EXHIBIT INDEX
EXHIBIT A:
Attachment to item 77B:
Accountants report on internal control
EXHIBIT B:
Attachment to item 77C:
Submission of matters to a vote of Security holders.
EXHIBIT C:
Attachment to item 77D:
Policies with respect to security investments.
EXHIBIT D:
Attachment to item 77Q1:
Amendment to Charter
EXHIBIT E:
Attachment to item 77Q1:
Advisory Agreement
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EXHIBIT A:
Report of Independent Auditors
To the Shareholders and
Board of Directors of
iShares, Inc.
In planning and performing our audit of the financial statements 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")
for the year ended August 31, 2000, we considered its internal
control, including control activities for safeguarding securities, to
determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the
requirements of Form N-SAR, and not to provide assurance on internal
control.
The management of iShares, Inc. is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of control. Generally, internal
controls that are relevant to an audit pertain to the entity's
objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted
accounting principles. Those internal controls include the
safeguarding of assets against unauthorized acquisition, use, or
disposition.
Because of inherent limitations in internal control, misstatements
due to errors or fraud may occur and not be detected. Also,
projections of any evaluation of internal control to future periods
are subject to the risk that internal control may become inadequate
because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Our consideration of internal control would not necessarily disclose
all matters in internal control that might be material weaknesses
under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the
design or operation of one or more of the specific internal control
components does not reduce to a relatively low level the risk that
errors or fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters
involving internal control, including control activities for
safeguarding securities, and its operation that we consider to be
material weaknesses as defined above at August 31, 2000.
This report is intended solely for the information and use of the
Board of Directors and management of iShares, Inc., and the
Securities and Exchange Commission and is not intended to be and
should not be used by anyone other than these specified parties.
/S/ERNST & YOUNG LLP
October 13, 2000
EXHIBIT B:
SUB-ITEM 77C: Submission of matters to a vote of security holders.
A special meeting of shareholders was held on Friday, May 5, 2000
and reconvened on May, 8, 2000 for Proposal 1 with respect to the
Australia Fund, and Proposals 2, 3 and 4 and June 27, 2000 for
Proposals 2, 3 and 4, to consider the following proposals:
(1) To approve amendments to the Fund's Advisory Agreement,
dated as of March 15, 1996 (as amended October 19, 1999)
between the Fund and Barclays Global Fund Advisors to revise
the fee arrangements and to make certain other changes (all
Fund shareholders). Shareholders of record at the close of
business on March 6, 2000 have the right to vote at this
special meeting. This proposal was approved pursuant to the
following votes:
XXXXXXX MSCI RECORD DATE SHARES VOTES VOTES SHARES
INDEX FUND SHARES PRESENT FOR AGAINST ABSTAINED
Australia 5,800,030 4,823,455 4,811,244 5,776 6,435
Austria 1,200,030 700,993 696,012 1,181 3,800
Belgium 840,030 442,241 441,123 818 300
Canada 800,030 568,004 564,324 1,780 900
France 3,401,000 2,125,172 2,174,995 4,680 5,497
Germany 6,601,000 3,807,368 3,773,915 23,100 10,353
Hong Kong 6,526,000 4,645,602 4,612,403 13,116 20,083
Italy 2,400,030 1,594,105 1,587,643 5,215 1,247
Japan 58,801,000 35,048,554 34,763,978 177,978 106,598
Malaysia(Free) 17,025,030 10,745,955 10,591,004 42,759 112,192
Mexico (Free) 1,500,030 1,164,197 1,150,080 4,755 9,362
Netherlands 1,001,000 665,864 1,001,000 665,864 663,326
Singapore(Free)13,700,030 10,348,713 10,241,090 72,707 34,916
Spain 1,500,030 969,344 965,921 1,059 2,364
Sweden 825,030 445,380 440,630 3,175 1,575
Switzerland 2,626,000 1,904,214 1,897,894 3,130 3,190
United Kingdom 6,201,000 3,259,601 3,245,606 2,530 11,465
(2) To approve a change of the Canada Fund's subclassification
from diversified to non-diversified (holders of shares of the
Canada Fund only). This proposal was approved pursuant to the
following votes:
RECORD DATE SHARES VOTES VOTES BROKER
SHARES PRESENT FOR AGAINST/ NON-VOTES
ABSTAINED
iShares MSCI Canada Index Fund
800,030 450,017 307,134 14,541 128,342
(3) To approve a change of the Japan Fund's subclassification
from diversified to non-diversified (holders of the Japan Fund
only);
RECORD DATE SHARES VOTES VOTES BROKER
SHARES PRESENT FOR AGAINST/ NON-VOTES
ABSTAINED
iShares MSCI Japan Index Fund
58,801,000 36,301,634 10,802,850 853,977 24,644,807
(4) To approve a change of the United Kingdom Fund's
subclassification from diversified to non-diversified (holders
of the United Kingdom Fund only);
RECORD DATE SHARES VOTES VOTES BROKER
SHARES PRESENT FOR AGAINST/ NON-VOTES
ABSTAINED
iShares MSCI United Kingdom Index Fund
6,201,000 3,332,421 1,560,528 263,150 1,508,743
EXHIBIT C:
SUB-ITEM 77D: Policies with respect to security investments.
