Schedule of Investments
(Unaudited) (Continued)
iSHARES
®
GLOBAL HIGH YIELD CORPORATE BOND FUND
January 31, 2013
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Security
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Shares
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Value
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SHORT-TERM INVESTMENTS
—
8.90%
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MONEY MARKET FUNDS
—
8.90%
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BlackRock Cash Funds: Institutional,
SL Agency Shares
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0.22%
f,g,h
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2,993,381
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2,993,381
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BlackRock Cash Funds: Prime,
SL Agency Shares
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0.20%
f,g,h
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270,807
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270,807
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BlackRock Cash Funds: Treasury,
SL Agency Shares
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0.03%
f,g
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42,993
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42,993
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3,307,181
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TOTAL SHORT-TERM INVESTMENTS
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(Cost: $3,307,181)
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3,307,181
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TOTAL INVESTMENTS
IN SECURITIES
—
106.15%
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(Cost: $37,759,580)
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39,450,833
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Other Assets, Less Liabilities
—
(6.15)%
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(2,284,538
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)
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NET ASSETS
—
100.00%
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$
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37,166,295
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CAD
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— Canadian Dollar
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EUR
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— Euro
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GBP
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— British Pound
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USD
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— United States Dollar
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a
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This security may be resold to qualified institutional buyers under Rule 144A of the Securities Act of 1933.
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b
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This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.
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c
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All or a portion of this security represents a security on loan. See Note 3.
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d
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Variable rate security. Rate shown is as of report date.
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e
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Step coupon security. Coupon rate will either increase (step-up bond) or decrease (step-down bond) at regular intervals until maturity. Interest rate shown
reflects the rate currently in effect.
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f
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Affiliated issuer. See Note 2.
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g
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The rate quoted is the annualized seven-day yield of the fund at period end.
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h
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All or a portion of this security represents an investment of securities lending collateral. See Note 3.
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See accompanying notes to schedules of investments.
Notes to Schedules of Investments
(Unaudited)
iSHARES
®
, INC.
iShares, Inc. (the “Company”) is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated
Articles of Incorporation.
These schedules of investments relate only
to the following funds (each, a “Fund,” and collectively, the “Funds”):
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iShares Bond Fund
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Emerging Markets Corporate
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Emerging Markets High Yield
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Emerging Markets Local Currency
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Global ex USD High Yield Corporate
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Global High Yield Corporate
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1.
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SIGNIFICANT ACCOUNTING POLICIES
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SECURITY VALUATION
Each Fund’s investments are valued at fair value each day that the Fund’s listing exchange is open. U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a
liability in an orderly transaction between market participants at the measurement date. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) provides oversight of the valuation of investments for the
Funds. The investments of each Fund are valued pursuant to policies and procedures developed by the Global Valuation Committee and approved by the Board of Directors of the Company (the “Board”).
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•
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Fixed income investments are valued at the last available bid price received from independent pricing services. In determining the value of a fixed income
investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between
investments and calculated yield measures.
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•
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Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV).
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In the event that application of these methods of valuation results in a price for an investment which is deemed
not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors deemed relevant by the Global Valuation Committee, in accordance with policies approved by
the Board. These factors include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment;
(iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves,
volatilities, prepayment speeds, loss severities, credit risks and/or other default rates. Valuations based on such factors are reported to the Board on a quarterly basis.
The Global Valuation Committee employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular
due diligence of the Company’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale
prices and large movements in market values, and reviews of market related activity.
Fair value pricing
could result in a difference between the prices used to calculate a Fund’s net asset value and the prices used by the Fund’s underlying index, which in turn could result in a difference between the Fund’s performance and the
performance of the Fund’s underlying index.
