iShares MSCI Series
ANNUAL REPORT
August 31, 2000
i|Shares
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BARCLAYS GLOBAL INVESTORS (LOGO) THE WAY YOU INVEST NOW.
[GRAPHIC OMITTED] ONLY BETTER.
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iSHARES, INC.
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October 20, 2000
Dear Shareholder:
We are pleased to present the annual report for the iShares MSCI Index
Funds, (each a "Fund", collectively the "Funds"), and formerly known as WEBS
Index Funds. The shares of the Funds were formerly known as World Equity
Benchmark Shares, or WEBS, and are now known as iShares. This report covers the
annual period from September 1, 1999 through August 31, 2000. The annual report
contains important information about the performance of your investment, a
manager's discussion and analysis for each Fund from its Investment Adviser,
Barclays Global Fund Advisors, as well as important financial information.
Each Fund seeks to provide broad-based exposure to a particular country's
stock market by tracking the performance of a Morgan Stanley Capital
International ("MSCI") Index. The Investment Adviser's discussion contains
information about performance and tracking for each of the Funds.
GROWTH ACTIVITY
With your help, the Funds have continued to grow as an efficient way to
invest in selected foreign equity markets. As of August 31, 2000, net assets of
the twenty-one Funds that have commenced operations have grown to $1.9 billion,
representing a 20% growth over the net assets of the seventeen original Funds at
August 31, 1999. Since the semi-annual report, four new Funds have been
introduced: the iShares MSCI Brazil (Free) Index Fund, the iShares MSCI EMU
Index Fund, the iShares MSCI South Korea Index Fund, and the iShares MSCI Taiwan
Index Fund.
Because the value of total net assets fluctuates with the performance of
the respective foreign equity markets, we believe that the number of iShares
outstanding offers a better indicator of the Funds' attractiveness to investors.
iShares outstanding at August 31, 2000 were 136.7 million, an increase of 9.8%
from August 31, 1999. The sustained increase in shares outstanding shows the
growing acceptance of iShares among investors as a way to access foreign equity
markets.
INTERNATIONAL PERFORMANCE
Although the performance reviews for each Fund contained in this report
address specific issues affecting the performance of each Fund's particular
market, a number of trends had a global impact over the past year. During the
first seven months of the reporting period (from September 1, 1999 through March
31, 2000), technology and telecommunications stocks led numerous international
markets by a wide margin. Internet-related stocks were especially popular. This
trend abruptly ended with a sharp correction in March. Although technology and
other growth-oriented issues recovered over the summer, telecommunications
stocks remained subdued due to concerns about slowing growth in the sector.
Other key factors included the direction of U.S. interest rates, which rose
several times over the reporting period but appeared to stabilize over the
summer.
SPECIAL MEETING OF SHAREHOLDERS
On May 5, 2000 the shareholders of each Fund approved a proposal to amend
the Company's agreement with the Investment Adviser in various respects. An
important result of the amendments was to effectively fix the expense ratio of
the Company's 17 original iShares MSCI Index Funds at 0.84% of net assets and
assuming no unusual expenses. The amendment of the Advisory Agreement, the
change from WEBS to iShares, and the appointment of SEI Investments Distribution
Company as the Funds' distributor effective March 27, 2000 occurred in
connection with the Investment Adviser's decision to substantially increase its
activities in the exchange-traded funds market. As of the date of this letter, a
total of 56 types of iShares are offered by iShares, Inc. and by iShares Trust,
which is also advised by the Investment Adviser.
At a meeting that had been adjourned until June 27, 2000 the shareholders
of the iShares MSCI Canada Index Fund approved a proposal to change that fund
from "diversified" to "non-diversified" for purposes of the Investment Company
Act. Such change became effective immediately. Shareholders of the iShares MSCI
Japan and United Kingdom Index Funds did not approve similar proposals at
special meetings that had been adjourned until July 3, 2000. Accordingly, these
Funds continue to operate as diversified funds.
SPECIAL NOTE WITH RESPECT TO MALAYSIA
As a result of capital controls imposed by the Malaysian Government on
September 1, 1998, sales of Creation Units of the iShares MSCI Malaysia (Free)
Index Fund (the "Malaysia Fund") were suspended, and the Company announced that
it would no longer be able to effect redemptions of Creation Units of Malaysia
Fund iShares on an "in kind" basis. Following this announcement, the trading
prices of the Malaysia Fund's iShares often differed materially from their net
asset values.
Effective May 12, 2000, the Malaysia Fund offered to redeem Creation Units
of its iShares for U.S. dollars, and offers of such Creation Units for U.S.
dollars commenced effective May 26, 2000. As a result of these actions Malaysia
Fund iShares have been trading at prices much closer to their net asset values.
The Malaysia Fund recently received regulatory relief from the Malaysian
authorities and is currently investigating the possibility of re-instituting
creations and redemptions on an "in kind" basis.
CONCLUSION
The continued popularity of the iShares MSCI Index Funds continues because
investors such as yourself understand that the Funds provides an easy,
relatively inexpensive way to access any of more than twenty foreign stock
markets.
We thank you for your continued support of and confidence in iShares, Inc.
and hope the Funds will continue to meet your portfolio needs.
Sincerely,
/S/ NATHAN MOST
Nathan Most
Chairman and President
iShares, Inc.
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INTRODUCTION
In this section, the Investment Adviser discusses the performance of each
fund. The introduction provides an overview of how the iShares MSCI Index Funds
(each, a "Fund," and collectively, "the Funds") seek to track their respective
indices. In addition, the introduction identifies some of the key factors that
contribute to the Funds' performance against their benchmarks.
Each Fund invests in a representative sample of the underlying securities
in a corresponding MSCI Index (using the analytic technique known as "portfolio
sampling"), as opposed to a full replication of the corresponding MSCI Index.
Certain funds may also invest to a limited extent in stocks that are not
included in the relevant MSCI Index to permit them additional flexibility to
comply with diversification and other regulatory requirements.
There are several important factors that should be kept in mind when
reviewing the performance of each Fund.
PORTFOLIO SAMPLING: Portfolio sampling is a disciplined approach to
capturing index returns which involves maximizing float and liquidity,
reflecting accurately the market's size and industry profiles and minimizing
cross-ownership. Because of portfolio sampling, the composition of each Fund
will vary from that of its benchmark MSCI Index. This may cause performance to
vary positively or negatively from that of its corresponding MSCI Index during
any period.
FUND EXPENSES: The MSCI Indices are statistical composites that track
changes in the financial markets of a particular country or region. Since the
indices do not actually hold a portfolio of securities, they do not bear
management, administration, distribution, transaction or other expenses, while
the Funds do incur such expenses, thereby negatively impacting the performance
of the Funds.
REGULATORY CONSTRAINTS: Regulatory constraints may also adversely impact
the Investment Adviser's ability to "optimize" the portfolios of certain Funds
through the use of portfolio sampling. For example, each Fund must comply with
the asset diversification tests of Subchapter M of the Internal Revenue Code at
the end of each quarter of its taxable year. The principal regulatory
constraints that affect Fund performance are the "Single Issuer Rule" and the
"5/50 Rule."
The "Single Issuer Rule" generally requires that not more than 25% of the
value of a Fund's total assets may be invested in the securities of one single
issuer. This constraint applies to all share classes of an issuer. As an
example, Samsung Electronics had a weighting of 30.1% in the MSCI South Korea
Index as of August 31, 2000. Because of the "Single Issuer Rule," however, the
iShares MSCI South Korea Index Fund could not hold more than 25% in Samsung.
The "5/50 Rule" generally precludes the sum of all of the securities
weighted over 5% from exceeding 50% of a Fund's total assets. If a security has
more than one share class, then all of the share classes must be considered as
one security for 5/50 Rule purposes. Many of the benchmark MSCI Indices have a
greater than 50% weighting of securities that account for more than 5% of the
respective index. For example, the sum of all the stocks with weightings of 5%
or greater in the MSCI Brazil (Free) Index was 62% as of August 31, so the
iShares MSCI Brazil (Free) Index Fund had to be underweight in some of these
stocks relative to the benchmark, and therefore overweight in other stocks.
The Investment Company Act of 1940 generally requires funds that are
"diversified" (for purposes of the Act) to meet a daily "5/25 Rule" that
requires that the sum of all securities weighted over 5% not exceed 25% of the
Fund's total assets. Although the MSCI Canada Index complied with the 5/25 Rule
when the iShares MSCI Canada Index Fund (the "Canada Fund") was launched in
March 1996, changes in the Canadian equities market resulted in the MSCI Canada
Index falling out of compliance over time. The Canada Fund's tracking was
adversely affected by the need to comply with the 5/25 Rule until the
shareholders of the Canada Fund voted in June to change that fund from
"diversified" to "non-diversified." Non-diversified funds are not subject to the
5/25 Rule. The only Funds that are currently "diversified," and therefore
subject to the 5/25 Rule, are the iShares MSCI Japan and United Kingdom Index
Funds.
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iSHARES, INC.
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REVENUE DIFFERENTIAL: A fourth factor that causes performance of the Funds
to differ from that of their respective MSCI Indices is "revenue differential."
The dividend revenues accrued by the Funds differ from those of the MSCI Indices
both in amount (principally as a result of the portfolio sampling techniques
described above) and timing. The Funds record dividend revenues on the "ex"
dates of the underlying stocks while the MSCI Indices allocate annual dividend
revenues evenly over a 12-month period. In addition, some of the Funds are
subject to withholding taxes at rates that are more favorable than the rates
assumed by the benchmark MSCI Indices, and this factor may affect the relative
performance of such Fund. Finally, while the sole source of revenues for the
MSCI Indices is dividends, the Funds receive interest on uninvested cash and, in
the case of most Funds, revenues from the lending of portfolio securities.
EFFECT OF UNINVESTED ASSETS: Finally, uninvested assets held by the Funds
affect performance relative to their respective benchmark indices. Cash and
deferred organizational expenses are the principal "unequitized" assets of the
Funds. In contrast, the MSCI Indices are always fully invested in the underlying
stocks and thus do not reflect any "unequitized" assets. The "Effect of
Uninvested Assets" refers to the portion of a fund that is not invested in
stocks. The effect of uninvested assets will tend to cause each Fund to
outperform its benchmark index in falling markets and underperform the benchmark
index in rising markets. However, even within a period that has a down market
return (i.e. (10.0%) loss for the annual period), there can be a short stint of
rising markets where the uninvested assets in the Fund have a negative impact on
return. This would cause the effect of uninvested assets to further reduce the
loss for the period (i.e. (10.4%) for the same period where the index returned
(10.0%).
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PERFORMANCE REVIEW iSHARES, INC.
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AUSTRALIA
PERFORMANCE REVIEW
The total return of the iShares MSCI Australia Index Fund (the "Australia
Fund") was 1.84% for the year ended August 31, 2000. The corresponding MSCI
Index returned 3.75% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Australia Fund underperformed the benchmark by 1.91 percentage points
during this period, primarily as a result of portfolio sampling and expenses,
which affected tracking by (1.93%) and (0.94%), respectively. These factors were
partially offset by the positive impact of revenue differential of 0.88% and the
effect of uninvested assets of 0.08%.
As stated in the introduction, regulatory restrictions can adversely affect
the Investment Adviser's ability to optimize the portfolio of a Fund. The MSCI
Australia Index held more than 55% of its assets in names with weights of over
5%. Because of the 5/50 Rule, the Australia Fund was obligated to shift the
weightings of some of its positions so that no more than 50% of its assets were
in companies weighted 5% or more. This was the principal cause of the (1.93%)
variance from the Index performance.
KEY MARKET CONDITIONS
Over the year ended August 31, 2000, the Australian equity market continued
its transformation from a market driven by commodities to one increasingly
influenced by media and telecommunications stocks. As of August 31, 2000, global
media giant News Corp. accounted for approximately one fifth of the MSCI
Australia Index while telecommunications firm Telstra made up another 12
percent. Both of these stocks benefited from investors' enthusiasm for "TMT"
(technology, media and telecommunications) stocks in late 1999 and early 2000.
Interest in those sectors cooled in the spring of 2000. News Corp. then
recovered some ground in May, having reported higher-than-expected earnings and
new expansion plans, including a bid to purchase U.S. television station
operator Chris-Craft. Telstra did not perform as well, due to concerns about
greater competition in Australia's domestic telecommunications market.
Although the mining sector does not dominate the Australian market to quite
the extent that it once did, it still had a powerful influence over the past
year. Investors were encouraged by the prospect of further industry
consolidation. Asia's economic recovery, coupled with weakness in the Australian
dollar, has also improved the outlook for mining companies and other exporters.
Those factors helped to keep the Australian economy healthy over the
reporting period. In June, the country's unemployment rate fell to its lowest
level in a decade. The strong level of growth raised expectations that interest
rates would increase, after having already risen several times during the year.
Income tax cuts, the Australian dollar's weakness, and a slight uptick in
inflation also point to the likelihood of higher interest rates in the next few
months.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI AUSTRALIA INDEX FUND VS. THE MSCI AUSTRALIA INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Australia Index Fund MSCI Australia Index
03/12/96 $10,000 $10,000
08/31/96 $10,388 $10,383
02/28/97 $11,048 $11,054
08/31/97 $11,035 $10,990
02/28/98 $10,799 $10,880
08/31/98 $8,486 $8,724
02/28/99 $10,607 $10,994
08/31/99 $11,208 $11,471
02/29/00 $11,361 $11,778
08/31/00 $11,415 $11,902
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Past performance is not predictive of future performance
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Value
August 31, 2000
---------------
iShares MSCI Australia Index Fund $11,415*
MSCI Australia Index $11,902
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AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
----- ----------
iShares MSCI Australia Index Fund 1.84% 3.00%
MSCI Australia Index 3.75% 3.97%
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* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Australia Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
4
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PERFORMANCE REVIEW iSHARES, INC.
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AUSTRIA
PERFORMANCE REVIEW
The total return of the iShares MSCI Austria Index Fund (the "Austria Fund")
was (15.51%) for the year ended August 31, 2000. The corresponding MSCI Index
returned (15.85%) over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Austria Fund slightly outperformed the benchmark by 0.34 percentage
points during the past year, primarily as a result of the positive effect on
performance of portfolio sampling, which contributed 1.24%, and revenue
differential, which added 0.30%. These factors were partially offset by the
negative effects of expenses, which was (1.15%), and the effect of uninvested
assets of (0.05%).
KEY MARKET CONDITIONS
Over the year ended August 31, 2000, the Austrian equity market turned in a
weak performance.
Unlike many other European markets, Austria continued to be dominated by
so-called "Old Economy" banking and utilities companies. The market's largest
stock as of August 31, 2000, was Bank Austria, which accounted for more than 32%
of the index. Its second-largest stock as of that date was Verbund Oesterreich
Elektrik, an electric-utilities company that, unlike other European utilities
firms, has not ventured extensively into higher-growth areas such as
telecommunications and the Internet. Political issues also weighed on the
Austrian market at various times during the reporting period. The controversy
surrounding Georg Haider put the country at odds with the European Union in
early 2000, as did Austria's slow progress in deregulating its domestic
telecommunications market.
Toward the end of the period, however, the Austrian market was buoyed by
positive sentiment. Investors the news that Bank Austria had agreed to be
acquired by Germany's HypoVereinsbank as a potential spark for further
consolidation in Austria. The deal, if successfully completed, would be the
largest takeover in Austria's history. In addition, the Austrian economy
continued to show signs of health over the past year.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI AUSTRIA INDEX FUND VS. THE MSCI AUSTRIA INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Austria Index Fund MSCI Austria Index
03/12/96 $10,000 $10,000
08/31/96 $9,661 $10,073
02/28/97 $9,401 $9,848
08/31/97 $9,764 $9,928
02/28/98 $10,535 $11,513
08/31/98 $9,975 $10,770
02/28/99 $9,403 $10,353
08/31/99 $9,108 $9,906
02/29/00 $7,622 $8,247
08/31/00 $7,695 $8,336
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Past performance is not predictive of future performance
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Value
August 31, 2000
---------------
iShares MSCI Austria Index Fund $7,695*
MSCI Austria Index $8,336
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AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
-------- ---------
iShares MSCI Austria Index Fund (15.51)% (5.69)%
MSCI Austria Index (15.85)% (3.98)%
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* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Austria Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
5
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PERFORMANCE REVIEW iSHARES, INC.
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BELGIUM
PERFORMANCE REVIEW
The total return of the iShares MSCI Belgium Index Fund (the "Belgium Fund")
was (15.50%) for the year ended August 31, 2000. The corresponding MSCI Index
returned (16.36%) over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Belgium Fund outperformed the benchmark by 0.86 percentage points during
the past year. Contributing to the Fund's outperformance were portfolio sampling
of 1.13%, revenue differential of 0.76%, and the effect of uninvested assets of
0.09%. These factors were partially offset by the negative impact of Fund
expenses, (1.12%).
KEY MARKET CONDITIONS
Over the year ended August 31, 2000, the performance of the Belgian equity
market was weak. In large part, that was because it continues to be dominated by
so-called "Old Economy" companies in the financial services and
electric-utilities industries. As of August 31, 2000, the market's three largest
stocks were financial services firm Fortis Belgium, electric-utilities company
Electrabel, and banking firm Kredietbank. These firms had weightings in the MSCI
Belgium Index of 30.0%, 15.5%, and 18.0%, respectively. Stocks such as these
generally underperformed "New Economy" stocks in the technology, media and
telecommunications industries in the one-year period. Belgium's banking and
utilities stocks were also negatively affected by rising interest rates.
In March and again in May, however, Fortis reported stronger-than-expected
earnings and its shares rose, helping the Belgian market recover some of its
losses for the period. Now Europe's largest combined banking and insurance
company, Fortis has also benefited from its 1999 purchase of American Banking
Insurance Group.
The Belgian market was also supported by relatively good economic conditions
over the past year. Although not as robust as other European economies, Belgium
has benefited somewhat from a better fiscal environment, lower unemployment and
accelerating global growth.
In March, the Brussels Stock Exchange announced that it planned to merge with
the Amsterdam and Paris stock exchanges. Such an exchange would be second in
size only to London among European bourses. In addition, the Belgian firm
Interbrew announced plans to float an initial public offering later in 2000.
Interbrew is now the world's second-largest brewer.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI BELGIUM INDEX FUND VS. THE MSCI BELGIUM INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Belgium Index Fund MSCI Belgium Index
03/12/96 $10,000 $10,000
08/31/96 $10,501 $10,496
02/28/97 $11,204 $11,595
08/31/97 $11,474 $11,662
02/28/98 $13,161 $13,768
08/31/98 $15,996 $17,633
02/28/99 $16,752 $19,637
08/31/99 $15,836 $18,184
02/29/00 $12,328 $14,178
08/31/00 $13,382 $15,209
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Past performance is not predictive of future performance
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Value
August 31, 2000
---------------
iShares MSCI Belgium Index Fund $13,382*
MSCI Belgium Index $15,209
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AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
-------- ---------
iShares MSCI Belgium Index Fund (15.50)% 6.72%
MSCI Belgium Index (16.36)% 9.82%
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* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Belgium Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
6
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PERFORMANCE REVIEW iSHARES, INC.
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BRAZIL (FREE)
PERFORMANCE REVIEW
The total return of the iShares MSCI Brazil (Free) Index Fund (the "Brazil
Fund") was (2.97%) for the period since the Fund's inception on July 11th to the
end of the period. The corresponding MSCI Index returned (3.03%) over the same
period.
SIGNIFICANT PERFORMANCE FACTORS
The Brazil Fund outperformed the benchmark during the reporting period by
0.06 percentage points. Portfolio sampling contributed 0.28% to the Fund's
performance. This was offset by the negative impact of expenses, revenue
differential and the effect of uninvested assets (which affected performance by
(0.13%), (0.05%) and (0.04%), respectively.
KEY MARKET CONDITIONS
The Brazilian market was fairly volatile from July 11 (the Fund's inception)
through August 31, 2000. In July and early August, the market was affected by a
number of factors, including low trading volumes and weakness in the U.S.
market.
The market's performance improved later in August, however. One of the
strongest performers was Petrobras, currently the largest and most liquid stock
in Brazil. Petrobras has benefited from several trends, especially higher prices
for crude oil (which has resulted in record profits for the company), optimism
over the company's global share offering, and general euphoria about the
strength of Brazil's economy. As a testament to Petrobras' success, the company
had a successful $4.1 billion equity offering of ordinary shares in mid-August,
the largest in Latin American history. That same optimism helped to lift other
liquid stocks in the country's banking and telecommunications sectors. Investors
also raised their exposure to Petrobras prior to a reconstitution of Brazil's
stock indexes, which gave even greater prominence to the company. One of the
stocks on the losing end of that trend was Eletrobras, the Brazilian market's
third-largest stock at the end of August. The index reshuffling reduced
Eletrobras' representation, while putting more emphasis on such companies as
cable-television provider Globo Cabo and aerospace company Embraer.
A select group of Brazilian stocks also benefited from good news on the
privatization front over July and August. Investors boosted shares of banking
company Banespa, for example, after a court decision cleared the way for its
postponed privatization to get back on track. Like the market's other financial
services companies, Banespa also benefited from the central bank's decision to
lower the key Selic interest rate to its lowest level in six years.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI BRAZIL (FREE) INDEX FUND VS. THE MSCI BRAZIL (FREE) INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Brazil (Free) Index Fund MSCI Brazil (Free) Index
07/11/00 $10,000 $10,000
07/31/00 $9,466 $9,457
08/31/00 $9,703 $9,697
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Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Brazil (Free) Index Fund $9,703*
MSCI Brazil (Free) Index $9,697
--------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION+
---- ----------
iShares MSCI Brazil (Free) Index Fund -- (2.97)%
MSCI Brazil (Free) Index -- (3.03)%
--------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Brazil (Free) Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
+ For the period July 11, 2000 (commencement of operations) through August 31,
2000 (unannualized).
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PERFORMANCE REVIEW iSHARES, INC.
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CANADA
PERFORMANCE REVIEW
The total return of the iShares MSCI Canada Index Fund (the "Canada Fund")
was 67.21% for the year ended August 31, 2000. The corresponding MSCI Index
returned 80.55% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Canada Fund underperformed the benchmark by 13.34 percentage points
during the past year, primarily as a result of portfolio sampling, which
impacted tracking by (11.65%). Expenses, revenue differential and the effect of
uninvested assets also contributed to the Canada Fund's underperformance
although to a much lesser extent (with impacts of (1.15%), (0.48%) and (0.06%),
respectively).
As stated in the introduction, regulatory restrictions can adversely affect
the Investment Adviser's ability to optimize the portfolio of a Fund. Due to the
Single Issuer Rule, the Canada Fund was obligated to underweight Nortel Networks
by approximately 8%, on average, during the reporting period. Nortel appreciated
by nearly 300% during that period. (Nortel began the fiscal year at 18% of the
MSCI Canada Index but grew to an index weighting of approximately 41% by August
31, 2000.) To compensate, the Investment Advisor had to overweight other
securities, which underperformed Nortel. In addition, the 5/25 Rule limited the
Investment Adviser's ability to optimize the Canada Fund's portfolio in fiscal
2000. As a result of the shareholder vote described in the introduction, the
Canada Fund is no longer subject to the 5/25 Rule.
KEY MARKET CONDITIONS
Over the year ended August 31, 2000, the Canadian equity market reflected in
large part the performance of one stock, Nortel Networks. As of August 31, 2000,
Nortel made up almost 41% of the MSCI Canada Index. Moreover, Nortel's influence
continued to rise with the price of its shares. Like other telecommunications
companies, Nortel benefited from the rally of "New Economy" stocks. Nortel has
been aggressively expanding into the Internet-access and optical-networking
businesses with a string of recent acquisitions. During the spring, however,
Nortel gave back some of its gains, along with other telecommunications and
technology-related stocks. It quickly recovered, and ended the reporting period
with a gain of close to 300%.
Like Nortel, the media conglomerate Seagram also benefited from investors'
enthusiasm for "TMT" (telecommunications, media and technology) stocks. Although
it, too, weakened over the spring, Seagram's shares later rebounded. In June, it
agreed to merge with the French firm Vivendi to form the world's second-largest
media company.
Other sectors of the Canadian equity market were also strong over the past
year. Shares of energy companies rose on higher crude oil prices and, like
commodity producers in general, continued to benefit from accelerating global
growth and a stabilization of the Canadian dollar.
Like its neighbor to the south, Canada's economy remained very healthy during
the reporting period.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI CANADA INDEX FUND VS. THE MSCI CANADA INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Canada Index Fund MSCI Canada Index
03/12/96 $10,000 $10,000
08/31/96 $10,463 $10,521
02/28/97 $12,569 $12,713
08/31/97 $13,445 $13,745
02/28/98 $14,322 $14,679
08/31/98 $10,529 $10,921
02/28/99 $12,717 $13,205
08/31/99 $14,711 $15,203
02/29/00 $18,943 $21,132
08/31/00 $24,594 $27,448
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Canada Index Fund $24,598*
MSCI Canada Index $27,448
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
------ ---------
iShares MSCI Canada Index Fund 67.21% 22.27%
MSCI Canada Index 80.55% 25.30%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Canada Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
8
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
EMU
PERFORMANCE REVIEW
The total return of the iShares MSCI EMU Index Fund (the "EMU Fund") was
(5.82%) for the period from inception through August 31, 2000. The corresponding
MSCI Index returned (5.78%) over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The EMU Fund, which began operations on July 26, 2000, underperformed the
benchmark by 0.04% for the period. Those results were primarily due to the
negative impact of expenses, which was (0.12%). Like all indices, the MSCI EMU
Index is unmanaged and, therefore, does not bear management, administration,
distribution, transaction or other expenses. The Fund's underperformance also
reflected revenue differential of (0.01%). At the same time, the effect of
uninvested assets contributed 0.02% to the Fund's returns and portfolio sampling
added 0.07%.
KEY MARKET CONDITIONS
Due to the Euro's persistent weakness, the US dollar returns from most stock
markets of European Monetary Union (EMU) member countries fell into negative
territory during August. In local-currency terms, however, most of them posted
modest gains, having recovered from a volatile July. In July, increasingly
influential telecom bellwethers such as Nokia and Ericsson announced that they
were expecting slower growth over at least the next quarter. This news created a
domino effect in EMU markets, which have been driven by telecommunications
stocks for some time. As of August 31, 2000, the two largest weightings in the
MSCI EMU Index were telecommunications-related issues: Nokia and France Telecom
with weightings of 6.55% and 3.81%, respectively.
August brought an opportunity for investors to reassess the situation, and a
somewhat more optimistic consensus emerged. Positive economic trends in EMU
member countries and a stabilization of US interest rates helped bolster
confidence as well; a continuation of both those trends would lend support to
further gains in the EMU markets. Investors remain concerned about the auction
of third-generation (3G) wireless licenses in several European markets, however,
as these licenses have commanded much higher prices than investors had been
expecting. That has prompted credit agencies to review the ratings of firms that
won the bidding and has left investors concerned about the long-term costs of
building 3G networks across Europe. Over the next few months, investors are
likely to keep a careful watch on how these developments unfold and affect the
performance of the increasingly telecom-driven EMU markets.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI EMU INDEX FUND VS. THE MSCI EMU INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI EMU Index Fund MSCI EMU Index
07/26/00 $10,000 $10,000
07/31/00 $9,668 $9,657
08/31/00 $9,418 $9,422
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI EMU Index Fund $9,418*
MSCI EMU Index $9,422
--------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION+
---- ----------
iShares MSCI EMU Index Fund -- (5.82)%
MSCI EMU Index -- (5.78)%
--------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI EMU Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
+ For the period July 26, 2000 (commencement of operations) through August 31,
2000 (unannualized).
9
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
FRANCE
PERFORMANCE REVIEW
The total return of the iShares MSCI France Index Fund (the "France Fund")
was 23.45% for the year ended August 31, 2000. The corresponding MSCI Index
returned 24.87% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The France Fund underperformed the benchmark by 1.42 percentage points during
the past year, primarily as a result of the impact of expenses of (0.95%),
portfolio sampling of (0.75%), and the effect of uninvested assets of (0.05%).
Those factors were partially offset by the positive contribution of revenue
differential, which was 0.33%.
KEY MARKET CONDITIONS
The past year was an exceptional period for the French equity market; driven
by stocks in a variety of sectors. During the period, the French market was one
of Europe's top performers.
Telecommunications and media-related stocks led the French market over much
of the reporting period. Shares of France Telecom, the market's largest stock,
rose as investors favored TMT (technology, telecommunications and media) issues.
Until the spring, investors continued to be drawn by France Telecom's record
earnings, strategic acquisitions and plans to float its rapidly growing Internet
and cellular telephone businesses. Since March, however, the stock has weakened
significantly due to growing concerns about the costs of building "third
generation" wireless networks.
Other weak areas during the year included a number of "Old Economy" stocks in
areas such as food, household products and financial services. The latter were
hurt by rising interest rates. Nonetheless, stocks such as TotalFinaElf--the
market's second-largest stock--have continued to provide some support for the
French market. TotalFinaElf shares rose along with the price of crude oil.
Toward the end of the reporting period, growth-oriented stocks were once
again leading the Paris Stock Exchange.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI FRANCE INDEX FUND VS. THE MSCI FRANCE INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI France Index Fund MSCI France Index
03/12/96 $10,000 $10,000
08/31/96 $10,495 $10,371
02/28/97 $12,177 $12,210
08/31/97 $12,237 $12,194
02/28/98 $14,880 $14,933
08/31/98 $16,492 $16,500
02/28/99 $18,010 $18,103
08/31/99 $19,957 $19,836
02/29/00 $24,561 $24,763
08/31/00 $24,637 $24,768
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI France Index Fund $24,637*
MSCI France Index $24,768
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
------ ---------
iShares MSCI France Index Fund 23.45% 22.31%
MSCI France Index 24.87% 22.46%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI France Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
10
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
GERMANY
PERFORMANCE REVIEW
The total return of the iShares MSCI Germany Index Fund (the "Germany Fund")
was 8.44% for the year ended August 31, 2000. The corresponding MSCI Index
returned 10.13% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Germany Fund underperformed its benchmark by 1.69 percentage points
during the past year as a result of the effects of portfolio sampling, which was
(1.31%), expenses of (0.92%), and the effect of uninvested assets of (0.01%).
These factors were partially offset by revenue differential's positive
contribution of 0.55%.
KEY MARKET CONDITIONS
A number of factors converged to make Germany one of Europe's best performing
markets for the year ended August 31, 2000.
Corporate restructuring and growing pro business sentiment on the part of the
government attracted new investors and capital to the German market last year.
One of the most positive developments, in the eyes of investors, was the
government's plan to significantly reduce corporate and personal income taxes.
The German government also announced that it would abolish the 50% capital gains
tax previously levied on corporations when they sold shares in other companies.
Investors greeted this last reform in particular with enthusiasm, as it will
allow German corporations to unwind the extensive network of cross shareholdings
and permit restructuring.
The tax reforms added fuel to the rally already underway. The German equity
market had been on the upswing throughout late 1999 and early 2000, thanks to
strength in its telecommunications and technology-related stocks. Deutsche
Telekom (DT), by far the market's largest stock, appreciated steadily through
March. The positive sentiment toward DT began to turn south over the spring,
however. Like other telecommunications providers, DT has faced some uncertainty
now that the cost of building third generation wireless networks appears to be
much higher than expected. Investors have also been concerned that DT is paying
too much for the U.S. firm VoiceStream Wireless, which DT announced plans to
acquire in order to extend its reach into the United States telecom market.
Although DT's weakness has weighed on the market, it has been supported by
Germany's economic health. The country's GDP grew at a rate of about 3.3% during
the period. Interest rates have risen, but not by much, and the Euro's weakness
has helped to bolster the country's exports.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI GERMANY INDEX FUND VS. THE MSCI GERMANY INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Germany Index Fund MSCI Germany Index
03/12/96 $10,000 $10,000
08/31/96 $10,399 $10,451
02/28/97 $11,291 $11,476
08/31/97 $12,533 $12,778
02/28/98 $14,661 $15,107
08/31/98 $15,752 $16,102
02/28/99 $16,117 $16,643
08/31/99 $16,862 $17,112
02/29/00 $21,975 $22,837
08/31/00 $18,286 $18,845
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Germany Index Fund $18,285*
MSCI Germany Index $18,845
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
------ ---------
iShares MSCI Germany Index Fund 8.44% 14.43%
MSCI Germany Index 10.13% 15.21%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Germany Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
11
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
HONG KONG
PERFORMANCE REVIEW
The total return of the iShares MSCI Hong Kong Index Fund (the "Hong Kong
Fund") was 14.73% for the year ended August 31, 2000. The corresponding MSCI
Index returned 16.41% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Hong Kong Fund underperformed the benchmark by 1.68 percentage points
during the past year, primarily as a result of the impact of portfolio sampling
of (2.36%) and expenses of (0.93%). The impact of security sampling and expenses
was partially offset by the positive effects of the effect of uninvested assets,
which was 1.12%, and revenue differential of 0.49%.
As stated in the introduction, regulatory restrictions can adversely affect
the Investment Adviser's ability to optimize the portfolio of a Fund. Due to the
5/50 Rule, the Hong Kong Fund was underweight in Cheung Kong Holdings, a leading
real-estate company, by approximately 7%. That stock appreciated by more than
60% from October 1999 through February 2000, a period in which the overall Hong
Kong market rose 25%. During the quarterly reconstitution of the MSCI Hong Kong
Index, it was noted that most of Cheung Kong's holdings were already represented
individually in the MSCI Hong Kong Index; if the index held the holding company
as well, it was essentially doubling the representation of Cheung Kong in the
Index. Therefore, Cheung Kong Holdings was deleted from the MSCI Hong Kong Index
during the quarterly index reconstitution on May 31st.
KEY MARKET CONDITIONS
The Hong Kong market ran on two tracks during the year ended August 31, 2000.
On one track were Hong Kong's "Old Economy" firms. Rising interest rates-a
perennial thorn in the side of the Hong Kong market--weighed on financial
services companies such as Hang Seng Bank, which made up nearly 10% of the Index
as of August 31.
The performance of Old Economy stocks contrasted sharply with that of Hong
Kong's growth oriented companies, especially in the technology, media and
telecommunications sectors. Stocks such as Cable & Wireless HKT (one of Hong
Kong's largest stocks) were lifted by positive sentiment in late 1999 and early
2000. Investors were excited by the possibility that China would liberalize its
telecom and Internet-related markets, opening the way for Cable & Wireless HKT
and newly public company China Telecom to build dominant positions in what is
potentially the world's largest consumer market. Although those stocks declined
along with many other telecom stocks worldwide in the spring and summer of 2000,
their gains over the previous months served only to reinforce telecom's growing
influence on the Hong Kong market.
That shift has been most evident in the transformation of Hutchison
Whampoa--which had a 28% weighting in the index as of August 31. The company's
property business has gradually been overshadowed by its expansion into the
telecom field.
With a concentration in telecom rapidly replacing its former concentration in
real estate, Hong Kong's new diversification has not led to a significant
decline in volatility. The market enjoyed a good economic backdrop throughout
the reporting period, with strong trade flows, very robust GDP growth and lower
unemployment.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI HONG KONG INDEX FUND VS. THE MSCI HONG KONG INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Hong Kong Index Fund MSCI Hong Kong Index
03/12/96 $10,000 $10,000
08/31/96 $10,322 $10,415
02/28/97 $11,868 $12,190
08/31/97 $12,159 $12,645
02/28/98 $9,197 $9,871
08/31/98 $5,567 $6,108
02/28/99 $7,630 $8,761
08/31/99 $10,606 $11,932
02/29/00 $12,116 $14,505
08/31/00 $12,167 $13,891
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Hong Kong Index Fund $12,167*
MSCI Hong Kong Index $13,891
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
------ ---------
iShares MSCI Hong Kong Index Fund 14.73% 4.48%
MSCI Hong Kong Index 16.41% 7.62%
--------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Hong Kong Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
12
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
ITALY
PERFORMANCE REVIEW
The total return of the iShares MSCI Italy Index Fund (the "Italy Fund") was
13.35% for the year ended August 31, 2000. The corresponding MSCI Index returned
13.91% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Italy Fund underperformed the benchmark by 0.56 percentage points during
the past year, primarily as a result of the negative effect of expenses of
(0.98%), and portfolio sampling, (0.72%). Those factors were partially offset by
the positive impact of revenue differential, which was 1.12%, and the effect of
uninvested assets of 0.02%.
KEY MARKET CONDITIONS
As with other European markets, the fortunes of Italy's stock exchange were
tied closely to those of its telecommunications stock. As of August 31, Telecom
Italia Mobile SpA and Telecom Italia made up a collective 28.5% of the MSCI
Italy Index.
From the beginning of the period--August 31, 1999--through mid-March 2000,
shares of Telecom Italia Mobile and Telecom Italia rose sharply. Investors were
excited about not only the outlook for continued strong growth in Europe's
telecommunications market, but also the companies' expansion into new businesses
such the Internet. In March, however, these stocks fell along with other TMT
(technology, media and telecommunications) stocks. Exacerbating the decline in
telecom stocks was the growing realization that the cost of building third
generation wireless networks would be much higher than previously expected.
Offsetting the performance of these stocks was the market's financial
services sector. Banks such as ENI (the market's third largest stock as of March
31, 2000) were hurt by concerns that inflation was rising sharply and interest
rates would soon follow suit.
Despite the recent weakness of its telecom stocks, the Italian equity market
benefited from the growing momentum of the country's economy. Italy's exporters
also profited from the weakness of the Euro and higher demand in Asia and other
regions. Italy's unemployment rate declined, although it is still higher than
that of other European countries.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI ITALY INDEX FUND VS. THE MSCI ITALY INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Italy Index Fund MSCI Italy Index
03/12/96 $10,000 $10,000
08/31/96 $10,411 $10,333
02/28/97 $11,151 $11,102
08/31/97 $12,845 $12,862
02/28/98 $17,250 $17,297
08/31/98 $18,968 $19,129
02/28/99 $21,328 $21,666
08/31/99 $19,943 $19,963
02/29/00 $24,734 $24,638
08/31/00 $22,605 $22,740
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Italy Index Fund $22,604*
MSCI Italy Index $22,740
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
------ ---------
iShares MSCI Italy Index Fund 13.35% 19.98%
MSCI Italy Index 13.91% 20.14%
--------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Italy Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
13
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
JAPAN
PERFORMANCE REVIEW
The total return of the iShares MSCI Japan Index Fund (the "Japan Fund") was
8.75% for the year ended August 31, 2000. The corresponding MSCI Index returned
9.22% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Japan Fund underperformed the benchmark by 0.47 percentage points during
the past year as a result of expenses of (0.87%) and the effect of uninvested
assets of (0.09%). The Fund benefited from portfolio sampling of 0.47% and
revenue differential of 0.02%.
KEY MARKET CONDITIONS
The performance of Japan's equity market over the past year was muted by
disappointing economic developments. News that the Japanese economy had
officially sunk back into recession in the fourth quarter of 1999 sent the
market tumbling. The nation's unemployment rate also reached a post-war record
high. In addition, the Yen continued to strengthen versus the U.S. dollar,
putting Japanese exporters at a disadvantage on the global playing field.
Even so, the Japanese market did benefit for a time from the strength of "New
Economy" stocks. Companies such as NTT and Sony attracted investors during late
1999 and early 2000. Although those stocks subsequently lost ground during the
spring's tech and telecom downturn, by the end of the period Sony, and other
Japanese growth stocks, had begun to recover.
In addition, recent data suggest that Japan's economy was stronger toward the
end of the period. With the unemployment rate dipping over the spring, investors
speculated that the Bank of Japan was on the verge of setting aside its zero
interest rate policy.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI JAPAN INDEX FUND VS. THE MSCI JAPAN INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Japan Index Fund MSCI Japan Index
03/12/96 $10,000 $10,000
08/31/96 $9,689 $9,720
02/28/97 $8,060 $8,117
08/31/97 $8,529 $8,596
02/28/98 $7,366 $7,438
08/31/98 $5,682 $5,785
02/28/99 $6,867 $7,031
08/31/99 $8,986 $9,409
02/29/00 $10,297 $10,742
08/31/00 $9,772 $10,277
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Japan Index Fund $9,772*
MSCI Japan Index $10,277
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
----- ---------
iShares MSCI Japan Index Fund 8.75% (0.51)%
MSCI Japan Index 9.22% 0.61%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Japan Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
14
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
MALAYSIA (FREE)
PERFORMANCE REVIEW
The total return of the iShares MSCI Malaysia (Free) Index Fund (the
"Malaysia Fund") was 7.57% for the year ended August 31, 2000. The corresponding
MSCI Index returned 6.54% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Malaysia Fund outperformed the benchmark by 1.03 percentage points during
the past year, primarily as a result of portfolio sampling which contributed
2.22% and revenue differential which added 0.59%. These factors were mitigated
by expenses of (0.95%) and the effect of uninvested assets of (0.83%). The
portfolio sampling contribution to performance of 2.2% was caused by the Fund
being underweight in several of the less liquid securities in the benchmark
index. Such securities underperformed the benchmark during the reporting period.
KEY MARKET CONDITIONS
Unlike other Asian markets, the Malaysian stock exchange posted a flat
performance over the first half of the reporting period in the late months of
1999. The market's large share of "Old Economy" firms, such as banks and
electric utilities, meant that it was on the losing end of a global rally in
"New Economy" stocks.
