Vital Quartet

The fund's top four holdings -- three in the financial sector and one in telecommunications services -- account for 47% of the portfolio.

Let's take a closer look at these companies to get a feel for the style of the portfolio and perhaps gauge its prospects. (1 Singapore Dollar (SGD) = 0.63135 USD).

DBS Group Holdings, which operates the largest bank in Singapore, provides mortgage financing, nominee- and trustee-funds management and corporate advisory and brokerage services. It is also the primary dealer of the country's government securities.

Fourteen of the 21 investment firms that cover this stock rate it a buy, while seven have a hold rating on it.

DBS currently trades at about 20.4 SGD. The company had a lackluster 2005, with its share price falling to a low of around 14 SGD in July of that year. Since then, however, the stock has rebounded, rising to its current level, which is its 52-week high.

DBS trades at a P/E -- a valuation ratio of a company's current share price compared to its per-share earnings -- of 28.41, which is high and reflects anticipated growth for the coming year, considering that a P/E between 15 to 20 is the upper threshold for a mature company. The firm's market capitalization is 30.7 billion SGD ($19.4 billion). The stock's one-year total return, through Oct. 3 (which includes both capital gains and dividend income), of 34.11% will be hard to match given the run-up in share price over the last year. However, this stock is viewed to outperform the market going forward.

United Overseas Bank offers private banking and trust services, venture capital investment, merchant banking, brokerage services, insurance, fund management, derivatives and precious-metals trading and life insurance.

UOB currently trades around 17 SGD. The stock hit a low of about 13.50 SGD in October 2005, and, like DBS, has rebounded nicely to its current price, which is also its 52-week high. Of the 21 firms that cover this stock, 16 rate it buy and five hold. It trades at a very low P/E of 10.58, which suggests that its growth prospects may be limited.

Another way to view UOB may be as a good value investment. The company's market capitalization is 25.9 billion SGD ($16.4 billion), and the stock's one-year total return through Oct. 3 was 27.68%. It is difficult to see this growth being matched going forward, but the stock is expected to outperform the market in general.

Singapore Telecommunications sells and maintains telecommunications equipment and provides mobile-phone, paging, computer-network, internet and information technology services.

The stock is trading around 2.4 SGD and has been a relatively flat performer. Its current price is equal to its November 2005 level. In between, in March 2006, the shares hit their 52-week high of 2.786 SGD. The stock's one-year total return -- through Oct. 3 -- is a very poor 2.92%, and this performance may be the reason for the low P/E of 9.5. Not much in the way of growth expectations here, and not the kind of stock that investors want to see heavily weighted in their portfolios.

However, of the 19 investment firms that cover ST, 12 rate it a buy, five a hold and two a sell. The 12-month consensus price target is 2.93 SGD, which, if attained, would yield a 22% capital gain. So while this stock has inhibited the performance of the iShares Singapore fund over the past year, it still has a chance to contribute in a meaningful way in the future. The company's market capitalization is 38.11 billion SGD ($24 billion).

Oversea-Chinese Banking Corporation provides banking, finance, investment, corporate and brokerage services, in addition to asset management, venture capital and nominee and trustee services.

The stock trades at 6.9 SGD and has experienced a steady increase since June 2004, when it traded at 5 SGD. Its current price is very close to its consensus estimate of 7 SGD. Accordingly, 13 of the firms covering the stock rate it a hold, four a buy and three a sell.

The stock's one-year total return was 14.33%. It does not look as if this company is expected to add too much to overall fund performance. The stock trades at a P/E of 12.12, and the company's market capitalization is 21.57 billion SGD ($13.59 billion).

In summary, the fund's prospects depend in large part on these four stocks, with two -- DBS and UOB -- looking to lead.

The table below, which illustrates the growth of EWS and the MSCI Singapore Free Index, gives you an idea of the fund's performance over the long and short terms.

Impressive Growth (as of Oct. 3, 2006)
Time Period	Performance
	EWS	SIMSCI
1 Week	2.6%	3.35%
1 Month	3.6	4.08
3 Month	7.11	8.43
YTD	20.13	20.6
1 Year	24.89	26.43
3 year	20.34	21.66
5 Year	19.61	19.79
Historical
2005	14.26	14.37
2004	24.13	22.27
2003	43.35	37.6
2002	-14.25	-11.05
2001	-20.9	-23.42
2000	-26.39	-27.46
1999	52.65	99.54
1998	-5.1	N/A
1997	-44.49	N/A
Source: Bloomberg

The table below breaks down Singapore's $194 billion gross domestic product into sectors:

A Tale of a Nation
	2005 Annual	2006 Q2
	$ Millions	$ Millions
GDP	194,359	49,765
Goods-Producing Industries	62,207	16,066
Manufacturing	52,127	13,591
Construction	7,044	1,692
Utilities	2,844	732
Other Goods Industries	191	49
Service-Producing Industries	121,901	31,363
Wholesale Retail Trade	28,838	7,740
Hotels & Restaurants	3,637	997
Transportation & Communication	23,142	5,696
Financial Services	20,906	5,301
Business Services	24,584	6,693
Other Service Industries	20,791	4,934
Ownership of Dwellings	6,890	1,774
Source: The Singapore Department of Statistics

Service-producing industries account for approximately two thirds of Singapore's GDP, and this is exactly where iShares Singapore is focused. This, combined with the nation's excellent fundamental economic indicators, makes this fund an ideal candidate for inclusion in a diversified portfolio.