UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number  

   811-09102

iShares, Inc.

 

(Exact name of registrant as specified in charter)

c/o: State Street Bank and Trust Company    

100 Summer Street, 4th Floor, Boston, MA   

02110

(Address of principal executive offices)

  

(Zip code)

The Corporation Trust Incorporated

2405 York Road, Suite 201, Lutherville-Timonium, Maryland 21093

 

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:  

     (415) 670-2000                    

 

Date of fiscal year end:

  

  August 31, 2020                

Date of reporting period:

  

  August 31, 2020                


Item 1.

Reports to Stockholders.

Copies of the annual reports transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 are attached.


 

LOGO

  AUGUST 31, 2020

 

 

   

  

2020 Annual Report

 

 

iShares, Inc.

 

·  

iShares MSCI Austria ETF   |   EWO   |   NYSE Arca

 

·  

iShares MSCI Belgium ETF  |  EWK  |  NYSE Arca

 

·  

iShares MSCI France ETF  |  EWQ  |  NYSE Arca

 

·  

iShares MSCI Netherlands ETF  |  EWN  |  NYSE Arca

 

·  

iShares MSCI Sweden ETF  |  EWD  |  NYSE Arca

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020

 

     
       6-Month       12-Month  
   

U.S. large cap equities
(S&P 500® Index)

  19.63%   21.94%
   

U.S. small cap equities
(Russell 2000® Index)

  6.57   6.02
   

International equities
(MSCI Europe, Australasia, Far East Index)

  7.10   6.13
   

Emerging market equities
(MSCI Emerging Markets Index)

  11.23   14.49
   

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

  0.34   1.26
   

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

  4.67   8.93
   

U.S. investment grade bonds
(Bloomberg Barclays U.S. Aggregate Bond Index)

  2.98   6.47
   

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

  0.29   3.15
   

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

  3.04   4.65

 

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

 

 

2

  H I S  A G E  I S  N O T  A R T  O F  O U R  U N D  E P O R T


Table of Contents

 

     Page  

 

 

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     15  

Shareholder Expenses

     15  

Schedules of Investments

     16  

Financial Statements

  

Statements of Assets and Liabilities

     32  

Statements of Operations

     34  

Statements of Changes in Net Assets

     36  

Financial Highlights

     39  

Notes to Financial Statements

     44  

Report of Independent Registered Public Accounting Firm

     53  

Important Tax Information (Unaudited)

     54  

Board Review and Approval of Investment Advisory Contract

     55  

Supplemental Information

     59  

Director and Officer Information

     60  

General Information

     62  

Glossary of Terms Used in this Report

     63  

 

 

 


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

A R K E T  V E R V I E W

  4


Fund Summary as of August 31, 2020    iShares® MSCI Austria ETF

 

Investment Objective

The iShares MSCI Austria ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Austrian equities, as represented by the MSCI Austria IMI 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    (16.58 )%       2.43      1.44       (16.58 )%       12.77      15.34

Fund Market

    (16.80      2.35        1.47         (16.80      12.34        15.74  

Index

    (16.96      2.45        1.52               (16.96      12.88        16.26  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Austria Investable Market Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Austria IMI 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During

the Period

 
 

 (a) 

           


Beginning

Account Value
(03/01/20)

 

 
 

      

Ending
Account Value
(08/31/20
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized

Expense

Ratio

 

 

 

    $        1,000.00          $      873.50          $       2.45               $      1,000.00          $      1,022.50          $      2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

5  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Austria ETF

 

Portfolio Management Commentary

Stocks in Austria declined strongly for the reporting period amid a deep global recession driven by the coronavirus pandemic. Growth in Austria’s economy, which is highly dependent on exports, was already stagnant at the end of 2019 due to slowing global trade. Pandemic-related closures led to the steepest economic contraction on record for the second quarter of 2020. With nonessential businesses closed, spending declined while unemployment rose to the highest level since World War II. Following sharp first-quarter declines, Austrian equities rebounded, helped by government stimulus and signs of economic revival. Expansive U.S. monetary policy, ultralow interest rates, and the rapid spread of the coronavirus drove U.S. dollar depreciation relative to the euro, which benefited U.S.-based investors. Nevertheless, Austrian equities remained well below pre-pandemic levels.