That changed dramatically in the second half of the reporting period.
Attracted by strength on both the corporate and economic levels, as well as
seemingly greater political stability, investors drove up the Malaysian market
sharply. Malaysia's reinstatement in the MSCI Emerging Markets Indices as of May
2000 encouraged foreign investors to revisit the market, after having pulled out
en masse after the government relaxed capital controls in 1999.
Rising interest rates later took some of the wind out of the rally, but
investors continued to be encouraged by Malaysia's economic strength. The
country's GDP grew at a rate of 8.2% in the third quarter of 1999 and 10.6% in
the fourth quarter.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI MALAYSIA (FREE) INDEX FUND VS. THE MSCI MALAYSIA (FREE) INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Malaysia (Free) Index Fund MSCI Malaysia (Free) Index
03/12/96 $10,000 $10,000
08/31/96 $10,428 $10,512
02/28/97 $11,834 $12,172
08/31/97 $6,237 $6,385
02/28/98 $4,877 $4,890
08/31/98 $1,648 $1,657
02/28/99 $2,428 $2,852
08/31/99 $4,711 $5,050
02/29/00 $6,304 $6,737
05/31/00 $5,958 $6,352
08/31/00 $5,068 $5,380
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
--------
iShares MSCI Malaysia (Free) Index Fund - August 31, 2000 $5,067*
MSCI Malaysia (Free) Index - May 31, 2000 $6,352**
MSCI Malaysia (Free) Index - August 31, 2000 $5,380**
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
------ ---------
iShares MSCI Malaysia (Free) Index Fund 7.57% (14.09)%
MSCI Malaysia (Free) Index 6.54% (12.93)%
--------------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Malaysia (Free) Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not
available for investment.
** The MSCI Malaysia (Free) Index changed from a Net to Gross Index effective
May 31, 2000.
15
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
MEXICO (FREE)
PERFORMANCE REVIEW
The total return of the iShares MSCI Mexico Index Fund (the "Mexico Fund")
was 28.20% for the year ended August 31, 2000. The corresponding MSCI Index
returned 29.21% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Mexico Fund underperformed the benchmark by 1.01 percentage points during
the past year. Although its returns were strong in absolute terms, its
performance relative to the Index was negatively impacted by expenses of (1.04%)
and portfolio sampling of (0.27%). Those factors were partially offset by the
positive effect of revenue differential, which was 0.24%, and the effect of
uninvested assets, which was 0.06%.
KEY MARKET CONDITIONS
The Mexican equity market was driven by a number of favorable trends over the
past year.
The global rush for telecommunications stocks extended to Telefonos de Mexico
("Telmex"), which, at 34.2% of the Index on August 31, 2000, is Mexico's most
important stock. That rally lasted for much of the first half of the reporting
period. In January, however, Mexican equities weakened as U.S. interest rates
rose. Then in March Telmex shares came under pressure from higher U.S. interest
rates, like telecommunications stocks everywhere.
That decline was offset by news that Moody's Investors Service had upgraded
Mexico's sovereign debt to investment-grade status. The Mexican market also
benefited from higher prices for crude oil, a key export. Over the spring,
however, the market continued to drop. Telmex shares again declined when the
company reported lower-than-expected earnings and got involved in diplomatic
wrangling with U.S. trade representatives over deregulation of Mexico's domestic
telecom market.
Overall, however, the Mexican market was supported by very favorable
macroeconomic and political developments over the summer. Investors reacted very
positively to the election of opposition candidate Vicente Fox in early July.
His election brought an end to more than 70 years of uninterrupted rule by the
Institutional Revolutionary Party. The following month brought news that Mexico
had prepaid its $3.2 billion debt to the IMF. Many investors viewed this
development as a very positive sign of Mexico's economic health.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI MEXICO (FREE) INDEX FUND VS. THE MSCI MEXICO (FREE) INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Mexico (Free) Index Fund MSCI Mexico (Free) Index
03/12/96 $10,000 $10,000
08/31/96 $11,592 $11,736
02/28/97 $12,820 $13,254
08/31/97 $15,675 $16,321
02/28/98 $15,311 $16,136
08/31/98 $8,750 $9,159
02/28/99 $12,108 $13,071
08/31/99 $14,605 $16,055
02/29/00 $19,632 $22,171
08/31/00 $18,723 $20,746
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Mexico (Free) Index Fund $18,723*
MSCI Mexico (Free) Index $20,746
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE YEAR SINCE INCEPTION
---------- ---------------
iShares MSCI Mexico (Free) Index Fund 28.20% 15.04%
MSCI Mexico (Free) Index 29.21% 17.71%
--------------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Mexico (Free) Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
16
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
NETHERLANDS
PERFORMANCE REVIEW
The total return of the iShares MSCI Netherlands Index Fund (the "Netherlands
Fund") was 1.28% for the year ended August 31, 2000. The corresponding MSCI
Index returned 4.61% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Netherlands Fund underperformed the benchmark by 3.33 percentage points
during the past year, as a result of the negative impact of portfolio sampling,
which was (2.34%), expenses of (1.02%) and the effect of uninvested assets of
(0.20%). These factors were partially offset by the favorable impact of revenue
differential, which was 0.23%.
As stated in the introduction, regulatory restrictions can adversely affect
the Investment Adviser's ability to optimize the portfolio of a Fund. At August
31, 2000, the sum of all the weightings of 5% or greater in the MSCI Netherlands
Index was over 70%. Because of the need to comply with the 5/50 Rule, the
Netherlands Fund was underweighted in certain positions, and overweighted in
others. The poor performance of the overweighted stocks compared to the MSCI
Netherlands Index was the primary cause of the 2.35% of underperformance caused
by security sampling.
KEY MARKET CONDITIONS
The export driven Dutch equity market benefited from accelerating global
growth and other favorable trends over the past year.
Not only did demand increase generally worldwide, but the price of crude oil
also rose substantially. That trend benefited Royal Dutch/Shell Petroleum, which
made up more than one fourth of the Index as of August 31, 2000. Higher global
demand also helped to lift Philips Electronics, the index's second-largest
stock. Its third-largest stock, telecommunications firm KPN, enjoyed very
positive investor sentiment toward telecom stocks.
Yet this last trend did not boost the Dutch market as much as other European
markets, given the Netherlands' relative shortage of technology stocks. Its
financial services stocks, another big component of the Index, were pressured by
rising interest rates during the reporting period.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI NETHERLANDS INDEX FUND VS. THE MSCI NETHERLANDS INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Netherlands Index Fund MSCI Netherlands Index
03/12/96 $10,000 $10,000
08/31/96 $11,118 $10,974
02/28/97 $12,934 $12,949
08/31/97 $14,237 $14,680
02/28/98 $16,811 $17,273
08/31/98 $16,716 $16,824
02/28/99 $16,952 $17,573
08/31/99 $18,209 $18,862
02/29/00 $18,076 $19,157
08/31/00 $18,450 $19,730
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Netherlands Index Fund $18,449*
MSCI Netherlands Index $19,731
--------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
----- ---------
iShares MSCI Netherlands Index Fund 1.28% 14.66%
MSCI Netherlands Index 4.61% 16.39%
--------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Netherlands Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
17
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
SINGAPORE (FREE)
PERFORMANCE REVIEW
The total return of the iShares MSCI Singapore Index Fund (the "Singapore
Fund") was (1.29%) for the year ended August 31, 2000. The corresponding MSCI
Index returned (3.06%) over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Singapore Fund outperformed the benchmark by 1.77 percentage points
during the past year, primarily as a result of the positive effects of revenue
differential of 1.46% and portfolio sampling of 1.24%. These factors were
partially offset by the negative impact of expenses, which were (0.93%).
KEY MARKET CONDITIONS
Singapore's equity market experienced periods of steep rises and sharp
declines during the reporting period.
Over the last four months of 1999, the Singapore market rallied tremendously.
Growing demand in Asia and around the world helped lift Singapore's export
driven economy. The country's electronics and chemical manufacturing sectors
were especially strong. Investors were also encouraged by the policies the
Singapore government had put in place to steer the economy through Asia's
economic crisis and encourage the growth of a "homegrown" technology sector.
With the turn of the New Year, however, Singapore's equity market deflated
considerably. Rising interest rates pressured banks (which made up 33.50% of the
MSCI Singapore Index as of August 31, 2000), other financial services and
property-related stocks. In addition, the news that Nokia and several high
profile telecommunications companies were expecting their growth to slow weighed
on Singapore's large contingent of contract manufacturers over the summer.
Profit-taking and rotation into other markets in the region also drew capital
from the market over the second half of the reporting period.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI SINGAPORE (FREE) INDEX FUND VS. THE MSCI SINGAPORE (FREE) INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Singapore (Free) Index Fund MSCI Singapore (Free) Index
03/12/96 $10,000 $10,000
08/31/96 $9,327 $9,196
02/28/97 $9,720 $9,670
08/31/97 $7,137 $6,961
02/28/98 $5,687 $5,978
08/31/98 $2,763 $3,108
02/28/99 $4,914 $5,246
08/31/99 $6,756 $7,274
02/29/00 $6,361 $6,951
08/31/00 $6,669 $7,051
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Singapore (Free) Index Fund $6,669*
MSCI Singapore (Free) Index $7,051
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
------- ---------
iShares MSCI Singapore (Free) Index Fund (1.29)% (8.65)%
MSCI Singapore (Free) Index (3.06)% (7.51)%
--------------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Singapore (Free) Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
18
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
SOUTH KOREA
PERFORMANCE REVIEW
The total return of the iShares MSCI South Korea Index Fund (the "South Korea
Fund") was (10.81%) for the period from May 10, 2000--the Fund's inception
date--through August 31, 2000. The corresponding MSCI Index returned (12.52%)
over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The South Korea Fund outperformed the benchmark by 1.71 percentage points
during the reporting period, primarily as a result of portfolio sampling, which
had a positive impact on performance of 2.15%. This positive influence more than
offset the negative impacts of expenses, revenue differential and the effect of
uninvested assets: (0.35%), (0.07%) and (0.02%), respectively.
As stated in the introduction, regulatory restrictions can adversely affect
the Investment Adviser's ability to optimize the portfolio of a Fund. Due to the
Single Issuer Rule, the South Korea Fund was obligated to underweight Samsung
Electronics, the largest security in the MSCI South Korea Index. Due to the 5/50
Rule, the Fund was also underweighted in the electronics components industry as
a whole. These underweightings helped the Fund outperform the Index over the
reporting period, and particularly in August, when Samsung Electronics lagged
the market. The Fund's overweighting in Dae Duck Electronics (largely to
compensate for its Samsung underweighting) was also beneficial, as this stock
appreciated by approximately 21% during the reporting period.
KEY MARKET CONDITIONS
The South Korean equity market was volatile during the period from May 12,
2000 (the Fund's inception date) through August 31, 2000.
Market sentiment was relatively poor as the reporting period began, due
largely to a liquidity crisis at Hyundai, South Korea's largest conglomerate.
The company's apparent reluctance to unwind its web of cross shareholdings and
reduce its debt led investors to sell off shares of Hyundai as well as other
industrial groups on and off until mid-August, when Hyundai finally announced a
restructuring plan.
Shares of Samsung Electronics were also intermittently depressed by weakening
sentiment toward technology and telecommunications-related stocks early in the
summer. That trend also weighed on SK Telecom, the nation's biggest telephone
company and third-largest stock as of March 31. Sentiment toward the telecom and
tech sector improved in August, however, helping to lift both stocks.
In contrast to the somewhat uncertain economic environment, South Korea's
political situation showed progress over the summer. The summit between South
Korean President Kim Dae-jung and North Korean leader Kim Jong-il in mid-June
helped buoy the equity market. Although the two countries' relationship remains
tenuous, investors have been encouraged by the rapprochement and its potential
to lessen the political risk long associated with the South Korean market.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI SOUTH KOREA INDEX FUND VS. THE MSCI SOUTH KOREA INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI South Korea Index Fund MSCI South Korea Index
05/10/00 $10,000 $10,000
05/31/00 $9,455 $9,437
08/31/00 $8,920 $8,748
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI South Korea Index Fund $8,920*
MSCI South Korea Index $8,748
--------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION+
----- ----------
iShares MSCI South Korea Index Fund -- (10.81)%
MSCI South Korea Index -- (12.52)%
--------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI South Korea Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
+ For the period May 10, 2000 (commencement of operations) through August 31,
2000 (unannualized).
19
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
SPAIN
PERFORMANCE REVIEW
The total return of the iShares MSCI Spain Index Fund (the "Spain Fund") was
(1.81%) for the year ended August 31, 2000. The corresponding MSCI Index
returned 2.39% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Spain Fund underperformed the benchmark by 4.20 percentage points during
the reporting period, primarily as a result of portfolio sampling of (3.91%) and
expenses of (0.98%). Those factors were mitigated in part by the positive impact
of revenue differential, which was 0.37%, and the effect of uninvested assets,
which was 0.32%.
As stated in the introduction, regulatory restrictions can adversely affect
the Investment Adviser's ability to optimize the portfolio of a Fund. Due to the
Single Issuer Rule, the Spain Fund was obligated to underweight Telefonica by
approximately 7% from October 1999 through February 2000. Telefonica appreciated
by more than 102% during that period. At the same time, the Investment Advisor
had to overweight other securities, which underperformed Telefonica.
KEY MARKET CONDITIONS
Like several of its European neighbors, Spain's equity market was lifted by a
number of positive trends over the first half of the reporting period. Along
with other markets, its performance weakened somewhat in the spring and summer
of 2000.
TMT (technology, media and telecommunications) stocks led the market in the
fall of 1999 and winter of 2000. Shares of Telefonica surged on positive
sentiment toward telecom in general and Telefonica's rapid growth in particular.
The company, which made up just over 30% of the MSCI Spain Index as of August
31, 2000, is Spain's largest by market capitalization. Although Telefonica has
faced increased competition in its home market, investors have responded
positively to its rapid expansion into new sectors (such as Internet access) and
markets outside Spain. Some of this goodwill dissipated in the spring of 2000,
however, amid a global sell-off in telecommunications stocks. From then through
the end of the reporting period, the price of the company's stock was quite
volatile.
The same was true of Spain's banking shares, another key component of that
market. BSCH Banco Santander Central and BBVA Group, which together made up
almost 35% of the Index as of August 31, 2000, were beset by real and expected
interest rate hikes. But they, too, were supported by investors' positive view
of their expansion plans. Like Telefonica, BSCH and BBVA have broken out of the
value stock mold, due to their rapid growth in Latin America and elsewhere in
Europe.
Overall growth in Spain's economy remained robust over the reporting period.
In fact, the economy's strength has prompted concern that it is overheating. In
July, inflation hit a four year high in both Spain and France, prompting
speculation that the European Central Bank would hike interest rates.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI SPAIN INDEX FUND VS. THE MSCI SPAIN INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Spain Index Fund MSCI Spain Index
03/12/96 $10,000 $10,000
08/31/96 $10,845 $10,917
02/28/97 $12,893 $13,066
08/31/97 $15,092 $15,379
02/28/98 $20,478 $21,053
08/31/98 $20,009 $20,589
02/28/99 $24,389 $24,970
08/31/99 $22,687 $23,707
02/29/00 $24,902 $27,540
08/31/00 $22,275 $24,275
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Spain Index Fund $22,274*
MSCI Spain Index $24,275
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
--------- ---------
iShares MSCI Spain Index Fund (1.81)% 19.59%
MSCI Spain Index 2.39% 21.91%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Spain Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
20
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
SWEDEN
PERFORMANCE REVIEW
The total return of the iShares MSCI Sweden Index Fund (the "Sweden Fund")
was 39.15% for the year ended August 31, 2000. The corresponding MSCI Index
returned 51.71% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Sweden Fund underperformed the benchmark by 12.56 percentage points
during the past year primarily as a result of the negative effects of portfolio
sampling of (12.25%) and expenses of (1.01%). The impact of portfolio sampling
and expenses was partially offset by the effect of uninvested assets, which was
0.47%, and revenue differential, which was 0.23%.
As stated in the introduction, regulatory restrictions can adversely affect
the Investment Adviser's ability to optimize the portfolio of a Fund. Due to the
Single Issuer Rule, the Sweden Fund was obligated to underweight Ericsson by
approximately 20%, on average, during the reporting period. Ericsson appreciated
by nearly 150% during that period. (Ericsson began the fiscal year at 33% of the
MSCI Sweden Index but grew to an index weighting of over 50% by August 31,
2000.) At the same time, the portfolio was overweighted in other securities,
which underperformed Ericsson.
KEY MARKET CONDITIONS
With its large telecommunications component, the Swedish equity market
reflected changing sentiment toward "TMT" (technology, media and
telecommunications) stocks over the reporting period.
In the last four months of 1999 and first few months of 2000, investors
seemingly could not get enough of TMT stocks in many markets around the world.
That created a huge updraft for telecommunications bellwether Ericsson, which
made up more than half the MSCI Sweden Index as of March 31, 2000. Driven
largely by that one stock, the Swedish equity market rose swiftly to outperform
most others in Europe.
Yet it was that same stock that drove the Swedish market in the opposite
direction over the spring and summer of 2000. Along with other TMT stocks
worldwide, shares of Ericsson faltered in March when interest rates rose. Later
that spring, the telecom sector took another hit as it became clearer that the
cost of building third generation wireless networks would be higher than most in
the industry had expected. The new "3G" technology will enable users to access
the Internet via their cell phone and receive high quality video feeds over
wireless devices.
The summer brought more disappointing news for investors. In July, Ericsson
announced that its handset division had posted a loss in the second quarter. It
also said that the unit would end the year in the red, as sales of its high end
phones decline as a share of the total. Investors sold off Ericsson's shares
after the announcement and, through the end of the reporting period, they were
still far from their previous high in early 2000.
Overall, however, the Swedish market has continued to benefit from strong
consumer confidence levels and liquidity.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI SWEDEN INDEX FUND VS. THE MSCI SWEDEN INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Sweden Index Fund MSCI Sweden Index
03/12/96 $10,000 $10,000
08/31/96 $11,413 $11,200
02/28/97 $13,357 $13,344
08/31/97 $14,847 $14,856
02/28/98 $16,353 $16,596
08/31/98 $15,659 $16,093
02/28/99 $16,748 $17,416
08/31/99 $19,589 $20,846
02/29/00 $31,615 $37,492
08/31/00 $27,260 $31,626
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Sweden Index Fund $27,260*
MSCI Sweden Index $31,626
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
----- ---------
iShares MSCI Sweden Index Fund 39.15% 25.11%
MSCI Sweden Index 51.71% 29.33%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Sweden Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
21
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
SWITZERLAND
PERFORMANCE REVIEW
The total return of the iShares MSCI Switzerland Index Fund (the "Switzerland
Fund") was 1.96% for the year ended August 31, 2000. The corresponding MSCI
Index returned 0.45% over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Switzerland Fund outperformed the benchmark by 1.51 percentage points
during the past year, primarily as a result of portfolio sampling, which
contributed 2.25%, and revenue differential, which added 0.35%. These factors
were partially offset by the impact of expenses of (1.00%) and the effect of
uninvested assets of (0.09%).
As stated in the introduction, regulatory restrictions can affect the
Investment Adviser's ability to optimize the portfolio of a Fund. At August 31,
2000, more than 70% of the MSCI Switzerland Index was comprised of names with
weights of over 5%. Because of the 5/50 Rule, the Switzerland Fund shifted the
weightings of some of its positions so that no more than 50% of its assets were
in companies weighted 5% or more. The outperformance of the stocks that were
overweighted in the Fund was the principal cause of the 2.26% positive variance
from the MSCI Switzerland Index.
KEY MARKET CONDITIONS
With its large contingent of so-called "Old Economy" firms, Switzerland's
equity market diverged from more growth-oriented markets over the past year.
During the fall of 1999 and the early months of 2000, investors overwhelmingly
favored TMT (technology, media and telecommunications) stocks over the market's
pharmaceutical, food and banking stocks--sectors which collectively made up
nearly 70% of the MSCI Switzerland Index as of August 31, 2000. Swiss banks and
other financial services companies were also hurt by rising interest rates over
the reporting period.
The market's defensive characteristics became an advantage in the spring of
2000, however. When growth stocks fell into a sharp correction in mid-March,
investors sought out the relative safety of such companies as pharmaceutical
maker Novartis and food manufacturer Nestle. Although growth stocks later
rebounded, investors' uncertainty about the direction of the global economy
continued to support Switzerland's defensive shares. The general health of the
Swiss economy also helped to sustain the country's equity market.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI SWITZERLAND INDEX FUND VS. THE MSCI SWITZERLAND INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Switzerland Index Fund MSCI Switzerland Index
03/12/96 $10,000 $10,000
08/31/96 $10,260 $10,319
02/28/97 $10,210 $10,347
08/31/97 $11,972 $11,998
02/28/98 $15,124 $16,271
08/31/98 $14,515 $15,609
02/28/99 $15,019 $16,706
08/31/98 $14,727 $15,974
02/29/00 $13,569 $14,310
08/31/00 $15,016 $16,045
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Switzerland Index Fund $15,017*
MSCI Switzerland Index $16,045
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
----- ---------
iShares MSCI Switzerland Index Fund 1.96% 9.51%
MSCI Switzerland Index 0.45% 11.14%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Switzerland Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
22
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
TAIWAN
PERFORMANCE REVIEW
The total return of the iShares MSCI Taiwan Index Fund (the "Taiwan Fund")
was (12.10%) for the period from June 21, 2000 (the Fund's inception date)
through August 31, 2000. The corresponding MSCI Index returned (12.15%) over the
same period.
SIGNIFICANT PERFORMANCE FACTORS
The Taiwan Fund outperformed the benchmark by 0.05 percentage points during
the reporting period, including expenses of (0.23%) and portfolio sampling of
(0.15%). The mitigating factor was the effect of uninvested assets which
contributed 0.43% to the Fund performance.
KEY MARKET CONDITIONS
To a large extent, the performance of Taiwan's equity market over the
reporting period reflected shifting sentiment toward the sector Electronic
Components: Instruments, which includes the semi conductor industry. This sector
comprised 52.8% of the MSCI Taiwan Index as of August 31, 2000. The sector was
under a cloud for much of the summer. One issue was slower-than-expected sales
of cellular-telephone handsets, which had been a voracious source of demand for
chips.
The election of Chen Shui-bian to Taiwan's presidency also weighed on the
market in early summer. China warned that any moves by Taiwan to declare
independence could spark hostilities between the two nations. But the
president's conciliatory gestures helped to defuse tension and create a more
positive backdrop for the equity market.
The market remained volatile in July, but began to recover in August, when
sentiment toward the semiconductor industry improved and helped to lift the
overall market. Shares of Taiwan Semiconductor, the market's largest stock, were
also bolstered by news that the company's first-half profits had surged 133% on
a year-over-year basis. The market also became more settled as tensions between
China and Taiwan cooled.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI TAIWAN INDEX FUND VS. THE MSCI TAIWAN INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI Taiwan Index Fund MSCI Taiwan Index
06/21/00 $10,000 $10,000
06/30/00 $9,638 $9,604
08/31/00 $8,790 $8,785
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI Taiwan Index Fund $8,790*
MSCI Taiwan Index $8,785
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION+
---- ----------
iShares MSCI Taiwan Index Fund -- (12.10)%
MSCI Taiwan Index -- (12.15)%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI Taiwan Index Fund and reflects all expenses of the Index Fund. Investors
should note that the Index Fund is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
+ For the period June 21, 2000 (commencement of operations) through August 31,
2000 (unannualized).
23
<PAGE>
PERFORMANCE REVIEW iSHARES, INC.
================================================================================
UNITED KINGDOM
PERFORMANCE REVIEW
The total return of the iShares MSCI United Kingdom Index Fund (the "United
Kingdom Fund") was (3.00%) for the year ended August 31, 2000. The corresponding
MSCI Index returned (2.67%) over the same period.
SIGNIFICANT PERFORMANCE FACTORS
The United Kingdom Fund underperformed the benchmark by 0.33 percentage
points during the past year, primarily as a result of expenses of (0.93%),
revenue differential of (0.01%), and the effect of uninvested assets of (0.08%).
These factors were partially offset by the positive impact of portfolio
sampling, which was 0.69%.
KEY MARKET CONDITIONS
During the reporting period, the U.K. market faced issues of "New Economy"
versus "Old Economy" on the one hand, and rising growth versus rising interest
rates on the other.
From the autumn of 1999 into the winter of 2000, the market rallied along
with many others in Europe. Although the U.K. market does not contain as large a
percentage of "New Economy" stocks as some other European markets, the
technology, media and telecommunications (TMT) stocks it does have contributed
disproportionately large gains.
With the start of the New Year, however, the Bank of England decided to put
the brakes on the economy and raised interest rates. That, coupled with the
pound's strength versus the Euro, created a more subdued market environment in
early 2000. And, as investors continued to flock to TMT stocks, markets with a
greater concentration in those areas outperformed the U.K.
The U.K.'s relatively light share of TMT companies worked to its advantage
over the spring and into summer, however, as investors retreated from those
issues in favor of more defensive "Old Economy" stocks. This trend benefited the
U.K.'s pharmaceutical issues, which made up just over 14% of the MSCI United
Kingdom Index as of August 31, 2000.
As the reporting period drew to a close, market sentiment remained in flux,
with some expecting the U.K. economy's current rate of growth to prompt further
interest rate increases.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
iSHARES MSCI UNITED KINGDOM INDEX FUND VS. THE MSCI UNITED KINGDOM INDEX*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
iShares MSCI United Kingdom Index Fund MSCI United Kingdom Index
03/12/96 $10,000 $10,000
08/31/96 $11,040 $11,078
02/28/97 $12,767 $12,996
08/31/97 $14,405 $14,601
02/28/98 $17,432 $17,851
08/31/98 $16,564 $16,742
02/28/99 $18,581 $18,971
08/31/99 $19,102 $19,461
02/29/00 $18,007 $18,552
08/31/00 $18,528 $18,941
--------------------------------------------------------
Past performance is not predictive of future performance
--------------------------------------------------------
Value
August 31, 2000
---------------
iShares MSCI United Kingdom Index Fund $18,528*
MSCI United Kingdom Index $18,941
-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
ONE SINCE
YEAR INCEPTION
------- ---------
iShares MSCI United Kingdom Index Fund (3.00)% 14.77%
MSCI United Kingdom Index (2.67)% 15.34%
-------------------------------------------------------------------------
------------------
* The chart assumes a hypothetical $10,000 initial investment in the iShares
MSCI United Kingdom Index Fund and reflects all expenses of the Index Fund.
Investors should note that the Index Fund is professionally managed while the
relevant MSCI Index is unmanaged, does not incur expenses and is not available
for investment.
24
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI AUSTRALIA INDEX FUND
--------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
BANKING 21.33%
306,683 Commonwealth Bank of Australia $ 4,905,467
344,100 National Australia Bank Limited 5,050,053
390,848 Westpac Banking Corporation Limited 2,856,549
-----------
12,812,069
-----------
BEVERAGES & TOBACCO 3.40%
42,904 British American Tobacco
Australasia Limited 299,958
277,760 Coca-Cola Amatil Limited 632,329
468,224 Foster's Brewing Group Limited 1,109,213
-----------
2,041,500
-----------
BROADCASTING & PUBLISHING 18.87%
472,502 News Corporation Limited 6,176,889
475,075 News Corporation Limited - Preferred 5,160,569
-----------
11,337,458
-----------
BUILDING MATERIALS &
COMPONENTS 1.99%
157,046 Boral Limited 193,188
302,622 CSR Limited 769,362
110,546 James Hardie Industries Limited 234,160
-----------
1,196,710
-----------
BUSINESS & PUBLIC SERVICES 4.75%
64,387 Brambles Industries Limited 1,830,676
108,500 Computershare Limited 514,069
101,308 Mayne Nickless Limited 232,972
139,500 Transurban Group 274,776
-----------
2,852,493
-----------
CHEMICALS 0.46%
76,074 Orica Limited 273,843
-----------
CONSTRUCTION & HOUSING 0.42%
68,107 Leighton Holdings Limited 252,641
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 0.52%
52,700 ERG Limited 311,991
-----------
ENERGY SOURCES 5.47%
247,132 Broken Hill Proprietary Company
Limited 2,708,352
169,880 Santos Limited 574,216
-----------
3,282,568
-----------
FINANCIAL SERVICES 0.59%
69,378 Suncorp-Metway Limited 355,969
-----------
FOOD & HOUSEHOLD PRODUCTS 0.42%
356,190 Goodman Fielder Limited 254,377
-----------
FOREST PRODUCTS & PAPER 1.12%
168,206 Amcor Limited 536,000
64,852 PaperlinX Limited 134,897
-----------
670,897
-----------
GOLD MINES 1.03%
124,000 Newcrest Mining Limited* 290,673
558,000 Normandy Mining Limited 328,861
-----------
619,534
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
HEALTH & PERSONAL CARE 2.04%
15,500 Cochlear Limited $ 257,446
35,433 CSL Limited 727,351
44,888 FH Faulding & Company Limited 238,614
-----------
1,223,411
-----------
INSURANCE 5.58%
269,514 AMP Limited 2,775,023
115,847 QBE Insurance Group Limited 579,000
-----------
3,354,023
-----------
LEISURE & TOURISM 0.96%
101,680 TABCORP Holdings Limited 578,694
-----------
MERCHANDISING 4.34%
316,138 Coles Myer Limited 1,318,838
325,345 Woolworths Limited 1,287,693
-----------
2,606,531
-----------
METALS - NON FERROUS 5.13%
533,386 Mount Isa Mines Holdings Limited 351,337
82,770 Rio Tinto Limited 1,278,492
308,481 WMC Limited 1,454,263
-----------
3,084,092
-----------
MULTI-INDUSTRY 2.58%
53,816 Howard Smith Limited 245,650
277,760 Pacific Dunlop Limited 250,364
168,640 Southcorp Limited 445,107
74,338 Wesfarmers Limited 607,133
-----------
1,548,254
-----------
REAL ESTATE 6.67%
434,000 Gandel Retail Trust 283,365
399,900 General Property Trust 605,383
140,058 Lend Lease Corporation Limited 1,655,008
155,000 Mirvac Group 325,995
134,788 Stockland Trust Group 291,273
460,691 Westfield Trust 846,475
-----------
4,007,499
-----------
RECREATION, OTHER
CONSUMER GOODS 0.90%
148,800 Aristocrat Leisure Limited 538,214
-----------
TELECOMMUNICATIONS 10.49%
1,728,684 Telstra Corporation Limited 6,302,640
-----------
UTILITIES - ELECTRICAL & GAS 0.94%
93,000 Australian Gas Light Company
Limited 564,222
-----------
TOTAL COMMON STOCK - BASKET
(Cost $59,277,891) 60,069,630
-----------
See accompanying notes to financial statements.
25
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI AUSTRALIA INDEX FUND (CONCLUDED)
--------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK -
NON-BASKET 0.00%
BANKING 0.00%
26 Commonwealth Bank of Australia $ 416
-----------
FOREST PRODUCTS & PAPER 0.00%
20 PaperlinX Limited 42
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $357) 458
-----------
TOTAL INVESTMENTS
(COST $59,278,248)+ 100.00% $60,070,088
======= ===========
------------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $59,622,376. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 6,194,324
Excess of tax cost over value (5,746,612)
-----------
$ 447,712
===========
See accompanying notes to financial statements.
26
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI AUSTRIA INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
BANKING 23.95%
48,146 Bank Austria $ 2,581,245
-----------
BEVERAGES & TOBACCO 9.25%
13,720 Austria Tabakwerke 527,585
10,556 BBAG Oesterreichische
Brau Beteiligungs 469,268
-----------
996,853
-----------
BUILDING MATERIALS &
COMPONENTS 4.72%
23,814 Wienerberger Baustoffindustrie 508,154
-----------
BUSINESS & PUBLIC SERVICES 4.64%
14,560 Flughafen Wien 499,819
-----------
CHEMICALS 2.23%
3,850 Lenzing 240,640
-----------
CONSTRUCTION & HOUSING 2.72%
9,562 Bau Holding 293,305
-----------
ENERGY SOURCES 9.03%
13,104 OMV 972,958
-----------
INSURANCE 4.35%
2,912 Generali Holding Vienna 468,621
-----------
MACHINERY & ENGINEERING 7.45%
12,180 BWT 409,346
8,092 VA Technologie 393,761
-----------
803,107
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
METALS - STEEL 4.61%
15,568 Boehler-Uddeholm $ 497,050
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 9.06%
9,898 Mayr-Melnhof Karton 448,817
24,808 RHI 527,159
-----------
975,976
-----------
TRANSPORTATION - AIRLINES 3.91%
36,302 Austrian Airlines 421,204
-----------
UTILITIES - ELECTRICAL & GAS 14.08%
16,254 Oesterreichische
Elektrizitaetswirtschafts -
Class A 1,517,404
-----------
TOTAL COMMON STOCK - BASKET
(Cost $12,759,379) 10,776,336
-----------
TOTAL INVESTMENTS
(COST $12,759,379)+ 100.00% $10,776,336
======= ===========
-----------
+ Aggregate cost for Federal income tax purposes is $13,274,403. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 174,544
Excess of tax cost over value (2,672,611)
-----------
$(2,498,067)
===========
See accompanying notes to financial statements.
27
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI BELGIUM INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
AUTOMOBILES 3.54%
1,950 D'Ieteren $ 476,955
-----------
BANKING 15.47%
4,225 Dexia 594,271
32,475 KBC Bancassurance Holding NV 1,486,990
-----------
2,081,261
-----------
RECREATION, OTHER CONSUMER
GOODS 1.59%
5,000 Gevaert NV 213,384
-----------
CHEMICALS 4.10%
8,475 Solvay 552,326
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 4.50%
4,800 Barco NV 605,159
-----------
ENERGY SOURCES 1.65%
1,475 Electrafina 221,631
-----------
FINANCIAL SERVICES 4.74%
14,750 Algmene Maatschappij voor
Nijverheidskredit NV 638,271
-----------
HEALTH & PERSONAL CARE 4.57%
16,125 UCB 614,761
-----------
INDUSTRIAL COMPONENTS 2.65%
7,850 Bekaert NV 355,952
-----------
INSURANCE 25.58%
113,175 Fortis B 3,442,352
-----------
MERCHANDISING 8.32%
14,325 Colruyt NV 562,312
9,975 Delhaize-Le Lion 557,847
-----------
1,120,159
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
METALS - NON FERROUS 2.03%
7,725 Union Miniere $ 273,634
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 1.71%
3,200 Glaverbel 230,455
-----------
MULTI-INDUSTRY 7.50%
6,125 Compagnie Benelux Paribas 397,540
2,350 Groupe Bruxelles Lambert 611,147
-----------
1,008,687
-----------
TRANSPORTATION - SHIPPING 0.89%
2,000 Compagnie Maritime Belge 120,029
-----------
UTILITIES - ELECTRICAL & GAS 11.16%
7,025 Electrabel 1,502,149
-----------
TOTAL COMMON STOCK - BASKET
(Cost $15,057,249) 13,457,165
-----------
TOTAL INVESTMENTS
(COST $15,057,249)+ 100.00% $13,457,165
======= ===========
-----------
+ Aggregate cost for Federal income tax purposes is $15,946,468. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 201,827
Excess of tax cost over value (2,691,130)
-----------
$(2,489,303)
===========
See accompanying notes to financial statements.
28
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI BRAZIL (FREE) INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
----------- -------- -----
COMMON STOCK - BASKET 99.27%
BANKING 10.28%
99,636,000 Banco Bradesco Pfd $ 837,829
6,251,000 Banco do Estado de Sao Paulo Pfd 211,974
8,835,000 Banco Itau Pfd 844,897
-----------
1,894,700
-----------
BEVERAGES & TOBACCO 6.17%
817,000 Companhia Cervejaria Brahma Pfd 819,470
64,600 Souza Cruz 317,763
-----------
1,137,233
-----------
BUILDING MATERIALS &
COMPONENTS 1.93%
1,463,000 Companhia Cimento Portland
Itau Pfd 248,473
3,059,000 Duratex Pfd 108,439
-----------
356,912
-----------
CHEMICALS 0.82%
361,000 Copene Petroquimica do
Nordeste Pfd A Shares 150,789
-----------
ENERGY SOURCES 16.99%
21,299,000 Companhia Brasileira de Petroleo
Ipiranga Pfd 226,159
20,900 Petroleo Brasileiro 662,207
74,100 Petroleo Brasileiro Pfd 2,243,974
-----------
3,132,340
-----------
FOOD & HOUSEHOLD PRODUCTS 1.48%
16,017,000 Bombril Pfd 152,291
190,000 Sadia Industria e Comercio Pfd 121,132
-----------
273,423
-----------
FOREST PRODUCTS & PAPER 3.99%
209,000 Aracruz Celulose Pfd B Shares 420,412
7,961,000 Votorantim Celulose e Papel Pfd 315,027
-----------
735,439
-----------
MACHINERY & ENGINEERING 0.35%
25,859,000 Inepar Industria e Construcoes Pfd* 64,239
-----------
MERCHANDISING 3.91%
18,259,000 Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar Pfd 692,427
9,823,000 Lojas Americanas Pfd 27,803
-----------
720,230
-----------
METALS - STEEL 13.58%
14,953,000 Companhia Siderurgica Nacional 543,222
62,700 Companhia Vale do Rio Doce
Pfd A Shares 1,695,433
45,600 Usinas Siderurgicas de Minas
Gerais Pfd A Shares 265,655
-----------
2,504,310
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
----------- -------- -----
TELECOMMUNICATIONS 25.85%
21,128,000 Brasil Telecom Participacoes $ 232,240
11,039,000 Embratel Participacoes 209,313
29,013,000 Embratel Participacoes Pfd 644,202
49,818,000 Tele Celular Sul Participacoes 158,804
46,987,000 Tele Celular Sul Participacoes Pfd 192,390
75,468,000 Tele Centro Oeste Celular
Participacoes Pfd 327,671
39,425,000 Tele Centro Sul Participacoes Pfd 563,369
70,357,000 Tele Nordeste Celular
Participacoes Pfd 216,543
18,449,000 Tele Norte Leste Participacoes 361,984
39,368,000 Tele Norte Leste Participacoes Pfd 997,452
58,349,000 Telesp Celular Participacoes Pfd 862,648
-----------
4,766,616
-----------
UTILITIES - ELECTRICAL & GAS 13.92%
43,092,000 Centrais Electricas Brasileiras 807,605
34,884,000 Centrais Electricas Brasileiras
Pfd B Shares 709,375
99,313,000 Centrais Geradoras do Sul do Brasil* 157,198
62,605,000 Centrais Geradoras do Sul do
Brasil Pfd* 99,094
44,308,000 Companhia Energetica de Minas
Gerais Pfd 793,867
-----------
2,567,139
-----------
TOTAL COMMON STOCK - BASKET
(Cost $18,594,466) 18,303,370
-----------
COMMON STOCK -
NON-BASKET 0.73%
FINANCE 0.71%
191,205,000 Bradespar Pfd Shares* 131,358
-----------
TELECOMMUNICATIONS 0.02%
5,834,900 Telesp Celular Participation
Rights Exp 10/2/00* 3,528
-----------
UTILITIES - ELECTRICAL & GAS 0.00%
1,371,989 Centrais Geradoras Rights Issue
Exp 9/11/00* 8
2,176,445 Centrais Gerasul Common Rights
Issue Exp 9/11/00* 12
-----------
20
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $194,500) 134,906
-----------
TOTAL INVESTMENTS
(COST $18,788,966)+ 100.00% $18,438,276
======= ===========
-------------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $19,517,266. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 627,012
Excess of tax cost over value (1,706,002)
-----------
$(1,078,990)
===========
See accompanying notes to financial statements.
