | 650,000 | | | | 300,000 | |
| | | | | | | | | | | | | | | | |
| a | Commencement of operations. |
See notes to financial statements.
| | |
| 14 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Financial Highlights
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares Asia/Pacific Dividend 30 Index Fund
| | | | | | | | |
| | | Six months
ended Oct. 31, 2012
(Unaudited) | | | Period from
Feb. 23, 2012a to Apr. 30, 2012 | |
Net asset value, beginning of period | | $ | 52.74 | | | $ | 51.62 | |
| | | | | | | | |
Income from investment operations: | | | | | | | | |
Net investment incomeb | | | 1.45 | | | | 0.55 | |
Net realized and unrealized gainc | | | 1.24 | | | | 1.14 | |
| | | | | | | | |
Total from investment operations | | | 2.69 | | | | 1.69 | |
| | | | | | | | |
Less distributions from: | | | | | | | | |
Net investment income | | | (1.49 | ) | | | (0.54 | ) |
Net realized gain | | | — | | | | (0.01 | ) |
Return of capital | | | — | | | | (0.02 | ) |
| | | | | | | | |
Total distributions | | | (1.49 | ) | | | (0.57 | ) |
| | | | | | | | |
Net asset value, end of period | | $ | 53.94 | | | $ | 52.74 | |
| | | | | | | | |
| | |
Total return | | | 5.30 | %d | | | 3.32 | %d |
| | | | | | | | |
| | |
Ratios/Supplemental data: | | | | | | | | |
Net assets, end of period (000s) | | $ | 24,273 | | | $ | 13,186 | |
Ratio of expenses to average net assetse | | | 0.49 | % | | | 0.49 | % |
Ratio of net investment income to average net assetse | | | 5.64 | % | | | 5.76 | % |
Portfolio turnover ratef | | | 7 | % | | | 1 | % |
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares Emerging Markets Dividend Index Fund
| | | | | | | | |
| | | Six months
ended Oct. 31, 2012
(Unaudited) | | | Period from
Feb. 23, 2012a to Apr. 30, 2012 | |
Net asset value, beginning of period | | $ | 53.23 | | | $ | 54.61 | |
| | | | | | | | |
Income from investment operations: | | | | | | | | |
Net investment incomeb | | | 1.44 | | | | 0.74 | |
Net realized and unrealized lossc | | | (1.10 | ) | | | (1.98 | ) |
| | | | | | | | |
Total from investment operations | | | 0.34 | | | | (1.24 | ) |
| | | | | | | | |
Less distributions from: | | | | | | | | |
Net investment income | | | (1.64 | ) | | | (0.14 | ) |
| | | | | | | | |
Total distributions | | | (1.64 | ) | | | (0.14 | ) |
| | | | | | | | |
Net asset value, end of period | | $ | 51.93 | | | $ | 53.23 | |
| | | | | | | | |
| | |
Total return | | | 0.71 | %d | | | (2.27 | )%d |
| | | | | | | | |
| | |
Ratios/Supplemental data: | | | | | | | | |
Net assets, end of period (000s) | | $ | 49,329 | | | $ | 15,970 | |
Ratio of expenses to average net assetse | | | 0.49 | % | | | 0.49 | % |
Ratio of expenses to average net assets prior to waived feese | | | 0.68 | % | | | 0.68 | % |
Ratio of net investment income to average net assetse | | | 5.58 | % | | | 7.51 | % |
Portfolio turnover ratef | | | 6 | % | | | 2 | % |
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| 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 October 31, 2012 is 6%. See Note 4. |
See notes to financial statements.
| | |
| 16 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (Unaudited)
iSHARES®, INC.
iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation.
These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):
| | |
| iShares Index Fund | | Diversification
Classification |
Asia/Pacific Dividend 30 | | Non-diversified |
Emerging Markets Dividend | | Non-diversified |
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
The investment objective of each Fund is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of its underlying index. The investment adviser uses a “passive” or index approach to try to achieve each Fund’s investment objective.
Each Fund may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Funds; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets; and the risk of war.
Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of
| | | | |
NOTESTO FINANCIAL STATEMENTS | | | 17 | |
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
investments for the Funds. The investments of each Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and approved by the Board of Directors of the Company (the “Board”).
| | • | | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| | • | | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors deemed relevant by the Global Valuation Committee, in accordance with policies approved by the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values, and reviews of market related activity.
Fair value pricing could result in a difference between the prices used to calculate a Fund’s net asset value and the prices used by the Fund’s underlying index, which in turn could result in a difference between the Fund’s performance and the performance of the Fund’s underlying index.