The energy sector detracted the most from the Index’s return. Already-low oil prices declined sharply in early 2020 due to increased competition from suppliers in Saudi Arabia and Russia. Meanwhile, the pandemic precipitated a steep drop in demand for energy, leading the integrated oil and gas industry to post starkly lower profits, consider dividend reductions, and decrease capital spending. Reduced demand for drilling equipment and services drove large layoffs and profit losses in the oil and gas equipment and services industry.

The financials sector also weighed on the Index’s performance, driven by the banking industry. Substantially higher loan default provisions weakened the credit outlook for Austrian banks and sharply constrained profits. Lower retail lending, along with persistently low interest rates that curtailed income generated from loans, further pressured banks’ revenues. The real estate sector was also a meaningful detractor. The value of real estate assets declined as temporarily closed businesses, particularly retailers, missed rent payments.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

   

Percent of

Total Investments


(a) 

Financials

    31.3

Materials

    13.9  

Industrials

    13.8  

Energy

    12.8  

Utilities

    10.7  

Real Estate

    10.5  

Communication Services

    3.5  

Information Technology

    2.3  

Consumer Staples

    1.2  

 

  (a)

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

   

Security

   

Percent of

Total Investments

 

(a) 

Erste Group Bank AG

    17.1

OMV AG

    11.6  

Verbund AG

    8.8  

Wienerberger AG

    7.5  

BAWAG Group AG

    4.7  

CA Immobilien Anlagen AG

    4.6  

Raiffeisen Bank International AG

    4.4  

voestalpine AG

    4.4  

ANDRITZ AG

    4.3  

IMMOFINANZ AG

    3.5  
 

 

U N D  U M M A R Y

  6


Fund Summary as of August 31, 2020     iShares® MSCI Belgium ETF

 

Investment Objective

The iShares MSCI Belgium ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Belgian equities, as represented by the MSCI Belgium IMI 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

     Average Annual Total Returns            Cumulative Total Returns  
     1 Year      5 Years     10 Years             1 Year      5 Years      10 Years  

Fund NAV

    (2.02 )%       3.22     7.23        (2.02 )%       17.16      101.01

Fund Market

    (2.80      3.13       7.22          (2.80      16.63        100.84  

Index

    (1.91      3.23       7.92                (1.91      17.20        114.31  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through November 8, 2012 reflects the performance of the MSCI Belgium Investable Market Index. Index performance beginning on November 9, 2012 reflects the performance of the MSCI Belgium IMI 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning

Account Value

(03/01/20)


 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period

 

 

 (a) 

     

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period

 

 

 (a) 

      

Annualized

Expense

Ratio

 

 

 

    $      1,000.00          $      1,061.00          $        2.69               $      1,000.00          $      1,022.50          $      2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

7  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Belgium ETF

 

Portfolio Management Commentary

Stocks in Belgium declined modestly for the reporting period amid a deep global recession driven by the coronavirus pandemic. Economic growth remained slow but steady in 2019, outpacing that of the Eurozone. However, Belgium’s economic activity declined following pandemic-related closures, leading to the steepest contraction on record for the second quarter of 2020. Following sharp first-quarter declines, Belgian equities rebounded amid government stimulus. Expansive U.S. monetary policy, ultralow interest rates, and the rapid spread of the coronavirus drove U.S. dollar depreciation relative to the euro, which benefited U.S.-based investors. Nevertheless, Belgian equities ended the reporting period below pre-pandemic levels.