29
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI CANADA INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
AEROSPACE & MILITARY TECHNOLOGY 3.32%
44,200 Bombardier Incorporated - Class B $ 728,324
-----------
BANKING 9.32%
36,231 Bank of Nova Scotia 949,568
33,800 Canadian Imperial Bank of Commerce 1,033,688
3,900 National Bank of Canada 61,752
-----------
2,045,008
-----------
BEVERAGES & TOBACCO 5.28%
19,396 Seagram Company Limited 1,158,078
-----------
BROADCASTING & PUBLISHING 5.34%
3,900 Quebecor Incorporated - Class B 103,801
9,100 Rogers Communications
Incorporated - Class B* 224,615
21,840 Thomson Corporation 842,677
-----------
1,171,093
-----------
BUSINESS & PUBLIC SERVICES 3.19%
22,100 CGI Group Inc.* 185,078
9,100 Cognos, Inc.* 394,002
2,600 Descartes Systems Group, Inc.* 120,858
-----------
699,938
-----------
CHEMICALS 1.53%
13,156 Agrium Incorporated 128,464
3,900 Potash Corporation of
Saskatchewan Incorporated 206,544
-----------
335,008
-----------
ELECTRICAL & ELECTRONICS 32.37%
10,400 Ballard Power Systems Inc* 1,053,258
15,600 Mitel Corporation* 379,765
60,541 Nortel Networks Corporation 4,936,635
3,900 Research in Motion, Limited* 292,890
5,200 Sierra Wireless* 337,099
15,600 SR Telecom Inc.* 105,784
-----------
7,105,431
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 6.03%
11,700 ATI Technologies Inc.* 111,867
15,600 Celestica Inc.* 1,211,229
-----------
1,323,096
-----------
ENERGY EQUIPMENT & SERVICES 0.40%
2,600 Precision Drilling Corporation* 88,330
-----------
ENERGY SOURCES 5.46%
10,881 Alberta Energy Company Limited 399,912
1,300 Canadian Natural Resources Limited* 41,873
975 Canadian Occidental Petroleum
Limited 25,587
13,000 Gulf Canada Resources Limited* 71,845
10,400 Imperial Oil Limited 259,171
6,500 Petro-Canada 137,740
10,400 Suncor Energy Incorporated 234,488
806 Talisman Energy Incorporated* 27,027
-----------
1,197,643
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
FINANCIAL SERVICES 4.15%
15,600 C.I. Fund Management Inc $ 285,617
2,600 Mackenzie Financial Corporation 41,961
27,781 Power Corporation of Canada 583,991
-----------
911,569
-----------
FOREST PRODUCTS & PAPER 0.97%
11,700 Abitibi Consolidated Incorporated 130,908
9,100 Domtar Incorporated 81,145
-----------
212,053
-----------
HEALTH & PERSONAL CARE 3.05%
3,900 Biovail Corporation* 249,519
5,200 MDS Incorporated - Class B 223,910
2,600 QLT Inc.* 196,318
-----------
669,747
-----------
INDUSTRIAL COMPONENTS 1.02%
4,706 Magna International
Incorporated - Class A 225,136
-----------
INSURANCE 3.30%
650 Fairfax Financial Holdings Limited* 87,272
15,600 Manulife Financial Corporation 336,394
14,300 Sun Life Financial Services of Canada* 300,604
-----------
724,270
-----------
LEISURE & TOURISM 0.45%
1,300 Four Seasons Hotel Inc 97,894
-----------
MACHINERY & ENGINEERING 2.00%
27,300 United Dominion Industries Limited 439,666
-----------
MERCHANDISING 0.83%
7,150 Canadian Tire Corporation -
Class A 98,666
3,900 Hudson's Bay Company 40,859
2,600 Sobeys Canada Incorporated 41,873
-----------
181,398
-----------
METALS - NON FERROUS 4.30%
11,700 Alcan Aluminium Limited 382,807
9,100 Cameco Corporation 117,244
5,200 Cominco Limited 73,344
6,006 Inco Limited* 106,501
28,275 Inco Limited VBN Shares* 167,767
1,950 Noranda Incorporated 19,438
3,900 Rio Algom Limited 76,694
-----------
943,795
-----------
METALS - STEEL 1.48%
18,850 Dofasco Incorporated 325,948
-----------
MULTI-INDUSTRY 2.35%
14,300 Canadian Pacific Limited 387,875
9,750 EdperBrascan Corporation -
Class A 127,272
-----------
515,147
-----------
TELECOMMUNICATIONS 2.79%
27,365 BCE Incorporated 612,358
-----------
TRANSPORTATION - AIRLINES 1.04%
18,200 Air Canada Inc.* 227,701
-----------
See accompanying notes to financial statements.
30
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI CANADA INDEX FUND (CONCLUDED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET (CONTINUED)
UTILITIES - ELECTRICAL & GAS 0.03%
585 Transcanada Pipelines Limited $ 5,673
-----------
TOTAL COMMON STOCK - BASKET
(Cost $18,677,367) 21,944,304
-----------
COMMON STOCK -
NON-BASKET 0.00%
ENERGY SOURCES 0.00%
4 Talisman Energy Incorporated 134
-----------
INDUSTRIAL COMPONENTS 0.00%
8 Magna International
Incorporated - Class A 383
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $491) 517
-----------
TOTAL INVESTMENTS
(COST $18,677,858)+ 100.00% $21,944,821
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $18,974,636. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $3,436,905
Excess of tax cost over value (466,720)
----------
$2,970,185
==========
See accompanying notes to financial statements.
31
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI EMU INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 99.99%
AUSTRIA 0.55%
BANKING 0.18%
1,375 Bank Austria $ 73,718
-----------
BEVERAGES & TOBACCO 0.03%
264 Austria Tabakwerke 10,152
110 BBAG Oesterreichische Brau
Beteiligungs 4,890
-----------
15,042
-----------
BUILDING MATERIALS &
COMPONENTS 0.04%
825 Wienerberger Baustoffindustrie 17,604
-----------
BUSINESS & PUBLIC SERVICES 0.02%
253 Flughafen Wien 8,685
-----------
CHEMICALS 0.01%
44 Lenzing 2,750
-----------
CONSTRUCTION & HOUSING 0.01%
88 Bau Holding 2,699
-----------
ENERGY SOURCES 0.06%
319 OMV 23,686
-----------
INSURANCE 0.03%
88 Generali Holding Vienna 14,162
-----------
MACHINERY & ENGINEERING 0.04%
198 BWT 6,654
176 VA Technologie 8,564
-----------
15,218
-----------
METALS - STEEL 0.01%
132 Boehler-Uddeholm 4,214
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.03%
143 Mayr-Melnhof Karton 6,484
242 RHI 5,143
-----------
11,627
-----------
TRANSPORTATION - AIRLINES 0.01%
407 Austrian Airlines 4,722
-----------
UTILITIES - ELECTRICAL & GAS 0.08%
363 Oesterreichische
Elektrizitaetswirtschafts - Class A 33,888
-----------
TOTAL AUSTRIA (Cost $236,815) 228,015
-----------
BELGIUM 2.15%
AUTOMOBILES 0.04%
66 D'Ieteren 16,143
-----------
BANKING 0.39%
3,542 KBC Bancassurance Holding NV 162,184
-----------
CHEMICALS 0.16%
1,001 Solvay 65,236
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 0.04%
143 Barco NV 18,029
-----------
HEALTH & PERSONAL CARE 0.16%
1,738 UCB 66,261
-----------
INDUSTRIAL COMPONENTS 0.03%
264 Bekaert NV 11,971
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
BELGIUM (continued)
INSURANCE 0.64%
8,756 Fortis B $ 266,324
-----------
MERCHANDISING 0.13%
462 Colruyt NV 18,135
616 Delhaize-Le Lion 34,449
-----------
52,584
-----------
METALS - NON FERROUS 0.03%
308 Union Miniere 10,910
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.01%
88 Glaverbel 6,338
-----------
MULTI-INDUSTRY 0.18%
286 Groupe Bruxelles Lambert 74,378
-----------
TRANSPORTATION - SHIPPING 0.01%
110 Compagnie Maritime
Belge 6,601
-----------
UTILITIES - ELECTRICAL & GAS 0.33%
649 Electrabel 138,775
-----------
TOTAL BELGIUM (Cost $913,558) 895,734
-----------
FINLAND 7.42%
BEVERAGES & TOBACCO 0.05%
1,100 Oyj Hartwall Abp 19,560
-----------
BUSINESS & PUBLIC SERVICES 0.08%
1,100 Tietoenator Oyj 35,844
-----------
CHEMICALS 0.01%
1,100 Kemira Oyj 5,858
-----------
ELECTRICAL & ELECTRONICS 6.15%
58,300 Nokia Oyj 2,559,077
-----------
FOOD & HOUSEHOLD PRODUCTS 0.01%
2,200 Raisio Group PLC 3,560
-----------
FOREST PRODUCTS & PAPER 0.20%
3,300 UPM-Kymmene Oyj 83,473
-----------
INSURANCE 0.11%
1,100 Sampo Insurance Co., Ltd. -
A Shares 44,744
-----------
MACHINERY & ENGINEERING 0.03%
1,100 Metso Oyj 13,301
-----------
METALS - NON FERROUS 0.03%
1,100 Outokumpu Oyj 10,954
-----------
METALS - STEEL 0.02%
2,200 Rautaruukki Oyj 8,998
-----------
TELECOMMUNICATIONS 0.71%
8,800 Sonera Oyj 294,186
-----------
WHOLESALE & INTERNATIONAL TRADE 0.02%
1,100 Kesko Oyj - B 10,074
-----------
TOTAL FINLAND (Cost $3,592,733) 3,089,629
-----------
FRANCE 30.98%
AEROSPACE & MILITARY TECHNOLOGY 0.23%
2,002 Thomson CSF 82,947
66 Zodiac SA 14,201
-----------
97,148
-----------
See accompanying notes to financial statements.
32
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI EMU INDEX FUND (CONTINUED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
FRANCE (continued)
APPLIANCES & HOUSEHOLD
DURABLES 0.03%
187 Seb SA $ 10,425
-----------
AUTOMOBILES 0.24%
539 PSA Peugeot Citroen 99,631
-----------
BANKING 1.89%
5,291 Banque Nationale de Paris 486,889
5,038 Societe Generale - Class A 298,769
-----------
785,658
-----------
BEVERAGES & TOBACCO 0.08%
671 Pernod Ricard 35,258
-----------
BROADCASTING & PUBLISHING 0.59%
1,507 Canal Plus 246,403
-----------
BUILDING MATERIALS &
COMPONENTS 0.57%
1,045 Compagnie de Saint Gobain 139,181
1,298 Lafarge 96,248
-----------
235,429
-----------
BUSINESS & PUBLIC SERVICES 3.52%
1,441 Cap Gemini 301,081
1,353 Dassault Systemes SA 116,446
110 Publicis Groupe 43,130
396 Sodexho Alliance 62,108
2,365 Suez Lyonnaise des Eaux 350,945
7,194 Vivendi 588,451
-----------
1,462,161
-----------
CHEMICALS 0.33%
1,089 Air Liquide 138,941
-----------
CONSTRUCTION & HOUSING 0.64%
3,883 Bouygues 244,256
187 Groupe GTM 22,262
-----------
266,518
-----------
ELECTRICAL & ELECTRONICS 3.31%
13,596 Alcatel 1,112,722
451 Sagem 124,345
1,859 Schneider 137,186
-----------
1,374,253
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 1.56%
10,571 ST Microelectronics NV 648,510
-----------
ENERGY EQUIPMENT & SERVICES 0.06%
220 Coflexip SA 26,798
-----------
ENERGY SOURCES 3.16%
8,855 Total - Class B 1,315,578
-----------
FINANCIAL SERVICES 0.08%
143 CPR* 5,562
55 Societe Eurafrance 28,362
-----------
33,924
-----------
FOOD & HOUSEHOLD PRODUCTS 0.64%
1,771 Groupe Danone 242,173
275 Eridania Beghin-Say 24,450
-----------
266,623
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
FRANCE (continued)
HEALTH & PERSONAL CARE 4.18%
9,306 Adventis SA $ 699,152
121 Essilor International 33,565
8,063 L'OREAL 583,543
8,723 Sanofi-Synthelabo 425,785
-----------
1,742,045
-----------
INDUSTRIAL COMPONENTS 0.24%
1,606 Michelin - Class B 47,121
990 Valeo 53,165
-----------
100,286
-----------
INSURANCE 1.60%
4,686 AXA 667,863
-----------
LEISURE & TOURISM 0.31%
2,343 Accor 101,034
209 Club Mediterranee 27,297
-----------
128,331
-----------
MACHINERY & ENGINEERING 0.13%
187 Compagnie Francaise d'Etudes
de Construction Technip 24,291
407 Sidel 27,755
-----------
52,046
-----------
MERCHANDISING 2.38%
8,327 Carrefour 607,832
1,023 Casino Guichard Perrachon 102,325
209 Casino Guichard Perrachon - Pfd 13,286
1,419 Pinault-Printemps-Redoute 268,602
-----------
992,045
-----------
METALS - NON FERROUS 0.11%
968 Pechiney - Class A 44,324
-----------
METALS - STEEL 0.07%
2,904 Usinor 31,113
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.06%
187 Imetal 21,614
154 Nord-Est SA 3,574
-----------
25,188
-----------
MULTI-INDUSTRY 0.28%
1,628 Lagardere S.C.A. 116,159
-----------
REAL ESTATE 0.16%
231 Gecina 21,237
231 Simco 15,702
187 Union du Credit-Bail Immobilier 28,431
-----------
65,370
-----------
RECREATION, OTHER
CONSUMER GOODS 1.17%
5,841 LVMH (Louis Vuitton Moet Hennessy) 453,890
660 Societe BIC 31,130
-----------
485,020
-----------
See accompanying notes to financial statements.
33
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI EMU INDEX FUND (CONTINUED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
FRANCE (continued)
TELECOMMUNICATIONS 3.35%
12,221 France Telecom $ 1,396,245
-----------
TEXTILES & APPAREL 0.01%
77 Chargeurs SA 4,210
-----------
TOTAL FRANCE (Cost $13,191,473) 12,893,503
-----------
GERMANY 23.08%
AUTOMOBILES 1.97%
12,100 DaimlerChrysler 625,048
3,850 Volkswagen 167,729
1,100 Volkswagen - Preferred 28,656
-----------
821,433
-----------
BANKING 2.86%
7,150 Deutsche Bank 624,901
6,050 Dresdner Bank 273,257
4,950 Bayerische HypoVereinsbank 289,369
-----------
1,187,527
-----------
BROADCASTING & PUBLISHING 0.20%
1,650 EM. TV & Merchandising 83,033
-----------
BUILDING MATERIALS &
COMPONENTS 0.12%
550 Buderus 8,949
550 Dyckerhoff - Preferred 10,758
550 Heidelberger Zement 30,318
-----------
50,025
-----------
BUSINESS & PUBLIC SERVICES 2.27%
1,100 Fresenius Medical Care 95,161
2,200 SAP 430,326
1,650 SAP Vorzug 419,567
-----------
945,054
-----------
CHEMICALS 1.54%
7,150 BASF 268,269
8,800 Bayer 372,818
-----------
641,087
-----------
CONSTRUCTION & HOUSING 0.08%
550 Bilfinger & Berger Bau 6,846
1,100 Hochtief 26,651
-----------
33,497
-----------
ELECTRICAL & ELECTRONICS 2.78%
7,150 Siemans 1,153,810
-----------
FOOD & HOUSEHOLD PRODUCTS 0.06%
1,100 Kamps 23,942
-----------
HEALTH & PERSONAL CARE 0.80%
1,100 Beiersdorf 101,224
1,100 Gehe 40,490
2,200 Merck KGAA 73,351
2,200 Schering 117,557
-----------
332,622
-----------
INDUSTRIAL COMPONENTS 0.08%
1,650 Continental 30,001
550 FAG Kugelfischer Georg
Schaefer 3,643
-----------
33,644
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
GERMANY (continued)
INSURANCE 3.68%
2,750 Allianz $ 929,112
2,200 Muenchener
Rueckversicherung 604,412
-----------
1,533,524
-----------
MACHINERY & ENGINEERING 0.29%
550 Deutz* 2,039
550 IWKA 6,699
1,650 Linde 69,683
1,100 MAN 30,807
550 MAN - Preferred 11,052
-----------
120,280
-----------
MERCHANDISING 0.55%
550 Douglas Holding 17,849
1,650 Karstadt 50,539
3,850 Metro 146,506
550 Metro-Vorzug 15,159
-----------
230,053
-----------
METALS - STEEL 0.22%
6,050 Thyssen 92,520
-----------
MULTI-INDUSTRY 0.19%
550 AGIV 5,428
2,200 Preussag 74,622
-----------
80,050
-----------
REAL ESTATE 0.13%
2,200 WCM Beteiligungs-und
Grundbesitz 55,062
-----------
RECREATION, OTHER
CONSUMER GOODS 0.07%
550 Adidas-Salomon 29,585
-----------
TELECOMMUNICATIONS 3.37%
36,300 Deutsche Telekom 1,403,937
-----------
TRANSPORTATION - AIRLINES 0.23%
4,400 Deutsche Lufthansa 97,606
-----------
UTILITIES - ELECTRICAL & GAS 1.59%
5,500 RWE 204,649
1,100 RWE - Preferred 33,008
8,800 VEBA 422,501
-----------
660,158
-----------
TOTAL GERMANY (Cost $10,246,637) 9,608,449
-----------
IRELAND 0.93%
BANKING 0.20%
9,900 Allied Irish Banks Plc 81,948
-----------
BROADCASTING & PUBLISHING 0.05%
6,600 Independent News & Media Plc 22,885
-----------
BUILDING MATERIALS &
COMPONENTS 0.18%
4,400 CRH Plc 73,625
-----------
FINANCIAL SERVICES 0.07%
3,300 Irish Life & Permanent Plc 28,460
-----------
See accompanying notes to financial statements.
34
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI EMU INDEX FUND (CONTINUED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
IRELAND (continued)
FOOD & HOUSEHOLD PRODUCTS 0.09%
3,300 Fyffes Plc $ 2,846
2,200 Greencore Group Plc 5,770
2,200 Kerry Group Plc - A Shares 29,438
-----------
38,054
-----------
FOREST PRODUCTS & PAPER 0.06%
13,200 Jefferson Smurfit Group Plc 25,585
-----------
LEISURE & TOURISM 0.02%
1,100 Jurys Doyle Hotel Group Plc 7,824
-----------
MULTI-INDUSTRY 0.03%
1,100 DCC Plc 10,563
-----------
RECREATION, OTHER
CONSUMER GOODS 0.02%
8,800 Waterford Wedgewood Plc 10,093
-----------
TELECOMMUNICATIONS 0.13%
26,400 eircom Plc 55,629
-----------
TRANSPORTATION - AIRLINES 0.08%
4,400 Ryanair Holdings Plc* 32,470
-----------
TOTAL IRELAND (Cost $402,071) 387,136
-----------
ITALY 11.11%
BANKING 2.46%
5,500 Banca Popolare di Milano SpA 38,759
55,000 Banco di Roma SpA 66,749
55,000 Banco Intesa SpA 235,065
11,000 Banco Intesa SpA Rnc 26,387
16,500 Istituto Bancario San Paolo
di Torino SpA 292,612
8,250 Mediobanca SpA 88,153
55,000 Unicredito Italiano SpA 278,440
-----------
1,026,165
-----------
BROADCASTING & PUBLISHING 0.86%
5,500 Arnoldo Mondadori Editore SpA 73,048
16,500 Mediaset SpA 284,308
-----------
357,356
-----------
BUILDING MATERIALS &
COMPONENTS 0.01%
1,254 Italcementi SpA 4,864
-----------
ENERGY SOURCES 1.32%
93,500 ENI SpA 548,083
-----------
FOOD & HOUSEHOLD PRODUCTS 0.10%
27,500 Parmalat Finanziaria SpA 39,830
-----------
INDUSTRIAL COMPONENTS 0.14%
22,000 Pirelli SpA 59,463
-----------
INSURANCE 1.39%
15,400 Assicurazioni Generali SpA 478,679
8,250 Riunione Adriatica di Sicurta SpA 96,046
429 Societa Assicuratrice
Industriale SpA Rnc 3,429
-----------
578,154
-----------
MERCHANDISING 0.08%
5,500 La Rinascente SpA 33,047
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
ITALY (continued)
TELECOMMUNICATIONS 3.57%
55,000 Olivetti SpA $ 165,920
44,000 Telecom Italia SpA 530,944
11,000 Telecom Italia SpA Rnc 63,952
77,000 Telecom Italia Mobile SpA 645,723
16,500 Telecom Italia Mobile SpA Rnc 80,055
-----------
1,486,594
-----------
TEXTILES & APPAREL 0.12%
27,500 Benetton Group SpA 51,321
-----------
TRANSPORTATION - AIRLINES 0.10%
22,000 Alitalia SpA* 40,822
-----------
UTILITIES - ELECTRICAL & GAS 0.96%
86,801 Enel SpA 347,982
11,000 Italgas SpA 51,042
-----------
399,024
-----------
TOTAL ITALY (Cost $4,911,319) 4,624,723
-----------
NETHERLANDS 14.59%
APPLIANCES & HOUSEHOLD
DURABLES 1.84%
15,686 Philips Electronics 764,266
-----------
BANKING 1.05%
17,523 ABN AMRO Holding 436,232
-----------
BEVERAGES & TOBACCO 0.46%
3,740 Heineken 190,204
-----------
BROADCASTING & PUBLISHING 0.39%
7,975 Elsevier 96,574
3,311 Wolters Klumer CVA 67,119
-----------
163,693
-----------
BUSINESS & PUBLIC SERVICES 0.48%
4,026 Getronics 50,543
5,698 TNT Post Group 133,289
1,144 Vedior 15,003
-----------
198,835
-----------
CHEMICALS 0.36%
3,410 Akzo Nobel 151,016
-----------
CONSTRUCTION & HOUSING 0.05%
418 Hollandsche Beton Groep 4,292
330 IHC Caland 17,164
-----------
21,456
-----------
DATA PROCESSING &
REPRODUCTION 0.04%
1,012 Oce 15,071
-----------
ELECTRONIC COMPONENTS &
INSTRUMENTS 0.45%
4,972 ASM Lithography Holding NV* 188,009
-----------
ENERGY SOURCES 3.74%
25,586 Royal Dutch/Shell Group 1,558,277
-----------
FINANCIAL SERVICES 1.86%
11,528 Ing Groep 772,818
-----------
FOOD & HOUSEHOLD PRODUCTS 0.78%
6,820 Unilever 323,194
-----------
See accompanying notes to financial statements.
35
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI EMU INDEX FUND (CONTINUED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
NETHERLANDS (continued)
INSURANCE 1.50%
16,016 Aegon $ 625,130
-----------
MACHINERY & ENGINEERING 0.01%
385 Stork 4,176
-----------
MERCHANDISING 0.60%
8,822 Koninklijke Ahold 249,585
-----------
TELECOMMUNICATIONS 0.73%
11,374 Koninklijke Kpn 303,481
-----------
TRANSPORTATION - AIRLINES 0.04%
660 KLM Koninklijke Luchvaart Mij 16,519
-----------
TRANSPORTATION - ROAD & RAIL 0.01%
275 Koninklijke Nedlloyd 5,149
-----------
TRANSPORTATION - SHIPPING 0.03%
649 Koninklijke Vopak 13,733
-----------
WHOLESALE & INTERNATIONAL TRADE 0.17%
1,221 Buhrmann 34,685
1,276 Hagemeyer 36,565
-----------
71,250
-----------
TOTAL NETHERLANDS
(Cost $6,202,821) 6,072,094
-----------
PORTUGAL 1.38%
BANKING 0.46%
24,376 Banco Comercial Portugues SA 127,002
2,288 Banco Espirito Santo SA 37,207
6,743 BPI - SGPS SA 23,981
-----------
188,190
-----------
BUILDING MATERIALS &
COMPONENTS 0.08%
1,606 Cimentos de Portugal SGPS SA 34,284
-----------
BUSINESS & PUBLIC SERVICES 0.07%
3,575 Brisa - Auto Estradas de Portugal SA 29,624
-----------
CHEMICALS 0.00%
297 CIN - Corporacao Industrial
do Norte SA 1,426
-----------
CONSTRUCTION & HOUSING 0.00%
385 Sociedade de Construcoes
Soares da Costa SA* 1,041
-----------
ELECTRICAL & ELECTRONICS 0.00%
165 EFACEC Capital SGPS SA* 996
-----------
FOREST PRODUCTS & PAPER 0.02%
363 INAPA - Investimentos
Participacoes e Gestao SA 2,191
1,034 Portucel Industrial - Empresa
Produtora de Celulose SA 6,527
-----------
8,718
-----------
MERCHANDISING 0.15%
1,144 Jeronimo Martins SGPS SA 16,335
29,326 Sonae SGPS SA 45,368
-----------
61,703
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.00%
176 Corticeira Amorim SGPS SA 1,402
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
PORTUGAL (continued)
TELECOMMUNICATIONS 0.32%
12,463 Portugal Telecom SA $ 129,868
-----------
UTILITIES - ELECTRICAL & GAS 0.28%
35,794 Electricidade de Portugal SA 116,160
-----------
TOTAL PORTUGAL (Cost $607,353) 573,412
-----------
SPAIN 7.80%
BANKING 2.71%
37,180 Banco Bilbao Vizcaya SA 552,380
53,031 Banco Santander Central
Hispano SA 570,515
-----------
1,122,895
-----------
BEVERAGES & TOBACCO 0.14%
4,169 Altadis SA 59,863
-----------
BUILDING MATERIALS &
COMPONENTS 0.02%
264 Portland Valderrivas SA 5,032
605 Uralita SA 3,765
-----------
8,797
-----------
BUSINESS & PUBLIC SERVICES 0.13%
1,650 Aguas de Barcelona 20,685
3,322 Autopistas Concesionaria
Espanola SA 25,696
715 Prosegur Cia de Seguridad SA 8,741
-----------
55,122
-----------
CHEMICALS 0.00%
2,794 Ercros SA* 1,341
-----------
CONSTRUCTION & HOUSING 0.14%
759 Actividades de Construccion y
Servicios SA 18,727
1,430 Fomento de Construcciones y
Contratas SA 22,886
2,057 Groupo Dragados 17,191
-----------
58,804
-----------
ENERGY SOURCES 0.67%
14,168 Repsol SA 280,909
-----------
FOOD & HOUSEHOLD PRODUCTS 0.04%
792 Azucarera Ebro Agricolas SA 9,225
3,641 Puleva SA* 5,503
-----------
14,728
-----------
FOREST PRODUCTS & PAPER 0.01%
253 Grupo Empresarial Ence SA 4,679
-----------
HEALTH & PERSONAL CARE 0.01%
396 Fabrica Espanola de Productos y
Farmaceuticos SA 4,119
-----------
INSURANCE 0.03%
726 Corporacion Mapfre 11,554
-----------
LEISURE & TOURISM 0.08%
2,046 Sol Melia SA 20,920
2,563 TelePizza SA* 13,308
-----------
34,228
-----------
MACHINERY & ENGINEERING 0.03%
1,628 Zardoya Otis SA 12,824
-----------
See accompanying notes to financial statements.
36
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI EMU INDEX FUND (CONCLUDED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
SPAIN (continued)
MERCHANDISING 0.02%
473 Cortefiel SA $ 9,576
-----------
METALS - NON FERROUS 0.01%
484 Asturiana de Zinc 4,523
-----------
METALS - STEEL 0.05%
693 Acerinox SA 20,333
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.01%
583 Viscofan 3,613
-----------
MULTI-INDUSTRY 0.06%
979 Corporacion Financiera Alba 24,546
-----------
REAL ESTATE 0.06%
616 Metrovacesa SA 9,804
990 Urbis Ser 1,2,3* 4,260
1,540 Vallehermoso SA 9,858
-----------
23,922
-----------
TELECOMMUNICATIONS 2.32%
50,358 Telefonica SA* 967,106
-----------
UTILITIES - ELECTRICAL & GAS 1.26%
12,628 Endesa SA 246,446
5,346 Gas Natural SDG SA 86,745
10,758 Iberdrola SA 123,866
3,630 Union Electrica Fenosa SA 67,486
-----------
524,543
-----------
TOTAL SPAIN (Cost $3,384,037) 3,248,025
-----------
TOTAL COMMON STOCK - BASKET
(Cost $43,688,817) 41,620,720
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK -
NON-BASKET 0.01%
IRELAND 0.01%
ENERGY SOURCES 0.01%
2,400 Tullow Oil Plc* $ 2,091
-----------
TOTAL IRELAND (Cost $2,236) 2,091
-----------
NETHERLANDS 0.00%
APPLIANCES & HOUSEHOLD
DURABLES 0.00%
9 Philips Electronics 439
-----------
TOTAL NETHERLANDS (Cost $429) 439
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $2,665) 2,530
-----------
TOTAL INVESTMENTS
(COST $43,691,482)+ 100.00% $41,623,250
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $43,693,747. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 586,764
Excess of tax cost over value (2,657,261)
-----------
$(2,070,497)
===========
See accompanying notes to financial statements.
37
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI FRANCE INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 99.99%
AEROSPACE & MILITARY TECHNOLOGY 0.66%
15,156 Thomson CSF $ 627,946
-----------
AUTOMOBILES 0.79%
4,032 PSA Peugeot Citroen 745,292
-----------
BANKING 6.30%
40,500 Banque Nationale de Paris 3,726,894
37,764 Societe Generale - Class A 2,239,523
-----------
5,966,417
-----------
BEVERAGES & TOBACCO 0.24%
4,392 Pernod Ricard 230,782
-----------
BROADCASTING & PUBLISHING 1.92%
11,124 Canal Plus 1,818,840
-----------
BUILDING MATERIALS &
COMPONENTS 1.83%
7,524 Compagnie de Saint Gobain 1,002,103
9,828 Lafarge 728,757
-----------
1,730,860
-----------
BUSINESS & PUBLIC SERVICES 11.69%
10,908 Cap Gemini 2,279,107
10,332 Dassault Systemes 889,225
828 Publicis Groupe 324,654
3,168 Sodexho Alliance 496,862
17,568 Suez Lyonnaise des Eaux 2,606,936
54,630 Vivendi 4,468,592
-----------
11,065,376
-----------
CHEMICALS 1.08%
8,028 Air Liquide 1,024,262
-----------
CONSTRUCTION & HOUSING 2.03%
27,720 Bouygues 1,743,698
1,476 Groupe GTM 175,719
-----------
1,919,417
-----------
ELECTRICAL & ELECTRONICS 10.84%
101,034 Alcatel 8,268,811
3,438 Sagem 947,893
14,184 Schneider 1,046,715
-----------
10,263,419
-----------
ELECTRICAL COMPONENTS,
INSTRUMENTS 4.48%
69,210 STMicroelectronics NV 4,245,899
-----------
ENERGY EQUIPMENT & SERVICES 0.21%
1,620 Coflexip 197,327
-----------
ENERGY SOURCES 10.30%
65,628 Total - Class B 9,750,286
-----------
FINANCIAL SERVICES 0.32%
1,998 CPR* 77,719
432 Societe Eurafrance 222,773
-----------
300,492
-----------
FOOD & HOUSEHOLD PRODUCTS 2.17%
2,412 Eridania Beghin-Say 214,451
13,446 Groupe Danone 1,838,659
-----------
2,053,110
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
HEALTH & PERSONAL CARE 13.52%
69,138 Aventis $ 5,194,279
1,062 Essilor International 294,599
58,014 L'OREAL 4,198,643
63,900 Sanofi-Synthelabo 3,119,069
-----------
12,806,590
-----------
INDUSTRIAL COMPONENTS 0.84%
13,122 Michelin - Class B 385,004
7,632 Valeo 409,852
-----------
794,856
-----------
INSURANCE 5.30%
35,190 AXA 5,015,388
-----------
LEISURE & TOURISM 1.03%
17,370 Accor 749,020
1,746 Club Mediterranee 228,044
-----------
977,064
-----------
MACHINERY & ENGINEERING 0.44%
1,530 Compagnie Francaise d'Etudes
de Construction Technip 198,744
3,132 Sidel 213,584
-----------
412,328
-----------
MERCHANDISING 7.40%
60,174 Carrefour 4,392,419
5,400 Casino Guichard Perrachon 540,130
10,944 Pinault-Printemps-Redoute 2,071,588
-----------
7,004,137
-----------
METALS - NON FERROUS 0.36%
7,452 Pechiney - Class A 341,218
-----------
METALS - STEEL 0.26%
23,364 Usinor 250,314
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.18%
1,512 Imerys 174,762
-----------
MULTI-INDUSTRY 0.98%
12,978 Lagardere S.C.A. 925,986
-----------
REAL ESTATE 0.18%
576 Simco 39,152
864 Union du Credit-Bail Immobilier 131,359
-----------
170,511
-----------
RECREATION, OTHER CONSUMER
GOODS 3.77%
43,092 LVMH (Louis Vuitton Moet
Hennessy) 3,348,573
4,716 Societe BIC 222,439
-----------
3,571,012
-----------
TELECOMMUNICATIONS 10.87%
90,108 France Telecom 10,294,807
-----------
TOTAL COMMON STOCK - BASKET
(Cost $76,399,698) 94,678,698
-----------
See accompanying notes to financial statements.
38
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI FRANCE INDEX FUND (CONCLUDED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK -
NON-BASKET 0.01%
ELECTRICAL & ELECTRONICS 0.00%
9 Sagem $ 2,481
-----------
ENERGY EQUIPMENT & SERVICES 0.01%
54 Compagnie General de
Geophysique* 4,033
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $5,514) 6,514
-----------
TOTAL INVESTMENTS
(COST $76,405,212)+ 100.00% $94,685,212
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $76,499,118. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $20,373,205
Excess of tax cost over value (2,187,111)
-----------
$18,186,094
===========
See accompanying notes to financial statements.
39
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI GERMANY INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
AEROSPACE & MILITARY TECHNOLOGY 0.02%
2,500 Rheinmetall $ 28,451
------------
AUTOMOBILES 7.18%
128,750 DaimlerChrysler 6,650,818
75,000 Volkswagen 3,267,451
40,000 Volkswagen - Preferred 1,042,028
------------
10,960,297
------------
BANKING 12.18%
90,000 Bayerische HypoVereinsbank 5,261,263
77,500 Deutsche Bank 6,773,403
145,000 Dresdner Bank 6,549,127
------------
18,583,793
------------
BEVERAGES & TOBACCO 0.03%
1,250 Brau und Brunnen* 40,843
------------
BROADCASTING & PUBLISHING 0.83%
25,000 EM.TV & Merchandising 1,258,080
------------
BUILDING MATERIALS &
COMPONENTS 0.78%
16,250 Buderus 264,397
12,500 Dyckerhoff - Preferred 244,503
12,375 Heidelberger Zement 682,164
------------
1,191,064
------------
BUSINESS & PUBLIC SERVICES 8.03%
18,750 Fresenius Medical Care 1,622,056
30,000 SAP 5,868,075
18,750 SAP - Vorzug 4,767,811
------------
12,257,942
------------
CHEMICALS 6.52%
120,000 BASF 4,502,414
128,750 Bayer 5,454,587
------------
9,957,001
------------
CONSTRUCTION & HOUSING 0.32%
10,000 Bilfinger & Berger Bau 124,474
15,000 Hochtief 363,421
------------
487,895
------------
ELECTRICAL & ELECTRONICS 13.48%
127,500 Siemens 20,574,938
------------
FOOD & HOUSEHOLD PRODUCTS 0.46%
32,500 Kamps 707,370
------------
HEALTH & PERSONAL CARE 3.75%
16,250 Beiersdorf 1,495,359
15,000 Gehe 552,133
36,250 Merck KGAA 1,208,623
46,250 Schering 2,471,371
------------
5,727,486
------------
INDUSTRIAL COMPONENTS 0.35%
23,750 Continental 431,826
15,000 FAG Kugelfischer Georg Schaefer 99,357
------------
531,183
------------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
INSURANCE 15.67%
52,500 Allianz $ 17,737,590
22,500 Muenchener
Rueckversicherung 6,181,484
------------
23,919,074
------------
MACHINERY & ENGINEERING 1.32%
10,000 Deutz* 37,076
3,750 IWKA 45,678
15,000 Linde 633,485
37,500 MAN 1,050,252
12,500 MAN - Preferred 251,171
------------
2,017,662
------------
MERCHANDISING 2.30%
16,250 Douglas Holding 527,349
28,750 Karstadt 880,600
48,750 Metro 1,855,112
8,750 Metro - Vorzug 241,169
------------
3,504,230
------------
METALS - STEEL 0.94%
93,750 Thyssen 1,433,677
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.23%
5,000 SGL Carbon* 346,750
------------
MULTI-INDUSTRY 1.06%
22,500 AGIV 222,053
41,250 Preussag 1,399,169
------------
1,621,222
------------
REAL ESTATE 0.57%
35,000 WCM Beteiligungs-und Grundbesitz 875,988
------------
RECREATION, OTHER CONSUMER
GOODS 0.35%
10,000 Adidas-Salomon 537,907
------------
TELECOMMUNICATIONS 15.17%
598,750 Deutsche Telekom 23,157,224
------------
TRANSPORTATION - AIRLINES 1.33%
91,250 Deutsche Lufthansa 2,024,208
------------
UTILITIES - ELECTRICAL & GAS 7.13%
102,375 RWE 3,809,264
21,875 RWE - Preferred 656,408
133,500 E.On 6,409,538
------------
10,875,210
------------
TOTAL COMMON STOCK - BASKET
(Cost $165,261,784) 152,619,495
------------
TOTAL INVESTMENTS
(COST $165,261,784)+ 100.00% $152,619,495
======= ============
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $168,119,494. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 8,368,096
Excess of tax cost over value (23,868,095)
------------
$(15,499,999)
============
See accompanying notes to financial statements.
40
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI HONG KONG INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 99.13%
BANKING 6.52%
576,000 Bank Of East Asia Limited $ 1,344,121
360,000 Hang Seng Bank Limited 3,865,732
-----------
5,209,853
-----------
BROADCASTING & PUBLISHING 2.61%
768,000 Oriental Press Group* 104,379
1,440,000 South China Morning Post
Holdings Limited 1,080,097
160,000 Television Broadcasts Limited 904,697
-----------
2,089,173
-----------
ELECTRICAL & ELECTRONICS 3.36%
1,280,000 Johnson Electric Holdings Limited 2,683,318
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 1.20%
160,000 ASM Pacific Technology Limited 508,764
480,000 QPL International Holdings Limited* 446,194
-----------
954,958
-----------
LEISURE & TOURISM 1.77%
1,480,000 Hong Kong & Shanghai
Hotels Limited 929,827
480,000 Shangri-La Asia Limited 486,197
-----------
1,416,024
-----------
MERCHANDISING 1.11%
800,000 Esprit Holdings Limited 625,697
480,000 Giordano International Limited 261,562
-----------
887,259
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.83%
320,000 Varitronix International Limited 666,726
-----------
MULTI-INDUSTRY 29.04%
400,000 Hopewell Holdings Limited 187,196
1,360,000 Hutchison Whampoa Limited 19,181,209
560,000 Swire Pacific Limited - Class A 3,841,370
-----------
23,209,775
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
REAL ESTATE 25.87%
1,200,000 Hang Lung Development
Company Limited $ 1,115,485
720,000 Henderson Land Development
Company Limited 3,997,282
800,000 Hysan Development Company
Limited 1,123,178
1,360,000 New World Development
Company Limited 2,223,276
2,560,000 Sino Land Company Limited 1,370,379
880,000 Sun Hung Kai Properties Limited 8,377,675
1,040,000 Wharf Holdings Limited 2,473,555
-----------
20,680,830
-----------
TELECOMMUNICATION 12.65%
5,440,000 Pacific Century Cyberworks Limited 10,113,728
-----------
TEXTILES & APPAREL 2.62%
480,000 Li & Fung Limited 2,092,495
-----------
TRANSPORTATION - AIRLINES 3.50%
1,440,000 Cathay Pacific Airways Limited 2,797,174
-----------
UTILITIES - ELECTRICAL & GAS 8.05%
680,000 CLP Holdings Limited 3,051,556
2,720,000 Hong Kong & China Gas
Company Limited 3,382,868
-----------
6,434,424
-----------
TOTAL COMMON STOCK - BASKET
(Cost $60,352,546) 79,235,737
-----------
COMMON STOCK -
NON-BASKET 0.87%
FINANCIAL SERVICES 0.00%
276,000 Peregrine Investment Holdings
Limited*/** --
-----------
MULTI-INDUSTRY 0.62%
34,800 Hutchison Whampoa Limited 490,813
-----------
TELECOMMUNICATIONS 0.13%
56,883 Pacific Century Cyberworks* 105,753
-----------
UTILITIES - ELECTRICAL & GAS 0.12%
78,300 Hong Kong & China Gas
Company Limited 97,382
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $811,195) 693,948
-----------
TOTAL INVESTMENTS
(COST $61,163,741)+ 100.00% $79,929,685
======= ===========
-----------
* Non-income producing security.
** Fair valued security.
+ Aggregate cost for Federal income tax purposes is $62,571,967. The aggregate
gross unrealized appreciation (depreciation) for all securities is as
follows:
Excess of value over tax cost $19,572,584
Excess of tax cost over value (2,214,866)
-----------
$17,357,718
===========
See accompanying notes to financial statements.