Various inputs are used in determining the fair value of financial instruments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument. The three levels of the fair value hierarchy are as follows:
| �� | • | | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| | • | | Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; and |
| | • | | Level 3 — Unobservable inputs for the asset or liability, including the Funds’ assumptions used in determining the fair value of investments. |
| | |
| 18 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of October 31, 2012. The breakdown of each Fund’s investments into major categories is disclosed in its respective Schedule of Investments.
| | | | | | | | | | | | | | | | |
iShares Index Fund and
Investment Type | | Investments | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Asia/Pacific Dividend 30 | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks | | $ | 23,905,041 | | | $ | — | | | $ | — | | | $ | 23,905,041 | |
Rights | | | — | | | | 73,189 | | | | — | | | | 73,189 | |
Short-Term Investments | | | 2,841,347 | | | | — | | | | — | | | | 2,841,347 | |
| | | | | | | | | | | | | | | | |
| | $ | 26,746,388 | | | $ | 73,189 | | | $ | — | | | $ | 26,819,577 | |
| | | | | | | | | | | | | | | | |
Emerging Markets Dividend | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks | | $ | 47,574,503 | | | $ | 415,122 | | | $ | — | | | $ | 47,989,625 | |
Preferred Stocks | | | 1,145,896 | | | | — | | | | — | | | | 1,145,896 | |
Short-Term Investments | | | 2,028,752 | | | | — | | | | — | | | | 2,028,752 | |
| | | | | | | | | | | | | | | | |
| | $ | 50,749,151 | | | $ | 415,122 | | | $ | — | | | $ | 51,164,273 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of October 31, 2012 are reflected in dividends receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Interest income is accrued daily. Realized gains and losses on investment transactions are determined using the specific identification method.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. Foreign currencies, as well as investment securities and other assets and liabilities denominated in foreign currencies, are translated into U.S. dollars using exchange rates deemed appropriate by the investment adviser. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.
Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of securities. Such fluctuations are reflected by the Funds as a component of realized and unrealized gains and losses from investments for financial reporting purposes.
| | | | |
NOTESTO FINANCIAL STATEMENTS | | | 19 | |
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are reflected in their Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of October 31, 2012, if any, are disclosed in the Funds’ Statements of Assets and Liabilities.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.
FEDERAL INCOME TAXES
Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.
RECENT ACCOUNTING STANDARD
In December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years beginning after January 1, 2013, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
| | |
| 20 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee based on the average daily net assets of each Fund as follows:
| | | | |
| iShares Index Fund | | Investment
Advisory Fee | |
Asia/Pacific Dividend 30 | | | 0.49 | % |
Emerging Markets Dividend | | | 0.68 | |
BFA has contractually agreed to waive a portion of its investment advisory fees for the iShares Emerging Markets Dividend Index Fund through December 31, 2014 in an amount equal to the investment advisory fees payable on the amount of the Fund’s investment in other iShares funds. The Fund did not hold any iShares funds during the six months ended October 31, 2012. In addition, BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through December 31, 2014 in an amount equal to 0.19%. After giving effect to the fee waiver, BFA will receive an annual advisory fee of 0.49% of the average daily net assets of the Fund.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”) to serve as securities lending agent for the Funds, subject to applicable conditions. BTC is an affiliate of BFA. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, and any fees or other payments to and from borrowers of securities. Each Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. As securities lending agent, BTC is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BTC is also responsible for fees and expenses incurred by each Fund as a result of the investment of cash collateral received for securities on loan in a money market fund managed by BFA or an affiliate.
For the six months ended October 31, 2012, BTC earned securities lending agent fees from the Funds as follows;
| | | | |
| iShares Index Fund | | Securities Lending
Agent Fees | |
Asia/Pacific Dividend 30 | | $ | 8,942 | |
Emerging Markets Dividend | | | 7,366 | |
BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.
Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest — affiliated” in the Statements of Operations.
The PNC Financial Services Group, Inc. is the largest stockholder of BlackRock and is considered to be an affiliate of the Funds for 1940 Act purposes.
The iShares Emerging Markets Dividend Index Fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the Fund’s underlying index.
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| | | | |
NOTESTO FINANCIAL STATEMENTS | | | 21 | |
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended October 31, 2012 were as follows:
| | | | | | | | |
| iShares Index Fund | | Purchases | | | Sales | |
Asia/Pacific Dividend 30 | | $ | 1,131,970 | | | $ | 1,294,127 | |
Emerging Markets Dividend | | | 17,022,086 | | | | 1,836,327 | |
In-kind transactions (see Note 4) for the six months ended October 31, 2012 were as follows:
| | | | | | | | |
| iShares Index Fund | | In-kind
Purchases | | | In-kind
Sales | |
Asia/Pacific Dividend 30 | | $ | 18,319,847 | | | $ | 8,051,267 | |
Emerging Markets Dividend | | | 18,090,505 | | | | — | |
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
| 5. | LOANS OF PORTFOLIO SECURITIES |
Each Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current value of the securities on loan. The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. Any securities lending cash collateral may be reinvested in certain short-term instruments either directly on behalf of a fund or through one or more joint accounts or money market funds, including those managed by BFA or its affiliates. Each Fund could suffer a loss if the value of an investment purchased with cash collateral falls below the value of the cash collateral received.
| | |
| 22 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of October 31, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of the securities on loan as of October 31, 2012 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of fees and other payments to and from borrowers, and less the fees paid to BTC as securities lending agent.