The consumer staples sector detracted the most from the Index’s return, driven primarily by the beverages industry. Despite relatively resilient sales at retail locations, starkly lower sales volumes due to closed restaurants and bars weighed heavily on the alcoholic beverages industry. Declining global revenues led a multinational beer producer to reduce its dividend payment and increase loss provisions, citing banned alcohol sales in South Africa.

The communication services sector also weighed on performance. The telecommunication services industry weakened amid protests about the environmental and health impacts of next-generation mobile networks, leading to a pause in the rollout of the country’s 5G network.

On the upside, the healthcare sector contributed to the Index’s return. Despite pandemic-related delays in clinical trials, the pharmaceuticals industry advanced amid merger and acquisition activity and solid revenue gains driven by sales of drugs to treat Crohn’s disease and epilepsy. The biotechnology industry benefited from positive late-stage trial results for a neuromuscular disease treatment. Within the materials sector, the chemicals industry was a modest contributor, as recycling activity somewhat offset lower demand for rechargeable batteries and catalytic converters used in automobiles.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

   

Percent of

Total Investments

 

(a) 

Consumer Staples

    25.4

Financials

    24.6  

Health Care

    18.5  

Materials

    9.7  

Real Estate

    9.6  

Communication Services

    3.9  

Information Technology

    2.4  

Utilities

    2.0  

Consumer Discretionary

    1.5  

Energy

    1.2  

Industrials

    1.2  

 

  (a)

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

   

Security

   

Percent of

Total Investments

 

(a) 

Anheuser-Busch InBev SA/NV

    22.6

UCB SA

    8.4  

KBC Group NV

    8.0  

Groupe Bruxelles Lambert SA

    5.8  

Umicore SA

    4.4  

Argenx SE

    4.3  

Ageas SA/NV

    4.3  

Solvay SA

    3.8  

Galapagos NV

    3.4  

Warehouses De Pauw CVA

    2.8  
 

 

U N D  U M M A R Y

  8


Fund Summary as of August 31, 2020     iShares® MSCI France ETF

 

Investment Objective

The iShares MSCI France ETF (the “Fund”) seeks to track the investment results of an index composed of French equities, as represented by the MSCI France Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

      Average Annual Total Returns             Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    0.50      5.54      6.02       0.50      30.97      79.37

Fund Market

    0.05        5.50        6.08         0.05        30.70        80.52  

Index

    0.70        5.51        6.00               0.70        30.78        79.12  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period

 

 

 (a) 

     

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period

 

 

 (a) 

      

Annualized

Expense

Ratio

 

 

 

    $      1,000.00          $    1,029.10          $      2.65               $      1,000.00          $      1,022.50          $      2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

9  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI France ETF

 

Portfolio Management Commentary

French stocks advanced modestly for the reporting period amid a global recession driven by the coronavirus pandemic. Economic activity, already diminished due to labor strikes that tempered manufacturing and slowing global trade, declined sharply following pandemic-related closures, leading to the steepest economic contraction on record for the second quarter of 2020. French equity performance for U.S.-based investors was also helped by U.S. dollar depreciation relative to the euro, driven by the U.S.’s expansive monetary policy, ultralow interest rates, and the rapid spread of the coronavirus.

The healthcare sector contributed the most to the Index’s return. The pharmaceuticals industry gained amid U.S. government-funded programs to develop a coronavirus vaccine. Positive developments in using existing drugs to treat complications from COVID-19 helped power the sector’s growth. The information technology sector also advanced, driven by higher revenues of software and services providers involved in developing France’s coronavirus contact tracing application. The semiconductors industry gained amid expectations of rising sales to automakers as signs of China’s economic recovery emerged. The consumer discretionary and materials sectors also bolstered the Index’s performance, benefiting respectively from improving luxury goods sales in Asia following easing of pandemic restrictions and sharply stronger demand for medical oxygen used to treat ventilated coronavirus patients.