41
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI ITALY INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 99.85%
AUTOMOBILES 3.29%
48,615 Fiat SpA $ 1,212,857
15,000 Fiat SpA-Pfd 231,229
15,000 Fiat RNC SpA 200,835
-----------
1,644,921
-----------
BANKING 18.26%
39,795 Banca Popolare di Milano SpA 280,436
937,500 Banco di Roma SpA 1,137,773
505,620 Banco Intesa SpA 2,160,977
132,750 Istituto Bancario San Paolo di
Torino SpA 2,354,193
86,250 Mediobanca SpA 921,601
450,000 Unicredito Italiano SpA 2,278,147
-----------
9,133,127
-----------
BROADCASTING & PUBLISHING 5.74%
30,000 Arnoldo Mondadori Editore SpA 398,442
143,715 Mediaset SpA 2,476,325
-----------
2,874,767
-----------
BUILDING MATERIALS &
COMPONENTS 0.44%
75,000 Cementerie del Tirreno SpA 113,427
11,250 Italcementi SpA 106,316
-----------
219,743
-----------
CONSTRUCTION & HOUSING 0.48%
75,000 Impregilo SpA 45,804
131,310 Sirti SpA 195,086
-----------
240,890
-----------
ENERGY SOURCES 11.07%
945,000 ENI SpA 5,539,449
-----------
FOOD & HOUSEHOLD PRODUCTS 0.60%
206,085 Parmalat Finanziaria SpA 298,483
-----------
FOREST PRODUCTS & PAPER 0.13%
30,000 Reno de Medici SpA 63,562
-----------
INDUSTRIAL COMPONENTS 1.84%
240,000 Pirelli SpA 648,689
120,000 Pirelli SpA Rnc 273,346
-----------
922,035
-----------
INSURANCE 12.85%
160,350 Assicurazioni Generali SpA 4,984,162
94,500 Riunione Adriatica di Sicurta SpA 1,100,160
16,845 Societa Assicuratrice Industriale
SpA 299,434
5,625 Societa Assicuratrice Industriale
SpA Rnc 44,961
-----------
6,428,717
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
LEISURE & TOURISM 1.35%
60,000 Autogrill SpA $ 676,962
-----------
MERCHANDISING 1.79%
90,810 La Rinascente SpA 545,637
90,000 La Rinascente SpA-Rnc 349,364
-----------
895,001
-----------
MULTI-INDUSTRY 0.98%
450,000 SNIA BPD SpA 491,718
-----------
RECREATION - OTHER CONSUMER
GOODS 1.30%
57,870 Bulgari SpA 649,380
-----------
TELECOMMUNICATIONS 31.30%
590,670 Olivetti SpA 1,781,888
441,750 Telecom Italia SpA 5,330,551
109,050 Telecom Italia SpA Rnc 633,999
836,250 Telecom Italia Mobile SpA 7,012,803
185,340 Telecom Italia Mobile SpA Rnc 899,238
-----------
15,658,479
-----------
TEXTILES & APPAREL 1.52%
300,000 Benetton Group SpA 559,868
23,415 Marzotto SpA 199,752
-----------
759,620
-----------
TRANSPORTATION - AIRLINES 0.76%
205,155 Alitalia SpA* 380,677
-----------
UTILITIES - ELECTRICAL & GAS 6.15%
568,305 Enel SpA 2,278,313
171,945 Italgas SpA 797,863
-----------
3,076,176
-----------
TOTAL COMMON STOCK - BASKET
(Cost $46,229,317) 49,953,707
-----------
COMMON STOCK -
NON-BASKET 0.15%
MULTI-INDUSTRY 0.15%
35,022 Montedison SpA 72,552
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $53,187) 72,552
-----------
TOTAL INVESTMENTS
(COST $46,282,504)+ 100.00% $50,026,259
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $46,453,042. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 4,861,888
Excess of tax cost over value (1,288,671)
-----------
$ 3,573,217
-----------
See accompanying notes to financial statements.
42
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI JAPAN INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 99.99%
APPLIANCES & HOUSEHOLD
DURABLES 8.08%
665,000 Matsushita Electric Industrial
Company Limited $ 18,208,927
95,000 Pioneer Corporation 4,008,815
665,000 Sanyo Electric Company Limited 5,643,520
380,000 Sharp Corporation 6,054,201
266,000 Sony Corporation 29,683,046
------------
63,598,509
------------
AUTOMOBILES 8.69%
285,000 Honda Motor Company Limited 10,422,918
1,330,000 Nissan Motor Company Limited* 6,684,921
1,178,000 Toyota Motor Corporation 51,255,814
------------
68,363,653
------------
BANKING 10.05%
855,000 Asahi Bank Limited 3,367,404
190,000 Ashikaga Bank Limited* 358,121
190,000 Bank of Fukuoka Limited 1,209,771
1,615,000 Bank of Tokyo-Mitsubishi Limited 19,778,601
380,000 Bank of Yokohama Limited 1,671,230
95,000 Chuo Mitsui Trust & Banking
Company Limited 365,247
1,140,000 Fuji Bank Limited 8,669,730
190,000 Gunma Bank Limited 979,932
285,000 Hokuriku Bank Limited* 628,048
760,000 Industrial Bank of Japan Limited 5,765,566
380,000 Joyo Bank Limited 1,371,905
475,000 Mitsubishi Trust & Banking
Corporation 3,652,476
1,235,000 Sakura Bank Limited 9,195,330
190,000 Seventy-Seven Bank Limited 1,478,807
285,000 Shizuoka Bank Limited 2,373,218
1,045,000 Sumitomo Bank Limited 12,935,109
570,000 The Daiwa Bank Limited 1,432,483
760,000 Tokai Bank Limited 3,848,462
------------
79,081,440
------------
BEVERAGES & TOBACCO 1.66%
190,000 Asahi Breweries Limited 1,737,153
665 Japan Tobacco Incorporated 5,100,994
380,000 Kirin Brewery Company Limited 4,169,167
95,000 Takara Shuzo Company Limited 2,075,675
------------
13,082,989
------------
BUILDING MATERIALS &
COMPONENTS 0.70%
95,000 Inax Corporation 514,019
190,000 Sekisui Chemical Company
Limited 664,572
95,000 Sumitomo Forestry Company
Limited 710,896
475,000 Taiheiyo Cement Corporation 766,129
95,000 Tostem Corporation 1,379,923
190,000 Toto Limited 1,485,934
------------
5,521,473
------------
BROADCASTING & PUBLISHING 0.17%
95 Fuji Television Network, Incorporated 1,327,363
------------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
BUSINESS & PUBLIC SERVICES 4.85%
38,000 Benesse Corporation $ 2,262,753
19,000 CSK Corporation 513,128
285,000 Dai Nippon Printing Company
Limited 4,487,200
9,500 Fuji Soft ABC Incorporated 727,823
95,000 Kokuyo Company Limited 1,640,051
38,000 Konami Company Limited 3,142,911
9,500 Meitec Corporation 439,188
9,500 OYO Corporation 122,937
95,000 Secom Company Limited 6,921,887
104,500 Softbank Corporation 13,807,249
285,000 Toppan Printing Company Limited 2,784,790
9,500 Trans Cosmos Incorporated 1,346,071
------------
38,195,988
------------
CHEMICALS 2.77%
570,000 Asahi Chemical Industry Company
Limited 3,565,173
95,000 Daicel Chemical Industries Limited 268,145
380,000 Dainippon Ink & Chemicals
Incorporated 1,336,272
95,000 Kaneka Corporation 1,047,637
190,000 Kuraray Company Limited 1,658,758
760,000 Mitsubishi Chemical Corporation 2,501,500
95,000 NOF Corporation 210,240
95,000 Shin-Etsu Chemical Company
Limited 4,668,042
665,000 Sumitomo Chemical Company
Limited 3,093,023
380,000 Teijin Limited 1,411,103
475,000 Toray Industries Incorporated 1,737,153
95,000 Tosoh Corporation 347,431
------------
21,844,477
------------
CONSTRUCTION & HOUSING 1.33%
47,500 Daito Trust Construction Company
Limited 797,309
190,000 Daiwa House Industry Company
Limited 1,247,187
475,000 Kajima Corporation 1,411,994
95,000 Kinden Corporation 610,231
285,000 Obayashi Corporation 1,138,503
285,000 Sekisui House Limited 2,891,692
475,000 Shimizu Corporation 1,403,085
665,000 Taisei Corporation 972,806
------------
10,472,807
------------
DATA PROCESSING & REPRODUCTION 3.72%
285,000 Canon Incorporated 12,748,031
570,000 Fujitsu Limited 16,516,317
------------
29,264,348
------------
ELECTRICAL & ELECTRONICS 6.15%
1,045,000 Hitachi Limited 12,376,547
760,000 Mitsubishi Electric Corporation 7,091,148
570,000 NEC Corporation 16,302,513
95,000 Omron Corporation 2,360,746
1,045,000 Toshiba Corporation 10,279,492
------------
48,410,446
------------
See accompanying notes to financial statements.
43
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI JAPAN INDEX FUND (CONTINUED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET (CONTINUED)
ELECTRONIC COMPONENTS,
INSTRUMENTS 8.74%
28,500 Advantest Corporation $ 5,812,781
95,000 Alps Electric Company Limited 2,004,407
76,000 Fanuc Limited 8,267,067
9,500 Hirose Electric Company Limited 1,377,251
66,500 Kyocera Corporation 11,873,218
85,500 Murata Manufacturing Company
Limited 13,092,789
19,000 Nidec Corporation 1,656,977
95,000 Nikon Corporation 2,913,072
95,000 Olympus Optical Company Limited 1,665,885
38,000 Rohm Company Limited 10,814,891
66,500 Tokyo Electron Limited 9,341,429
------------
68,819,767
------------
ENERGY SOURCES 0.46%
475,000 Nippon Mitsubishi Oil Corporation 2,699,269
190,000 Showa Shell Sekiyu K. K. 937,172
------------
3,636,441
------------
FINANCIAL SERVICES 4.76%
47,500 Acom Company Limited 4,048,903
47,500 Credit Saison Company Limited 1,146,966
475,000 Daiwa Securities Group
Incorporated 5,924,137
28,500 Nichiei Company Limited 339,413
95,000 Nippon Shinpan Company Limited 201,332
665,000 Nomura Securities Company Limited 15,558,655
95,000 Orient Corporation* 386,628
19,000 Orix Corporation 2,530,007
38,000 Promise Company Limited 2,647,599
47,500 Takefuji Corporation 4,672,496
------------
37,456,136
------------
FOOD & HOUSEHOLD PRODUCTS 1.60%
190,000 Ajinomoto Company Incorporated 2,059,640
190,000 Kao Corporation 5,220,368
190,000 Meiji Seika Incorporated 1,090,398
95,000 Nisshin Flour Milling Company
Limited 899,756
47,500 Nissin Food Products Company
Limited 1,238,278
95,000 Snow Brand Milk Products
Company Limited 359,902
95,000 Yakult Honsha Company Limited 962,116
95,000 Yamazaki Baking Company Limited 769,692
------------
12,600,150
------------
FOREST PRODUCTS & PAPER 0.56%
285,000 Nippon Paper Industries Company 1,873,453
380,000 Oji Paper Company Limited 2,526,444
------------
4,399,897
------------
HEALTH & PERSONAL CARE 5.58%
95,000 Chugai Pharmaceutical Company
Limited 1,692,611
95,000 Daiichi Pharmaceutical Company
Limited 2,244,936
95,000 Eisai Company Limited 2,868,530
190,000 Kanebo Limited* 559,452
190,000 Kyowa Hakko Kogyo Company
Limited 1,560,765
190,000 Sankyo Company Limited 4,400,788
95,000 Shionogi & Company Limited 1,674,794
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
HEALTH & PERSONAL CARE (CONTINUED)
95,000 Shiseido Company Limited $ 1,122,468
95,000 Taisho Pharmaceutical Company
Limited 2,877,438
285,000 Takeda Chemical Industries 16,863,747
85,500 Terumo Corporation 2,365,201
19,000 Uni-Charm Corporation 988,841
95,000 Yamanouchi Pharmaceutical
Company Limited 4,703,676
------------
43,923,247
------------
INDUSTRIAL COMPONENTS 3.70%
285,000 Bridgestone Corporation 3,688,110
285,000 Denso Corporation 6,761,534
95,000 Fujikura Limited 819,580
190,000 Furukawa Electric Company
Limited 6,111,215
95,000 Koyo Seiko Company Limited 728,713
95,000 Minebea Company Limited 1,229,370
95,000 NGK Insulators Limited 1,305,092
95,000 NGK Spark Plug Company Limited 1,718,445
190,000 NSK Limited 1,459,209
285,000 Sumitomo Electric Industries 5,264,910
------------
29,086,178
------------
INSURANCE 0.82%
285,000 Mitsui Marine & Fire Insurance
Company Limited 1,419,120
190,000 Sumitomo Marine & Fire Insurance
Company Limited 1,142,067
380,000 Tokio Marine & Fire Insurance
Company Limited 3,859,152
------------
6,420,339
------------
LEISURE & TOURISM 0.40%
19,000 Namco Limited 530,945
28,500 Oriental Land Company Limited 2,624,437
------------
3,155,382
------------
MACHINERY & ENGINEERING 2.35%
95,000 Amada Company Limited 815,126
95,000 Daikin Industries Limited 1,910,868
95,000 Ebara Corporation 1,389,722
380,000 Ishikawajima-Harima Heavy
Industries Company Limited* 555,889
95,000 Japan Steel Works Limited* 106,011
285,000 Kawasaki Heavy Industries Limited* 328,723
285,000 Komatsu Limited 1,841,382
570,000 Kubota Corporation 1,838,710
95,000 Kurita Water Industries Limited 1,977,682
1,140,000 Mitsubishi Heavy Industries Limited 4,008,815
95,000 Mitsui Engineering & Shipbuilding
Company Limited* 81,067
19,000 SMC Corporation 3,367,404
95,000 Sumitomo Heavy Industries Limited 235,184
------------
18,456,583
------------
MERCHANDISING 1.85%
28,500 Aoyama Trading Company Limited 386,182
9,500 Autobacs Seven Company Limited 271,709
285,000 Daiei Incorporated* 817,798
95,000 Hankyu Department Stores 498,875
95,000 Isetan Company Limited
Incorporated 856,105
95,000 Ito-Yokado Company Limited 4,721,493
95,000 Jusco Company Limited 1,786,150
See accompanying notes to financial statements.
44
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI JAPAN INDEX FUND (CONCLUDED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET (CONTINUED)
MERCHANDISING (CONTINUED)
95,000 Marui Company Limited $ 1,497,515
190,000 Mitsukoshi Limited* 653,882
95,000 Mycal Corporation 276,163
95,000 Seiyu Limited* 375,047
9,500 Shimamura Company Limited 728,713
95,000 Takashimaya Company Limited 650,319
95,000 Uny Company Limited 1,012,894
------------
14,532,845
------------
METALS - NON FERROUS 0.53%
475,000 Mitsubishi Materials Corporation 1,492,170
190,000 Mitsui Mining & Smelting
Company Limited 1,505,533
95,000 Nippon Light Metal Company Limited 99,775
190,000 Sumitomo Metal Mining Company* 1,042,292
------------
4,139,770
------------
METALS - STEEL 0.93%
1,140,000 Kawasaki Steel Corporation 1,443,173
2,755,000 Nippon Steel Corporation 5,166,917
1,140,000 Sumitomo Metal Industries Limited 684,171
------------
7,294,261
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 1.25%
380,000 Asahi Glass Company Limited 3,552,701
95,000 Nippon Sheet Glass Company
Limited 1,726,463
66,500 Nitto Denko Corporation 2,693,923
95,000 Toyo Seikan Kaisha Limited 1,630,251
95,000 Ube Industries Limited 228,948
------------
9,832,286
------------
REAL ESTATE 0.75%
285,000 Mitsubishi Estate Company Limited 2,806,170
285,000 Mitsui Fudosan Company Limited 3,086,787
------------
5,892,957
------------
RECREATION - OTHER CONSUMER
GOODS 2.43%
190,000 Citizen Watch Company Limited 2,073,893
190,000 Fuji Photo Film Company 6,806,077
47,500 Nintendo Company Limited 8,200,253
19,000 Sega Enterprises Limited* 218,258
47,500 Shimano Incorporated 982,160
95,000 Yamaha Corporation 834,724
------------
19,115,365
------------
TELECOMMUNICATIONS 6.04%
3,990 Nippon Telegraph & Telephone
Corporation 47,517,817
------------
TEXTILES & APPAREL 0.16%
95,000 Onward Kashiyama Company Limited 932,718
9,500 World Company Limited 289,526
------------
1,222,244
------------
TRANSPORTATION - AIRLINES 0.30%
665,000 Japan Airlines Company Limited 2,388,363
------------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
TRANSPORTATION - ROAD & RAIL 3.23%
760 Central Japan Railway Company $ 4,404,351
1,425 East Japan Railway Company 7,750,375
570,000 Kinki Nippon Railway Company Limited 2,506,845
380,000 Nippon Express Company Limited 2,134,471
665,000 Tobu Railway Company Limited 1,983,027
475,000 Tokyu Corporation 2,481,011
190,000 Yamato Transport Company Limited 4,142,442
------------
25,402,522
------------
TRANSPORTATION - SHIPPING 0.24%
95,000 Kawasaki Kisen Kaisha Limited 176,388
380,000 Nippon Yusen Kabushiki Kaisha 1,681,920
------------
1,858,308
------------
UTILITIES - ELECTRICAL & GAS 3.15%
370,500 Kansai Electric Power Company
Incorporated 6,080,036
855,000 Osaka Gas Company Limited 2,148,725
247,000 Tohoku Electric Power Company
Incorporated 3,532,211
475,000 Tokyo Electric Power Company 10,623,359
950,000 Tokyo Gas Company Limited 2,440,923
------------
24,825,254
------------
WHOLESALE & INTERNATIONAL TRADE 1.99%
475,000 Itochu Corporation* 2,093,492
570,000 Marubeni Corporation* 1,576,800
570,000 Mitsubishi Corporation 4,169,167
665,000 Mitsui & Company Limited 4,471,165
380,000 Sumitomo Corporation 3,313,953
------------
15,624,577
------------
TOTAL COMMON STOCK - BASKET
(Cost $681,751,661) 786,764,182
------------
COMMON STOCK -
NON-BASKET 0.01%
BANKING 0.01%
14,000 Chuo Mitsui Trust & Banking
Company Limited 53,826
------------
ELECTRONIC COMPONENTS,
INSTRUMENTS 0.00%
352 Tokyo Electron Limited 49,447
------------
ENERGY SOURCES 0.00%
500 Nippon Mitsubishi Oil Corporation 2,841
------------
TOTAL COMMON STOCK - NON-BASKET
(Cost $99,451) 106,114
------------
TOTAL INVESTMENTS
(COST $681,851,112)+ 100.00% $786,870,296
======= ============
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $687,181,147. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $153,524,768
Excess of tax cost over value (53,835,619)
------------
$ 99,689,149
============
See accompanying notes to financial statements.
45
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI MALAYSIA (FREE) INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
AUTOMOBILES 3.01%
222,000 Edaran Otomobil Nasional $ 607,579
444,000 Oriental Holdings 917,210
666,000 Perusahaan Otomobil Nasional 872,810
1,554,000 Tan Chong Motor Holdings 568,437
-----------
2,966,036
-----------
BANKING 20.25%
1,554,000 Commerce Asset Holdings 4,089,474
2,886,000 Malayan Banking 11,088,316
2,442,000 Public Bank 2,133,537
2,442,000 RHB Capital 2,647,642
-----------
19,958,969
-----------
BEVERAGES & TOBACCO 4.83%
444,000 British American Tobacco (Malaysia) 4,147,895
666,000 Guinness Anchor 609,916
-----------
4,757,811
-----------
BROADCASTING & PUBLISHING 1.31%
222,000 New Straits Times Press 470,289
222,000 Star Publications (Malaysia) 817,895
-----------
1,288,184
-----------
BUILDING MATERIALS &
COMPONENTS 2.31%
666,000 Hume Industries (Malaysia) 746,621
3,552,000 Malayan Cement 1,233,853
1,110,000 Pan Malaysia Corporation 297,947
-----------
2,278,421
-----------
CHEMICALS 0.62%
222,000 Malaysian Oxygen 613,421
-----------
CONSTRUCTION & HOUSING 4.30%
222,000 Ekran* 64,263
666,000 Gamuda 753,631
444,000 IJM Corporation 399,600
444,000 Road Builder Holdings 495,410
1,998,000 YTL Corporation 2,523,789
-----------
4,236,693
-----------
ELECTRICAL & ELECTRONICS 1.11%
1,110,000 Time Engineering* 1,098,316
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 3.13%
222,000 Malaysian Pacific Industries 1,927,895
222,000 Unisem 1,156,737
-----------
3,084,632
-----------
FINANCIAL SERVICES 2.94%
488,400 AMMB Holdings 1,606,579
1,110,000 MBF Capital* 92,013
888,000 Rashid Hussain* 689,368
1,776,000 TA Enterprises 514,105
-----------
2,902,065
-----------
FOOD & HOUSEHOLD PRODUCTS 1.94%
222,000 Nestle (Malaysia) 1,121,684
666,000 PPB Group 788,684
-----------
1,910,368
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
FOREST PRODUCTS & PAPER 0.72%
222,000 Jaya Tiasa Holdings $ 268,737
222,000 WTK Holdings 441,079
-----------
709,816
-----------
INDUSTRIAL COMPONENTS 0.26%
888,000 Leader Universal Holdings* 252,379
-----------
LEISURE & TOURISM 5.15%
666,000 Berjaya Sports Toto 1,069,105
1,998,000 Magnum Corporation 1,256,637
1,332,000 Resorts World 2,751,632
-----------
5,077,374
-----------
MACHINERY & ENGINEERING 1.01%
666,000 UMW Holdings 990,237
-----------
METALS - STEEL 0.23%
2,442,000 Amsteel Corporation 228,134
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 5.60%
1,998,000 Golden Hope Plantations 1,945,421
1,554,000 Highlands & Lowlands 1,063,263
1,110,000 IOI Corporation 946,421
222,000 Kian Joo Can Factory 303,789
888,000 Kuala Lumpur Kepong 1,261,895
-----------
5,520,789
-----------
MULTI-INDUSTRY 8.59%
444,000 Land & General* 94,642
1,776,000 Malaysia Mining Corporation 1,065,600
1,554,000 Malaysian Resources Corporation* 997,832
1,776,000 Malayan United Industries* 273,411
1,332,000 Mulpha International* 182,274
1,554,000 Multi-Purpose Holdings* 523,453
2,664,000 Sime Darby 2,958,442
1,110,000 United Engineers (Malaysia) 2,366,053
-----------
8,461,707
-----------
REAL ESTATE 1.36%
1,332,000 FACB Resorts 245,368
1,998,000 Hong Leong Properties 694,042
444,000 S P Setia Group 404,274
-----------
1,343,684
-----------
TELECOMMUNICATIONS 12.61%
888,000 Technology Resources Industries* 1,065,600
3,996,000 Telekom Malaysia 11,357,053
-----------
12,422,653
-----------
TRANSPORTATION - AIRLINES 0.67%
666,000 Malaysian Airline System* 658,989
-----------
TRANSPORTATION - SHIPPING 3.75%
2,442,000 Malaysia International Shipping 3,695,132
-----------
UTILITIES - ELECTRICAL & GAS 14.30%
4,218,000 Tenaga Nasional 14,097,000
-----------
TOTAL COMMON STOCK - BASKET
(Cost $74,480,948) 98,552,810
-----------
See accompanying notes to financial statements.
46
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI MALAYSIA (FREE) INDEX FUND (CONCLUDED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK -
NON-BASKET 0.00%
METALS - STEEL 0.00%
35,944 Silverstone*/** $ --
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $0) --
-----------
TOTAL INVESTMENTS
(COST $74,480,948)+ 100.00% $98,552,810
======= ===========
-----------
* Non-income producing security.
** Fair valued security.
+ Aggregate cost for Federal income tax purposes is $76,559,835. The aggregate
gross unrealized appreciation (depreciation) for all securities is as
follows:
Excess of value over tax cost $28,575,459
Excess of tax cost over value (6,582,484)
-----------
$21,992,975
===========
See accompanying notes to financial statements.
47
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI MEXICO (FREE) INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
BANKING 9.83%
360,000 Grupo Financiero Banamex
Accival SA de CV - Series O* $ 1,838,032
3,456,000 Grupo Financiero BBVA Bancomer
SA de CV - Series O* 2,072,361
-----------
3,910,393
-----------
BEVERAGES & TOBACCO 14.89%
408,000 Fomento Economico Mexicano
SA de CV - Series UBD 1,843,767
355,200 Grupo Continental SA 451,452
1,104,000 Grupo Modelo SA de CV - Series C 2,752,355
192,000 Savia SA de CV* 873,912
-----------
5,921,486
-----------
BROADCASTING & PUBLISHING 7.21%
888,000 Grupo Televisa SA - Series CPO* 2,869,806
-----------
BUILDING MATERIALS &
COMPONENTS 4.53%
384,000 Cemex SA de CV - Series CPO 1,802,053
-----------
ENERGY EQUIPMENT & SERVICES 1.82%
48,000 Tubos de Acero de Mexico SA 724,784
-----------
FOOD & HOUSEHOLD PRODUCTS 3.18%
792,000 Grupo Industrial Bimbo
SA de CV - Series A 1,264,722
-----------
HEALTH & PERSONAL CARE 4.50%
576,000 Kimberly-Clark de Mexico
SA de CV - Series A 1,789,539
-----------
MERCHANDISING 16.22%
744,000 Controladora Comercial
Mexicana SA de CV -
Series UBC 953,691
1,560,000 Grupo Elektra SA de CV -
Series CPO 1,592,961
336,000 Walmart de Mexico C* 788,398
1,248,000 Walmart de Mexico V* 3,118,136
-----------
6,453,186
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
METALS - NON FERROUS 3.52%
264,000 Grupo Mexico SA - Series B $ 1,178,687
144,000 Industrias Penoles SA - Series CP 222,128
-----------
1,400,815
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.47%
168,000 Vitro SA - Series A 186,150
-----------
MULTI-INDUSTRY 10.64%
528,000 Alfa SA de CV - Series A 1,454,000
1,872,000 Desc SA de CV - Series B 1,159,133
456,000 Grupo Carso SA de CV - Series A1* 1,619,814
-----------
4,232,947
-----------
TELECOMMUNICATIONS 23.19%
96,000 Telefonos de Mexico SA -
Series A 260,714
3,288,000 Telefonos de Mexico SA -
Series L 8,965,162
-----------
9,225,876
-----------
TOTAL COMMON STOCK - BASKET
(Cost $35,191,865) 39,781,757
-----------
TOTAL INVESTMENTS
(COST $35,191,865)+ 100.00% $39,781,757
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $35,390,336. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 5,822,297
Excess of tax cost over value (1,430,876)
----------
$ 4,391,421
===========
See accompanying notes to financial statements.
48
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI NETHERLANDS INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
APPLIANCES & HOUSEHOLD
DURABLES 11.83%
74,334 Philips Electronics $ 3,621,761
-----------
BANKING 4.88%
60,034 ABN AMRO Holding 1,494,538
-----------
BEVERAGES & TOBACCO 3.76%
22,620 Heineken 1,150,377
-----------
BROADCASTING & PUBLISHING 4.22%
64,168 Elsevier 777,047
1,040 VNU 55,480
22,620 Wolters Klumer - CVA 458,542
-----------
1,291,069
-----------
BUSINESS & PUBLIC SERVICES 6.45%
40,638 Getronics 510,175
5,200 Randstad Holding 141,936
48,880 TNT Post Group 1,143,415
13,780 Vedior 180,715
-----------
1,976,241
-----------
CHEMICALS 3.69%
24,440 Akzo Nobel 1,082,354
1,560 DSM 47,713
-----------
1,130,067
-----------
CONSTRUCTION & HOUSING 1.20%
18,980 Hollandsche Beton Groep 194,908
3,302 IHC Caland 171,745
-----------
366,653
-----------
DATA PROCESSING & REPRODUCTION 1.87%
38,350 Oce 571,126
-----------
ELECTRICAL COMPONENTS,
INSTRUMENTS 3.71%
30,030 ASM Lithography Holding NV* 1,135,540
-----------
ENERGY SOURCES 23.09%
116,090 Royal Dutch/Shell Group 7,070,288
-----------
FINANCIAL SERVICES 5.22%
23,842 Ing Groep 1,598,327
-----------
FOOD & HOUSEHOLD PRODUCTS 4.35%
7,800 Koninklijke Wessanen 87,381
26,260 Unilever 1,244,439
-----------
1,331,820
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
INSURANCE 10.49%
78,156 Aegon $ 3,050,553
5,200 Fortis (NL) 160,291
-----------
3,210,844
-----------
MACHINERY & ENGINEERING 0.52%
14,638 Stork 158,779
-----------
MERCHANDISING 4.65%
50,336 Koninklijke Ahold 1,424,068
-----------
MULTI-INDUSTRY 0.24%
2,600 Hunter Douglas 74,551
-----------
TELECOMMUNICATIONS 3.07%
35,204 Koninklijke Kpn 939,312
-----------
TRANSPORTATION - AIRLINES 1.35%
16,562 KLM - Koninklijke Luchvaart Mij 414,518
-----------
TRANSPORTATION - ROAD & RAIL 0.31%
5,070 Koninklijke Nedlloyd* 94,933
-----------
TRANSPORTATION - SHIPPING 1.96%
28,340 Koninklijke Vopak 599,692
-----------
WHOLESALE & INTERNATIONAL TRADE 3.14%
9,334 Buhrmann 265,149
24,310 Hagemeyer 696,622
-----------
961,771
-----------
TOTAL COMMON STOCK - BASKET
(Cost $30,137,407) 30,616,275
-----------
COMMON STOCK -
NON-BASKET 0.00%
APPLIANCES & HOUSEHOLD
DURABLES 0.00%
13 Philips Electronics 633
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $415) 633
-----------
TOTAL INVESTMENTS
(COST $30,137,822)+ 100.00% $30,616,908
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $30,423,435. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 2,617,719
Excess of tax cost over value (2,424,246)
-----------
$ 193,473
===========
See accompanying notes to financial statements.
49
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI SINGAPORE (FREE) INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
AUTOMOBILES 0.57%
234,000 Cycle & Carriage Limited $ 516,586
-----------
BANKING 31.80%
1,170,000 Development Bank of Singapore
Limited 14,138,151
1,234,350 Oversea-Chinese Banking
Corporation Limited 8,533,530
234,000 Overseas Union Bank Limited 1,182,711
617,760 United Overseas Bank Limited 4,845,036
-----------
28,699,428
-----------
BEVERAGES & TOBACCO 0.97%
234,000 Fraser & Neave Limited 870,040
-----------
BROADCASTING & PUBLISHING 4.17%
234,000 Singapore Press Holdings Limited 3,765,642
-----------
BUSINESS & PUBLIC SERVICES 1.90%
585,000 Parkway Holdings Limited 1,488,584
117,000 Singapore Computer Systems Limited 224,307
-----------
1,712,891
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 17.76%
1,053,000 Chartered Semiconductor
Manufacturing, Limited* 8,809,156
87,750 Creative Technology Limited 1,906,611
468,000 Natsteel Electronics Limited 1,563,353
351,000 Omni Industries Limited 758,566
234,000 Venture Manufacturing
(Singapore) Limited 2,990,763
-----------
16,028,449
-----------
LEISURE & TOURISM 1.33%
234,000 Hotel Properties Limited 202,556
351,000 Overseas Union Enterprise Limited 999,187
-----------
1,201,743
-----------
MACHINERY & ENGINEERING 4.19%
2,808,000 Singapore Technologies
Engineering Limited 3,784,674
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
MULTI-INDUSTRY 5.32%
152,100 Haw Par Corporation Limited $ 272,159
585,000 Keppel Corporation Limited 1,325,452
2,223,000 Sembcorp Industries Limited 2,376,297
968,760 Straits Trading Company Limited 827,327
-----------
4,801,235
-----------
REAL ESTATE 10.11%
702,000 City Developments Limited 3,486,958
1,755,000 DBS Land Limited 2,834,428
117,000 First Capital Corporation Limited 113,513
2,223,000 United Industrial Corporation
Limited 1,059,002
1,404,000 United Overseas Land Limited 1,321,373
351,000 Wing Tai Holdings Limited 309,952
-----------
9,125,226
-----------
TELECOMMUNICATIONS 6.85%
3,744,000 Singapore Telecommunications
Limited 6,177,285
-----------
TRANSPORTATION - AIRLINES 12.50%
1,170,000 Singapore Airlines Limited 11,283,332
-----------
TRANSPORTATION - ROAD & RAIL 0.69%
1,170,000 Comfort Group Limited 621,943
-----------
TRANSPORTATION - SHIPPING 1.84%
1,521,000 Neptune Orient Lines Limited* 1,661,233
-----------
TOTAL COMMON STOCK - BASKET
(Cost $80,656,699) 90,249,707
-----------
TOTAL INVESTMENTS
(COST $80,656,699)+ 100.00% $90,249,707
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $81,462,780. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 9,795,095
Excess of tax cost over value (1,008,168)
-----------
$ 8,786,927
===========
See accompanying notes to financial statements.
50
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI SOUTH KOREA INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
APPLIANCES & HOUSEHOLD
DURABLES 3.49%
18,600 LG Electronics $ 473,073
-----------
AUTOMOBILES 4.59%
41,100 Hyundai Motor Company, Limited 622,755
-----------
BANKING 8.53%
37,650 Kookmin Bank 458,422
48,000 Korea Exchange Bank* 101,520
16,800 Korea Housing Bank 359,107
21,750 Shinhan Bank 237,362
-----------
1,156,411
-----------
BEVERAGES & TOBACCO 1.40%
2,550 Doosan Corporation* 48,528
3,300 Hite Brewery Company 141,375
-----------
189,903
-----------
BUILDING MATERIALS &
COMPONENTS 0.97%
3,150 Kumkang Korea Chemical
Company Limited 132,108
-----------
BUSINESS & PUBLIC SERVICES 2.77%
300 Cheil Communications, Inc. 31,657
3,000 Daou Technology, Inc. 20,158
1,200 Daum Communications Corporation* 74,895
4,950 Haansoft, Inc.* 58,485
2,400 Handysoft Corporation* 44,807
1,200 Korea Information & Communications
Company Limited* 64,289
3,600 Serome Technology Inc. 81,335
-----------
375,626
-----------
CHEMICALS 3.43%
13,350 Hanwha Chemical Corporation* 44,189
18,450 Honam Petrochemical Corporation 127,299
2,850 Isu Chemical Company Limited 17,736
16,350 LG Chemical Limited 275,756
-----------
464,980
-----------
CONSTRUCTION & HOUSING 0.44%
4,800 Daelim Industrial Company 26,062
12,450 Hyundai Engineering & Construction
Company* 33,574
-----------
59,636
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 30.16%
6,600 Anam Semiconductor Inc* 60,717
30,750 Dae Duck Electronics Company 292,593
9,900 Samsung SDI Company Limited 441,984
9,150 Samsung Electro-Mechanics
Company* 388,694
11,775 Samsung Electronics 2,904,589
-----------
4,088,577
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
FINANCIAL SERVICES 2.83%
3,975 Dongwon Securities Company $ 25,096
9,000 KTBNetwork 68,997
4,800 LG Investment & Securities
Company Limited 50,435
11,700 Samsung Securities Company Limited 238,485
-----------
383,013
-----------
FOOD & HOUSEHOLD PRODUCTS 0.81%
2,550 Cheil Jedang Corporation 106,945
2,250 Daesang Corporation 3,399
-----------
110,344
-----------
FOREST PRODUCTS & PAPER 0.22%
7,350 Hansol Paper Company 30,096
-----------
HEALTH & PERSONAL CARE 0.11%
300 Korea Green Cross Corporation 12,298
450 Medison Company Limited 3,052
-----------
15,350
-----------
INDUSTRIAL COMPONENTS 1.16%
10,050 Hankook Tire Company 24,655
9,600 LG Cable Limited 132,474
-----------
157,129
-----------
INSURANCE 1.68%
8,550 Samsung Fire & Marine Insurance 228,257
-----------
MACHINERY & ENGINEERING 1.38%
12,600 Hanjin Heavy Industries 32,615
39,450 Samsung Heavy Industries
Company, Limited* 154,776
-----------
187,391
-----------
MERCHANDISING 0.86%
600 Hyundai Department Store
Company Limited 4,546
2,250 Shinsegae Department Store
Company 112,018
-----------
116,564
-----------
METALS - NON FERROUS 0.02%
150 Korea Zinc Company 2,029
-----------
METALS - STEEL 3.93%
7,200 Pohang Iron & Steel Company
Limited 532,492
-----------
MULTI-INDUSTRY 11.03%
49,200 Korea Electric Power Corporation 1,446,602
4,050 S1 Corporation 48,216
-----------
1,494,818
-----------
TELECOMMUNICATIONS 16.48%
9,000 Korea Telecom Corporation 616,099
7,350 SK Telecom 1,617,497
-----------
2,233,596
-----------
TRANSPORTATION - AIRLINES 0.78%
14,850 Korean Air Company Limited 105,674
-----------
See accompanying notes to financial statements.
51
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI SOUTH KOREA INDEX FUND (CONCLUDED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET (CONTINUED)
TRANSPORTATION - ROAD & RAIL 0.49%
13,800 Korea Express Company* $ 66,215
-----------
TRANSPORTATION - SHIPPING 0.40%
14,250 Hyundai Merchant Marine 53,594
-----------
WHOLESALE & INTERNATIONAL TRADE 2.04%
24,450 Samsung Corporation 221,621
5,100 SK Global 54,507
-----------
276,128
-----------
TOTAL COMMON STOCK - BASKET
(Cost $14,234,885) 13,555,759
-----------
TOTAL INVESTMENTS
(COST $14,234,885)+ 100.00% $13,555,759
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $14,561,571. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 847,789
Excess of tax cost over value (1,853,601)
-----------
$(1,005,812)
===========
See accompanying notes to financial statements.
52
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI SPAIN INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
BANKING 23.93%
317,900 Banco Bilbao Vizcaya SA $ 4,723,008
437,382 Banco Santander Central
Hispano SA 4,705,416
-----------
9,428,424
-----------
BEVERAGES & TOBACCO 1.56%
42,702 Altadis SA 613,158
-----------
BUILDING MATERIALS &
COMPONENTS 1.46%
17,622 Portland Valderrivas SA 335,917
38,544 Uralita SA 239,887
-----------
575,804
-----------
BUSINESS & PUBLIC SERVICES 4.56%
40,040 Aguas de Barcelona 501,955
100,100 Autopistas Concesionaria
Espanola SA 774,292
42,658 Prosegur Cia de Seguridad SA 521,501
-----------
1,797,748
-----------
CHEMICALS 1.43%
1,172,666 Ercros SA* 563,015
-----------
CONSTRUCTION & HOUSING 3.19%
11,000 Actividades de Construccion y
Servicios SA 271,398
29,876 Fomento de Construcciones y
Contratas SA 478,131
60,830 Groupo Dragados 508,390
-----------
1,257,919
-----------
ENERGY SOURCES 4.61%
91,542 Repsol SA 1,815,001
-----------
FOOD & HOUSEHOLD PRODUCTS 1.38%
13,816 Azucarera Ebro Agricolas SA 160,918
253,704 Puleva SA* 383,467
-----------
544,385
-----------
FOREST PRODUCTS & PAPER 0.41%
8,800 Grupo Empresarial Ence SA 162,741
-----------
HEALTH & PERSONAL CARE 1.70%
64,152 Fabrica Espanola de Productos y
Farmaceuticos SA 667,341
-----------
INSURANCE 2.54%
62,810 Corporacion Mapfre 999,617
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
LEISURE & TOURISM 2.42%
70,774 Sol Melia SA $ 723,641
44,000 TelePizza SA* 228,464
-----------
952,105
-----------
MACHINERY & ENGINEERING 1.40%
69,960 Zardoya Otis SA 551,106
-----------
MERCHANDISING 0.78%
15,158 Cortefiel SA 306,872
-----------
METALS - NON FERROUS 0.66%
27,984 Asturiana de Zinc 261,495
-----------
METALS - STEEL 3.12%
41,888 Acerinox SA 1,229,010
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.43%
27,500 Viscofan 170,419
-----------
MULTI-INDUSTRY 2.34%
36,828 Corporacion Financiere Alba 923,377
-----------
REAL ESTATE 1.81%
58,674 Urbis Ser 1,2,3* 252,489
72,072 Vallehermoso SA 461,372
-----------
713,861
-----------
TELECOMMUNICATIONS 22.44%
460,196 Telefonica SA* 8,837,884
-----------
UTILITIES - ELECTRICAL & GAS 17.83%
90,090 Endesa SA 1,758,178
110,000 Gas Natural SDG SA 1,784,873
145,926 Iberdrola SA 1,680,174
96,800 Union Electrica Fenosa SA 1,799,621
-----------
7,022,846
-----------
TOTAL COMMON STOCK - BASKET
(Cost $41,821,643) 39,394,128
-----------
TOTAL INVESTMENTS
(COST $41,821,643)+ 100.00% $39,394,128
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $42,279,803. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 2,011,774
Excess of tax cost over value (4,897,449)
-----------
$(2,885,675)
===========
See accompanying notes to financial statements.