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
As of April 30, 2012, the Fund’s fiscal year-end, the iShares Emerging Markets Dividend Index Fund had non-expiring capital loss carryforwards in the amount of $32,766 available to offset future realized capital gains.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of October 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| | | | | | | | | | | | | | | | |
| iShares Index Fund | | Tax Cost | | | Gross
Unrealized
Appreciation | | | Gross
Unrealized
Depreciation | | | Net Unrealized
Appreciation
(Depreciation) | |
Asia/Pacific Dividend 30 | | $ | 26,360,902 | | | $ | 942,528 | | | $ | (483,853 | ) | | $ | 458,675 | |
Emerging Markets Dividend | | | 51,600,622 | | | | 2,067,958 | | | | (2,504,307 | ) | | | (436,349 | ) |
Management has reviewed the tax positions as of October 31, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| | | | |
NOTESTO FINANCIAL STATEMENTS | | | 23 | |
Supplemental Information (Unaudited)
iSHARES®, INC.
Section 19(a) Notices
The amounts and sources of distributions reported are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon each Fund’s investment experience during the year and may be subject to changes based on the tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report distributions for federal income tax purposes.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Total Cumulative Distributions
for the Fiscal Year-to-Date | | | % Breakdown of the Total Cumulative
Distributions for the Fiscal Year-to-Date | |
| iShares Index Fund | | Net
Investment
Income | | | Net
Realized
Capital
Gains | | | Return
of
Capital | | | Total
Per
Share | | | Net
Investment
Income | | | Net
Realized
Capital
Gains | | | Return
of
Capital | | | Total
Per
Share | |
Asia/Pacific Dividend 30 | | $ | 1.40085 | | | $ | — | | | $ | 0.08966 | | | $ | 1.49051 | | | | 94 | % | | | — | % | | | 6 | % | | | 100 | % |
Emerging Markets Dividend | | | 1.46722 | | | | — | | | | 0.17262 | | | | 1.63984 | | | | 89 | | | | — | | | | 11 | | | | 100 | |
| | |
| 24 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Notes:
Notes:
| | |
| 26 | | 2012 iSHARES SEMI-ANNUAL REPORTTO SHAREHOLDERS |
For more information visit www.iShares.com
or call 1-800-474-2737
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.
Investing involves risk, including possible loss of principal.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by S&P Dow Jones Indices, LLC, nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request, by calling toll-free 1-800-474-2737; on the Funds’ website at www.iShares.com; and on the U.S. Securities and Exchange Commission (SEC) website at www.sec.gov.
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website.
©2012 BlackRock. All rights reserved. iShares® and BlackRock® are registered trademarks of BlackRock. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.
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iS-SAR-47-1012
Item 2. Code of Ethics.
Not applicable to this semi-annual filing.
Item 3. Audit Committee Financial Expert.
Not applicable to this semi-annual filing.
Item 4. Principal Accountant Fees and Services.
Not applicable to this semi-annual filing.
Item 5. Audit Committee of Listed Registrants.
Not applicable to this semi-annual filing.
Item 6. Investments.
| | (a) | Schedules of investments are included as part of the reports to shareholders filed under Item 1 of this Form. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the Registrant.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.
Item 11. Controls and Procedures.
| | (a) | The President (the Registrant’s Principal Executive Officer) and Chief Financial Officer (the Registrant’s Principal Financial Officer) have concluded that, based on their evaluation as of a date within 90 days of the filing date of this report, the disclosure controls and procedures of the Registrant (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are reasonably designed to achieve the purposes described in Section 4(a) of the attached certification. |
| | (b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a) (1) Not applicable to this semi-annual filing.
(a) (2) Section 302 Certifications are attached.
(a) (3) Not applicable to the Registrant.
(b) Section 906 Certifications are attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
iShares, Inc.
| | |
| By: | | /s/ Michael Latham |
| | Michael Latham, President (Principal Executive Officer) |
| Date: | | December 19, 2012 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| | |
| By: | | /s/ Michael Latham |
| | Michael Latham, President (Principal Executive Officer) |
| Date: | | December 19, 2012 |
| |
| By: | | /s/ Jack Gee |
| | Jack Gee, Treasurer and Chief Financial Officer (Principal Financial Officer) |
| Date: | | December 19, 2012 |