Various inputs are used in determining the fair value
of financial instruments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of
three broad levels for financial reporting purposes. The level of a value determined for a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
Notes to Schedules of Investments
(Unaudited) (Continued)
iSHARES
®
, INC.
measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not
necessarily correspond to the Funds’ perceived risk of that instrument. The three levels of the fair value hierarchy are as follows:
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•
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Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities;
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•
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Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including
quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or
liability (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; and
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•
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Level 3 — Unobservable inputs for the asset or liability, including the Funds’ assumptions used in determining the fair value of investments.
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Changes in valuation techniques may result in transfers in or out of an assigned
level within the disclosure hierarchy. In accordance with the Company’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period.
The following table summarizes the value of each of the Funds’ investments according to the fair value
hierarchy as of January 31, 2013. The breakdown of each Fund’s investments into major categories is disclosed in its respective schedule of investments.
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iShares Bond Fund and
Investment Type
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Investments
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Level 1
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Level 2
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Level 3
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Total
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Emerging Markets Corporate
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Assets:
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Corporate Bonds & Notes
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$
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—
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$
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12,534,311
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$
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—
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$
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12,534,311
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Foreign Agency Obligations
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—
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13,343,772
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—
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13,343,772
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Short-Term Investments
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188,829
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—
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—
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188,829
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$
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188,829
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$
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25,878,083
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$
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—
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$
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26,066,912
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Emerging Markets High Yield
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Assets:
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Corporate Bonds & Notes
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$
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—
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$
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55,725,232
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$
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—
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$
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55,725,232
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Foreign Agency Obligations
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—
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23,501,252
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—
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23,501,252
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Foreign Government Obligations
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—
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141,015,601
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—
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141,015,601
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Short-Term Investments
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1,258,766
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—
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—
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1,258,766
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$
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1,258,766
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$
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220,242,085
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$
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—
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$
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221,500,851
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Emerging Markets Local Currency
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Assets:
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Foreign Agency Obligations
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$
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—
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$
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2,827,646
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$
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—
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$
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2,827,646
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Foreign Government Obligations
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—
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403,645,394
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—
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403,645,394
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Short-Term Investments
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251,388
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—
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—
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251,388
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$
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251,388
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$
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406,473,040
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$
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—
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$
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406,724,428
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Global ex USD High Yield Corporate
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Assets:
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Corporate Bonds & Notes
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$
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—
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$
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35,565,946
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$
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—
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$
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35,565,946
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Foreign Agency Obligations
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—
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639,227
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—
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639,227
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Short-Term Investments
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4,005
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—
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—
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4,005
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$
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4,005
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$
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36,205,173
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$
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—
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$
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36,209,178
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Global High Yield Corporate
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Assets:
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Corporate Bonds & Notes
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$
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—
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$
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35,928,781
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$
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—
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$
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35,928,781
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Foreign Agency Obligations
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—
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|
214,871
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—
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214,871
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Short-Term Investments
|
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|
3,307,181
|
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—
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—
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3,307,181
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$
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3,307,181
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$
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36,143,652
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$
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—
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$
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39,450,833
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Notes to Schedules of Investments
(Unaudited) (Continued)
iSHARES
®
, INC.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. Foreign currencies, as well as investment
securities and other assets and liabilities denominated in foreign currencies, are translated into U.S. dollars using exchange rates deemed appropriate by the investment adviser. Purchases and sales of securities, income receipts and expense
payments are translated into U.S. dollars on the respective dates of such transactions.