53
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI SWEDEN INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
APPLIANCES & HOUSEHOLD
DURABLES 1.73%
32,500 Electrolux AB - B $ 402,957
-----------
BANKING 16.60%
33,800 ForeningsSparbanken AB 503,248
214,500 Nordbanken Holding AB 1,488,873
84,500 Skandinaviska Enskilda
Banken AB - A 1,011,869
41,600 Svenska Handelsbanken AB - A 687,713
10,400 Svenska Handelsbanken AB - B 169,173
-----------
3,860,876
-----------
BUSINESS & PUBLIC SERVICES 13.40%
11,700 Esselte AB - B 69,432
67,600 Icon Medialab International AB* 1,289,461
45,500 Securitas AB - B 1,012,558
132,600 WM-Data AB - B 744,746
-----------
3,116,197
-----------
ELECTRICAL & ELECTRONICS 23.35%
269,100 Ericsson LM - B 5,432,475
-----------
FINANCIAL SERVICES 4.76%
22,100 Om Gruppen AB 1,107,752
-----------
HEALTH & PERSONAL CARE 0.38%
10,400 Gambro AB - B 87,066
-----------
INDUSTRIAL COMPONENTS 1.64%
16,900 SKF AB - A 229,238
10,400 SKF AB - B 150,988
-----------
380,226
-----------
INSURANCE 13.57%
156,000 Skandia Forsakrings AB 3,157,527
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
MACHINERY & ENGINEERING 7.06%
5,200 Atlas Copco AB - A $ 107,455
5,200 Atlas Copco AB - B 101,945
24,700 Sandvik AB 539,204
22,100 Volvo AB - A 353,637
32,500 Volvo AB - B 538,997
-----------
1,641,238
-----------
MERCHANDISING 3.99%
52,975 Hennes Mauritz AB - B 929,090
-----------
MULTI-INDUSTRY 4.58%
39,000 Industriforvaltnings Kinnevik AB - B 1,012,558
7,800 Trelleborg AB - B 53,314
-----------
1,065,872
-----------
REAL ESTATE 0.81%
16,900 Drott AB - B 188,046
-----------
TELECOMMUNICATIONS 8.13%
17,875 NetCom AB - B* 943,332
132,600 Telia AB* 948,498
-----------
1,891,830
-----------
TOTAL COMMON STOCK - BASKET
(Cost $21,973,014) 23,261,152
-----------
TOTAL INVESTMENTS
(COST $21,973,014)+ 100.00% $23,261,152
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $22,111,227. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 3,760,961
Excess of tax cost over value (2,611,036)
-----------
$ 1,149,925
===========
See accompanying notes to financial statements.
54
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI SWITZERLAND INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 100.00%
BANKING 16.14%
1,472 Banque Cantonale Vaudoise $ 506,829
12,719 Credit Suisse Group 2,656,786
23,000 UBS AG 3,345,863
276 Vontobel Holding AG 736,486
-----------
7,245,964
-----------
BUILDING MATERIALS &
COMPONENTS 3.75%
1,104 Forbo Holding AG 482,755
874 Holderbank Financiere Glarus
AG - Bearer 1,031,687
529 Holderbank Financiere Glarus
AG - Registered 167,267
-----------
1,681,709
-----------
BUSINESS & PUBLIC SERVICES 2.85%
1,633 Adecco SA 1,251,036
69 SGS Societe Generale de
Surveillance Holding SA 27,717
-----------
1,278,753
-----------
CHEMICALS 5.11%
276 EMS-Chemie Holding AG* 1,187,880
1,380 Lonza AG 671,548
1,472 Sika Finanz AG 435,873
-----------
2,295,301
-----------
ELECTRICAL & ELECTRONICS 3.88%
15,571 ABB Ltd. 1,742,422
-----------
FINANCIAL SERVICES 3.03%
276 Julius Baer Holding Limited AG 1,362,103
-----------
FOOD & HOUSEHOLD PRODUCTS 9.93%
2,070 Nestle SA 4,459,302
-----------
HEALTH & PERSONAL CARE 31.26%
598 Givaudan* 159,915
5,589 Novartis AG 8,447,966
69 Roche Holding AG - Bearer 690,950
529 Roche Holding AG - Genussein 4,735,682
-----------
14,034,513
-----------
INSURANCE 9.74%
1,081 Schweizerische Rueckversicherungs
(Swiss Re) 2,218,327
4,186 Zurich Allied AG 2,154,735
-----------
4,373,062
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
LEISURE & TOURISM 0.66%
92 Kuoni Reisen Holding AG $ 41,338
621 Moevenpick Holding AG 256,582
-----------
297,920
-----------
MACHINERY & ENGINEERING 3.16%
1,610 Georg Fischer AG 476,736
46 Schindler Holding AG - Particapation
Certificates 75,364
115 Schindler Holding AG - Registered 197,188
920 Sulzer AG* 667,853
-----------
1,417,141
-----------
MERCHANDISING 3.93%
552 Jelmoli Holding AG - Bearer 696,256
2,622 Jelmoli Holding AG - Registered 653,017
1,679 Valora Holding AG 417,197
-----------
1,766,470
-----------
MULTI-INDUSTRY 1.50%
1,012 Alusuisse Lonza Group AG* 671,337
-----------
RECREATION, OTHER CONSUMER
GOODS 0.36%
115 The Swatch Group AG - B 163,334
-----------
TELECOMMUNICATIONS 3.15%
4,991 Swisscom AG 1,414,871
-----------
TRANSPORTATION - AIRLINES 1.55%
4,485 SairGroup 693,623
-----------
TOTAL COMMON STOCK - BASKET
(Cost $45,616,229) 44,897,825
-----------
TOTAL INVESTMENTS
(COST $45,616,229)+ 100.00% $44,897,825
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $45,948,629. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 2,385,886
Excess of tax cost over value (3,436,690)
-----------
$(1,050,804)
===========
See accompanying notes to financial statements.
55
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI TAIWAN INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 99.19%
APPLIANCES & HOUSEHOLD
DURABLES 0.26%
208,000 Sampo Corporation* $ 107,774
-----------
AUTOMOBILES 1.03%
208,000 China Motor Company 208,853
312,000 Yulon Motor Company Limited* 220,903
-----------
429,756
-----------
BANKING 9.86%
624,000 Chang Hwa Commercial Bank 389,592
1,144,000 China Development Industrial Bank* 1,181,829
728,000 Chinatrust Commercial Bank* 574,012
624,000 First Commercial Bank 542,216
572,000 Hua Nan Commercial Bank 452,851
572,000 International Commercial
Bank of China 449,169
624,000 United World Chinese
Commercial Bank 536,191
-----------
4,125,860
-----------
BUILDING MATERIALS &
COMPONENTS 1.67%
364,000 Asia Cement Corporation 197,976
260,000 Goldsun Development and
Construction Company* 45,185
416,000 Taiwan Cement Corporation 262,406
208,000 Taiwan Glass Industrial Corporation 192,788
-----------
698,355
-----------
CHEMICALS 8.60%
52,000 China Synthetic Rubber Corporation 46,189
624,000 Formosa Chemical & Fibre
Corporation 700,864
676,000 Formosa Plastics Corporation 1,087,779
572,000 Hualon Corporation* 51,912
104,000 Lee Chang Yung Chemicals
Industries Corporation* 43,176
936,000 Nan Ya Plastic Corporation 1,551,340
104,000 Oriental Union Chemical Corporation 36,984
364,000 Shinkong Synthetic Fibers
Corporation* 50,372
468,000 Tuntex Distinct Corporation* 30,424
-----------
3,599,040
-----------
CONSTRUCTION & HOUSING 0.36%
260,000 BES Engineering Corporation* 40,833
156,000 Continental Engineering Corporation* 83,843
208,000 Ever Fortune Industrial Company* 27,780
-----------
152,456
-----------
DATA PROCESSING &
REPRODUCTION 5.91%
676,000 Acer Incorporated 841,941
260,000 Compal Electronics Incorporated 497,868
312,000 Quanta Computer Incorporated 1,134,637
-----------
2,474,446
-----------
ELECTRICAL & ELECTRONICS 1.34%
104,000 Lite-On Electronics Incorporated 135,554
52,000 Microelectronics Technology
Incorporated* 154,799
312,000 Teco Electric & Machinery Company
Limited 271,108
-----------
561,461
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
ELECTRONIC COMPONENTS,
INSTRUMENTS 51.94%
468,000 Advanced Semiconductor
Engineering Incorporated* $ 866,039
260,000 Asustek Computer Incorporated 1,598,198
156,000 Delta Electronics Incorporated 597,441
260,000 Hon Hai Precision Industry Company 1,983,104
520,000 Mosel Vitelic Incorporated* 895,325
2,080,000 Taiwan Semiconductor
Manufacturing Company* 9,003,460
1,976,000 United Microelectronics Corporation* 5,246,440
624,000 Winbond Electronics Corporation* 1,546,319
-----------
21,736,326
-----------
FINANCIAL SERVICES 0.40%
572,000 Chung Hsing Bills Finance
Corporation 165,677
-----------
FOOD & HOUSEHOLD PRODUCTS 1.02%
104,000 Lien Hwa Industrial Corporation 33,805
572,000 Uni-President Enterprises Company 393,943
-----------
427,748
-----------
FOREST PRODUCTS & PAPER 0.26%
104,000 Chung Hwa Pulp Corporation* 60,581
52,000 Shihlin Paper Corporation* 46,858
-----------
107,439
-----------
INDUSTRIAL COMPONENTS 2.50%
156,000 Cheng Shin Rubber Industries
Company 95,390
572,000 Pacific Electric Wire &
Cable Company Limited* 425,238
104,000 Shihlin Electric & Engineering
Corporation 72,630
624,000 Walsin Lihwa Corporation 453,855
-----------
1,047,113
-----------
INSURANCE 5.43%
988,000 Cathay Life Insurance Company 2,273,457
-----------
MERCHANDISING 0.52%
104,000 Aurora Corporation* 140,574
156,000 Far East Department Stores Limited 78,320
-----------
218,894
-----------
METALS - STEEL 2.62%
1,560,000 China Steel Corporation 1,034,226
156,000 Tung Ho Steel Enterprise* 61,250
-----------
1,095,476
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.23%
312,000 Ton Yi Industrial Corporation 95,390
-----------
MULTI-INDUSTRY 1.15%
780,000 Tatung Company, Limited 481,970
-----------
REAL ESTATE 0.37%
364,000 Cathay Construction Corporation 97,231
260,000 Pacific Construction Company* 58,154
-----------
155,385
-----------
RECREATION, OTHER CONSUMER
GOODS 1.07%
156,000 Kinpo Electronics Incorporated 171,200
208,000 Pou Chen Corporation* 275,794
-----------
446,994
-----------
See accompanying notes to financial statements.
56
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI TAIWAN INDEX FUND (CONCLUDED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET (CONTINUED)
TEXTILES & APPAREL 1.68%
572,000 Far Eastern Textile Limited $ 636,936
52,000 Nien Hsing Textile Corporation
Limited* 67,777
-----------
704,713
-----------
TRANSPORTATION - SHIPPING 0.84%
364,000 Evergreen Marine Corporation* 234,291
312,000 Yang Ming Marine Transport 116,476
-----------
350,767
-----------
WHOLESALE & INTERNATIONAL TRADE 0.13%
208,000 Taiwan Tea Corporation* 52,213
-----------
TOTAL COMMON STOCK - BASKET
(Cost $45,330,224) 41,508,710
-----------
COMMON STOCK -
NON-BASKET 0.81%
AUTOMOBILES 0.01%
4,000 China Motor Company 4,017
-----------
BANKING 0.08%
2,000 Chang Hwa Commercial Bank* 1,249
14,000 China Development Industrial Bank* 14,463
1,600 Chinatrust Commercial Bank 1,262
4,000 First Commercial Bank 3,476
4,000 Hua Nan Commercial Bank 3,167
2,000 International Commercial Bank
of China 1,570
11,200 United World Chinese
Commercial Bank 9,624
-----------
34,811
-----------
BUILDING MATERIALS &
COMPONENTS 0.05%
12,600 Asia Cement Corporation 6,853
22,400 Taiwan Cement Corporation 14,130
-----------
20,983
-----------
CHEMICALS 0.15%
5,250 China Synthetic Rubber Corporation 4,663
17,400 Formosa Chemical &
Fibre Corporation 19,543
5,950 Formosa Plastics Corporation 9,575
16,000 Nan Ya Plastic Corporation 26,519
-----------
60,300
-----------
CONSTRUCTION & HOUSING 0.02%
7,000 BES Engineering Corporation* 1,099
15,600 Continental Engineering Corporation* 8,384
-----------
9,483
-----------
DATA PROCESSING &
REPRODUCTION 0.05%
15,000 Acer Incorporated 18,682
-----------
ELECTRICAL & ELECTRONICS 0.02%
7,500 Lite-On Electronics Incorporated 9,776
-----------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
ELECTRONIC COMPONENTS,
INSTRUMENTS 0.26%
4,100 Advanced Semiconductor
Engineering Incorporated* $ 7,587
17,250 Delta Electronics Incorporated 66,063
4,000 Hon Hai Precision Industry Company 30,509
2,800 Mosel Vitelic Incorporated* 4,821
-----------
108,980
-----------
FOOD & HOUSEHOLD PRODUCTS 0.03%
3,150 Lien Hwa Industrial Corporation 1,024
17,600 Uni-President Enterprises Company 12,121
-----------
13,145
-----------
FOREST PRODUCTS & PAPER 0.01%
3,120 Chung Hwa Pulp Corporation* 1,817
-----------
INDUSTRIAL COMPONENTS 0.02%
5,250 Cheng Shin Rubber Industries
Company 3,210
7,000 Pacific Electric Wire & Cable
Company Limited* 5,204
-----------
8,414
-----------
MERCHANDISING 0.01%
7,500 Far East Department Stores Limited 3,765
-----------
MULTI-INDUSTRY 0.00%
2,400 Tatung Company Limited 1,483
-----------
REAL ESTATE 0.01%
10,400 Pacific Construction Company* 2,326
-----------
RECREATION, OTHER CONSUMER
GOODS 0.03%
10,400 Pou Chen Corporation* 13,790
-----------
TEXTILES & APPAREL 0.01%
4,000 Far Eastern Textile Limited 4,454
-----------
TRANSPORTATION - SHIPPING 0.05%
29,120 Evergreen Marine Corporation* 18,743
7,200 Yang Ming Marine Transport 2,688
-----------
21,431
-----------
TOTAL COMMON STOCK - NON-BASKET
(Cost $405,288) 337,657
-----------
TOTAL INVESTMENTS
(COST $45,735,512)+ 100.00% $41,846,367
======= ===========
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $47,128,045. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 48,083
Excess of tax cost over value (5,329,761)
-----------
$(5,281,678)
===========
See accompanying notes to financial statements.
57
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI UNITED KINGDOM INDEX FUND
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET 99.95%
AEROSPACE & MILITARY TECHNOLOGY 0.92%
215,400 BAE Systems Plc $ 1,344,516
------------
BANKING 14.04%
122,720 Abbey National Plc 1,489,170
116,440 Barclays Plc 2,914,027
198,800 Halifax Group Plc 1,556,186
473,040 HSBC Holdings Plc 6,820,787
426,480 Lloyds TSB Group Plc 4,021,024
204,960 Royal Bank of Scotland Group Plc 3,709,817
------------
20,511,011
------------
BEVERAGES & TOBACCO 2.90%
169,960 British American Tobacco Plc 1,095,503
151,640 Cadbury Schweppes Plc 873,719
265,080 Diageo Plc 2,267,865
------------
4,237,087
------------
BROADCASTING & PUBLISHING 3.23%
149,280 British Sky Broadcasting Group Plc* 2,434,839
52,560 Pearson Plc 1,521,848
88,200 Reed International Plc 757,153
------------
4,713,840
------------
BUILDING MATERIALS &
COMPONENTS 0.95%
28,400 Blue Circle Industries Plc 163,222
58,760 Caradon Plc 153,465
78,360 Hanson Plc 465,176
31,800 Hepworth Plc 96,471
27,800 RMC Group Plc 260,896
44,000 Wolseley Plc 243,916
------------
1,383,146
------------
BUSINESS & PUBLIC SERVICES 7.55%
22,560 Anglian Water Plc* 183,491
86,280 British Airport Authority Plc 690,456
48,840 Capita Group Plc 371,300
19,040 De La Rue Plc 105,965
25,080 Exel Plc 428,774
159,040 Hays Plc 932,555
32,360 Logica Plc 1,014,656
48,520 Misys Plc 563,714
30,720 Railtrack Group Plc 439,824
171,320 Rentokil Initial Plc 401,326
111,080 Reuters Group Plc 2,230,375
108,400 Sage Group Plc 1,002,323
41,480 SEMA Group Plc 778,559
28,280 Thames Water Plc 343,581
54,560 United Utilities Plc 508,063
72,560 WPP Group Plc 1,032,521
------------
11,027,483
------------
CHEMICALS 0.77%
41,680 BOC Group Plc 607,050
75,720 Imperial Chemical Industries Plc 512,303
------------
1,119,353
------------
CONSTRUCTION & HOUSING 0.10%
62,200 Taylor Woodrow Plc 147,517
-----------
DATA PROCESSING & REPRODUCTION 0.20%
23,000 Psion Plc 294,492
------------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
ELECTRICAL & ELECTRONICS 2.56%
209,920 Marconi Plc $ 3,732,399
------------
ELECTRONIC COMPONENTS,
INSTRUMENTS 1.97%
83,800 ARM Holdings Plc* 1,121,747
36,960 Electrocomponents Plc 435,592
234,480 Invensys Plc 917,743
72,920 Williams Plc 408,480
------------
2,883,562
------------
ENERGY SOURCES 10.53%
1,656,880 BP Amoco Plc 15,199,844
80,800 Lasmo Plc 178,697
------------
15,378,541
------------
FINANCIAL SERVICES 2.42%
64,200 Amvescap Plc 1,373,142
38,560 Provident Financial Plc 465,109
25,920 Schroders Plc 544,961
46,680 3i Group Plc 1,153,951
------------
3,537,163
------------
FOOD & HOUSEHOLD PRODUCTS 0.99%
229,360 Unilever Plc 1,439,997
------------
HEALTH & PERSONAL CARE 13.57%
139,720 Astrazeneca Plc 6,383,388
20,000 Celltech Group Plc* 424,860
224,440 Glaxo Wellcome Plc 6,469,158
58,800 Nycomed Amersham Plc 527,440
71,320 Smith & Nephew Plc 293,152
438,080 Smithkline Beecham Plc 5,720,722
------------
19,818,720
------------
INDUSTRIAL COMPONENTS 0.33%
68,600 Balfour Beatty Plc 106,301
52,120 BBA Group Plc 380,690
------------
486,991
------------
INSURANCE 4.89%
129,880 Allied Zurich AG Plc 1,594,007
172,400 CGU Plc 2,658,925
342,280 Legal & General Group Plc 881,491
152,720 Prudential Corporation Plc 2,004,313
------------
7,138,736
------------
LEISURE & TOURISM 3.00%
80,760 Bass Plc 789,639
48,440 Carlton Communications Plc 528,601
195,800 Granada Compass Plc* 2,417,281
120,000 Hilton Group Plc 380,628
111,400 Rank Organisation Plc 272,306
------------
4,388,455
------------
MACHINERY & ENGINEERING 0.67%
55,800 GKN Plc 726,642
19,080 Smith Industries Plc 249,853
------------
976,495
------------
See accompanying notes to financial statements.
58
<PAGE>
AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS iSHARES, INC.
================================================================================
iSHARES MSCI UNITED KINGDOM INDEX FUND (CONCLUDED)
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
COMMON STOCK - BASKET (CONTINUED)
MERCHANDISING 3.73%
60,600 Boots Company Plc $ 447,919
153,360 Dixons Group Plc 532,744
76,920 Great Universal Stores Plc 546,163
117,880 Kingfisher Plc 857,577
261,360 Marks & Spencer Plc 789,078
131,640 Sainsbury Plc 683,784
505,800 Tesco Plc 1,595,148
------------
5,452,413
------------
METALS - NON FERROUS 0.92%
83,680 Rio Tinto Plc 1,338,081
------------
METALS - STEEL 0.16%
224,400 Corus Group Plc* 230,184
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.25%
119,200 Pilkington Plc 158,694
49,120 Rexam Plc 200,115
------------
358,809
------------
MULTI-INDUSTRY 0.15%
42,680 TI Group Plc 217,348
------------
REAL ESTATE 0.79%
36,000 British Land Company Plc 223,663
42,640 Canary Wharf Finance Plc* 309,586
52,040 Land Securities Plc 623,539
------------
1,156,788
------------
RECREATION, OTHER CONSUMER
GOODS 0.41%
64,560 EMI Group Plc 600,243
------------
TELECOMMUNICATIONS 17.31%
507,440 British Telecommunications Plc 6,460,345
4,650,440 Vodafone Airtouch Plc 18,827,481
------------
25,287,826
------------
---------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- -------- -----
TEXTILES & APPAREL 0.06%
127,800 Coats Viyella Plc $ 94,369
------------
TRANSPORTATION - AIRLINES 0.39%
121,200 British Airways Plc 573,565
------------
TRANSPORTATION - SHIPPING 0.40%
64,600 Peninsular & Oriental Steam
Navigation Company Plc 579,937
------------
UTILITIES - ELECTRICAL & GAS 3.79%
273,160 BG Plc 1,705,051
322,440 Centrica Plc 1,055,588
115,840 National Grid Group Plc 950,606
84,080 National Power Plc 576,205
163,200 Scottish Power Plc 1,246,644
------------
5,534,094
------------
TOTAL COMMON STOCK - BASKET
(Cost $154,137,718) 145,983,161
------------
COMMON STOCK -
NON-BASKET 0.05%
HEALTH & PERSONAL CARE 0.00%
24 Smith & Nephew Plc 99
------------
LEISURE & TOURISM 0.05%
5,341 Granada Compass Plc* 65,938
------------
TOTAL COMMON STOCK - NON-BASKET
(Cost $65,662) 66,037
------------
TOTAL INVESTMENTS
(COST $154,203,380)+ 100.00% $146,049,198
======= ============
-----------
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $155,971,319. The aggregate
gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $ 8,426,268
Excess of tax cost over value (18,348,389)
------------
$ (9,922,121)
============
See accompanying notes to financial statements.
59
<PAGE>
AUGUST 31, 2000
STATEMENTS OF ASSETS AND LIABILITIES iSHARES, INC.
================================================================================
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI
AUSTRALIA AUSTRIA BELGIUM BRAZIL (FREE) CANADA
INDEX FUND INDEX FUND INDEX FUND INDEX FUND INDEX FUND
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at value ............................. $60,070,088 $10,776,336 $13,457,165 $18,438,276 $21,944,821
Cash and foreign currency (at value) .............. 1,020,459 -- -- -- 76,227
Cash collateral for securities loaned ............. 7,687,795 2,734,620 881,124 -- --
Dividends receivable .............................. 99,597 13,812 42,789 53,552 18,922
Interest receivable ............................... 4,021 586 262 319 4,123
Receivable from investment adviser ................ -- 1,578 -- 12,856 275
Receivable for securities sold .................... 481,457 -- -- -- --
Assets for in-kind redemptions .................... -- -- -- -- --
Receivable for Fund shares sold ................... -- -- -- -- 3,362,026
Deferred organization cost ........................ 18,878 14,025 6,124 -- 13,319
Prepaid expenses .................................. 1,766 273 315 -- 431
----------- ----------- ----------- ----------- -----------
Total assets .................................. 69,384,061 13,541,230 14,387,779 18,505,003 25,420,144
----------- ----------- ----------- ----------- -----------
LIABILITIES
Bank Overdraft .................................... -- 45,169 250,334 157,714 --
Payable for securities purchased .................. -- -- -- -- --
Payable for Fund shares redeemed .................. -- -- -- -- --
Liability for in-kind subscriptions ............... -- -- -- -- 3,345,965
Payable for securities loaned ..................... 7,687,795 2,734,620 881,124 -- --
Payable for foreign withholding tax ............... -- -- -- -- --
Advisory fee payable .............................. 29,976 -- 3,626 -- --
Administration fee payable ........................ 16,316 2,811 3,496 4,908 4,997
Distribution fee payable .......................... 27,192 4,684 5,827 8,179 8,327
Custody fee payable ............................... 12,254 3,928 2,499 28,643 11,824
Accrued expenses .................................. 36,038 9,357 11,176 22,381 20,836
----------- ----------- ----------- ----------- -----------
Total liabilities ............................. 7,809,571 2,800,569 1,158,082 221,825 3,391,949
----------- ----------- ----------- ----------- -----------
NET ASSETS
Capital stock, $0.001 par value ................... 6,200 1,400 1,000 950 1,300
Paid-in capital ................................... 64,526,648 14,172,890 16,129,145 19,369,990 19,095,814
Accumulated net investment income/(loss) .......... (84,128) 5,920 (131,041) (8,267) (39,405)
Accumulated net realized gain/(loss) on investments (3,656,162) (1,455,376) (1,159,102) (728,300) (296,778)
Net unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ... 781,932 (1,984,173) (1,610,305) (351,195) 3,267,264
----------- ----------- ----------- ----------- -----------
Net Assets ........................................ $61,574,490 $10,740,661 $13,229,697 $18,283,178 $22,028,195
=========== =========== =========== =========== ===========
Shares of common stock issued and outstanding ..... 6,200,030 1,400,030 1,000,030 950,000 1,300,030
=========== =========== =========== =========== ===========
Net Asset Value Per Share ......................... $ 9.93 $ 7.67 $ 13.23 $ 19.25 $ 16.94
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI
EMU FRANCE GERMANY HONG KONG ITALY
INDEX FUND INDEX FUND INDEX FUND INDEX FUND INDEX FUND
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at value ............................. $41,623,250 $94,685,212 $152,619,495 $79,929,685 $50,026,259
Cash and foreign currency (at value) .............. 185,295 254,846 938,437 -- 74,229
Cash collateral for securities loaned ............. -- 15,266,730 16,072,385 11,908,351 6,593,159
Dividends receivable .............................. 33,408 311,993 219,779 84,418 --
Interest receivable ............................... 726 5,378 15,157 10,229 10,274
Receivable from investment adviser ................ 21,916 -- -- -- --
Receivable for securities sold .................... 18,127 -- -- -- --
Assets for in-kind redemptions .................... -- -- -- -- --
Receivable for Fund shares sold ................... -- -- -- -- --
Deferred organization cost ........................ -- 36,560 34,732 9,680 18,411
Prepaid expenses .................................. -- 2,900 5,513 2,580 1,945
----------- ----------- ------------ ----------- -----------
Total assets .................................. 41,882,722 110,563,619 169,905,498 91,944,943 56,724,277
----------- ----------- ------------ ----------- -----------
LIABILITIES
Bank Overdraft .................................... -- -- -- 389,960 --
Payable for securities purchased .................. -- -- -- -- --
Payable for Fund shares redeemed .................. -- -- -- -- --
Liability for in-kind subscriptions ............... -- -- -- -- --
Payable for securities loaned ..................... -- 15,266,730 16,072,385 11,908,351 6,593,159
Payable for foreign withholding tax ............... -- -- -- -- --
Advisory fee payable .............................. -- 39,927 97,621 40,632 34,744
Administration fee payable ........................ 6,012 24,804 45,283 20,170 16,919
Distribution fee payable .......................... 10,021 41,336 75,469 33,617 28,198
Custody fee payable ............................... 18,134 22,873 23,316 28,044 15,165
Accrued expenses .................................. 37,405 51,844 104,025 45,100 27,675
----------- ----------- ------------ ----------- -----------
Total liabilities ............................. 71,572 15,447,514 16,418,099 12,465,874 6,715,860
----------- ----------- ------------ ----------- -----------
NET ASSETS
Capital stock, $0.001 par value ................... 550 3,601 7,501 6,001 2,250
Paid-in capital ................................... 43,879,732 77,030,716 168,985,176 66,714,893 46,464,802
Accumulated net investment income/(loss) .......... 1,158 (83,611) 14,651 (16,526) (31,459)
Accumulated net realized gain/(loss) on investments (559) (91,660) (2,857,711) (5,991,307) (170,538)
Net unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ... (2,069,731) 18,257,059 (12,662,218) 18,766,008 3,743,362
----------- ----------- ------------ ----------- -----------
Net Assets ........................................ $41,811,150 $95,116,105 $153,487,399 $79,479,069 $50,008,417
=========== =========== ============ =========== ===========
Shares of common stock issued and outstanding ..... 550,000 3,601,000 7,501,000 6,001,000 2,250,030
=========== =========== ============ =========== ===========
Net Asset Value Per Share ......................... $ 76.02 $ 26.41 $ 20.46 $ 13.24 $ 22.23
=========== =========== ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
JAPAN
INDEX FUND
------------
<S> <C>
ASSETS
Investments, at value ............................. $786,870,296
Cash and foreign currency (at value) .............. 2,224,904
Cash collateral for securities loaned ............. 83,952,455
Dividends receivable .............................. 122,689
Interest receivable ............................... 28,473
Receivable from investment adviser ................ --
Receivable for securities sold .................... --
Assets for in-kind redemptions .................... --
Receivable for Fund shares sold ................... --
Deferred organization cost ........................ 76,651
Prepaid expenses .................................. 27,261
------------
Total assets .................................. 873,302,729
------------
LIABILITIES
Bank Overdraft .................................... --
Payable for securities purchased .................. --
Payable for Fund shares redeemed .................. --
Liability for in-kind subscriptions ............... --
Payable for securities loaned ..................... 83,952,455
Payable for foreign withholding tax ............... --
Advisory fee payable .............................. 516,416
Administration fee payable ........................ 206,540
Distribution fee payable .......................... 344,263
Custody fee payable ............................... 99,404
Accrued expenses .................................. 393,443
------------
Total liabilities ............................. 85,512,521
------------
NET ASSETS
Capital stock, $0.001 par value ................... 57,001
Paid-in capital ................................... 688,035,589
Accumulated net investment income/(loss) .......... (3,501,630)
Accumulated net realized gain/(loss) on investments (1,820,452)
Net unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ... 105,019,700
------------
Net Assets ........................................ $787,790,208
============
Shares of common stock issued and outstanding ..... 57,001,000
============
Net Asset Value Per Share ......................... $ 13.82
============
</TABLE>
See accompanying notes to financial statements.
60-61
<PAGE>
AUGUST 31, 2000
STATEMENTS OF ASSETS AND LIABILITIES (concluded) iSHARES, INC.
================================================================================
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI
MALAYSIA (FREE) MEXICO (FREE) NETHERLANDS SINGAPORE (FREE)
INDEX FUND INDEX FUND INDEX FUND INDEX FUND
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value ............................. $ 98,552,810 $39,781,757 $30,616,908 $90,249,707
Cash and foreign currency (at value) .............. 739,883 333,871 -- --
Cash collateral for securities loaned ............. -- 3,932,481 -- 2,018,900
Dividends receivable .............................. 111,666 363 119,322 192,757
Interest receivable ............................... 3,877 5,499 1,111 875
Receivable from investment adviser ................ -- -- -- --
Receivable for securities sold .................... -- 3,096,575 -- --
Assets for in-kind redemptions .................... -- -- -- --
Receivable for Fund shares sold ................... -- -- -- --
Deferred organization cost ........................ 10,263 10,369 8,683 12,323
Prepaid expenses .................................. 3,782 844 715 3,050
------------ ----------- ----------- -----------
Total assets .................................. 99,422,281 47,161,759 30,746,739 92,477,612
------------ ----------- ----------- -----------
LIABILITIES
Bank Overdraft .................................... -- -- 72,602 1,548,288
Payable for securities purchased .................. -- 3,026,128 -- --
Payable for Fund shares redeemed .................. -- -- -- --
Liability for in-kind subscriptions ............... -- -- -- --
Payable for securities loaned ..................... -- 3,932,481 -- 2,018,900
Payable for foreign withholding tax ............... -- -- -- --
Advisory fee payable .............................. 55,536 3,031 10,464 48,616
Administration fee payable ........................ 26,360 9,179 7,250 23,541
Distribution fee payable .......................... 43,928 15,303 12,081 39,235
Custody fee payable ............................... 34,939 21,741 12,706 26,339
Accrued expenses .................................. 55,663 27,114 18,360 53,531
------------ ----------- ----------- -----------
Total liabilities ............................. 216,426 7,034,977 133,463 3,758,450
------------ ----------- ----------- -----------
NET ASSETS
Capital stock, $0.001 par value ................... 16,650 2,400 1,301 11,700
Paid-in capital ................................... 85,846,225 35,552,329 30,426,542 79,905,979
Accumulated net investment income/(loss) .......... 4,339 95,163 3,674 5,130
Accumulated net realized gain/(loss) on investments (10,733,222) (113,966) (285,612) (806,081)
Net unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ... 24,071,863 4,590,856 467,371 9,602,434
------------ ----------- ----------- -----------
Net Assets ........................................ $ 99,205,855 $40,126,782 $30,613,276 $88,719,162
============ =========== =========== ===========
Shares of common stock issued and outstanding ..... 16,650,030 2,400,030 1,301,000 11,700,030
============ =========== =========== ===========
Net Asset Value Per Share ......................... $ 5.96 $ 16.72 $ 23.53 $ 7.58
============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI
SOUTH KOREA SPAIN SWEDEN SWITZERLAND TAIWAN
INDEX FUND INDEX FUND INDEX FUND INDEX FUND INDEX FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at value ............................. $13,555,759 $39,394,128 $23,261,152 $44,897,825 $41,846,367
Cash and foreign currency (at value) .............. 107,974 515,149 553,194 -- 907,089
Cash collateral for securities loaned ............. -- 6,792,669 1,484,900 3,209,850 --
Dividends receivable .............................. 4,970 65,956 -- 174,318 19,657
Interest receivable ............................... 472 3,274 3,199 906 5,527
Receivable from investment adviser ................ 13,484 -- -- -- 21,265
Receivable for securities sold .................... -- -- -- -- --
Assets for in-kind redemptions .................... -- -- -- -- --
Receivable for Fund shares sold ................... -- -- -- -- --
Deferred organization cost ........................ -- 15,221 9,910 23,399 --
Prepaid expenses .................................. -- 1,300 892 1,155 --
----------- ----------- ----------- ----------- -----------
Total assets .................................. 13,682,659 46,787,697 25,313,247 48,307,453 42,799,905
----------- ----------- ----------- ----------- -----------
LIABILITIES
Bank Overdraft .................................... -- -- -- 328,017 --
Payable for securities purchased .................. -- -- -- -- --
Payable for Fund shares redeemed .................. -- -- -- -- --
Liability for in-kind subscriptions ............... -- -- -- -- --
Payable for securities loaned ..................... -- 6,792,669 1,484,900 3,209,850 --
Payable for foreign withholding tax ............... -- -- -- -- 29,679
Advisory fee payable .............................. -- 17,459 8,133 15,474 --
Administration fee payable ........................ 4,493 10,887 6,898 11,231 8,768
Distribution fee payable .......................... 7,488 18,145 11,498 18,718 14,614
Custody fee payable ............................... 35,347 9,777 9,665 12,628 43,224
Accrued expenses .................................. 13,758 25,899 17,837 26,417 36,345
----------- ----------- ----------- ----------- -----------
Total liabilities ............................. 61,086 6,874,836 1,538,931 3,622,335 132,630
----------- ----------- ----------- ----------- -----------
NET ASSETS
Capital stock, $0.001 par value ................... 750 1,650 975 2,876 2,600
Paid-in capital ................................... 15,143,617 42,867,858 22,632,298 45,745,527 47,951,484
Accumulated net investment income/(loss) .......... (19,699) (58,260) (174) 9,437 (5,064)
Accumulated net realized gain/(loss) on investments (823,996) (458,160) (138,213) (332,398) (1,392,533)
Net unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ... (679,099) (2,440,227) 1,279,430 (740,324) (3,889,212)
----------- ----------- ----------- ----------- -----------
Net Assets ........................................ $13,621,573 $39,912,861 $23,774,316 $44,685,118 $42,667,275
=========== =========== =========== =========== ===========
Shares of common stock issued and outstanding ..... 750,000 1,650,030 975,030 2,876,000 2,600,000
=========== =========== =========== =========== ===========
Net Asset Value Per Share ......................... $ 18.16 $ 24.19 $ 24.38 $ 15.54 $ 16.41
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
UNITED KINGDOM
INDEX FUND
----------
<S> <C>
ASSETS
Investments, at value ............................. $146,049,198
Cash and foreign currency (at value) .............. 299,764
Cash collateral for securities loaned ............. --
Dividends receivable .............................. 716,598
Interest receivable ............................... 10,622
Receivable from investment adviser ................ --
Receivable for securities sold .................... --
Assets for in-kind redemptions .................... --
Receivable for Fund shares sold ................... --
Deferred organization cost ........................ 22,089
Prepaid expenses .................................. 3,592
------------
Total assets .................................. 147,101,863
------------
LIABILITIES
Bank Overdraft .................................... --
Payable for securities purchased .................. --
Payable for Fund shares redeemed .................. --
Liability for in-kind subscriptions ............... --
Payable for securities loaned ..................... --
Payable for foreign withholding tax ............... --
Advisory fee payable .............................. 84,414
Administration fee payable ........................ 37,825
Distribution fee payable .......................... 63,032
Custody fee payable ............................... 19,850
Accrued expenses .................................. 94,041
------------
Total liabilities ............................. 299,162
------------
NET ASSETS
Capital stock, $0.001 par value ................... 8,001
Paid-in capital ................................... 156,855,678
Accumulated net investment income/(loss) .......... (244,068)
Accumulated net realized gain/(loss) on investments (1,634,878)
Net unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ... (8,182,032)
------------
Net Assets ........................................ $146,802,701
============
Shares of common stock issued and outstanding ..... 8,001,000
============
Net Asset Value Per Share ......................... $ 18.35
============
</TABLE>
See accompanying notes to financial statements.
62-63
<PAGE>
FOR THE YEAR ENDED AUGUST 31, 2000
STATEMENTS OF OPERATIONS iSHARES, INC.