On the downside, the energy sector detracted from the Index’s return. The integrated oil and gas industry, constrained by ultralow oil prices and the steep drop in demand for energy, posted losses amid asset write-downs. The financials sector also constrained the Index’s performance. Banks declined amid pandemic-related revenue losses, particularly from trading. A weakened credit outlook due to expected loan defaults also worked against French banks. Industrials stocks also weighed notably on the Index’s return, as travel restrictions led to sharply reduced demand for new aircraft.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

   

Percent of

Total Investments

 

(a) 

Industrials

    20.8

Consumer Discretionary

    20.0  

Consumer Staples

    11.4  

Health Care

    9.9  

Financials

    8.7  

Information Technology

    7.2  

Energy

    6.4  

Materials

    6.2  

Communication Services

    4.7  

Utilities

    3.3  

Real Estate

    1.4  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

   

Security

   

Percent of

Total Investments

 

(a) 

LVMH Moet Hennessy Louis Vuitton SE

    8.5

Sanofi

    7.5  

TOTAL SE

    6.4  

L’Oreal SA

    5.4  

Air Liquide SA

    5.1  

Schneider Electric SE

    4.5  

BNP Paribas SA

    3.2  

Airbus SE

    3.2  

Vinci SA

    3.2  

Kering SA

    3.0  
 

 

U N D  U M M A R Y

  10


Fund Summary as of August 31, 2020    

iShares® MSCI Netherlands ETF

 

Investment Objective

The iShares MSCI Netherlands ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Dutch equities, as represented by the MSCI Netherlands IMI 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

      Average Annual Total Returns             Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    16.88      9.96      9.36       16.88      60.78      144.76

Fund Market

    16.74        9.94        9.43         16.74        60.58        146.23  

Index

    17.48        10.51        9.77               17.48        64.79        153.90  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through August 31, 2017 reflects the performance of the MSCI Netherlands Investable Market Index. Index performance beginning on September 1, 2017 reflects the performance of the MSCI Netherlands IMI 25/50.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
     

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
    $      1,000.00          $      1,180.20          $      2.85               $      1,000.00          $      1,022.50          $      2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

11  

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Fund Summary as of August 31, 2020  (continued)   

iShares® MSCI Netherlands ETF

 

Portfolio Management Commentary

Stocks in the Netherlands advanced strongly for the reporting period despite a deep global recession driven by the coronavirus pandemic. Sharply lower household spending during the pandemic led to the largest economic contraction on record for the second quarter of 2020. Meanwhile, exports diminished as global trade slowed due to supply chain disruptions. The first quarter’s steep equity market declines were reversed during the second quarter amid government stimulus and gradual easing of restrictions. U.S.-based investors also benefited from U.S. dollar depreciation relative to the euro, driven by the U.S.’s expansive monetary policy, ultralow interest rates, and the rapid spread of the coronavirus.

The information technology sector contributed the most to the Index’s return, as remote working arrangements drove sharply higher use of technology products and services. The semiconductor equipment industry continued to supply the expansion of 5G networks, data center usage, and cloud computing. Following the pandemic’s restrictions on social interaction, businesses increased investment in remote working and communications infrastructure, while consumers staying at home drove demand for computer equipment and gaming consoles, further supporting the semiconductor equipment industry’s gains. The software and services industry also contributed to the sector’s gains, advancing amid higher e-commerce payment processing revenues due to increased online purchases.

The consumer discretionary sector was also a key source of strength. Internet and direct marketing retailers posted rising revenues as consumers increased purchases of video games and spent more time on social media, which drove higher advertising spending. Increased consumer demand for meal delivery when eat-in dining at restaurants was prohibited drove strong revenue growth for food delivery services, another area of the industry’s strength.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

   

Percent of

Total Investments

 

(a) 

Information Technology

    28.8

Consumer Staples

    23.4  

Consumer Discretionary

    10.6  

Industrials

    10.5  

Financials

    9.3  

Materials

    8.8  

Health Care

    4.3  

Communication Services

    2.1  

Energy

    1.4  

Real Estate

    0.8  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

   

Security

   

Percent of

Total Investments

 