The Board of Directors recommended and shareholders approved a
change in the subclassification of the iShares MSCI Canada Index
Fund from diversified investment companies to non-diversified
investment companies. Shareholders of record as of March 6, 2000
of each of these iShares MSCI Index Funds voted on such changes
at a special meeting of shareholders held on May 5, 2000 and
reconvened on May 8, 2000 and June 27, 2000.
EXHIBIT D:
SUB-ITEM 77Q1
(1) Articles of Amendment dated May 15, 2000 to the Amended and
Restated Articles of Incorporation of iShares, Inc.
ARTICLES OF AMENDMENT
TO
CHARTER
OF
WEBS INDEX FUND, INC.
THIS IS TO CERTIFY that WEBS INDEX FUND, INC., a
Maryland corporation, having its principal office in
Baltimore, Maryland (the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Charter of the Corporation is hereby
amended by striking out Article SECOND of the Articles of
Incorporation and inserting in lieu thereof a new Article
SECOND as follows:
SECOND: Name. The name of the corporation (which
is hereinafter called the "Corporation"): is
iSHARES, INC.
SECOND: The designation of each of the Corporation's
series of common stock as a "WEBS Index Series" is hereby
amended to be an "iShares MSCI [name] Index Fund" and the
name of the "Korea WEBS Index Series" is further amended to
become the "iShares MSCI South Korea Index Fund", with the
effect that the name of each such series changes as follows:
From:
TO:
Australia WEBS Index Series
ISHARES MSCI AUSTRALIA INDEX FUND
Austria WEBS Index Series
ISHARES MSCI AUSTRIA INDEX FUND
Belgium WEBS Index Series
ISHARES MSCI BELGIUM INDEX FUND
Brazil (Free) WEBS Index Series
ISHARES MSCI BRAZIL (FREE) INDEX FUND
Canada WEBS Index Series
ISHARES MSCI CANADA INDEX FUND
EMU WEBS Index Series
ISHARES MSCI EMU INDEX FUND
France WEBS Index Series
ISHARES MSCI FRANCE INDEX FUND
Germany WEBS Index Series
ISHARES MSCI GERMANY INDEX FUND
Greece WEBS Index Series
ISHARES MSCI GREECE INDEX FUND
Hong Kong WEBS Index Series
ISHARES MSCI HONG KONG INDEX FUND
Indonesia (Free) WEBS Index Series
ISHARES MSCI INDONESIA (FREE) INDEX FUND
Italy WEBS Index Series
ISHARES MSCI ITALY INDEX FUND
Japan WEBS Index Series
ISHARES MSCI JAPAN INDEX FUND
Korea WEBS Index Series
ISHARES MSCI SOUTH KOREA INDEX FUND
Malaysia WEBS Index Series
ISHARES MSCI MALAYSIA INDEX FUND
Mexico (Free) WEBS Index Series
ISHARES MSCI MEXICO (FREE) INDEX FUND
Netherlands WEBS Index Series
ISHARES MSCI NETHERLANDS INDEX FUND
Portugal WEBS Index Series
ISHARES MSCI PORTUGAL INDEX FUND
Singapore WEBS Index Series
ISHARES MSCI SINGAPORE INDEX FUND
South Africa WEBS Index Series
ISHARES MSCI SOUTH AFRICA INDEX FUND
Spain WEBS Index Series
ISHARES MSCI SPAIN INDEX FUND
Sweden WEBS Index Series
ISHARES MSCI SWEDEN INDEX FUND
Switzerland WEBS Index Series
ISHARES MSCI SWITZERLAND INDEX FUND
Taiwan WEBS Index Series
ISHARES MSCI TAIWAN INDEX FUND
Thailand (Free) WEBS Index Series
ISHARES MSCI THAILAND (FREE) INDEX FUND
Turkey WEBS Index Series
ISHARES MSCI TURKEY INDEX FUND
United Kingdom WEBS Index Series
ISHARES MSCI UNITED KINGDOM INDEX FUND
USA WEBS Index Series
ISHARES MSCI USA INDEX FUND
THIRD: The foregoing amendment does not change the
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications,
or terms or conditions of redemption of the capital stock of
the Corporation.