================================================================================
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI
AUSTRALIA AUSTRIA BELGIUM
INDEX FUND INDEX FUND INDEX FUND
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes) ................................. $1,915,380 $ 181,603 $ 309,677
Interest ..................................................................... 25,864 3,734 8,141
---------- ----------- -----------
Total investment income .................................................... 1,941,244 185,337 317,818
---------- ----------- -----------
EXPENSES:
Advisory fees ................................................................ 148,628 19,889 25,952
Administration fees .......................................................... 106,930 19,678 22,408
Distribution fees ............................................................ 135,876 24,528 28,350
Custodian fees and expenses .................................................. 38,163 12,803 12,769
Transfer agent fees .......................................................... 17,125 11,872 12,405
Directors' fees .............................................................. 9,834 1,799 2,038
Legal fees ................................................................... 23,546 3,897 4,499
Audit fees ................................................................... 23,592 4,317 5,153
Federal and state registration fees .......................................... 2,840 1,696 5,434
Amortization of deferred organization costs .................................. 32,178 23,929 10,453
Insurance .................................................................... 5,266 1,158 1,244
Printing ..................................................................... 7,342 1,087 1,415
Licensing fees ............................................................... 18,391 3,333 3,831
AMEX listing fee ............................................................. 937 121 193
Interest expense ............................................................. 4,963 300 6,077
Miscellaneous expenses ....................................................... 6,152 2,563 1,825
---------- ----------- -----------
Total expenses ............................................................. 581,763 132,970 144,046
Less reimbursements from investment adviser ................................ -- (4,019) --
---------- ----------- -----------
Net expenses ............................................................... 581,763 128,951 144,046
---------- ----------- -----------
Net investment income/(loss) ................................................. 1,359,481 56,386 173,772
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF
OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:
Net realized gain/(loss) on investments ...................................... 2,233,973) (466,783) (498,140)
Net realized gain/(loss) on investments on
in-kind redemptions ........................................................ 70,377 (586,740) --
Net realized gain/(loss) on foreign currency
related transactions ....................................................... (76,422) 1,967 26,036
---------- ----------- -----------
2,240,018) (1,051,556) (472,104)
Net change in unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies .............................. 2,071,775 (1,077,240) (1,751,697)
---------- ----------- -----------
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities
denominated in foreign currencies .......................................... (168,243) (2,128,796) (2,223,801)
---------- ----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ............................................................ $1,191,238 $(2,072,410) $(2,050,029)
========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI
BRAZIL (FREE) CANADA EMU
INDEX FUND(a) INDEX FUND INDEX FUND(b)
------------- ---------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes) ................................. $ 56,628 $ 730,908 $ 34,099
Interest ..................................................................... 1,032 7,848 733
--------- ----------- -----------
Total investment income .................................................... 57,660 738,756 34,832
--------- ----------- -----------
EXPENSES:
Advisory fees ................................................................ 410 23,119 7,196
Administration fees .......................................................... 4,908 23,780 6,012
Distribution fees ............................................................ 8,179 31,942 10,021
Custodian fees and expenses .................................................. 9,743 12,688 2,134
Transfer agent fees .......................................................... 1,080 12,840 980
Directors' fees .............................................................. 264 2,474 594
Legal fees ................................................................... 3,253 8,501 5,778
Audit fees ................................................................... 5,044 6,992 9,268
Federal and state registration fees .......................................... 5,111 4,934 11,586
Amortization of deferred organization costs .................................. -- 22,731 --
Insurance .................................................................... 510 1,328 360
Printing ..................................................................... 963 2,469 2,261
Licensing fees ............................................................... 982 4,230 1,202
AMEX listing fee ............................................................. 5,135 281 5,311
Interest expense ............................................................. -- 2,052 --
Miscellaneous expenses ....................................................... 73 7,989 78
--------- ----------- -----------
Total expenses ............................................................. 45,655 168,350 62,781
Less reimbursements from investment adviser ................................ (13,265) (3,428) (29,111)
--------- ----------- -----------
Net expenses ............................................................... 32,390 164,922 33,670
--------- ----------- -----------
Net investment income/(loss) ................................................. 25,270 573,834 1,162
--------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF
OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:
Net realized gain/(loss) on investments ...................................... (403,399) 4,532,079 (559)
Net realized gain/(loss) on investments on
in-kind redemptions ........................................................ -- -- --
Net realized gain/(loss) on foreign currency
related transactions ....................................................... (12,733) (41,804) (4)
--------- ----------- -----------
(416,132) 4,490,275 (563)
Net change in unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies .............................. (351,195) 2,244,139 (2,069,731)
--------- ----------- -----------
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities
denominated in foreign currencies .......................................... (767,327) 6,734,414 (2,070,294)
--------- ----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ............................................................ $(742,057) $ 7,308,248 $(2,069,132)
========= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI
FRANCE GERMANY HONG KONG
INDEX FUND INDEX FUND INDEX FUND
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes) ................................. $ 1,117,332 $ 2,555,684 $ 2,797,982
Interest ..................................................................... 45,239 111,153 39,361
----------- ------------ -----------
Total investment income .................................................... 1,162,571 2,666,837 2,837,343
----------- ------------ -----------
EXPENSES:
Advisory fees ................................................................ 208,698 415,826 203,154
Administration fees .......................................................... 152,143 272,489 141,347
Distribution fees ............................................................ 197,119 359,126 178,342
Custodian fees and expenses .................................................. 64,830 90,391 55,596
Transfer agent fees .......................................................... 21,938 35,921 40,003
Directors' fees .............................................................. 14,259 27,305 9,903
Legal fees ................................................................... 35,084 66,160 31,286
Audit fees ................................................................... 34,565 59,912 30,057
Federal and state registration fees .......................................... 3,232 19,333 4,522
Amortization of deferred organization costs .................................. 62,387 59,271 16,522
Insurance .................................................................... 4,641 6,696 7,003
Printing ..................................................................... 12,065 23,479 9,439
Licensing fees ............................................................... 26,518 48,086 24,251
AMEX listing fee ............................................................. 1,442 2,654 1,252
Interest expense ............................................................. -- 4,422 5,007
Miscellaneous expenses ....................................................... 7,337 9,237 5,249
----------- ------------ -----------
Total expenses ............................................................. 846,258 1,500,308 762,933
Less reimbursements from investment adviser ................................ -- -- --
----------- ------------ -----------
Net expenses ............................................................... 846,258 1,500,308 762,933
----------- ------------ -----------
Net investment income/(loss) ................................................. 316,313 1,166,529 2,074,410
----------- ------------ -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF
OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:
Net realized gain/(loss) on investments ...................................... 5,585,604 14,993,834 5,977,121
Net realized gain/(loss) on investments on
in-kind redemptions ........................................................ 3,534,049 1,613,589 2,956,325
Net realized gain/(loss) on foreign currency
related transactions ....................................................... (34,008) 28,021 (2,848)
----------- ------------ -----------
9,085,645 16,635,444 8,930,598
Net change in unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies .............................. 7,586,933 (13,766,948) (771,258)
----------- ------------ -----------
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities
denominated in foreign currencies .......................................... 16,672,578 2,868,496 8,159,340
----------- ------------ -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ............................................................ $16,988,891 $ 4,035,025 $10,233,750
=========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI
ITALY JAPAN
INDEX FUND INDEX FUND
---------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes) ................................. $ 1,421,179 $ 4,596,673
Interest ..................................................................... 199,005 263,680
----------- -----------
Total investment income .................................................... 1,620,184 4,860,353
----------- -----------
EXPENSES:
Advisory fees ................................................................ 154,493 2,363,952
Administration fees .......................................................... 107,296 1,506,281
Distribution fees ............................................................ 138,808 1,915,263
Custodian fees and expenses .................................................. 47,735 341,918
Transfer agent fees .......................................................... 15,203 149,448
Directors' fees .............................................................. 10,235 141,038
Legal fees ................................................................... 23,640 325,640
Audit fees ................................................................... 21,343 300,217
Federal and state registration fees .......................................... -- 11,091
Amortization of deferred organization costs .................................. 31,416 130,795
Insurance .................................................................... 8,035 14,356
Printing ..................................................................... 7,272 100,301
Licensing fees ............................................................... 18,656 259,402
AMEX listing fee ............................................................. 841 12,548
Interest expense ............................................................. 25,926 1,674
Miscellaneous expenses ....................................................... 6,813 39,593
----------- -----------
Total expenses ............................................................. 617,712 7,613,517
Less reimbursements from investment adviser ................................ -- --
----------- -----------
Net expenses ............................................................... 617,712 7,613,517
----------- -----------
Net investment income/(loss) ................................................. 1,002,472 (2,753,164)
----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF
OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:
Net realized gain/(loss) on investments ...................................... 3,883,525 33,478,937
Net realized gain/(loss) on investments on
in-kind redemptions ........................................................ 4,300,150 17,913,316
Net realized gain/(loss) on foreign currency
related transactions ....................................................... (80,346) 425,358
----------- -----------
8,103,329 51,817,611
Net change in unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies .............................. (2,555,628) 9,615,813
----------- -----------
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities
denominated in foreign currencies .......................................... 5,547,701 61,433,424
----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ............................................................ $ 6,550,173 $58,680,260
=========== ===========
<FN>
(a) For the period July 11, 2000 (commencement of operations) through August
31, 2000.
(b) For the period July 26, 2000 (commencement of operations) through August
31, 2000.
</FN>
</TABLE>
See accompanying notes to financial statements.
64-65
<PAGE>
FOR THE YEAR ENDED AUGUST 31, 2000
STATEMENTS OF OPERATIONS (concluded) iSHARES, INC.
================================================================================
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI
MALAYSIA (FREE) MEXICO (FREE) NETHERLANDS SINGAPORE (FREE)
INDEX FUND INDEX FUND INDEX FUND INDEX FUND
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes) ........... $1,830,961 $ 327,840 $ 402,360 $ 2,642,915
Interest ............................................... 74,506 40,005 12,977 50,089
---------- ---------- --------- ------------
Total investment income .............................. 1,905,467 367,845 415,337 2,693,004
---------- ---------- --------- ------------
EXPENSES:
Advisory fees .......................................... 264,088 45,446 61,274 268,788
Administration fees .................................... 185,310 45,292 47,334 188,421
Distribution fees ...................................... 238,818 58,906 58,919 232,087
Custodian fees and expenses ............................ 93,770 40,679 20,603 84,589
Transfer agent fees .................................... 36,387 16,552 13,560 53,965
Directors' fees ........................................ 17,423 4,014 4,149 16,766
Legal fees ............................................. 82,791 10,625 9,461 38,378
Audit fees ............................................. 37,185 11,895 11,339 37,652
Federal and state registration fees .................... 1,293 5,466 1,397 --
Amortization of deferred organization costs ............ 17,510 17,690 14,816 21,027
Insurance .............................................. 2,066 570 2,846 10,525
Printing ............................................... 13,247 4,111 2,889 10,728
Licensing fees ......................................... 32,257 7,911 8,018 31,794
AMEX listing fee ....................................... 1,673 472 407 1,439
Interest expense ....................................... -- 245 13,206 205
Miscellaneous expenses ................................. 8,477 5,673 3,996 2,700
---------- ---------- --------- ------------
Total expenses ....................................... 1,032,295 275,547 274,214 999,064
Less reimbursements from investment adviser .......... -- (463) -- --
---------- ---------- --------- ------------
Net expenses ......................................... 1,032,295 275,084 274,214 999,064
---------- ---------- --------- ------------
Net investment income/(loss) ........................... 873,172 92,761 141,123 1,693,940
---------- ---------- --------- ------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF
OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:
Net realized gain/(loss) on investments ................ 3,891,844 1,035,145 178,529 13,086,839
Net realized gain/(loss) on investments on
in-kind redemptions .................................. -- 5,425 (330,320) 6,060,555
Net realized gain/(loss) on foreign currency
related transactions ................................. 54,571 (6,246) 5,784 2,766
---------- ---------- --------- ------------
3,946,415 1,034,324 (146,007) 19,150,160
Net change in unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ........ 2,433,278 4,125,540 148,944 (22,721,621)
---------- ---------- --------- ------------
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions and
translation of other assets and liabilities
denominated in foreign currencies .................... 6,379,693 5,159,864 2,937 (3,571,461)
---------- ---------- --------- ------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $7,252,865 $5,252,625 $ 144,060 $ (1,877,521)
========== ========== ========= ============
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI iSHARES MSCI
SOUTH KOREA SPAIN SWEDEN SWITZERLAND
INDEX FUND(c) INDEX FUND INDEX FUND INDEX FUND
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes) ........... $ 16,779 $ 618,882 $ 349,341 $ 492,538
Interest ............................................... 3,361 23,831 18,321 6,892
----------- ----------- ----------- ---------
Total investment income .............................. 20,140 642,713 367,662 499,430
----------- ----------- ----------- ---------
EXPENSES:
Advisory fees .......................................... 8,252 94,886 52,196 88,433
Administration fees .................................... 8,322 71,035 42,428 69,813
Distribution fees ...................................... 13,870 91,261 55,163 89,178
Custodian fees and expenses ............................ 13,347 33,281 26,888 31,803
Transfer agent fees .................................... 2,040 16,087 14,046 14,886
Directors' fees ........................................ 1,130 6,661 4,010 6,549
Legal fees ............................................. 12,393 15,951 10,194 15,151
Audit fees ............................................. 3,126 15,435 9,582 16,246
Federal and state registration fees .................... 3,980 3,330 2,635 3,288
Amortization of deferred organization costs ............ -- 25,976 16,911 39,927
Insurance .............................................. 1,130 4,631 1,356 4,335
Printing ............................................... 762 5,138 3,459 4,922
Licensing fees ......................................... 1,665 12,308 7,417 12,034
AMEX listing fee ....................................... 5,097 629 411 626
Interest expense ....................................... -- 6,757 2,912 4,520
Miscellaneous expenses ................................. 1,549 4,835 3,890 4,568
----------- ----------- ----------- ---------
Total expenses ....................................... 76,663 408,201 253,498 406,279
Less reimbursements from investment adviser .......... (21,736) -- -- --
----------- ----------- ----------- ---------
Net expenses ......................................... 54,927 408,201 253,498 406,279
----------- ----------- ----------- ---------
Net investment income/(loss) ........................... (34,787) 234,512 114,164 93,151
----------- ----------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF
OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:
Net realized gain/(loss) on investments ................ (823,996) 855,519 5,792,582 371,467
Net realized gain/(loss) on investments on
in-kind redemptions .................................. -- -- 2,645,700 375,640
Net realized gain/(loss) on foreign currency
related transactions ................................. (19,699) (65,470) (3,926) 6,726
----------- ----------- ----------- ---------
(843,695) 790,049 8,434,356 753,833
Net change in unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ........ (679,099) (2,294,792) (2,132,301) (303,839)
----------- ----------- ----------- ---------
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions and
translation of other assets and liabilities
denominated in foreign currencies .................... (1,522,794) (1,504,743) 6,302,055 449,994
----------- ----------- ----------- ---------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $(1,557,581) $(1,270,231) $ 6,416,219 $ 543,145
=========== =========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI
TAIWAN UNITED KINGDOM
INDEX FUND(d) INDEX FUND
------------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes) ........... $ 878,935 $ 2,999,601
Interest ............................................... 9,466 44,933
----------- -----------
Total investment income .............................. 888,401 3,044,534
----------- -----------
EXPENSES:
Advisory fees .......................................... 16,530 349,463
Administration fees .................................... 9,318 226,121
Distribution fees ...................................... 15,531 293,126
Custodian fees and expenses ............................ 14,424 42,646
Transfer agent fees .................................... 1,280 30,018
Directors' fees ........................................ 683 21,637
Legal fees ............................................. 9,042 54,193
Audit fees ............................................. 8,428 53,734
Federal and state registration fees .................... 12,932 13,835
Amortization of deferred organization costs ............ -- 37,694
Insurance .............................................. 710 8,894
Printing ............................................... 2,602 16,924
Licensing fees ......................................... 1,864 39,287
AMEX listing fee ....................................... 5,368 2,124
Interest expense ....................................... -- 25,265
Miscellaneous expenses ................................. 583 13,394
----------- -----------
Total expenses ....................................... 99,295 1,228,355
Less reimbursements from investment adviser .......... (37,794) --
----------- -----------
Net expenses ......................................... 61,501 1,228,355
----------- -----------
Net investment income/(loss) ........................... 826,900 1,816,179
----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF
OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:
Net realized gain/(loss) on investments ................ (1,134,217) 5,873,599
Net realized gain/(loss) on investments on
in-kind redemptions .................................. -- 2,937,974
Net realized gain/(loss) on foreign currency
related transactions ................................. (5,064) (37,499)
----------- -----------
(1,139,281) 8,774,074
Net change in unrealized appreciation/(depreciation) on
investments and translation of other assets and
liabilities denominated in foreign currencies ........ (3,889,212) (14,882,373)
----------- -----------
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions and
translation of other assets and liabilities
denominated in foreign currencies .................... (5,028,493) (6,108,299)
----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $(4,201,593) $(4,292,120)
=========== ===========
<FN>
(c) For the period May 10, 2000 (commencement of operations) through August 31,
2000.
(d) For the period June 21, 2000 (commencement of operations) through August
31, 2000.
</FN>
</TABLE>
See accompanying notes to financial statements.
66-67
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS iSHARES, INC.
================================================================================
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI
AUSTRALIA AUSTRIA
INDEX FUND INDEX FUND
-------------------------------- -----------------------------
For the For the For the For the
year year year year
ended ended ended ended
08/31/00 08/31/99 08/31/00 08/31/99
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 1,359,481 $ 1,018,910 $ 56,386 $ 103,998
Net realized gain/(loss) on investments and
foreign currency related transactions ... (2,240,018) (1,050,159) (1,051,556) (967,245)
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... 2,071,775 11,353,376 (1,077,240) 36,686
----------- ----------- ----------- -----------
Net increase/(decrease) in net assets
resulting from operations ............... 1,191,238 11,322,127 (2,072,410) (826,561)
----------- ----------- ----------- -----------
DISTRIBUTIONS:
Net investment income ..................... (1,359,481) (1,018,910) (56,386) (103,998)
In excess of net investment income ........ (25,516) (7,396) (6,475) (13,614)
Net realized gains ........................ -- -- -- --
In excess of net realized gains ........... -- -- -- --
Return of capital ......................... (156,130) (319,842) -- (25,471)
----------- ----------- ----------- -----------
Net decrease in net assets from
distributions ........................... (1,541,127) (1,346,148) (62,861) (143,083)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 12,114,567 14,143,418 2,349,160 5,660,757
Cost of shares redeemed ................... (4,147,344) (4,261,441) (2,249,507) --
----------- ----------- ----------- -----------
Net increase/(decrease) in net assets
derived from capital share transactions . 7,967,223 9,881,977 99,653 5,660,757
----------- ----------- ----------- -----------
Total increase/(decrease) in net assets ... 7,617,334 19,857,956 (2,035,618) 4,691,113
NET ASSETS:
Beginning of period ....................... 53,957,156 34,099,200 12,776,279 8,085,166
----------- ----------- ----------- -----------
End of period ............................. $61,574,490 $53,957,156 $10,740,661 $12,776,279
=========== =========== =========== ===========
Capital Share Transactions:
Shares sold ............................... 1,200,000 1,400,000 300,000 600,000
Shares redeemed ........................... (400,000) (400,000) (300,000) --
----------- ----------- ----------- -----------
Net increase/(decrease) in shares ......... 800,000 1,000,000 -- 600,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI
BELGIUM BRAZIL (FREE)
INDEX FUND INDEX FUND
-------------------------------- --------------
For the For the For the
year year period
ended ended 07/11/00*-
08/31/00 08/31/99 08/31/00
----------- ----------- ----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 173,772 $ 74,362 $ 25,270
Net realized gain/(loss) on investments and
foreign currency related transactions ... (472,104) 3,499,750 (416,132)
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... (1,751,697) (2,955,479) (351,195)
----------- ------------ ------------
Net increase/(decrease) in net assets
resulting from operations ............... (2,050,029) 618,633 (742,057)
----------- ------------ ------------
DISTRIBUTIONS:
Net investment income ..................... (173,772) -- (20,804)
In excess of net investment income ........ (185,439) (7,001) --
Net realized gains ........................ -- (997,661) --
In excess of net realized gains ........... -- -- (324,901)
Return of capital ......................... -- (770,321) --
----------- ------------ ------------
Net decrease in net assets from
distributions ........................... (359,211) (1,774,983) (345,705)
----------- ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 2,142,828 2,006,880 34,771,580
Cost of shares redeemed ................... -- (13,118,955) (15,400,640)
----------- ------------ ------------
Net increase/(decrease) in net assets
derived from capital share transactions . 2,142,828 (11,112,075) 19,370,940
----------- ------------ ------------
Total increase/(decrease) in net assets ... (266,412) (12,268,425) 18,283,178
NET ASSETS:
Beginning of period ....................... 13,496,109 25,764,534 --
----------- ------------ ------------
End of period ............................. $13,229,697 $ 13,496,109 $ 18,283,178
=========== ============ ============
Capital Share Transactions:
Shares sold ............................... 160,000 120,000 1,750,000
Shares redeemed ........................... -- (680,000) (800,000)
----------- ------------ ------------
Net increase/(decrease) in shares ......... 160,000 (560,000) 950,000
=========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI
CANADA EMU
INDEX FUND INDEX FUND
-------------------------------- -------------
For the For the For the
year year period
ended ended 07/26/00*-
08/31/00 08/31/99 08/31/00
----------- ------------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 573,834 $ 64,571 $ 1,162
Net realized gain/(loss) on investments and
foreign currency related transactions ... 4,490,275 1,384,936 (563)
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... 2,244,139 2,309,528 (2,069,731)
----------- ----------- -----------
Net increase/(decrease) in net assets
resulting from operations ............... 7,308,248 3,759,035 (2,069,132)
----------- ----------- -----------
DISTRIBUTIONS:
Net investment income ..................... (573,834) (64,571) --
In excess of net investment income ........ (28,480) (6,549) --
Net realized gains ........................ (4,490,275) (385,919) --
In excess of net realized gains ........... (338,582) -- --
Return of capital ......................... (134,421) -- --
----------- ----------- -----------
Net decrease in net assets from
distributions ........................... (5,565,592) (457,039) --
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 11,032,592 7,126,953 43,880,282
Cost of shares redeemed ................... -- (8,107,562) --
----------- ----------- -----------
Net increase/(decrease) in net assets
derived from capital share transactions . 11,032,592 (980,609) 43,880,282
----------- ----------- -----------
Total increase/(decrease) in net assets ... 12,775,248 2,321,387 41,811,150
NET ASSETS:
Beginning of period ....................... 9,252,947 6,931,560 --
----------- ----------- -----------
End of period ............................. $22,028,195 $ 9,252,947 $41,811,150
=========== =========== ===========
Capital Share Transactions:
Shares sold ............................... 600,000 600,000 550,000
Shares redeemed ........................... -- (600,000) --
----------- ----------- -----------
Net increase/(decrease) in shares ......... 600,000 -- 550,000
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
FRANCE
INDEX FUND
----------------------------------
For the For the
year year
ended ended
08/31/00 08/31/99
----------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 316,313 $ 343,192
Net realized gain/(loss) on investments and
foreign currency related transactions ... 9,085,645 3,579,987
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... 7,586,933 5,565,223
----------- ------------
Net increase/(decrease) in net assets
resulting from operations ............... 16,988,891 9,488,402
----------- ------------
DISTRIBUTIONS:
Net investment income ..................... (316,313) (343,192)
In excess of net investment income ........ (62,610) (70,988)
Net realized gains ........................ (5,551,596) (157,628)
In excess of net realized gains ........... (115,993) --
Return of capital ......................... (91,967) (271,980)
----------- ------------
Net decrease in net assets from
distributions ........................... (6,138,479) (843,788)
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 15,952,082 34,466,929
Cost of shares redeemed ................... (9,571,623) (11,147,991)
----------- ------------
Net increase/(decrease) in net assets
derived from capital share transactions . 6,380,459 23,318,938
----------- ------------
Total increase/(decrease) in net assets ... 17,230,871 31,963,552
NET ASSETS:
Beginning of period ....................... 77,885,234 45,921,682
----------- ------------
End of period ............................. $95,116,105 $ 77,885,234
=========== ============
Capital Share Transactions:
Shares sold ............................... 600,000 1,600,000
Shares redeemed ........................... (400,000) (600,000)
----------- ------------
Net increase/(decrease) in shares ......... 200,000 1,000,000
=========== ============
<FN>
* Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
68-69
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued) iSHARES, INC.
================================================================================
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI
GERMANY HONG KONG
INDEX FUND INDEX FUND
---------------------------- -----------------------------
For the For the For the For the
year year year year
ended ended ended ended
08/31/00 08/31/99 08/31/00 08/31/99
------------ ------------ --------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 1,166,529 $ 464,079 $ 2,074,410 $ 2,076,168
Net realized gain/(loss) on investments and
foreign currency related transactions ... 16,635,444 9,046,609 8,930,598 (4,283,573)
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... (13,766,948) (4,137,292) (771,258) 45,476,872
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets
resulting from operations ............... 4,035,025 5,373,396 10,233,750 43,269,467
------------ ------------ ------------ ------------
DISTRIBUTIONS:
Net investment income ..................... (1,166,529) (464,079) (1,944,477) (2,076,168)
In excess of net investment income ........ (56,709) (47,802) -- (331,861)
Net realized gains ........................ (15,021,855) (1,463,921) -- --
In excess of net realized gains ........... (2,419,881) (380,445) -- --
Return of capital ......................... (324,558) (37,182) (146,976) --
------------ ------------ ------------ ------------
Net decrease in net assets from
distributions ........................... (18,989,532) (2,393,429) (2,091,453) (2,408,029)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 93,602,539 50,334,147 6,699,833 4,990,436
Cost of shares redeemed ................... (26,805,867) (24,602,755) (12,563,378) (18,624,427)
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets
derived from capital share transactions . 66,796,672 25,731,392 (5,863,545) (13,633,991)
------------ ------------ ------------ ------------
Total increase/(decrease) in net assets ... 51,842,165 28,711,359 2,278,752 27,227,447
NET ASSETS:
Beginning of period ....................... 101,645,234 72,933,875 77,200,317 49,972,870
------------ ------------ ------------ ------------
End of period ............................. $153,487,399 $101,645,234 $ 79,479,069 $ 77,200,317
============ ============ ============ ============
Capital Share Transactions:
Shares sold ............................... 3,900,000 2,400,400 525,000 525,000
Shares redeemed ........................... (1,200,000) (1,200,000) (1,050,000) (1,800,000)
------------ ------------ ------------ ------------
Net increase/(decrease) in shares ......... 2,700,000 1,200,000 (525,000) (1,275,000)
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI
ITALY JAPAN
INDEX FUND INDEX FUND
-------------------------- ---------------------------
For the For the For the For the
year year year year
ended ended ended ended
08/31/00 08/31/99 08/31/00 08/31/99
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 1,002,472 $ 484,969 $ (2,753,164) $ (1,115,084)
Net realized gain/(loss) on investments and
foreign currency related transactions ... 8,103,329 12,220,165 51,817,611 (18,671,535)
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... (2,555,628) (9,880,532) 9,615,813 178,555,572
------------ ------------ ------------- ------------
Net increase/(decrease) in net assets
resulting from operations ............... 6,550,173 2,824,602 58,680,260 158,768,953
------------ ------------ ------------- ------------
DISTRIBUTIONS:
Net investment income ..................... (258,556) (179,682) -- --
In excess of net investment income ........ -- -- (87,603) (2,424,032)
Net realized gains ........................ (3,803,179) (6,161,860) (30,206,630) --
In excess of net realized gains ........... (240,263) -- -- --
Return of capital ......................... (708,144) (689,335) (1,946,368) (265,218)
------------ ------------ ------------- ------------
Net decrease in net assets from
distributions ........................... (5,010,142) (7,030,877) (32,240,601) (2,689,250)
------------ ------------ ------------- ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 11,166,696 18,459,343 153,087,778 383,655,690
Cost of shares redeemed ................... (20,922,156) (14,397,461) (105,390,299) (27,567,601)
------------ ------------ ------------- ------------
Net increase/(decrease) in net assets
derived from capital share transactions . (9,755,460) 4,061,882 47,697,479 356,088,089
------------ ------------ ------------- ------------
Total increase/(decrease) in net assets ... (8,215,429) (144,393) 74,137,138 512,167,792
NET ASSETS:
Beginning of period ....................... 58,223,846 58,368,239 713,653,070 201,485,278
------------ ------------ ------------- ------------
End of period ............................. $ 50,008,417 $ 58,223,846 $ 787,790,208 $713,653,070
============ ============ ============= ============
Capital Share Transactions:
Shares sold ............................... 450,000 750,000 10,200,000 33,000,000
Shares redeemed ........................... (900,000) (600,000) (7,200,000) (3,000,000)
------------ ------------ ------------- ------------
Net increase/(decrease) in shares ......... (450,000) 150,000 3,000,000 30,000,000
============ ============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI
MALAYSIA (FREE) MEXICO (FREE)
INDEX FUND INDEX FUND
--------------------------- ------------------------
For the For the For the For the
year year year year
ended ended ended ended
08/31/00 08/31/99 08/31/00 08/31/99
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 873,172 $ 214,370 $ 92,761 $ 75,680
Net realized gain/(loss) on investments and
foreign currency related transactions ... 3,946,415 (12,836,244) 1,034,324 (288,007)
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... 2,433,278 75,448,531 4,125,540 5,395,343
----------- ------------ ----------- -----------
Net increase/(decrease) in net assets
resulting from operations ............... 7,252,865 62,826,657 5,252,625 5,183,016
----------- ------------ ----------- -----------
DISTRIBUTIONS:
Net investment income ..................... (873,172) (116,388) -- (75,680)
In excess of net investment income ........ (13,993) -- -- (21,243)
Net realized gains ........................ -- -- (1,016,173) --
In excess of net realized gains ........... -- -- -- (8,020)
Return of capital ......................... (1,947) (3,326,074) -- (89,641)
----------- ------------ ----------- -----------
Net decrease in net assets from
distributions ........................... (889,112) (3,442,462) (1,016,173) (194,584)
----------- ------------ ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... -- -- 15,769,905 11,363,778
Cost of shares redeemed ................... (2,408,796) -- (1,309,195) (2,218,426)
----------- ------------ ----------- -----------
Net increase/(decrease) in net assets
derived from capital share transactions . (2,408,796) -- 14,460,710 9,145,352
----------- ------------ ----------- -----------
Total increase/(decrease) in net assets ... 3,954,957 59,384,195 18,697,162 14,133,784
NET ASSETS:
Beginning of period ....................... 95,250,898 35,866,703 21,429,620 7,295,836
----------- ------------ ----------- -----------
End of period ............................. $99,205,855 $ 95,250,898 $40,126,782 $21,429,620
=========== ============ =========== ===========
Capital Share Transactions:
Shares sold ............................... -- -- 900,000 900,000
Shares redeemed ........................... (375,000) -- (100,000) (200,000)
----------- ------------ ----------- -----------
Net increase/(decrease) in shares ......... (375,000) -- 800,000 700,000
=========== ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
NETHERLANDS
INDEX FUND
---------------------------
For the For the
year year
ended ended
08/31/00 08/31/99
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 141,123 $ 555,367
Net realized gain/(loss) on investments and
foreign currency related transactions ... (146,007) 2,580,324
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... 148,944 (767,104)
----------- -----------
Net increase/(decrease) in net assets
resulting from operations ............... 144,060 2,368,587
----------- -----------
DISTRIBUTIONS:
Net investment income ..................... (103,829) (555,367)
In excess of net investment income ........ -- (17,097)
Net realized gains ........................ (142,337) (1,779,092)
In excess of net realized gains ........... -- (319,338)
Return of capital ......................... (47,470) (111,506)
----------- -----------
Net decrease in net assets from
distributions ........................... (293,636) (2,782,400)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 7,236,808 13,324,865
Cost of shares redeemed ................... (8,159,114) (3,575,197)
----------- -----------
Net increase/(decrease) in net assets
derived from capital share transactions . (922,306) 9,749,668
----------- -----------
Total increase/(decrease) in net assets ... (1,071,882) 9,335,855
NET ASSETS:
Beginning of period ....................... 31,685,158 22,349,303
----------- -----------
End of period ............................. $30,613,276 $31,685,158
=========== ===========
Capital Share Transactions:
Shares sold ............................... 300,000 550,000
Shares redeemed ........................... (350,000) (150,000)
----------- -----------
Net increase/(decrease) in shares ......... (50,000) 400,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
70-71
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (concluded) iSHARES, INC.
================================================================================
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI
SINGAPORE (FREE) SOUTH KOREA SPAIN
INDEX FUND INDEX FUND INDEX FUND
--------------------------- -------------- -------------------------
For the For the For the For the For the
year year period year year
ended ended 05/10/00*- ended ended
08/31/00 08/31/99 08/31/00 08/31/00 08/31/99
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 1,693,940 $ 718,400 $ (34,787) $ 234,512 $ 106,851
Net realized gain/(loss) on investments and
foreign currency related transactions ... 19,150,160 5,548,829 (843,695) 790,049 2,903,295
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... (22,721,621) 62,353,180 (679,099) (2,294,792) (665,542)
------------ ------------ ----------- ----------- -----------
Net increase/(decrease) in net assets
resulting from operations ............... (1,877,521) 68,620,409 (1,557,581) (1,270,231) 2,344,604
------------ ------------ ----------- ----------- -----------
DISTRIBUTIONS:
Net investment income ..................... (1,437,747) (718,400) -- (230,377) (106,851)
In excess of net investment income ........ -- (901,448) -- -- (25,193)
Net realized gains ........................ (1,615,815) -- -- (790,049) (1,779,176)
In excess of net realized gains ........... -- -- -- (523,630) --
Return of capital ......................... (274,616) (151,866) -- (21,987) (52,032)
------------ ------------ ----------- ----------- -----------
Net decrease in net assets from
distributions ........................... (3,328,178) (1,771,714) -- (1,566,043) (1,963,252)
------------ ------------ ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 1,597,919 25,731,770 19,717,804 6,280,595 15,098,787
Cost of shares redeemed ................... (21,110,456) (26,391,185) (4,538,650) -- (4,040,953)
------------ ------------ ----------- ----------- -----------
Net increase/(decrease) in net assets
derived from capital share transactions . (19,512,537) (659,415) 15,179,154 6,280,595 11,057,834
------------ ------------ ----------- ----------- -----------
Total increase/(decrease) in net assets ... (24,718,236) 66,189,280 13,621,573 3,444,321 11,439,186
NET ASSETS:
Beginning of period ....................... 113,437,398 47,248,118 -- 36,468,540 25,029,354
------------ ------------ ----------- ----------- -----------
End of period ............................. $ 88,719,162 $113,437,398 $13,621,573 $39,912,861 $36,468,540
============ ============ =========== =========== ===========
Capital Share Transactions:
Shares sold ............................... 200,000 3,800,000 1,000,000 225,000 525,000
Shares redeemed ........................... (2,800,000) (3,800,000) (250,000) -- (150,000)
------------ ------------ ----------- ----------- -----------
Net increase/(decrease) in shares ......... (2,600,000) -- 750,000 225,000 375,000
============ ============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI iSHARES MSCI iSHARES MSCI
SWEDEN SWITZERLAND TAIWAN
INDEX FUND INDEX FUND INDEX FUND
---------------------------- --------------------------- -------------
For the For the For the For the For the
year year year year period
ended ended ended ended 06/21/00*-
08/31/00 08/31/99 08/31/00 08/31/99 08/31/00
----------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 114,164 $ 79,147 $ 93,151 $ 84,982 $ 826,900
Net realized gain/(loss) on investments and
foreign currency related transactions ... 8,434,356 554,296 753,833 1,006,580 (1,139,281)
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... (2,132,301) 3,068,134 (303,839) (1,316,317) (3,889,212)
----------- ----------- ----------- ----------- ------------
Net increase/(decrease) in net assets
resulting from operations ............... 6,416,219 3,701,577 543,145 (224,755) (4,201,593)
----------- ----------- ----------- ----------- ------------
DISTRIBUTIONS:
Net investment income ..................... (114,164) (79,147) (93,151) (84,982) (826,900)
In excess of net investment income ........ (17,345) (9,823) (17,598) (90,051) --
Net realized gains ........................ (5,788,656) (549,798) (318,982) (415,196) --
In excess of net realized gains ........... (127,174) (11,025) -- (360,924) (258,316)
Return of capital ......................... (42,411) (11,369) (22,376) (27,488) (1,144,284)
----------- ----------- ----------- ----------- ------------
Net decrease in net assets from
distributions ........................... (6,089,750) (661,162) (452,107) (978,641) (2,229,500)
----------- ----------- ----------- ----------- ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 9,668,394 3,202,043 11,887,494 18,201,550 62,919,368
Cost of shares redeemed ................... (6,254,326) -- (5,792,803) (7,661,744) (13,821,000)
----------- ----------- ----------- ----------- ------------
Net increase/(decrease) in net assets
derived from capital share transactions . 3,414,068 3,202,043 6,094,691 10,539,806 49,098,368
----------- ----------- ----------- ----------- ------------
Total increase/(decrease) in net assets ... 3,740,537 6,242,458 6,185,729 9,336,410 42,667,275
NET ASSETS:
Beginning of period ....................... 20,033,779 13,791,321 38,499,389 29,162,979 --
----------- ----------- ----------- ----------- ------------
End of period ............................. $23,774,316 $20,033,779 $44,685,118 $38,499,389 $ 42,667,275
=========== =========== =========== =========== ============
Capital Share Transactions:
Shares sold ............................... 300,000 150,000 750,000 1,125,000 3,350,000
Shares redeemed ........................... (225,000) -- (375,000) (500,000) (750,000)
----------- ----------- ----------- ----------- ------------
Net increase/(decrease) in shares ......... 75,000 150,000 375,000 625,000 2,600,000
=========== =========== =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
UNITED KINGDOM
INDEX FUND
-----------------------------
For the For the
year year
ended ended
08/31/00 08/31/99
-------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income/(loss) .............. $ 1,816,179 $ 1,966,524
Net realized gain/(loss) on investments and
foreign currency related transactions ... 8,774,074 6,660,234
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies ....... (14,882,373) 1,407,869
------------ ------------
Net increase/(decrease) in net assets
resulting from operations ............... (4,292,120) 10,034,627
------------ ------------
DISTRIBUTIONS:
Net investment income ..................... (1,816,179) (1,966,524)
In excess of net investment income ........ (169,250) (30,855)
Net realized gains ........................ (5,836,100) (3,268,152)
In excess of net realized gains ........... (1,530,441) (100,408)
Return of capital ......................... (362,073) (479,427)
------------ ------------
Net decrease in net assets from
distributions ........................... (9,714,043) (5,845,366)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares .......... 63,726,690 57,840,429
Cost of shares redeemed ................... (16,319,883) (11,473,166)
------------ ------------
Net increase/(decrease) in net assets
derived from capital share transactions . 47,406,807 46,367,263
------------ ------------
Total increase/(decrease) in net assets ... 33,400,644 50,556,524
NET ASSETS:
Beginning of period ....................... 113,402,057 62,845,533
------------ ------------
End of period ............................. $146,802,701 $113,402,057
============ ============
Capital Share Transactions:
Shares sold ............................... 3,200,000 2,800,000
Shares redeemed ........................... (800,000) (600,000)
------------ ------------
Net increase/(decrease) in shares ......... 2,400,000 2,200,000
============ ============
<FN>
* Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
72-73
<PAGE>
AUGUST 31, 2000
FINANCIAL HIGHLIGHTS iSHARES, INC.
================================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
iSHARES MSCI
AUSTRALIA
INDEX
FUND
------------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
----------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ................................... $ 9.99 $ 7.75 $ 10.35 $ 10.15 $ 9.95(1)
------- ------- ------- ------- -------
Net investment income/(loss) (+) ....................................... 0.23 0.20 0.23 0.17 0.10
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ........................ (0.04) 2.29 (2.60) 0.47 0.29
------- ------- ------- ------- -------
Net increase/(decrease) in net assets resulting from operations .... 0.19 2.49 (2.37) 0.64 0.39
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income ................................... (0.22) (0.19) (0.23) (0.16) (0.08)
Dividends in excess of net investment income ........................... (0.01) (0.00)** (0.00)** (0.04) (0.05)
Distributions from net realized gains .................................. -- -- -- (0.04) (0.02)
Distributions in excess of net realized gains .......................... -- -- -- -- --
Return of capital ...................................................... (0.02) (0.06) -- (0.20) (0.04)
------- ------- ------- ------- -------
Total dividends and distributions .................................. (0.25) (0.25) (0.23) (0.44) (0.19)
------- ------- ------- ------- -------
Net asset value, end of period ......................................... $ 9.93 $ 9.99 $ 7.75 $ 10.35 $ 10.15
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN (2) .............................................. 1.84% 32.09% (23.11)% 6.23% 3.88%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ................................... $61,574 $53,957 $34,099 $41,406 $12,177
Ratios of expenses to average net assets (5) ........................... 0.95% 1.00% 1.05% 1.33% 1.59%(3)
Ratios of net investment income/(loss) to average net assets (5) ....... 2.22% 2.03% 2.38% 1.57% 2.18%(3)
Portfolio turnover rate (6) ............................................ 36.20% 13.83% 1.49% 5.30% 8.84%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.33% 1.60%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements ......................... -- -- -- 1.57% 2.17%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
AUSTRIA
INDEX
FUND
------------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
--------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ................................... $ 9.13 $ 10.11 $10.51 $10.40 $ 10.91(1)
------- ------- ------ ------ -------
Net investment income/(loss) (+) ....................................... 0.04 0.10 0.06 (0.02) 0.04
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ........................ (1.46) (0.98) 0.20 0.13 (0.41)
------- ------- ------ ------ -------
Net increase/(decrease) in net assets resulting from operations .... (1.42) (0.88) 0.26 0.11 (0.37)
------- ------- ------ ------ -------
LESS DISTRIBUTIONS
Dividends from net investment income ................................... (0.04) (0.07) (0.04) -- (0.02)
Dividends in excess of net investment income ........................... (0.00)** (0.01) (0.01) -- (0.01)
Distributions from net realized gains .................................. -- -- (0.61) -- (0.03)
Distributions in excess of net realized gains .......................... -- -- (0.00)** -- --
Return of capital ...................................................... -- (0.02) (0.00)** -- (0.08)
------- ------- ------ ------ -------
Total dividends and distributions .................................. (0.04) (0.10) (0.66) -- (0.14)
------- ------- ------ ------ -------
Net asset value, end of period ......................................... $ 7.67 $ 9.13 $10.11 $10.51 $ 10.40
======= ======= ====== ====== =======
TOTAL INVESTMENT RETURN (2) .............................................. (15.51)% (8.69)% 2.16% 1.06% (3.39)%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ................................... $10,741 $12,776 $8,085 $4,205 $13,520
Ratios of expenses to average net assets (5) ........................... 1.16% 1.31% 1.41% 1.68% 1.56%(3)
Ratios of net investment income/(loss) to average net assets (5) ....... 0.51% 1.04% 0.51% (0.22)% 0.87%(3)
Portfolio turnover rate (6) ............................................ 33.65% 49.95% 36.14% 28.47% 9.60%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements 1.20% -- -- 1.69% 1.57%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements ......................... 0.47% -- -- (0.22)% 0.86%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
BELGIUM
INDEX
FUND
------------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
---------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ................................... $ 16.07 $ 18.40 $ 15.64 $ 14.99 $14.92(1)
------- ------- ------- ------- ------
Net investment income/(loss) (+) ....................................... 0.19 0.08 0.24 0.77 0.40
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ........................ (2.67) (0.30) 6.09 0.62 0.36
------- ------- ------- ------- ------
Net increase/(decrease) in net assets resulting from operations .... (2.48) (0.22) 6.33 1.39 0.76
------- ------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income ................................... (0.17) -- (0.27) (0.33) (0.54)
Dividends in excess of net investment income ........................... (0.19) (0.01) (1.21) (0.28) (0.09)
Distributions from net realized gains .................................. -- (1.19) (1.99) (0.12) (0.06)
Distributions in excess of net realized gains .......................... -- -- -- -- --
Return of capital ...................................................... -- (0.91) (0.10) (0.01) --
------- ------- ------- ------- ------
Total dividends and distributions .................................. (0.36) (2.11) (3.57) (0.74) (0.69)
------- ------- ------- ------- ------
Net asset value, end of period ......................................... $ 13.23 $ 16.07 $ 18.40 $ 15.64 $14.99
======= ======= ======= ======= ======
TOTAL INVESTMENT RETURN (2) .............................................. (15.50)% (1.00)% 39.42% 9.26% 5.01%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ................................... $13,230 $13,496 $25,765 $32,528 $1,800
Ratios of expenses to average net assets (5) ........................... 1.13% 1.24% 1.04% 1.24% 2.29%(3)
Ratios of net investment income/(loss) to average net assets (5) ....... 1.36% 0.45% 1.28% 4.63% 5.67%(3)
Portfolio turnover rate (6) ............................................ 53.27% 62.99% 50.46% 16.83% 6.25%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.24% 2.30%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements ......................... -- -- -- 4.63% 5.66%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
BRAZIL (FREE)
INDEX
FUND
------------
For the
period
07/11/00*-
08/31/00
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ................................... $ 20.22(1)
-------
Net investment income/(loss) (+) ....................................... 0.02
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ........................ (0.63)
-------
Net increase/(decrease) in net assets resulting from operations .... (0.61)
-------
LESS DISTRIBUTIONS
Dividends from net investment income ................................... (0.02)
Dividends in excess of net investment income ........................... --
Distributions from net realized gains .................................. --
Distributions in excess of net realized gains .......................... (0.34)
Return of capital ...................................................... --
-------
Total dividends and distributions .................................. (0.36)
-------
Net asset value, end of period ......................................... $ 19.25
=======
TOTAL INVESTMENT RETURN (2) .............................................. (2.97)%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ................................... $18,283
Ratios of expenses to average net assets (5) ........................... 0.99%(3)
Ratios of net investment income/(loss) to average net assets (5) ....... 0.77%(3)
Portfolio turnover rate (6) ............................................ 63.61%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements 1.40%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements ......................... 0.37%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
See accompanying notes to financial statements.