FEDERAL INCOME
TAXES
As of January 31, 2013, gross unrealized appreciation and gross unrealized
depreciation based on cost for federal income tax purposes were as follows:
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iShares Bond Fund
|
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Tax Cost
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Gross
Unrealized
Appreciation
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Gross
Unrealized
Depreciation
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Net Unrealized
Appreciation
(Depreciation)
|
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|
Emerging Markets Corporate
|
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$
|
25,621,816
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|
|
$
|
601,190
|
|
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$
|
(156,094
|
)
|
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$
|
445,096
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|
Emerging Markets High Yield
|
|
|
217,940,841
|
|
|
|
5,487,790
|
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|
|
(1,927,780
|
)
|
|
|
3,560,010
|
|
|
Emerging Markets Local Currency
|
|
|
397,307,878
|
|
|
|
22,142,130
|
|
|
|
(12,725,580
|
)
|
|
|
9,416,550
|
|
|
Global ex USD High Yield Corporate
|
|
|
34,095,945
|
|
|
|
2,209,102
|
|
|
|
(95,869
|
)
|
|
|
2,113,233
|
|
|
Global High Yield Corporate
|
|
|
37,759,580
|
|
|
|
1,827,587
|
|
|
|
(136,334
|
)
|
|
|
1,691,253
|
|
RECENT ACCOUNTING STANDARD
In December 2011, the Financial Accounting Standards Board issued guidance to enhance current disclosure
requirements on offsetting of certain assets and liabilities and enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards (IFRS). The new disclosures are required for
investments and derivative financial instruments subject to master netting agreements or similar agreements and require an entity to disclose both gross and net information about such investments and transactions eligible for offset in the statement
of assets and liabilities. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar agreements. The guidance is effective for financial statements for fiscal years
beginning after January 1, 2013, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statements and disclosures.
|
2.
|
TRANSACTIONS WITH AFFILIATES
|
Each Fund may invest its positive cash balances in certain money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment
adviser, or an affiliate. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”).
|
3.
|
LOANS OF PORTFOLIO SECURITIES
|
Each Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial
institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Fund
is required to have a value of at least 102% of the current value of the loaned securities plus the interest accrued on such securities, if any, for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The
collateral is maintained thereafter, at a value equal to at least 100% of the current value of the securities on loan plus accrued interest, if any. The market value of the loaned securities is determined at the close of each business day of the
Funds and any additional required collateral is delivered to the Funds on the next business day. The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities
when due. To mitigate these risks, the Funds benefit from a borrower default indemnity provided by BlackRock. BlackRock’s indemnity allows for full replacement of securities lent. Any securities lending cash collateral may be reinvested in
certain short-term instruments either directly on behalf of a fund or through one or more joint accounts or money market funds, including those managed by
Notes to Schedules of Investments
(Unaudited) (Continued)
iSHARES
®
, INC.
BFA or its affiliates. Each Fund could suffer a loss if the value of an investment purchased with cash collateral falls below the value of the cash collateral received.
As of January 31, 2013, any securities on loan were collateralized by cash. The cash collateral received was
invested in money market funds managed by BFA.
|
Item 2.
|
Controls and Procedures.
|
|
|
(a)
|
The President (the Registrant’s Principal Executive Officer) and Chief Financial Officer (the Registrant’s Principal Financial Officer) have concluded that,
based on their evaluation as of a date within 90 days of the filing date of this report, the disclosure controls and procedures of the Registrant (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are reasonably designed to
achieve the purposes described in Section 4(a) of the certifications filed with this Form N-Q.
|
|
|
|
(b)
|
There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that
occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
|
|
|
|
(a)
|
Certifications of the President (the Registrant’s Principal Executive Officer) and Chief Financial Officer (the Registrant’s Principal Financial Officer) as
required by Rule 30a-2(a) under the Investment Company Act of 1940 are filed with this Form N-Q as exhibits.
|
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
iShares, Inc.
|
|
|
|
|
By:
|
|
/s/ Michael Latham
|
|
|
|
Michael Latham, President
(Principal Executive Officer)
|
|
|
|
|
Date:
|
|
March 27, 2013
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of
1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
|
|
|
|
|
By:
|
|
/s/ Michael Latham
|
|
|
|
Michael Latham, President
(Principal Executive Officer)
|
|
|
|
|
Date:
|
|
March 27, 2013
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By:
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/s/ Jack Gee
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Jack Gee, Treasurer and Chief Financial Officer
(Principal Financial Officer)
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Date:
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March 27, 2013
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