FOURTH: A majority of the entire Board of Directors of
the Corporation approved the foregoing amendments to the
Charter of the Corporation and duly adopted a resolution in
which were set forth the foregoing amendments to the Charter
of the Corporation, declaring that said amendments of the
Charter as proposed were advisable.
FIFTH: The foregoing amendments to the Charter of the
Corporation are limited to changes expressly permitted by
2-605(a)(1) and (a)(2) of the General Corporation Law of
Maryland to be made without action by stockholders and the
Corporation is registered as an open-end company under the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, WEBS Index Fund, Inc. has caused
these presents to be signed in its name and on its behalf by
its President and witnessed by its Secretary on May 15,
2000.
WITNESS:
/s/ Xxxx X. Xxxxxxx
Xxxx X Xxxxxxx
Secretary
WEBS INDEX FUND, INC.
By: /s/Xxxxxx Most
Xxxxxx Most
President
THE UNDERSIGNED, President of WEBS Index Fund, Inc.,
who executed on behalf of the Corporation the foregoing
amendments to the Charter of which this Certificate is made
a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing amendments to the Charter to
be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with
respect to the authorization and approval thereof are true
in all material respects under the penalties of perjury.
/s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
EXHIBIT E:
SUB-ITEM 77Q1
(2) Advisory Agreement dated May 8, 2000 between Barclays Global
Fund Advisors and iShares, Inc. (formerly WEBS Index Fund,
Inc.
ADVISORY AGREEMENT
AGREEMENT made as of the 8th day of May, 2000 between Barclays
Global Fund Advisors, a corporation organized under the laws of the
State of California (the "Adviser"), and WEBS Index Fund, Inc.,
a Maryland corporation (the "Company").
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Company engages in the business of an open-end
management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Company is authorized to issue shares of
beneficial interest in separate series with each such series
representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Company intends to offer shares representing
interests in each of the separate portfolios identified on Schedule
A hereto (each, a "Series"); and
WHEREAS, the Company desires to appoint the Adviser to serve
as the investment adviser with respect to each Series; and
WHEREAS, the Company may, from time to time, offer shares
representing interests in one or more additional portfolios (each,
an "Additional Series"); and
WHEREAS, the Company may desire to appoint the Adviser as the
investment adviser with respect to one or more Additional Series;
NOW THEREFORE, the parties hereto hereby agree as follows:
1. APPOINTMENT OF ADVISER
a. Series. The Company hereby appoints the Adviser to act
as investment adviser for the Series listed on Schedule
A for the period and on the terms herein set forth. The
Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein
provided.
b. Additional Series. In the event the Company desires to
retain the Adviser to render investment advisory services
hereunder with respect to any Additional Series, it shall
so notify the Adviser in writing, indicating the advisory
fee to be payable with respect to the Additional Series.
If the Adviser is willing to render such services for
such fee and on the terms provided for herein, it shall
so notify the Company in writing, whereupon such
Additional Series shall become a Series hereunder.
2. DUTIES OF THE ADVISER
The Adviser shall be responsible for the general management of
the Company's affairs. The Adviser, at its own expense
(subject to the overall supervision and review of the Board of
Directors of the Company), shall (i) furnish continuously an
investment program for each Series in compliance with that
Series' investment objective and policies, as set forth in the
then-current prospectus and statement of additional
information for such Series contained in the Company's
Registration Statement on Form N-lA, as such prospectus and
statement of additional information is amended or supplemented
from time to time, (ii) determine what investments shall be
purchased, held, sold or exchanged for each Series and what
portion, if any, of the assets of each Series shall be held
uninvested, (iii) make changes on behalf of the Company in the
investments for each Series and (iv) provide the Company with
records concerning the Adviser's activities that the Company
is required to maintain and render reports to the Company's
officers and Board of Directors concerning the Adviser's
discharge of the foregoing responsibilities. The Adviser
shall furnish to the Company all office facilities, equipment,
services and executive and administrative personnel necessary
for managing the investment program of the Company for each
Series.