74-75
<PAGE>
AUGUST 31, 2000
FINANCIAL HIGHLIGHTS (continued) iSHARES, INC.
================================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
iSHARES MSCI
CANADA
INDEX
FUND
-----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
----------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ....................................... $ 13.22 $ 9.90 $ 13.43 $ 10.60 $ 10.17(1)
------- ------ ------- ------- -------
Net investment income/(loss) (+) ........................................... 0.70 0.07 0.07 0.05 0.04
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ............................ 8.08 3.87 (2.89) 2.97 0.43
------- ------ ------- ------- -------
Net increase/(decrease) in net assets resulting from operations ........ 8.78 3.94 (2.82) 3.02 0.47
------- ------ ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income ....................................... (0.52) (0.08) (0.13) (0.05) (0.03)
Dividends in excess of net investment income ............................... (0.03) (0.01) (0.00)** (0.00)** (0.01)
Distributions from net realized gains ...................................... (4.08) (0.53) (0.58) (0.14) --
Distributions in excess of net realized gains .............................. (0.31) -- -- -- (0.00)**
Return of capital .......................................................... (0.12) -- -- -- (0.00)**
------- ------ ------- ------- -------
Total dividends and distributions ...................................... (5.06) (0.62) (0.71) (0.19) (0.04)
------- ------ ------- ------- -------
Net asset value, end of period ............................................. $ 16.94 $13.22 $ 9.90 $ 13.43 $ 10.60
======= ====== ======= ======= =======
TOTAL INVESTMENT RETURN (2) .................................................. 67.21% 39.71% (21.69)% 28.50% 4.63%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....................................... $22,028 $9,253 $ 6,932 $24,168 $13,776
Ratios of expenses to average net assets (5) ............................... 1.17% 1.23% 1.14% 1.35% 1.44%(3)
Ratios of net investment income/(loss) to average net assets (5) ........... 4.07% 0.53% 0.46% 0.39% 0.79%(3)
Portfolio turnover rate (6) ................................................ 64.03% 11.66% 3.70% 11.02% 0.00%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements . 1.19% -- -- 1.36% 1.45%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements ............................. 4.05% -- -- 0.39% 0.78%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s)
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
EMU
INDEX
FUND
----------
For the
period
07/26/00*-
08/31/00
----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ....................................... $ 80.72(1)
-------
Net investment income/(loss) (+) ........................................... (0.00)**
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ............................ (4.70)
-------
Net increase/(decrease) in net assets resulting from operations ........ (4.70)
-------
LESS DISTRIBUTIONS
Dividends from net investment income ....................................... --
Dividends in excess of net investment income ............................... --
Distributions from net realized gains ...................................... --
Distributions in excess of net realized gains .............................. --
Return of capital .......................................................... --
-------
Total dividends and distributions ...................................... --
-------
Net asset value, end of period ............................................. $ 76.02
=======
TOTAL INVESTMENT RETURN (2) .................................................. (5.82)%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....................................... $41,811
Ratios of expenses to average net assets (5) ............................... 0.84%(3)
Ratios of net investment income/(loss) to average net assets (5) ........... 0.03%(3)
Portfolio turnover rate (6) ................................................ 0.00%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements . 1.57%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements ............................. (0.70)%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s)
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
FRANCE
INDEX
FUND
----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 8/31/98 08/31/97 08/31/96
-------- ------------------ -------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ....................................... $ 22.90 $ 19.13 $ 14.50 $ 12.73 $ 12.42(1)
------- ------- ------- ------- -------
Net investment income/(loss) (+) ........................................... 0.10 0.14 0.30 0.17 0.17
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ............................ 5.21 3.88 4.76 1.95 0.45
------- ------- ------- ------- -------
Net increase/(decrease) in net assets resulting from operations ........ 5.31 4.02 5.06 2.12 0.62
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income ....................................... (0.09) (0.10) (0.19) (0.15) (0.09)
Dividends in excess of net investment income ............................... (0.02) (0.02) (0.03) -- (0.01)
Distributions from net realized gains ...................................... (1.64) (0.05) (0.13) (0.20) (0.00)**
Distributions in excess of net realized gains .............................. (0.03) -- (0.01) -- --
Return of capital .......................................................... (0.02) (0.08) (0.07) -- (0.21)
------- ------- ------- ------- -------
Total dividends and distributions ...................................... (1.80) (0.25) (0.43) (0.35) (0.31)
------- ------- ------- ------- -------
Net asset value, end of period ............................................. $ 26.41 $ 22.90 $ 19.13 $ 14.50 $ 12.73
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN (2) .................................................. 23.45% 21.01% 34.77% 16.60% 4.95%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....................................... $95,116 $77,885 $45,922 $14,519 $22,930
Ratios of expenses to average net assets (5) ............................... 0.96% 1.06% 1.18% 1.52% 1.84%(3)
Ratios of net investment income/(loss) to average net assets (5) ........... 0.36% 0.67% 1.58% 1.17% 2.72%(3)
Portfolio turnover rate (6) ................................................ 17.43% 0.00% 5.65% 7.13% 0.00%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements . -- -- -- 1.52% 1.85%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements ............................. -- -- -- 1.17% 2.71%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s)
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
GERMANY
INDEX
FUND
----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ....................................... $ 21.17 $ 20.25 $ 16.31 $ 13.64 $ 13.23(1)
-------- -------- ------- ------- -------
Net investment income/(loss) (+) ........................................... 0.18 0.12 0.29 0.03 0.06
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ............................ 1.64 1.31 3.92 2.77 0.47
-------- -------- ------- ------- -------
Net increase/(decrease) in net assets resulting from operations ........ 1.82 1.43 4.21 2.80 0.53
-------- -------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income ....................................... (0.16) (0.10) (0.17) (0.03) (0.03)
Dividends in excess of net investment income ............................... (0.01) (0.01) (0.01) (0.01) (0.01)
Distributions from net realized gains ...................................... (2.00) (0.31) (0.01) (0.07) --
Distributions in excess of net realized gains .............................. (0.32) (0.08) (0.00)** -- (0.01)
Return of capital .......................................................... (0.04) (0.01) (0.08) (0.02) (0.07)
-------- -------- ------- ------- -------
Total dividends and distributions ...................................... (2.53) (0.51) (0.27) (0.13) (0.12)
-------- -------- ------- ------- -------
Net asset value, end of period ............................................. $ 20.46 $ 21.17 $ 20.25 $ 16.31 $ 13.64
======== ======== ======= ======= =======
TOTAL INVESTMENT RETURN (2) .................................................. 8.44% 7.04% 25.69% 20.51% 4.00%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....................................... $153,487 $101,645 $72,934 $24,486 $28,664
Ratios of expenses to average net assets (5) ............................... 0.94% 1.00% 1.08% 1.37% 1.68%(3)
Ratios of net investment income/(loss) to average net assets (5) ........... 0.73% 0.57% 1.43% 0.23% 1.00%(3)
Portfolio turnover rate (6) ................................................ 56.38% 13.67% 0.64% 9.04% 0.00%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements . -- -- -- 1.37% 1.69%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements ............................. -- -- -- 0.22% 0.99%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s)
</FN>
</TABLE>
See accompanying notes to financial statements.
76-77
<PAGE>
AUGUST 31, 2000
FINANCIAL HIGHLIGHTS (continued) iSHARES, INC.
================================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
iSHARES MSCI
HONG KONG
INDEX
FUND
-----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
--------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 11.83 $ 6.41 $ 14.73 $ 13.05 $12.83(1)
------- ------- ------- ------- ------
Net investment income/(loss) (+) .................................. 0.33 0.29 0.35 0.26 0.15
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... 1.42 5.49 (8.27) 2.12 0.27
------- ------- ------- ------- ------
Net increase/(decrease) in net assets resulting from operations 1.75 5.78 (7.92) 2.38 0.42
------- ------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.32) (0.31) (0.28) (0.21) (0.13)
Dividends in excess of net investment income ...................... -- (0.05) (0.00)** (0.01) (0.02)
Distributions from net realized gains ............................. -- -- -- (0.34) (0.01)
Distributions in excess of net realized gains ..................... -- -- -- (0.00)** --
Return of capital ................................................. (0.02) -- (0.12) (0.14) (0.04)
------- ------- ------- ------- ------
Total dividends and distributions ............................. (0.34) (0.36) (0.40) (0.70) (0.20)
------- ------- ------- ------- ------
Net asset value, end of period .................................... $ 13.24 $ 11.83 $ 6.41 $ 14.73 $13.05
======= ======= ======= ======= ======
TOTAL INVESTMENT RETURN (2) ......................................... 14.73% 90.51% (54.22)% 17.80% 3.22%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $79,479 $77,200 $49,973 $25,417 $7,845
Ratios of expenses to average net assets (5) ...................... 0.94% 1.01% 1.09% 1.43% 1.52%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 2.57% 2.84% 3.76% 1.71% 2.37%(3)
Portfolio turnover rate (6) ....................................... 21.30% 42.89% 21.50% 22.90% 0.00%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.43% 1.53%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- 1.71% 2.36%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
ITALY
INDEX
FUND
-----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
--------- -------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 21.56 $ 22.89 $ 16.66 $ 13.79 $ 13.62(1)
------- ------- ------- ------- -------
Net investment income/(loss) (+) .................................. 0.39 0.17 0.18 0.12 0.25
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... 2.51 1.05 7.94 3.10 0.31
------- ------- ------- ------- -------
Net increase/(decrease) in net assets resulting from operations 2.90 1.22 8.12 3.22 0.56
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.12) (0.06) (0.18) (0.11) (0.14)
Dividends in excess of net investment income ...................... -- -- (1.02) (0.24) (0.03)
Distributions from net realized gains ............................. (1.69) (2.24) (0.69) -- (0.14)
Distributions in excess of net realized gains ..................... (0.11) -- -- -- --
Return of capital ................................................. (0.31) (0.25) -- -- (0.08)
------- ------- ------- ------- -------
Total dividends and distributions ............................. (2.23) (2.55) (1.89) (0.35) (0.39)
------- ------- ------- ------- -------
Net asset value, end of period .................................... $ 22.23 $ 21.56 $ 22.89 $ 16.66 $ 13.79
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN (2) ......................................... 13.35% 5.14% 47.66% 23.37% 4.11%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $50,008 $58,224 $58,368 $32,495 $35,170
Ratios of expenses to average net assets (5) ...................... 0.99% 1.03% 1.02% 1.33% 1.43%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 1.61% 0.70% 0.76% 0.76% 3.69%(3)
Portfolio turnover rate (6) ....................................... 39.85% 7.89% 8.16% 13.70% 19.80%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.33% 1.44%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- 0.76% 3.68%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
JAPAN
INDEX
FUND
-----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
-------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 13.22 $ 8.39 $ 12.61 $ 14.33 $ 14.79(1)
-------- -------- -------- -------- --------
Net investment income/(loss) (+) .................................. (0.05) (0.03) (0.02) (0.06) (0.07)
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... 1.21 4.91 (4.19) (1.65) (0.39)
-------- -------- -------- -------- --------
Net increase/(decrease) in net assets resulting from operations 1.16 4.88 (4.21) (1.71) (0.46)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. -- -- -- -- --
Dividends in excess of net investment income ...................... (0.00)** (0.04) -- -- --
Distributions from net realized gains ............................. (0.53) -- (0.00)** -- --
Distributions in excess of net realized gains ..................... -- -- -- (0.01) --
Return of capital ................................................. (0.03) (0.01) (0.01) -- --
-------- -------- -------- -------- --------
Total dividends and distributions ............................. (0.56) (0.05) (0.01) (0.01) --
-------- -------- -------- -------- --------
Net asset value, end of period .................................... $ 13.82 $ 13.22 $ 8.39 $ 12.61 $ 14.33
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN (2) ......................................... 8.75% 58.14% (33.38)% (11.97)% (3.11)%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $787,790 $713,653 $201,485 $158,957 $103,164
Ratios of expenses to average net assets (5) ...................... 0.88% 0.94% 1.04% 1.19% 1.37%(3)
Ratios of net investment income/(loss) to average net assets (5) .. (0.32)% (0.27)% (0.21)% (0.48)% (1.01)%(3)
Portfolio turnover rate (6) ....................................... 21.93% 0.00% 0.00% 12.90% 21.54%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.19% 1.38%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- (0.48)% (1.02)%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
See accompanying notes to financial statements.
78-79
<PAGE>
AUGUST 31, 2000
FINANCIAL HIGHLIGHTS (continued) iSHARES, INC.
================================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
iSHARES MSCI
MALAYSIA (FREE)
INDEX
FUND
----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 5.59 $ 2.11 $ 8.23 $ 13.80 $13.24(1)
------- ------- ------- ------- ------
Net investment income/(loss) (+) .................................. 0.05 0.01 0.06 0.01 (0.02)
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... 0.37 3.67 (6.10) (5.55) 0.59
------- ------- ------- ------- ------
Net increase/(decrease) in net assets resulting from operations 0.42 3.68 (6.04) (5.54) 0.57
------- ------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.05) (0.01) (0.05) (0.00)** --
Dividends in excess of net investment income ...................... (0.00)** -- -- (0.01) --
Distributions from net realized gains ............................. -- -- -- -- --
Distributions in excess of net realized gains ..................... -- -- -- -- --
Return of capital ................................................. (0.00)** (0.19) (0.03) (0.02) (0.01)
------- ------- ------- ------- ------
Total dividends and distributions ............................. (0.05) (0.20) (0.08) (0.03) (0.01)
------- ------- ------- ------- ------
Net asset value, end of period .................................. $ 5.96 $ 5.59 $ 2.11 $ 8.23 $13.80
======= ======= ======= ======= ======
TOTAL INVESTMENT RETURN (2) ......................................... 7.57% 185.81% (73.57)% (40.20)% 4.28%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $99,206 $95,251 $35,867 $12,339 $9,318
Ratios of expenses to average net assets (5) ...................... 0.96% 1.43% 1.09% 1.46% 1.58%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 0.81% 0.33% 1.40% 0.04% (0.35)%(3)
Portfolio turnover rate (6) ....................................... 17.56% 7.24% 2.11% 0.00% 0.00%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.47% 1.59%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- 0.04% (0.36)%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
MEXICO (FREE)
INDEX
FUND
-------------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
----------- -------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 13.39 $ 8.11 $15.11 $ 11.52 $ 9.95(1)
------- ------- ------ ------- ------
Net investment income/(loss) (+) .................................. 0.06 0.06 0.09 0.02 0.00**
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... 3.69 5.36 (6.71) 4.07 1.59
------- ------- ------ ------- ------
Net increase/(decrease) in net assets resulting from operations 3.75 5.42 (6.62) 4.09 1.59
------- ------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. -- (0.06) (0.09) (0.01) --
Dividends in excess of net investment income ...................... -- (0.01) -- (0.01) (0.01)
Distributions from net realized gains ............................. (0.42) -- (0.29) (0.44) --
Distributions in excess of net realized gains ..................... -- (0.01) -- -- --
Return of capital ................................................. -- (0.06) -- (0.04) (0.01)
------- ------- ------ ------- ------
Total dividends and distributions ............................. (0.42) (0.14) (0.38) (0.50) (0.02)
------- ------- ------ ------- ------
Net asset value, end of period .................................. $ 16.72 $ 13.39 $ 8.11 $ 15.11 $11.52
======= ======= ====== ======= ======
TOTAL INVESTMENT RETURN (2) ......................................... 28.20% 66.92% (44.18)% 35.21% 15.93%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $40,127 $21,430 $7,296 $16,627 $5,759
Ratios of expenses to average net assets (5) ...................... 1.04% 1.26% 1.34% 1.63% 1.75%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 0.35% 0.52% 0.60% 0.14% 0.01%(3)
Portfolio turnover rate (6) ....................................... 23.97% 18.36% 14.05% 22.80% 0.00%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements 1.04% -- -- 1.63% 1.76%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... 0.35% -- -- 0.13% 0.00%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
NETHERLANDS
INDEX
FUND
-----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
---------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 23.45 $ 23.50 $ 21.42 $17.36 $15.91(1)
------- ------- ------- ------ ------
Net investment income/(loss) (+) .................................. 0.13 0.53 0.25 0.11 0.24
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... 0.18 1.60 3.53 4.79 1.54
------- ------- ------- ------ ------
Net increase/(decrease) in net assets resulting from operations 0.31 2.13 3.78 4.90 1.78
------- ------- ------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.08) (0.43) (0.16) (0.10) (0.14)
Dividends in excess of net investment income ...................... -- (0.01) -- (0.01) (0.01)
Distributions from net realized gains ............................. (0.11) (1.42) (1.47) (0.71) (0.08)
Distributions in excess of net realized gains ..................... -- (0.24) -- -- (0.01)
Return of capital ................................................. (0.04) (0.08) (0.07) (0.02) (0.09)
------- ------- ------- ------ ------
Total dividends and distributions ............................. (0.23) (2.18) (1.70) (0.84) (0.33)
------- ------- ------- ------ ------
Net asset value, end of period .................................. $ 23.53 $ 23.45 $ 23.50 $21.42 $17.36
======= ======= ======= ====== ======
TOTAL INVESTMENT RETURN (2) ......................................... 1.28% 8.98% 17.41% 28.04% 11.19%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $30,613 $31,685 $22,349 $9,661 $6,962
Ratios of expenses to average net assets (5) ...................... 1.03% 1.07% 1.12% 1.46% 1.63%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 0.53% 2.20% 1.00% 0.54% 2.93%(3)
Portfolio turnover rate (6) ....................................... 21.64% 32.13% 15.81% 12.68% 4.32%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.46% 1.64%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- 0.53% 2.92%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
See accompanying notes to financial statements.
80-81
<PAGE>
AUGUST 31, 2000
FINANCIAL HIGHLIGHTS (continued) iSHARES, INC.
================================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
iSHARES MSCI
SINGAPORE (FREE)
INDEX
FUND
--------------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
----------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 7.93 $ 3.30 $ 8.66 $ 11.38 $12.24(1)
------- -------- ------- ------- ------
Net investment income/(loss) (+) .................................. 0.13 0.05 0.07 (0.00)** 0.04
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ................... (0.21) 4.70 (5.37) (2.67) (0.86)
------- -------- ------- ------- ------
Net increase/(decrease) in net assets resulting from operations (0.08) 4.75 (5.30) (2.67) (0.82)
------- -------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.11) (0.05) (0.04) (0.00)** (0.03)
Dividends in excess of net investment income ...................... -- (0.06) (0.01) (0.01) (0.01)
Distributions from net realized gains ............................. (0.14) -- -- (0.02) --
Distributions in excess of net realized gains ..................... -- -- -- -- --
Return of capital ................................................. (0.02) (0.01) (0.01) (0.02) --
------- -------- ------- ------- ------
Total dividends and distributions ............................. (0.27) (0.12) (0.06) (0.05) (0.04)
------- -------- ------- ------- ------
Net asset value, end of period .................................... $ 7.58 $ 7.93 $ 3.30 $ 8.66 $11.38
======= ======== ======= ======= ======
TOTAL INVESTMENT RETURN (2) ......................................... (1.29)% 144.52% (61.29)% (23.48)% (6.73)%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $88,719 $113,438 $47,248 $14,722 $9,107
Ratios of expenses to average net assets (5) ...................... 0.94% 0.97% 1.08% 1.43% 1.56%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 1.60% 0.76% 1.17% 0.03% 0.69%(3)
Portfolio turnover rate (6) ....................................... 52.06% 25.31% 67.17% 13.40% 26.29%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.43% 1.57%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- 0.03% 0.68%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
SOUTH KOREA
INDEX
FUND
----------
For the
period
05/10/00*-
08/31/00
----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 20.36(1)
-------
Net investment income/(loss) (+) .................................. (0.04)
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ................... (2.16)
-------
Net increase/(decrease) in net assets resulting from operations (2.20)
-------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. --
Dividends in excess of net investment income ...................... --
Distributions from net realized gains ............................. --
Distributions in excess of net realized gains ..................... --
Return of capital ................................................. --
-------
Total dividends and distributions ............................. --
-------
Net asset value, end of period .................................... $ 18.16
=======
TOTAL INVESTMENT RETURN (2) ......................................... (10.81)%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $13,622
Ratios of expenses to average net assets (5) ...................... 0.99%(3)
Ratios of net investment income/(loss) to average net assets (5) .. (0.63)%(3)
Portfolio turnover rate (6) ....................................... 55.13%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements 1.38%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... (1.02)%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
SPAIN
INDEX
FUND
----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
-------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 25.59 $ 23.84 $ 18.49 $14.09 $13.28(1)
------- ------- ------- ------ ------
Net investment income/(loss) (+) .................................. 0.15 0.09 0.16 0.19 0.14
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ................... (0.60) 3.14 5.94 5.33 0.98
------- ------- ------- ------ ------
Net increase/(decrease) in net assets resulting from operations (0.45) 3.23 6.10 5.52 1.12
------- ------- ------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.14) (0.07) (0.12) (0.12) (0.18)
Dividends in excess of net investment income ...................... -- (0.02) (0.02) (0.05) --
Distributions from net realized gains ............................. (0.48) (1.35) (0.55) (0.86) (0.13)
Distributions in excess of net realized gains ..................... (0.32) -- -- -- --
Return of capital ................................................. (0.01) (0.04) (0.06) (0.09) --
------- ------- ------- ------ ------
Total dividends and distributions ............................. (0.95) (1.48) (0.75) (1.12) (0.31)
------- ------- ------- ------ ------
Net asset value, end of period .................................... $ 24.19 $ 25.59 $ 23.84 $18.49 $14.09
======= ======= ======= ====== ======
TOTAL INVESTMENT RETURN (2) ......................................... (1.81)% 13.39% 32.58% 39.15% 8.45%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $39,913 $36,469 $25,029 $8,321 $4,227
Ratios of expenses to average net assets (5) ...................... 0.99% 1.04% 1.11% 1.67% 1.76%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 0.57% 0.31% 0.61% 1.04% 2.04%(3)
Portfolio turnover rate (6) ....................................... 39.42% 16.58% 9.10% 19.21% 4.73%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.67% 1.77%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- 1.04% 2.03%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
SWEDEN
INDEX
FUND
----------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
---------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 22.26 $ 18.39 $ 18.32 $14.67 $13.22(1)
------- ------- ------- ------ ------
Net investment income/(loss) (+) .................................. 0.14 0.10 0.10 (0.03) 0.20
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets and
liabilities denominated in foreign currencies ................... 8.38 4.52 0.95 4.45 1.67
------- ------- ------- ------ ------
Net increase/(decrease) in net assets resulting from operations 8.52 4.62 1.05 4.42 1.87
------- ------- ------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.12) (0.09) (0.08) -- (0.23)
Dividends in excess of net investment income ...................... (0.02) (0.01) (0.01) -- (0.07)
Distributions from net realized gains ............................. (6.09) (0.62) (0.86) (0.77) (0.12)
Distributions in excess of net realized gains ..................... (0.13) (0.01) (0.01) -- --
Return of capital ................................................. (0.04) (0.02) (0.02) -- --
------- ------- ------- ------ ------
Total dividends and distributions ............................. (6.40) (0.75) (0.98) (0.77) (0.42)
------- ------- ------- ------ ------
Net asset value, end of period .................................... $ 24.38 $ 22.26 $ 18.39 $18.32 $14.67
======= ======= ======= ====== ======
TOTAL INVESTMENT RETURN (2) ......................................... 39.15% 25.09% 5.48% 30.10% 14.13%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $23,774 $20,034 $13,791 $8,243 $4,400
Ratios of expenses to average net assets (5) ...................... 1.03% 1.13% 1.17% 1.64% 1.75%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 0.46% 0.49% 0.48% (0.19)% 3.05%(3)
Portfolio turnover rate (6) ....................................... 90.13% 33.44% 10.88% 13.71% 5.87%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.64% 1.76%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- (0.19)% 3.04%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
See accompanying notes to financial statements.
82-83
<PAGE>
AUGUST 31, 2000
FINANCIAL HIGHLIGHTS (concluded) iSHARES, INC.
================================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
iSHARES MSCI
SWITZERLAND
INDEX
FUND
------------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
----------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 15.39 $ 15.55 $ 13.79 $ 12.29 $ 12.07(1)
------- ------- ------- ------- -------
Net investment income/(loss) (+) .................................. 0.04 0.04 (0.00)** (0.04) 0.08
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... 0.27 0.19 3.01 2.11 0.24
------- ------- ------- ------- -------
Net increase/(decrease) in net assets resulting from operations 0.31 0.23 3.01 2.07 0.32
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.03) (0.03) -- -- (0.10)
Dividends in excess of net investment income ...................... (0.01) (0.04) (0.01) -- --
Distributions from net realized gains ............................. (0.11) (0.17) (1.21) (0.57) --
Distributions in excess of net realized gains ..................... -- (0.14) -- -- --
Return of capital ................................................. (0.01) (0.01) (0.03) (0.00)** --
------- ------- ------- ------- -------
Total dividends and distributions ............................. (0.16) (0.39) (1.25) (0.57) (0.10)
------- ------- ------- ------- -------
Net asset value, end of period .................................... $ 15.54 $ 15.39 $ 15.55 $ 13.79 $ 12.29
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN (2) ......................................... 1.96% 1.47% 21.24% 16.69% 2.60%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $44,685 $38,499 $29,163 $13,805 $ 6,158
Ratios of expenses to average net assets (5) ...................... 1.01% 1.09% 1.15% 1.52% 1.82%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 0.23% 0.24% (0.03)% (0.29)% 1.39%(3)
Portfolio turnover rate (6) ....................................... 34.87% 35.10% 43.09% 48.05% 17.06%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.53% 1.83%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- (0.29)% 1.38%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
TAIWAN
INDEX
FUND
------------
For the
period
06/21/00*-
08/31/00
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 19.59(1)
-------
Net investment income/(loss) (+) .................................. 0.47
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... (2.79)
-------
Net increase/(decrease) in net assets resulting from operations (2.32)
-------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.32)
Dividends in excess of net investment income ...................... --
Distributions from net realized gains ............................. --
Distributions in excess of net realized gains ..................... (0.10)
Return of capital ................................................. (0.44)
-------
Total dividends and distributions ............................. (0.86)
-------
Net asset value, end of period .................................... $ 16.41
=======
TOTAL INVESTMENT RETURN (2) ......................................... (12.10)%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $42,667
Ratios of expenses to average net assets (5) ...................... 0.99%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 13.31%(3)
Portfolio turnover rate (6) ....................................... 51.68%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements 1.60%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... 12.70%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
<TABLE>
<CAPTION>
iSHARES MSCI
UNITED KINGDOM
INDEX
FUND
----------------------------------------------------------
For the For the For the For the For the
year year year year period
ended ended ended ended 03/12/96*-
08/31/00 08/31/99 08/31/98 08/31/97 08/31/96
------------ -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............................. $ 20.25 $ 18.48 $ 16.50 $ 13.15 $ 12.14(1)
------- -------- ------- ------- -------
Net investment income/(loss) (+) .................................. 0.27 0.44 0.37 0.38 0.21
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions and translation of other assets
and liabilities denominated in foreign currencies ............... (0.85) 2.40 2.12 3.62 1.06
------- -------- ------- ------- -------
Net increase/(decrease) in net assets resulting from operations (0.58) 2.84 2.49 4.00 1.27
------- -------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income .............................. (0.23) (0.36) (0.29) (0.32) (0.20)
Dividends in excess of net investment income ...................... (0.02) (0.01) (0.04) (0.06) (0.03)
Distributions from net realized gains ............................. (0.84) (0.60) (0.11) (0.17) (0.00)**
Distributions in excess of net realized gains ..................... (0.19) (0.02) -- -- --
Return of capital ................................................. (0.04) (0.08) (0.07) (0.10) (0.03)
-------- -------- ------- ------- -------
Total dividends and distributions ............................. (1.32) (1.07) (0.51) (0.65) (0.26)
-------- -------- ------- ------- -------
Net asset value, end of period .................................... $ 18.35 $ 20.25 $ 18.48 $ 16.50 $ 13.15
======== ======== ======= ======= =======
TOTAL INVESTMENT RETURN (2) ......................................... (3.00)% 15.33% 14.98% 30.48% 10.41%(4)
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............................. $146,803 $113,402 $62,846 $29,721 $15,790
Ratios of expenses to average net assets (5) ...................... 0.94% 0.97% 1.03% 1.38% 1.61%(3)
Ratios of net investment income/(loss) to average net assets (5) .. 1.39% 2.16% 1.90% 2.47% 3.62%(3)
Portfolio turnover rate (6) ....................................... 32.83% 13.24% 2.83% 1.84% 0.00%(4)
<FN>
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on commencement of operations.
(2) Total investment return is calculated assuming a purchase of capital stock
at net asset value per share on the first day and a sale at the net asset
value per share on the last day of the period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to be
reinvested at the net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers of the listing fee through December 31, 1996 and
reimbursements from the Adviser commencing with the year ended August 31,
2000. If such waivers/reimbursements had not been made the ratios of
expenses to average net assets and ratios of net investment income/(loss) to
average net assets would have been as follows:
Ratios of expenses to average net assets before waivers/reimbursements -- -- -- 1.38% 1.62%(3)
Ratios of net investment income/(loss) to average
net assets before waivers/reimbursements .................... -- -- -- 2.47% 3.61%(3)
(6) Excludes portfolio securities received or delivered as a result of
processing capital share transactions in Creation Unit(s).
</FN>
</TABLE>
See accompanying notes to financial statements.
84-85
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
GENERAL
iShares, Inc. (formerly WEBS Index Fund, Inc.) (the "Fund") or (the
"iShares MSCI Index Fund") was incorporated under the laws of the State of
Maryland on September 1, 1994, and seventeen of its portfolios commenced
operations on March 12, 1996. The iShares MSCI South Korea Index Fund commenced
operations on May 10, 2000; the iShares MSCI Taiwan Index Fund commenced
operations on June 21, 2000; the iShares MSCI Brazil (Free) Index Fund commenced
operations on July 11, 2000 and the iShares MSCI EMU Index Fund commenced
operations on July 26, 2000. The Fund is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open end management investment
company.
The shares of common stock of each iShares MSCI Index Fund are traded on
the American Stock Exchange, Inc. (the "AMEX") under the following symbols:
iSHARES MSCI INDEX FUND SYMBOL
----------------------- ------
iShares MSCI Australia Index Fund EWA
iShares MSCI Austria Index Fund EWO
iShares MSCI Belgium Index Fund EWK
iShares MSCI Brazil (Free) Index Fund EWZ
iShares MSCI Canada Index Fund EWC
iShares MSCI EMU Index Fund EZU
iShares MSCI France Index Fund EWQ
iShares MSCI Germany Index Fund EWG
iShares MSCI Hong Kong Index Fund EWH
iShares MSCI Italy Index Fund EWI
iShares MSCI Japan Index Fund EWJ
iShares MSCI Malaysia (Free) Index Fund EWM
iShares MSCI Mexico (Free) Index Fund EWW
iShares MSCI Netherlands Index Fund EWN
iShares MSCI Singapore (Free) Index Fund EWS
iShares MSCI South Korea Index Fund EWY
iShares MSCI Spain Index Fund EWP
iShares MSCI Sweden Index Fund EWD
iShares MSCI Switzerland Index Fund EWL
iShares MSCI Taiwan Index Fund EWT
iShares MSCI United Kingdom Index Fund EWU
On December 9, 1999, the following iShares MSCI Index Funds were
established: iShares MSCI Brazil (Free) Index Fund; iShares MSCI EMU Index Fund;
iShares MSCI Greece Index Fund; iShares MSCI Indonesia (Free) Index Fund;
iShares MSCI South Korea Index Fund; iShares MSCI Portugal Index Fund; iShares
MSCI South Africa Index Fund; iShares MSCI Taiwan Index Fund; iShares MSCI
Thailand (Free) Index Fund; iShares MSCI Turkey Index Fund and iShares MSCI USA
Index Fund. Only the iShares MSCI Brazil (Free) Index Fund, iShares MSCI EMU
Index Fund, iShares MSCI South Korea Index Fund and iShares MSCI Taiwan Index
Fund have commenced operations.
The investment objective of each of the iShares MSCI Index Funds is to seek
to provide investment results that correspond generally to the price and yield
performance of publicly traded securities in the aggregate in particular
markets, as represented by a particular equity securities index compiled by
Morgan Stanley Capital International Inc. ("MSCI"). The MSCI Indices utilized by
the Fund reflect the reinvestment of net dividends (except for the MSCI Indices
utilized by the iShares MSCI Brazil (Free) Index Fund, iShares MSCI Malaysia
(Free) Index Fund, iShares MSCI Mexico (Free) Index Fund, iShares MSCI South
Korea Fund and iShares MSCI Taiwan Fund which reflect the reinvestment of gross
dividends).
Each iShares MSCI Index Fund utilizes a "passive" or indexing investment
approach in an effort to approximate the investment performance of its benchmark
index through the use of quantitative analytical procedures.
The Fund issues and redeems shares of each iShares MSCI Index Fund only in
aggregations of a specified number of shares (each, a "Creation Unit") at net
asset value. Except when aggregated in Creation Units, iShares are not
redeemable securities. The non-redeemable iShares trade on the AMEX during the
day at prices that differ to some degree from their net asset value.
The Depository Trust Company ("DTC") acts as the securities depository for
the shares of the iShares MSCI Index Funds. iShares MSCI Index Funds are
represented by global securities, registered in the name of DTC or its nominee
and deposited with, or on behalf of, the DTC.
86
<PAGE>
iSHARES, INC.
================================================================================
Each of the iShares MSCI Japan Index Fund, the iShares MSCI United Kingdom
Index Fund and the iShares MSCI USA Index Fund is classified as a "diversified"
investment company under the Act. Each of the other iShares MSCI Index Funds are
classified as a "non-diversified" investment company under the Act.
SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
PORTFOLIO VALUATION
Investments are stated at value. All securities for which market quotations
are readily available are valued at (i) the last sales price prior to the time
of determination, if there was a sale on the date of determination, (ii) at the
mean between the last current bid and asked prices if there was no sales price
on such date and bid and asked quotations are available, or (iii) at the bid
price if there was no sales price on such date and only bid quotations are
available. Securities that are traded over-the-counter are valued at the last
quoted bid price. Securities for which market values are not readily available
are carried at fair value as determined in good faith by Barclays Global Fund
Advisors (the "Adviser") in accordance with procedures adopted by the Fund's
Board of Directors.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. The cost of
investments sold is determined by use of the specific identification method for
both financial reporting and income tax purposes. Interest income is recorded on
the accrual basis; dividend income is recorded on the ex-dividend date.
TAX STATUS
No provision is made for U.S. Federal income or excise taxes as it is each
iShares MSCI Index Fund's intention to continue to qualify as a regulated
investment company and to make the requisite distributions to its shareholders
which will be sufficient to relieve it from all, or substantially all, Federal
income and excise taxes.
If so elected, each iShares MSCI Fund's realized net foreign exchange
losses and realized net capital losses incurred since October 31, 1999 will be
treated for tax purposes as arising on September 1, 2000. Each iShares MSCI
Index Fund incurred and will elect to defer such losses as follows:
<TABLE>
<CAPTION>
FOREIGN EXCHANGE NET REALIZED CAPITAL
iSHARES MSCI INDEX FUND LOSSES LOSSES
-------------------------- ----------------- --------------------
<S> <C> <C>
iShares MSCI Australia Index Fund $ 86,025 $2,012,229
iShares MSCI Austria Index Fund $ -- $ 384,872
iShares MSCI Belgium Index Fund $ 3,839 $ 336,200
iShares MSCI Brazil (Free) Index Fund $ 12,733 $ --
iShares MSCI Canada Index Fund $ 45,033 $ --
iShares MSCI EMU Index Fund $ 4 $ 559
iShares MSCI France Index Fund $ 82,559 $ --
iShares MSCI Germany Index Fund $ -- $ --
iShares MSCI Hong Kong Index Fund $ 2,374 $ --
iShares MSCI Italy Index Fund $ 39,231 $ --
iShares MSCI Japan Index Fund $ -- $ --
iShares MSCI Malaysia (Free) Index Fund $ -- $ --
iShares MSCI Mexico (Free) Index Fund $ 6,504 $ --
iShares MSCI Netherlands Index Fund $ -- $ --
iShares MSCI Singapore (Free) Index Fund $ -- $ --
iShares MSCI South Korea Index Fund $ 19,699 $ 497,310
iShares MSCI Spain Index Fund $ 64,689 $ --
iShares MSCI Sweden Index Fund $ 4,360 $ --
iShares MSCI Switzerland Index Fund $ -- $ --
iShares MSCI Taiwan Index Fund $ 5,064 $ --
iShares MSCI United Kingdom Index Fund $118,193 $ --
</TABLE>
87
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
================================================================================
In addition, each of the following iShares MSCI Index Funds has a capital
loss carryover which will expire as follows:
<TABLE>
<CAPTION>
iSHARES MSCI INDEX FUND 2007 2008
----------------------- ---------- --------
<S> <C> <C>
iShares MSCI Australia Index Fund $ 674,889 $630,985
iShares MSCI Austria Index Fund $ 4,273 $551,208
iShares MSCI Belgium Index Fund $ -- $ 94,675
iShares MSCI Hong Kong Index Fund $4,583,086 --
iShares MSCI Malaysia (Free) Index Fund $8,654,333 --
</TABLE>
If any of the iShares MSCI Index Funds own shares in certain foreign
investment entities, referred to, under U.S. tax law principles, as "passive
foreign investment companies", the iShares MSCI Index Fund may elect to
mark-to-market annually the shares of the passive foreign investment company,
and would be required to distribute to shareholders any such mark-to-market
gains.
FOREIGN CURRENCY TRANSLATION
The books and records of each iShares MSCI Index Fund are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the
following basis:
(i) Market value of investment securities, assets and liabilities at
the prevailing rates of exchange on the valuation date; and
(ii) Purchases and sales of investment securities and investment
income at the relevant rates of exchange prevailing on the
respective dates of such transactions.
Foreign currency and assets and liabilities denominated in foreign currency
are generally converted into U.S. dollars using the same exchange rates utilized
by MSCI in the calculation of the relevant MSCI Indices (currently, exchange
rates as of 4:00 p.m. London time, except that the exchange rate for the MSCI
Mexico (Free) Index is that as of 3:00 p.m. New York City time). However, the
Fund may use a different exchange rate from the rate used by MSCI in the event
that the Adviser concludes that such rate is more appropriate.
Effective January 1, 1999, foreign currency amounts for the iShares MSCI
Austria Index Fund, iShares MSCI Belgium Index Fund, iShares MSCI France Index
Fund, iShares MSCI Germany Index Fund, iShares MSCI Italy Index Fund, iShares
MSCI Netherlands Index Fund, and iShares MSCI Spain Index Fund are converted
into U.S. Dollars using the Euro exchange rate.
Each iShares MSCI Index Fund generally does not isolate the effect of
fluctuations in foreign exchange rates from the effect of fluctuations in the
market prices of securities. Each iShares MSCI Index Fund reports certain
foreign exchange realized gains and losses on foreign currency related
transactions as components of realized gains and losses for financial reporting
purposes, whereas such components are treated as ordinary income for Federal
income tax purposes.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic origin
as a result of, among other factors, the level of governmental supervision and
regulation of foreign securities markets and the possibility of political or
economic instability, and the fact that foreign securities markets may be
smaller, less developed and have less reliable settlement and share registration
procedures.
DISTRIBUTION OF INCOME AND GAINS
Each iShares MSCI Index Fund intends to distribute, at least annually, to
shareholders, substantially all of its net investment income, including net
foreign currency gains, if any, and any realized net capital gains after the
utilization of available capital loss carryovers. An additional distribution may
be made to the extent necessary to avoid payment of a 4% Federal excise tax.
In addition, each iShares MSCI Index Fund intends to distribute at least
annually amounts representing the dividend yield on the underlying portfolio
securities of each iShares MSCI Index Fund, net of expenses, as if such iShares
MSCI Index Fund owned such underlying portfolio securities for the entire
dividend period. As a result, some portion of each distribution may result in a
return of capital. Dividends and distributions are paid in U.S. dollars and
cannot be automatically reinvested in additional iShares.
Distributions to shareholders are recorded on the ex-dividend date. The
amount of dividends and distributions from net investment income and net
realized gains are determined in accordance with U.S. tax law principles, which
may differ from generally accepted accounting principles. These book/tax
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within each iShares MSCI Index Funds' capital accounts based on their Federal
tax treatment. Dividends and distributions which exceed net investment income
and realized net capital gains for financial
88
<PAGE>
iSHARES, INC.