3. ALLOCATION OF EXPENSES
Subject to Section 4 below, the Company shall be responsible
for and pay all expenses for Company operations and
activities.
4. ADVISORY FEE
For the services to be provided by the Adviser hereunder with
respect to each Series, the Company shall pay to the Adviser
an annual gross investment advisory fee equal to the amount
set forth on Schedule A attached hereto; provided, however,
that the fee paid to the Adviser with respect to each Series
shall be reduced by the aggregate of such Series' fees and
expenses, other than (i) expenses of the Series incurred in
connection with the execution of portfolio securities
transactions on behalf of such Series, (ii) expenses incurred
in connection with any distribution plan adopted by the
Company in compliance with Rule 12b-1 under the 1940 Act,
(iii) litigation expenses, (iv) taxes (including, but not
limited to, income, excise, transfer and withholding taxes),
(v) any cost or expense that a majority of the Directors of
the Company who are not "interested persons" (as defined in
the 1940 Act) deems to be an extraordinary expense and (vi)
the advisory fee payable to the Adviser hereunder; and
provided, further, that the Adviser shall reimburse the
Company to the extent that the expenses of any Series (other
than the expenses set forth in the foregoing proviso) exceed
the amount set forth in Schedule A with respect to such
Series.
Schedule A shall be amended from time to time to reflect the
addition and/or termination of any Series as a Series
hereunder and to reflect any change in the advisory fees
payable with respect to any Series duly approved in accordance
with Section 7(b) hereunder. All fees payable hereunder shall
be accrued daily and paid as soon as practicable after the
last day of each calendar quarter.
In the case of commencement or termination of this Agreement
with respect to any Series during any calendar quarter, the
fee with respect to such Series for that quarter shall be
reduced proportionately based upon the number of calendar days
during which it is in effect, and the fee shall be computed
upon the average daily net assets of such Series for the days
during which it is in effect.
5. PORTFOLIO TRANSACTIONS
In connection with the management of the investment and
reinvestment of the assets of the Company, the Adviser, acting
by its own officers, directors or employees, is authorized to
select the brokers or dealers that will execute purchase and
sale transactions for the Company. In executing portfolio
transactions and selecting brokers or dealers, if any, the
Adviser will use its best efforts to seek on behalf of a
Series the best overall terms available. In assessing the best
overall terms available for any transaction, the Adviser shall
consider all factors it deems relevant, including the breadth
of the market in and the price of the security, the financial
condition and execution capability of the broker or dealer,
and the reasonableness of the commission, if any (for the
specific transaction and on a continuing basis). In
evaluating the best overall terms available, and in selecting
the broker or dealer, if any, to execute a particular
transaction, the Adviser may also consider the brokerage and
research services (as those terms are defined in Section 28(e)
of the 1934 Act) provided to any Series of the Company. The
Adviser may pay to a broker or dealer who provides such
brokerage and research services a commission for executing a
portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Adviser
determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research
services provided. The Company acknowledges that any such
research may be useful to the Adviser in connection with other
accounts managed by it.
6. LIABILITY OF ADVISER
Neither the Adviser nor its officers, directors, employees,
agents or controlling persons or assigns shall be liable for
any error of judgment or mistake of law or for any loss
suffered by the Company or its shareholders in connection with
the matters to which this Agreement relates; provided,
however, that no provision of this Agreement shall be deemed
to protect the Adviser against any liability to the Company or
its shareholders to which it might otherwise be subject by
reason of any willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless
disregard of its obligations and duties under this Agreement.
7. DURATION AND TERMINATION OF THIS AGREEMENT
a. Duration. This Agreement shall become effective with
respect to each Series on the date hereof and, with
respect to any Additional Series, on the date specified
in the written notice received by the Company from the
Adviser in accordance with paragraph 1(b) hereof that the
Adviser is willing to serve as Adviser with respect to
such Series. Unless terminated as herein provided, this
Agreement shall remain in full force and effect for one
year from the date hereof with respect to each Series
and, with respect to each Additional Series, for two
years from the date on which such Series becomes a Series
hereunder. Subsequent to such initial periods of
effectiveness, this Agreement shall continue in full
force and effect for periods of one year thereafter with
respect to each Series so long as such continuance with
respect to such Series is approved at least annually (i)
by either the Directors of the Company or by vote of a
majority of the outstanding voting securities (as defined
in the 1940 Act) of such Series, and (ii), in either
event, by the vote of a majority of the Directors of the
Company who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for
the purpose of voting on such approval.
b. Amendment. Any amendment to this Agreement shall become
effective with respect to a Series upon approval of the
Adviser and of a majority of Directors who are not
parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting such
approval and a majority of the outstanding voting
securities (as defined in the 1940 Act) of that Series.
c. Termination. This Agreement may be terminated with
respect to any Series at any time, without payment of any
penalty, by vote of the Directors or by vote of a
majority of the outstanding voting securities (as defined
in the 1940 Act) of that Series, or by the Adviser, in
each case on sixty (60) days' prior written notice to the
other party; provided, that a shorter notice period shall
be permitted for a Series in the event its shares are no
longer listed on a national securities exchange.
d. Automatic Termination. This Agreement shall
automatically and immediately terminate in the event of
its "assignment" (as defined in the 1940 Act).
e. Approval, Amendment or Termination by a Series. Any
approval, amendment or termination of this Agreement by
the holders of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of any Series
shall be effective to continue, amend or terminate this
Agreement with respect to any such Series notwithstanding
(i) that such action has not been approved by the holders
of a majority of the outstanding voting securities of any
other Series affected thereby, and (ii) that such action
has not been approved by the vote of a majority of the
outstanding voting securities of the Company, unless such
action shall be required by any applicable law or
otherwise.
8. SERVICES NOT EXCLUSIVE
The services of the Adviser to the Company hereunder are not
to be deemed exclusive, and the Adviser shall be free to
render similar services to others so long as its services
hereunder are not impaired thereby.
9. MISCELLANEOUS
a. "iShares" Name. The Company shall, at the request of
the Adviser, stop all use of the "iShares" name in the
event that the Adviser or its affiliates is no longer the
Company's investment adviser.
b. Notice. Any notice under this Agreement shall be in
writing, addressed and delivered or mailed, postage
prepaid, to the other party at such address as such other
party may designate in writing for the receipt of such
notices.
c. Severability. If any provision of this Agreement shall
be held or made invalid by a court decision, statute,
rule or otherwise, the remainder shall not be thereby
affected.
d. Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of New York.
e. Execution by Counterpart. This Agreement may be executed
in any number of counterparts, all of which together
shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
WEBS INDEX FUND, INC.
By:
Name:
Title:
BARCLAYS GLOBAL FUND ADVISORS
By:
Name:
Title:
SCHEDULE A
ADVISORY FEE* FOR THE CATEGORY I SERIES:
0.59% per annum of the aggregate net assets of the Category I
Series less than or equal to $7.0 billion
plus 0.54% per annum of the aggregate net assets of the Category
I Series between $7.0 billion and $11.0 billion
plus 0.49% per annum of the aggregate net assets of the Category
I Series in excess of $11.0 billion
CATEGORY I SERIES:
Australia WEBS Index Series
Austria WEBS Index Series
Belgium WEBS Index Series
Canada WEBS Index Series
EMU WEBS Index Series
France WEBS Index Series
Germany WEBS Index Series
Hong Kong WEBS Index Series
Italy WEBS Index Series
Japan WEBS Index Series
Malaysia (Free) WEBS Index Series
Mexico (Free) WEBS Index Series
Netherlands WEBS Index Series
Singapore (Free) WEBS Index Series
Spain WEBS Index Series
Sweden WEBS Index Series
Switzerland WEBS Index Series
United Kingdom WEBS Index Series
USA WEBS Index Series
ADVISORY FEE* FOR CATEGORY II SERIES:
0.74% per annum of the aggregate net assets of the Category II
Series less than or equal to $2 billion
plus 0.69% per annum of the aggregate net assets of the Category
II Series between $2 billion and $4 billion
plus 0.64% per annum of the aggregate net assets of the Category
II Series greater than $6 billion
CATEGORY II SERIES:
Brazil (Free) WEBS Index Series
Greece WEBS Index Series
Indonesia (Free) WEBS Index Series
Portugal WEBS Index Series
South Africa WEBS Index Series
South Korea WEBS Index Series
Thailand (Free) WEBS Index Series
Taiwan WEBS Index Series
Turkey WEBS Index Series
* Pursuant to Section 4 of this Advisory Agreement, the fee rates
for a Series set forth in this Schedule A will
be reduced, possibly to zero, by the expenses of the Series.