================================================================================
reporting purposes but not for tax purposes are reported as distributions in
excess of net investment income and realized net capital gains, respectively. To
the extent they exceed net investment income and net realized gains for tax
purposes, they are reported as return of capital distributions.
For the year ended August 31, 2000, each iShares MSCI Index Fund
reclassified certain amounts 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.
ORGANIZATION COSTS
Organization costs were originally allocated to each of the seventeen
original iShares MSCI Index Funds based on the original net assets of each of
these iShares MSCI Index Funds. Such organization costs have been deferred and
are amortized ratably on the reverse sum of the years digits method over a
period of sixty months from the commencement of operations.
If any of the shares initially issued to the Distributor are redeemed
before the end of the amortization period, the proceeds of the redemption will
be reduced by their pro rata share of the unamortized organization costs. The
pro rata share by which the proceeds are reduced is derived by dividing the
number of original shares redeemed by the total number of original shares
outstanding at the time of redemption.
Organization costs of the iShares MSCI Brazil (Free) Index Fund; iShares
MSCI EMU Index Fund; iShares MSCI South Korea Index Fund and iShares MSCI Taiwan
Index Fund have been expensed in their first year of operations.
FEE ARRANGEMENTS
The Adviser manages the investments of each of the iShares MSCI Index
Funds. Effective May 8, 2000, the Fund modified its Advisory Agreement (the
"Advisory Agreement") with the Adviser. Prior to May 8, 2000, for its services
to each iShares MSCI Index Fund, the Adviser received fees based on the Fund's
aggregate average daily net assets equal to .27% per annum up to aggregate net
assets of $1.7 billion; plus .15% per annum of the aggregate net assets between
$1.7 billion and $7 billion; plus .12% per annum of the aggregate net assets
between $7 billion and $10 billion; plus .08% per annum of the aggregate net
assets in excess of $10 billion.
At a January 28, 2000 Special Meeting of the Board of Directors of the
Fund, the Board considered and approved, and recommended to shareholders for
their approval at a Special Meeting of Shareholders held on May 8, 2000,
amendments to the Advisory Agreement between the Fund and the Adviser. The
amendments provide for a revised investment advisory fee to be paid to the
Adviser that would generally fix the expense ratio of each iShares MSCI Index
Fund at .59% of average daily net assets plus payments under the Fund's Rule
12b-1 Distribution Plan of up to .25% of average daily net assets for a total
expense ratio of .84% of average daily net assets for all iShares MSCI Index
Funds except the iShares MSCI Brazil (Free) Index Fund, iShares MSCI South Korea
and iShares MSCI Taiwan Index Fund. The expense ratio of each of these three
Funds is .74% of average daily net assets plus payments under the Fund's Rule
12b-1 Distribution Plan of up to .25% of average daily net assets for a total
expense ratio of .99% of average daily net assets.
The Advisory Agreement was amended in several respects. Effective May 8,
2000, it now provides that, the Fund is responsible for its expenses, but that
the Adviser will receive from the Fund the difference between the Fund's
expenses (except for expenses incurred in connection with the execution of
portfolio transactions; expenses incurred in connection with the Fund's Rule
12b-1 Distribution Plan; litigation expenses; taxes; any cost or expense that a
majority of the Directors of the Fund who are not "interested persons" (as
defined in the 1940 Act) deems to be an extraordinary expense; and the advisory
fee itself) and .59% per annum of the aggregate net assets of the Developed
Country Funds (the seventeen original iShares MSCI Index Funds plus the EMU and
USA Index Funds) less than or equal to $7.0 billion, plus .54% per annum of the
aggregate net assets of the Developed Country Funds between $7.0 billion and
$11.0 billion, plus .49% per annum of the aggregate net assets of the Developed
Country Funds in excess of $11.0 billion. For its investment management services
to the iShares MSCI Brazil (Free) Index Fund, iShares MSCI South Korea Index
Fund and iShares MSCI Taiwan Index Fund, the Adviser is paid management fees
equal to each of these three Index Funds' allocable portion of: 0.74% per annum
of the aggregate net assets of these three Index Funds less than or equal to $2
billion, plus 0.69% per annum of the aggregate net assets of these three Index
Funds between $2 billion and $4 billion, plus 0.64% per annum of the aggregate
net assets of the net assets of these three Index Funds greater than $4 billion.
The Adviser is responsible for any expenses of the Fund (other than the
exceptions listed above) that would cause the Fund's expenses to exceed such
levels.
The Fund has an Administration and Accounting Services Agreement with PFPC
Inc. ("PFPC" or the "Administrator"). Under the Administration and Accounting
Services Agreement, PFPC assists in supervising the operations of each iShares
MSCI Index Fund.
89
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NOTES TO FINANCIAL STATEMENTS (continued)
================================================================================
Prior to February 1, 2000, for its services to the Fund, the Administrator
received an aggregate fee equal to each iShares MSCI Index Fund's allocable
portion of: .22% per annum of the aggregate average daily net assets of the Fund
up to $1.5 billion; plus .15% per annum of the aggregate average daily net
assets of the Fund between $1.5 billion and $3 billion, plus .14% per annum of
the aggregate average daily net assets of the Fund between $3 billion and $5
billion, plus .13% per annum of the aggregate average daily net assets of the
Fund between $5 billon and $7.5 billion, plus .115% per annum of the aggregate
average daily net assets of the Fund between $7.5 billion and $10 billion, plus
.10% per annum of the aggregate average daily net assets of the Fund in excess
of $10 billion.
Effective February 1, 2000, for its services to the iShares MSCI Index
Funds, the Administrator receives an aggregate fee equal to each iShares MSCI
Index Fund's allocable portion of: .15% per annum of the aggregate average daily
net assets of the Fund up to $3 billion; plus .10% per annum of the aggregate
average daily net assets of the Fund between $3 billion and $4.5 billion and
.095% of the aggregate average daily net assets of the Fund in excess of $4.5
billion. The Administrator receives a minimum monthly fee of .05% of the
aggregate average daily net assets of the Fund plus $131,250 for the current
twenty one iShares MSCI Index Funds.
PFPC and the Fund are party to a Sub-Administration Agreement with Morgan
Stanley & Co. Incorporated ("MS&Co."). The Administrator pays MS&Co. an annual
fee of .05% of the average daily net assets of the Fund for its
sub-administration services.
PFPC, Inc., an affiliate of the Administrator, serves as each iShares MSCI
Index Fund's Transfer Agent and Dividend Disbursement Agent.
The Fund has a Sub-License Agreement with Barclay Global Investors, N.A.
for the use of the relevant MSCI Indices. Effective May 8, 2000 each iShares
MSCI Index Fund no longer pays a fee for the use of such MSCI indices. Prior to
May 8, 2000 each MSCI Index Fund paid a license fee equal to .03% per annum of
the average daily net assets of each iShares MSCI Index Fund.
Prior to March 26, 2000, the Fund had adopted a Distribution Plan pursuant
to Rule 12b-1 under the Act ("Rule 12b-1 Plan") with respect to each of the
original 17 iShares MSCI Index Funds. Under the Rule 12b-1 Plan, Funds
Distributor, Inc. ("FDI") was paid an annual fee of up to .25% of the average
daily net assets of each of the original 17 iShares MSCI Index Funds as
compensation in connection with the offering and sale of shares of each of the
original 17 iShares MSCI Index Funds. The fee paid to FDI under the Rule 12b-1
Plan was accrued daily and paid monthly with respect to each of the original 17
iShares MSCI Index Funds. For its services to the original 17 iShares MSCI Index
Funds, FDI received an annual fee under the Rule 12b-1 Plan of .20% of the
average daily net assets of each of the original 17 iShares MSCI Index Funds.
At the January 28, 2000 meeting, the Board approved, upon the
recommendation of the Adviser, the termination of FDI as distributor for the
Fund and the appointment of SEI Investments Distribution Company ("SEI") as
distributor, which became effective on March 27, 2000. The distribution
agreement between the Fund and SEI is substantially identical to the Fund's
former agreement with FDI. In addition, the Board approved the removal of the
previous limitation on annual distribution fees paid by an iShares MSCI Index
Fund under the Fund's Rule 12b-1 Distribution Plan (up to .20% of the average
daily net assets of the iShares MSCI Index Fund) effective at the time that SEI
became the Fund's distributor. Each iShares MSCI Index Fund may pay annual
distribution fees of up to .25% of the average daily net assets of the iShares
MSCI Index Fund under the Rule 12b-1 Distribution Plan. Accordingly, effective
March 27, 2000, SEI is paid an annual fee of .25% of the average daily net
assets of each iShares MSCI Index Fund. The Directors also approved, upon the
recommendation of the Adviser, a Marketing and Consulting Agreement (the
"Marketing Agreement") with FDI. The Marketing Agreement provides that FDI will
provide certain marketing and consulting services in connection with the
distribution of the Fund's shares for a period of three years after the date
that SEI became the Fund's distributor, in return for a fee of .035% of the
average daily net assets of the Fund's 17 initial iShares MSCI Index Funds. Such
fee is paid from the Fund's Rule 12b-1 Distribution Plan.
The Chase Manhattan Bank ("Chase") serves as global custodian as well as
the Securities Lending Agent to each of the iShares MSCI Index Funds. Effective
February 1, 1999, for its custody services to each iShares MSCI Index Fund,
Chase was paid per annum fees based on the aggregate net assets of each iShares
MSCI Index Fund as follows: iShares MSCI Australia Index Fund (.07%); iShares
MSCI Austria Index Fund (.09%); iShares MSCI Belgium Index Fund (.09%); iShares
MSCI Canada Index Fund (.05%); iShares MSCI France Index Fund (.09%); iShares
MSCI Germany Index Fund (.08%); iShares MSCI Hong Kong Index Fund (.10%);
iShares MSCI Italy Index Fund (.08%); iShares MSCI Japan Index Fund (.055%);
iShares MSCI Malaysia (Free) Index Fund (.10%); iShares MSCI Mexico (Free) Index
Fund (.15%); iShares MSCI Netherlands Index Fund (.09%); iShares MSCI Singapore
Index Fund (.09%); iShares MSCI Spain Index Fund (.09%); iShares MSCI Sweden
Index Fund (.09%); iShares MSCI Switzerland Index Fund (.09%); and iShares MSCI
United Kingdom Index Fund (.05%).
90
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iSHARES, INC.
================================================================================
Effective February 1, 2000, the fees payable under the Custody Agreement
were revised. For its custody services to each iShares MSCI Index Fund, Chase is
now paid per annum fees based on the aggregate net assets of each iShares MSCI
Index Fund as follows: iShares MSCI Australia Index Fund (.05%); iShares MSCI
Austria Index Fund (.06%); iShares MSCI Belgium Index Fund (.05%); iShares MSCI
Brazil (Free) Index Fund (.20%); iShares MSCI Canada Index Fund (.02%); iShares
MSCI EMU Index Fund (a fee based on the aggregate net assets of each of its
investments in Austria, Belgium, France, Germany, Italy, Netherlands and Spain
at the fees applicable to these countries plus Finland (.06%), Ireland (.06%)
and Portugal (.20%); iShares MSCI France Index Fund (.05%); iShares MSCI Germany
Index Fund (.04%); iShares MSCI Hong Kong Index Fund (.04%); iShares MSCI Italy
Index Fund (.05%); iShares MSCI Japan Index Fund (.026%); iShares MSCI Malaysia
(Free) Index Fund (.07%); iShares MSCI Mexico (Free) Index Fund (.15%); iShares
MSCI Netherlands Index Fund (.04%); iShares MSCI Singapore Index Fund (.05%);
iShares MSCI South Korea Index Fund (.15%); iShares MSCI Spain Index Fund
(.05%); iShares MSCI Sweden Index Fund (.05%); iShares MSCI Switzerland Index
Fund (.05%); iShares MSCI Taiwan Index Fund (.20%) and iShares MSCI United
Kingdom Index Fund (.01%).
Chase also receives certain fees for each transaction of each of the
iShares MSCI Index Funds and is reimbursed for certain out-of-pocket expenses.
The Fund pays each director who is not an "affiliated person" (as defined
in the 1940 Act) of the Adviser an annual fee of $20,000 plus $5,000 for each
Board of Directors meeting attended. The Chairman of the Board receives an
annual fee of $30,000 plus $7,500 for each Board of Directors meeting attended.
In addition, the Fund reimburses the directors for travel and out-of-pocket
expenses incurred in connection with their attendance at the Board of Directors
meetings.
FOREIGN CURRENCY
At August 31, 2000, each iShares MSCI Fund's cash or bank overdraft
balances included the following amount of foreign currency:
iSHARES MSCI INDEX FUND COST VALUE
----------------------- ---------- ----------
iShares MSCI Australia Index Fund $ 925,102 $ 928,744
iShares MSCI Austria Index Fund $ 12,866 $ 12,180
iShares MSCI Belgium Index Fund $ 96,800 $ 91,323
iShares MSCI Brazil (Free) Index Fund $ -- $ --
iShares MSCI Canada Index Fund $ 48,763 $ 49,020
iShares MSCI EMU Index Fund $ 4,115 $ 4,051
iShares MSCI France Index Fund $ 134,540 $ 132,295
iShares MSCI Germany Index Fund $ 700,946 $ 690,773
iShares MSCI Hong Kong Index Fund $ 812,349 $ 812,414
iShares MSCI Italy Index Fund $ 22,510 $ 22,117
iShares MSCI Japan Index Fund $1,067,080 $1,067,762
iShares MSCI Malaysia (Free) Index Fund $ 225,604 $ 225,604
iShares MSCI Mexico (Free) Index Fund $ 290,939 $ 291,898
iShares MSCI Netherlands Index Fund $ 194,920 $ 187,413
iShares MSCI Singapore (Free) Index Fund $ 454,213 $ 458,742
iShares MSCI South Korea Index Fund $ -- $ --
iShares MSCI Spain Index Fund $ 463,954 $ 458,744
iShares MSCI Sweden Index Fund $ 523,375 $ 514,668
iShares MSCI Switzerland Index Fund $ 92,151 $ 86,313
iShares MSCI Taiwan Index Fund $ 281,986 $ 281,954
iShares MSCI United Kingdom Index Fund $ 148,568 $ 146,829
STOCK LOAN
Each iShares MSCI Index Fund may lend securities from its portfolio to
brokers, dealers and other financial institutions. Because the collateral
pledged to each iShares MSCI Index Fund in connection with these loans generates
income, securities lending enables an iShares MSCI Index Fund to earn income
that may partially offset the expenses of that iShares MSCI Index Fund. Each
iShares MSCI Index Fund receives collateral equal to at least 100% of the
current market value of the loaned securities. To the extent that the value of
the collateral falls below the value of securities on loan, the Fund's Custodian
will receive additional collateral on the next business day. Each iShares MSCI
Index Fund receives cash collateral and may invest such collateral in short-term
investments and bear the risk of loss of the invested collateral. In addition,
an iShares MSCI Index Fund is exposed to the risk of loss should a borrower
default on its obligation to return the borrowed securities. For its services as
the securities lending agent, the Fund pays Chase, in respect of each iShares
MSCI Index Fund, 40% of the net investment income earned on the collateral for
securities loaned. The compensation each Fund earned in connection with
securities lending is included in interest income.
91
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
================================================================================
The market values of securities on loan to broker/dealers at August 31,
2000, and the cash collateral received with respect to such loans were as
follows:
CASH
COLLATERAL MARKET VALUE OF
iSHARES MSCI INDEX FUND RECEIVED LOANED SECURITIES
----------------------- ----------- -----------------
iShares MSCI Australia Index Fund $ 7,687,795 $ 7,280,908
iShares MSCI Austria Index Fund $ 2,734,620 $ 2,551,788
iShares MSCI Belgium Index Fund $ 881,124 $ 826,596
iShares MSCI Brazil (Free) Index Fund $ -- $ --
iShares MSCI Canada Index Fund $ -- $ --
iShares MSCI EMU Index Fund $ -- $ --
iShares MSCI France Index Fund $15,266,730 $14,453,599
iShares MSCI Germany Index Fund $16,072,385 $14,964,232
iShares MSCI Hong Kong Index Fund $11,908,351 $10,969,869
iShares MSCI Italy Index Fund $ 6,593,159 $ 6,281,581
iShares MSCI Japan Index Fund $83,952,455 $79,170,203
iShares MSCI Malaysia (Free) Index Fund $ -- $ --
iShares MSCI Mexico (Free) Index Fund $ 3,932,481 $ 3,748,187
iShares MSCI Netherlands Index Fund $ -- $ --
iShares MSCI Singapore (Free) Index Fund $ 2,018,900 $ 1,894,217
iShares MSCI South Korea Index Fund $ -- $ --
iShares MSCI Spain Index Fund $ 6,792,669 $ 6,356,727
iShares MSCI Sweden Index Fund $ 1,484,900 $ 1,531,324
iShares MSCI Switzerland Index Fund $ 3,209,850 $ 3,055,135
iShares MSCI Taiwan Index Fund $ -- $ --
iShares MSCI United Kingdom Index Fund $ -- $ --
CAPITAL SHARES
The Fund's authorized shares are 10.9 billion shares of capital stock. The
following number of shares were allocated to each iShares MSCI Index Fund:
iShares MSCI Australia Index Fund (127.8 million shares); iShares MSCI Austria
Index Fund (19.8 million shares); iShares MSCI Belgium Index Fund (136.2 million
shares); iShares MSCI Brazil (Free) Index Fund (500 million shares); iShares
MSCI Canada Index Fund (340.2 million shares); iShares MSCI EMU Index Fund (500
million shares); iShares MSCI France Index Fund (340.2 million shares); iShares
MSCI Germany Index Fund (382.2 million shares); iShares MSCI Greece Index Fund
(200 million shares); iShares MSCI Hong Kong Index Fund (191.4 million shares);
iShares MSCI Indonesia (Free) Index Fund (200 million shares); iShares MSCI
Italy Index Fund (63.6 million shares); iShares MSCI Japan Index Fund (2,124.6
million shares); iShares MSCI Malaysia (Free) Index Fund (127.8 million shares);
iShares MSCI Mexico (Free) Index Fund (255 million shares); iShares MSCI
Netherlands Index Fund (255 million shares); iShares MSCI Portugal Index Fund
(200 million shares); iShares MSCI Singapore (Free) Index Fund (191.4 million
shares); iShares MSCI South Africa Index Fund (200 million shares); iShares MSCI
South Korea Index Fund (200 million shares); iShares MSCI Spain Index Fund
(127.8 million shares); iShares MSCI Sweden Index Fund (63.6 million shares);
iShares MSCI Switzerland Index Fund (318.625 million shares); iShares MSCI
Taiwan Index Fund (200 million shares); iShares MSCI Thailand (Free) Index Fund
(200 million shares); iShares MSCI Turkey Index Fund (200 million shares);
iShares MSCI United Kingdom Index Fund (943.2 million shares); and the iShares
MSCI USA Index Fund (500 million shares). The iShares MSCI Greece Index Fund,
iShares MSCI Indonesia (Free) Index Fund, iShares MSCI Portugal Index Fund,
iShares MSCI South Africa Index Fund, iShares MSCI Thailand (Free) Index Fund,
iShares MSCI Turkey Index Fund and iShares MSCI USA Index Fund have not
commenced operations.
The shares will not be issued or redeemed individually, but only in
specified aggregations of shares (a "Creation Unit").
The consideration for purchase of a Creation Unit of an iShares MSCI Index
Fund is generally the in-kind deposit of a designated portfolio of equity
securities constituting an optimized representation of the corresponding MSCI
Index (the "Basket Securities") and an amount of cash (the "Cash Component")
(except for the iShares MSCI Brazil (Free) Index Fund, iShares MSCI South Korea
Index Fund and iShares MSCI Taiwan Index Fund which are offered in Creation
Units solely for cash and temporarily for the iShares MSCI Malaysia (Free) Index
Fund which is offered in Creation Units for U.S. Dollars). In addition, certain
iShares MSCI Index Funds may include securities that are not in its respective
MSCI Index in the Basket Securities. Non-Basket Securities may be held by an
iShares MSCI Index Fund as a result of corporate actions, odd share lots, or as
a result of rebalancing of the Basket Securities.
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iSHARES, INC.
================================================================================
Shares of each iShares MSCI Index Fund are offered in Creation Units at net
asset value without an initial sales load, in exchange for an in-kind deposit of
a designated portfolio of securities specified by the Distributor each day
(except the iShares MSCI Brazil (Free) Index Fund, iShares MSCI EMU Index Fund,
iShares MSCI South Korea Index Fund and iShares MSCI Taiwan Index Fund which are
offered in Creation Units solely for cash and temporarily for the iShare MSCI
Malaysia (Free) Index Fund which is offered for U.S. Dollars), plus a specified
amount of cash and a purchase transaction fee. Shares of each of the other
iShares MSCI Index Funds may also be issued in the specified aggregations for
cash at the sole discretion of the Fund. Redemptions of the shares of each
iShares MSCI Index Fund in the specified aggregations are made in portfolio
securities, (except the iShares MSCI Brazil (Free) Index Fund, iShares MSCI
South Korea Index Fund and iShares MSCI Taiwan Index Fund which are redeemed in
Creation Units solely for cash and temporarily for the iShares MSCI Malaysia
(Free) Index Fund which is redeemed in Malaysian Ringgits Units only) plus or
minus a specified amount of cash, and minus a specified redemption transaction
fee and except that residents of Australia and New Zealand are paid redemption
proceeds in cash only. Shares of other iShares MSCI Index Funds may also be
redeemed in the specified aggregations for cash by other persons at the sole
discretion of the Fund.
LOAN AGREEMENT
At August 31, 1999 the Fund had entered into a Term Loan Agreement with PNC
Bank, N.A., an affiliate of the Administrator. Under the terms of the Loan, any
of the initial 17 iShares MSCI Index Funds could have requested an advance,
under certain provisions, of the full amount of the $25,000,000 term loan.
The Term Loan Agreement with PNC Bank was terminated effective September
30, 1999, therefore, there were no outstanding advances under loan arrangements
at August 31, 2000.
<TABLE>
<CAPTION>
AVERAGE ADVANCES AVERAGE NUMBER OF DAYS
OUTSTANDING INTEREST ADVANCES OUTSTANDING
iSHARES MSCI INDEX FUND DURING THE PERIOD RATE DURING THE PERIOD
-------------------------------- ----------------- -------- --------------------
<S> <C> <C> <C>
iShares MSCI Australia Index Fund $ 985,000 6.29% 29
iShares MSCI Austria Index Fund $ 82,000 6.30% 21
iShares MSCI Belgium Index Fund $1,663,000 6.30% 21
iShares MSCI Canada Index Fund $ 355,111 6.35% 36
iShares MSCI France Index Fund -- -- --
iShares MSCI Germany Index Fund $1,210,000 6.30% 21
iShares MSCI Hong Kong Index Fund $1,370,000 6.30% 22
iShares MSCI Italy Index Fund $4,490,000 6.35% 36
iShares MSCI Japan Index Fund $ 458,000 6.30% 22
iShares MSCI Malaysia (Free) Index Fund -- -- --
iShares MSCI Mexico (Free) Index Fund $ 67,000 6.30% 21
iShares MSCI Netherlands Index Fund $2,274,611 6.35% 36
iShares MSCI Singapore (Free) Index Fund $ 56,000 6.30% 22
iShares MSCI Spain Index Fund $1,341,000 6.29% 29
iShares MSCI Sweden Index Fund $ 578,000 6.29% 29
iShares MSCI Switzerland Index Fund $ 897,000 6.29% 29
iShares MSCI United Kingdom Index Fund $5,014,000 6.29% 29
</TABLE>
93
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
================================================================================
PORTFOLIO ACTIVITY
The iShares MSCI Index Funds' purchases and sales of securities (excluding
in-kind transactions), other than short-term obligations, were as follows, for
the year ended August 31, 2000:
PURCHASES OF SALES OF
iSHARES MSCI INDEX FUND SECURITIES SECURITIES
----------------------- ------------- ------------
iShares MSCI Australia Index Fund $ 21,690,864 $ 24,257,825
iShares MSCI Austria Index Fund $ 3,778,063 $ 3,708,838
iShares MSCI Belgium Index Fund $ 7,244,600 $ 6,699,685
iShares MSCI Brazil (Free) Index Fund $ 35,655,864 $ 16,463,499
iShares MSCI Canada Index Fund $ 8,917,445 $ 14,576,131
iShares MSCI EMU Index Fund $ -- $ 4,119
iShares MSCI France Index Fund $ 15,116,582 $ 19,680,565
iShares MSCI Germany Index Fund $ 87,769,282 $105,215,914
iShares MSCI Hong Kong Index Fund $ 20,699,072 $ 16,927,596
iShares MSCI Italy Index Fund $ 24,127,653 $ 28,444,135
iShares MSCI Japan Index Fund $188,667,761 $224,558,910
iShares MSCI Malaysia (Free) Index Fund $ 18,504,302 $ 18,226,975
iShares MSCI Mexico (Free) Index Fund $ 6,234,182 $ 7,231,905
iShares MSCI Netherlands Index Fund $ 5,745,810 $ 5,912,086
iShares MSCI Singapore (Free) Index Fund $ 54,138,074 $ 54,477,924
iShares MSCI South Korea Index Fund $ 24,472,244 $ 9,413,363
iShares MSCI Spain Index Fund $ 15,881,716 $ 19,051,730
iShares MSCI Sweden Index Fund $ 21,633,170 $ 27,046,900
iShares MSCI Switzerland Index Fund $ 13,825,636 $ 14,584,916
iShares MSCI Taiwan Index Fund $ 62,037,314 $ 16,012,018
iShares MSCI United Kingdom Index Fund $ 42,634,095 $ 55,041,204
FOREIGN INCOME TAXES
For the year ended August 31, 2000, the iShares MSCI Index Funds' net
foreign withholding taxes deducted from foreign dividends received were as
follows:
FOREIGN
WITHHOLDING
iSHARES MSCI INDEX FUND TAX
------------------------------- -----------
iShares MSCI Australia Index Fund $ 72,892
iShares MSCI Austria Index Fund $ 32,032
iShares MSCI Belgium Index Fund $ 54,815
iShares MSCI Brazil (Free) Index Fund $ 4,388
iShares MSCI Canada Index Fund $ 30,242
iShares MSCI EMU Index Fund $ 5,803
iShares MSCI France Index Fund $216,534
iShares MSCI Germany Index Fund $283,556
iShares MSCI Hong Kong Index Fund $ --
iShares MSCI Italy Index Fund $246,622
iShares MSCI Japan Index Fund $811,189
iShares MSCI Malaysia (Free) Index Fund $ --
iShares MSCI Mexico (Free) Index Fund $ 27,205
iShares MSCI Netherlands Index Fund $ 71,115
iShares MSCI Singapore (Free) Index Fund $ --
iShares MSCI South Korea Index Fund $ 3,316
iShares MSCI Spain Index Fund $103,697
iShares MSCI Sweden Index Fund $ 64,813
iShares MSCI Switzerland Index Fund $ 86,919
iShares MSCI Taiwan Index Fund $ 53,004
iShares MSCI United Kingdom Index Fund $332,217
94
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iSHARES, INC.
================================================================================
MARKET AND PORTFOLIO RISKS
An investment in the iShares MSCI Index Funds involves risks similar to
those of investing in a broadly-based portfolio of equity securities traded on
exchanges in the relevant foreign securities market, such as market fluctuations
caused by such factors as economic and political developments, changes in
interest rates and perceived trends in stock prices. Investing in iShares MSCI
Index Funds generally involves certain risks and considerations not typically
associated with investing in a fund that invests in the securities of U.S.
issuers. These risks could include less liquid and less efficient securities
markets; greater price volatility; exchange rate fluctuations and exchange
controls; less publicly available information about issuers; the imposition of
withholding or other taxes; restrictions on the expatriation of funds or other
assets of an iShares MSCI Index Fund; higher transaction and custody costs;
delays in settlement; difficulties in enforcing contractual obligations; less
liquidity and smaller market capitalization of most non-U.S. securities markets;
lower levels of regulation of the securities markets; different accounting,
disclosure and reporting requirements; more substantial government involvement
in the economy; higher rates of inflation; greater social, economic, and
political uncertainty and the risk of nationalization or expropriation of assets
and risk of war.
With respect to the two most heavily weighted industries or groups of
industries in the benchmark index of a iShares MSCI Index Fund, the iShares MSCI
Index Fund will invest in portfolio securities (consistent with its investment
objective and other investment policies) such that the weighting of each such
industry or group of industries in the iShares MSCI Index Fund does not diverge
by more than 10 percentage points from the respective weightings of such
industry or group of industries in the benchmark index. An exception to the
general policy stated in the previous sentence is that if investment in the
stock of a single issuer would account for more than 25% of the iShares MSCI
Index Fund, the iShares MSCI Index Fund will invest less than 25% of its net
assets in such stock and will reallocate the excess to stock(s) in the same
industry or group of industries, and/or to stock(s) in another industry or group
of industries, in the benchmark index.
The stocks of particular issuers, or of issuers in particular industries,
may dominate the benchmark indices of certain iShares MSCI Index Funds and,
consequently, the investment portfolios of such iShares MSCI Index Funds may
adversely affect the performance of such iShares MSCI Index Funds or subject
such iShares MSCI Index Funds to greater price volatility than that experienced
by more diversified investment companies.
MALAYSIAN CAPITAL RESTRICTIONS
As a result of capital controls imposed by the Malaysian Government on
September 1, 1998 that, among other things, imposed: (i) a one year prohibition
on the repatriation of capital by foreign investors such as the iShares MSCI
Malaysia (Free) Index Fund, (ii) stringent restrictions on transfers of
Malaysian securities that made "in kind" sales and redemptions of Creation Units
of the iShares MSCI Malaysia (Free) Index Fund unlawful, and (iii) a fixed
exchange rate; sales of Creation Units of the iShares MSCI Malaysia (Free) Index
Fund were suspended, and the Fund announced that it would no longer be able to
effect redemptions of Creation Units on an "in kind" basis.
Since April 1, 1999 the iShares MSCI Malaysia (Free) Index Fund has used a
foreign exchange rate of 3.8 ringgits per U.S. dollar, the official exchange
rate fixed by the Malaysian authorities, in computing its net asset value per
share. The iShares MSCI Malaysia (Free) Index Fund may use different exchange
rates for computing its net asset value in the future. The Malaysian capital
controls have been revised several times since they were announced. Currently,
repatriations by the iShares MSCI Malaysia (Free) Index Fund are generally
subject to a levy of 10% of the amount attributable to "profit" as determined
pursuant to the relevant Malaysian regulations.
Effective May 12, 2000, the iShares MSCI Malaysia (Free) Index Fund offered
to redeem Creation Units for U.S. dollars, and offers of such Creation Units for
U.S. dollars commenced effective May 26, 2000. The iShares MSCI Malaysia (Free)
Index Fund recently received regulatory relief from the Malaysian authorities
and is currently investigating the possibility of reinstituting sales and
redemptions of Creation Units on an "in kind" basis.
POSSIBLE CLAIM
A United States patentholder has notified the Fund that it believes that
the manner of the Fund's operation results in the Fund, possibly in conjunction
with others, engaging in acts of infringement of such patent and has suggested
that the Fund or one or more of its service providers enter into a license
agreement with it and pay it substantial license fees. In August 2000 the AMEX
commenced an action seeking a declaratory judgement that its activities with
respect to exchange traded funds, including the Fund, do not infringe the
patentholder's patents. The patentholder has counterclaimed, alleging patent
infringement by the AMEX. The Fund is not a party to this action. The Fund
believes that it has valid defenses to any potential patent infringement claim
by the patentholder.
95
<PAGE>
REPORT OF INDEPENDENT AUDITORS iSHARES, INC.
================================================================================
Shareholders and Board of Directors
iSHARES, INC.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of iShares, Inc. (comprised of the
iShares MSCI Australia Index Fund, the iShares MSCI Austria Index Fund, the
iShares MSCI Belgium Index Fund, the iShares MSCI Brazil (Free) Index Fund, the
iShares MSCI Canada Index Fund, the iShares MSCI EMU Fund, the iShares MSCI
France Index Fund, the iShares MSCI Germany Index Fund, the iShares MSCI Hong
Kong Index Fund, the iShares MSCI Italy Index Fund, the iShares MSCI Japan Index
Fund, the iShares MSCI Malaysia (Free) Index Fund, the iShares MSCI Mexico
(Free) Index Fund, the iShares MSCI Netherlands Index Fund, the iShares MSCI
Singapore (Free) Index Fund, the iShares MSCI South Korea Index Fund, the
iShares MSCI Spain Index Fund, the iShares MSCI Sweden Index Fund, the iShares
MSCI Switzerland Index Fund, the iShares MSCI Taiwan Index Fund and the iShares
MSCI United Kingdom Index Fund) (collectively, the "Funds") as of August 31,
2000, and the related statements of operations and changes in net assets and the
financial highlights for each of the periods presented therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of August 31, 2000 by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective Funds comprising iShares, Inc. at August 31, 2000, and
the results of their operations, the changes in their net assets and the
financial highlights for the respective periods ended August 31, 2000, in
conformity with accounting principles generally accepted in the United States.
/S/ ERNST & YOUNG LLP
New York, NY
October 13, 2000
96
<PAGE>
iSHARES, INC.
================================================================================
FEDERAL TAXATION NOTICE (UNAUDITED)
The iShares MSCI Index Funds paid the following foreign taxes during the
year ended August 31, 2000 which they intend to pass through to their
shareholders pursuant to Section 853 of the Internal Revenue Code. In addition,
each of the iShares MSCI Index Funds earned the following foreign source income
and is designating the following distributions as long-term capital gain
distributions:
<TABLE>
<CAPTION>
FOREIGN SOURCE LONG-TERM
iSHARES MSCI INDEX FUND INCOME FOREIGN TAXES CAPITAL GAINS DISTRIBUTIONS
----------------------- -------------- ------------- ---------------------------
<S> <C> <C> <C>
iShares MSCI Australia Index Fund $1,983,747 $ 72,892 $ --
iShares MSCI Austria Index Fund $ 214,177 $ 32,032 $ --
iShares MSCI Belgium Index Fund $ 578,866 $ 54,815 $ --
iShares MSCI Brazil (Free) Index Fund $ 61,016 $ 4,388 $ --
iShares MSCI Canada Index Fund $ 763,631 $ 30,242 $ 4,150,148
iShares MSCI EMU Index Fund $ 42,167 $ 5,803 $ --
iShares MSCI France Index Fund $ 928,627 $216,534 $ 4,912,901
iShares MSCI Germany Index Fund $2,873,271 $283,556 $ 9,702,076
iShares MSCI Hong Kong Index Fund $2,502,940 $ -- $ --
iShares MSCI Italy Index Fund $ 950,365 $246,622 $ 4,043,442
iShares MSCI Japan Index Fund $5,463,953 $811,189 $28,506,091
iShares MSCI Malaysia (Free) Index Fund $1,830,099 $ -- $ --
iShares MSCI Mexico (Free) Index Fund $ 354,819 $ 27,205 $ 810,815
iShares MSCI Netherlands Index Fund $ 475,724 $ 71,115 $ 138,873
iShares MSCI Singapore (Free) Index Fund $2,363,139 $ -- $ 1,615,816
iShares MSCI South Korea Index Fund $ 20,095 $ 3,316 $ --
iShares MSCI Spain Index Fund $ 725,345 $103,697 $ 1,313,679
iShares MSCI Sweden Index Fund $ 415,611 $ 64,813 $ 5,403,944
iShares MSCI Switzerland Index Fund $ 580,308 $ 86,919 $ 22,614
iShares MSCI Taiwan Index Fund $ 931,939 $ 53,004 $ --
iShares MSCI United Kingdom Index Fund $3,481,972 $332,217 $ 6,644,169
</TABLE>
Shareholders will receive more detailed information along with Form
1099-DIV in January 2001.
97
<PAGE>
RESULTS OF SPECIAL SHAREHOLDERS MEETING (UNAUDITED) iSHARES, INC.
================================================================================
A Special Shareholders Meeting was held on May 8, 2000. A quorum was
obtained for Shareholder Proposal I on May 8, 2000.
The meeting was adjourned several times for failure to obtain the necessary
quorum to transact business for Shareholder Proposals II, III, and IV. At the
meeting, as reconvened on June 27, 2000, the shareholders of the iShares MSCI
Canada Index Fund approved Shareholder Proposal II to change such from
diversified to non-diversified. The Shareholder Proposals III and IV failed to
meet the necessary quorum.
The following table provides information concerning the matters voted on:
PROPOSAL I: TO APPROVE AMENDMENTS TO THE FUND'S ADVISORY AGREEMENT.
<TABLE>
<CAPTION>
VOTES VOTES SHARES SHARES RECORD
VOTES FOR AGAINST ABSTAINED PRESENT NOT VOTING DATE SHARES
----------- ------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
iShares MSCI Australia Index Fund 4,811,244 5,776 6,435 4,823,455 976,575 5,800,030
iShares MSCI Austria Index Fund 696,012 1,181 3,800 700,993 499,037 1,200,030
iShares MSCI Belgium Index Fund 441,123 818 300 422,241 397,789 840,030
iShares MSCI Canada Index Fund 565,324 1,780 900 568,004 232,026 800,030
iShares MSCI France Index Fund 2,114,995 4,680 5,497 2,125,172 1,275,828 3,401,000
iShares MSCI Germany Index Fund 3,773,915 23,100 10,353 3,807,368 2,793,632 6,601,000
iShares MSCI Hong Kong Index Fund 4,612,403 13,116 20,083 4,645,602 1,880,398 6,526,000
iShares MSCI Italy Index Fund 1,587,643 5,215 1,247 1,594,105 805,925 2,400,030
iShares MSCI Japan Index Fund 34,763,978 177,978 106,598 35,048,554 23,752,446 58,801,000
iShares MSCI Malaysia Index Fund 10,591,004 42,759 112,192 10,745,955 6,279,075 17,025,030
iShares MSCI Mexico Index Fund 1,150,080 4,755 9,362 1,164,197 335,833 1,500,030
iShares MSCI Netherlands Index Fund 663,326 1,633 905 665,864 335,136 1,001,000
iShares MSCI Singapore Index Fund 10,241,090 72,707 34,916 10,348,713 3,351,317 13,700,030
iShares MSCI Spain Index Fund 965,921 1,059 2,364 969,344 530,686 1,500,030
iShares MSCI Sweden Index Fund 440,630 3,175 1,575 445,380 379,650 825,030
iShares MSCI Switzerland Index Fund 1,897,894 3,130 3,190 1,904,214 721,786 2,626,000
iShares MSCI United Kingdom
Index Fund 3,245,606 2,530 11,465 3,259,601 2,941,399 6,201,000
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL II: TO APPROVE A CHANGE OF THE iSHARES MSCI CANADA INDEX FUND FROM DIVERSIFIED TO NON-DIVERSIFIED.
VOTES VOTES BROKER SHARES SHARES RECORD
VOTES FOR AGAINST ABSTAINED NON-VOTES PRESENT NOT VOTING DATE SHARES
--------- ------- --------- --------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
iShares MSCI Canada Index Fund 307,134 10,145 4,396 128,342 450,017 350,013 800,030
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL III: TO APPROVE A CHANGE OF THE iSHARES MSCI JAPAN INDEX FUND FROM DIVERSIFIED TO NON-DIVERSIFIED.
VOTES VOTES BROKER SHARES SHARES RECORD
VOTES FOR AGAINST ABSTAINED NON-VOTES PRESENT NOT VOTING DATE SHARES
---------- ------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
iShares MSCI Japan Index Fund 10,986,790 343,939 536,528 24,560,162 36,427,419 22,373,581 58,801,000
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL IV: TO APPROVE A CHANGE OF THE iSHARES MSCI UNITED KINGDOM INDEX FUND FROM DIVERSIFIED TO NON-DIVERSIFIED.
VOTES VOTES BROKER SHARES SHARES RECORD
VOTES FOR AGAINST ABSTAINED NON-VOTES PRESENT NOT VOTING DATE SHARES
---------- ------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
iShares MSCI United Kingdom
Index Fund 1,589,268 37,491 225,659 791,093 2,643,511 3,557,489 6,201,000
</TABLE>
98
<PAGE>
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<PAGE>
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<PAGE>
|
I|Shares
|------------------------------
BARCLAYS GLOBAL INVESTORS (LOGO)
[GRAPHIC OMITTED]
45 Fremont Street WWW.iSHARES.COM 1-800-iSHARES
San Francisco, CA 1-800-474-2737
94105
iShares are distributed by SEI Investments
Distribution Co. Barclays Global Fund Advisors
serves as an adviser to iShares and is a subsidiary
of Barclays Global Investors, N.A., neither of which
is affiliated with SEI.
PFPC serves as administrator and transfer agent
for the iShares MSCI Series. The Chase Manhattan
Bank acts as custodian and securities lending
agent.
iShares are not sponsored, endorsed, sold
or promoted by MSCI. Nor does this company
make any representation regarding the advisability
of investing in iShares.
(COPYRIGHT) 2000 Barclays Global Investors. All rights
reserved. iShares is a servicemark of Barclays
Global Investors, N.A. All other trademarks,
servicemarks or registered trademarks are the
property of their respective owners.
BGI-F-002-02000 (9/00)
NOT FDIC INSURED
HAVE NO BANK GUARANTEE
MAY LOSE VALUE