(a) 

ASML Holding NV

    22.5

Unilever NV

    12.9  

Prosus NV

    7.5  

ING Groep NV

    4.5  

Adyen NV

    4.4  

Koninklijke Ahold Delhaize NV

    4.4  

Koninklijke DSM NV

    4.3  

Koninklijke Philips NV

    4.1  

Wolters Kluwer NV

    3.5  

Akzo Nobel NV

    3.4  
 

 

U N D  U M M A R Y

  12


Fund Summary as of August 31, 2020    

iShares® MSCI Sweden ETF

 

Investment Objective

The iShares MSCI Sweden ETF (the “Fund”) seeks to track the investment results of an index composed of Swedish equities, as represented by the MSCI Sweden 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

      Average Annual Total Returns             Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    28.51      6.87      7.52       28.51      39.38      106.47

Fund Market

    28.00        6.80        7.58         28.00        38.96        107.67  

Index

    28.37        6.40        7.10               28.37        36.36        98.65  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through November 30, 2016 reflects the performance of the MSCI Sweden Index. Index performance beginning on December 1, 2016 reflects the performance of the MSCI Sweden 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
    $      1,000.00          $      1,194.30          $        3.20               $      1,000.00          $      1,022.20          $        2.95          0.58

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

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Fund Summary as of August 31, 2020  (continued)   

iShares® MSCI Sweden ETF

 

Portfolio Management Commentary

Stocks in Sweden advanced strongly for the reporting period despite a global recession driven by the coronavirus pandemic. Economic activity in the export-dependent country was already slowing at the end of 2019 due to global trade tensions. Despite relatively few pandemic-related closures in contrast to most of Europe, Sweden experienced the steepest economic contraction on record for the second quarter of 2020. Nevertheless, the first-quarter’s sharp equity market declines were reversed during the second quarter amid massive government stimulus and relatively resilient corporate profits. U.S.-based investors also benefited from U.S. dollar depreciation relative to the euro, driven by the U.S.’s expansive monetary policy, ultralow interest rates, and the rapid spread of the coronavirus.

The industrials sector contributed the most to the Index’s return, driven by the capital goods industry. Despite lower global manufacturing activity, strong sales of industrial machinery, such as gas compressors and equipment used to manufacture semiconductors, drove the industry’s performance. Improving orders for metal cutting equipment used in the automotive, energy, and mining industries, particularly after China lifted harsh lockdowns, bolstered gains. Higher-than-expected profits of machinery and building products makers also served as industry tailwinds.

The financials and information technology sectors also contributed to the Index’s return. Among financials, bank stocks advanced amid unexpectedly strong profits and lower-than-expected loan defaults. Sweden’s lenient pandemic response, which kept businesses open, benefited domestically focused banks. Gains in the portfolio companies of a large investment conglomerate in the diversified financials industry also supported the sector’s performance. Within the information technology sector, the technology hardware and equipment industry drove gains amid higher sales of communications equipment used for expanding 5G networks and anticipated contract gains due to the U.K.’s ban on a Chinese supplier’s equipment.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

   
Percent of
Total Investments
 
(a) 

Industrials

    37.7

Financials

    27.1  

Information Technology

    11.9  

Consumer Staples

    8.4  

Consumer Discretionary

    6.8  

Communication Services

    3.8  

Materials

    3.2  

Energy

    1.1  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

   

Security

   
Percent of
Total Investments
 
(a) 

Telefonaktiebolaget LM Ericsson, Class B

    7.3

Atlas Copco AB, Class A

    6.7  

Investor AB, Class B

    6.3  

Volvo AB, Class B

    6.2  

Nordea Bank Abp

    5.7  

Assa Abloy AB, Class B

    5.0  

Hexagon AB, Class B

    4.6  

Sandvik AB

    4.5  

Essity AB, Class B

    4.4  

Skandinaviska Enskilda Banken AB, Class A

    3.6  
 

 

U N D  U M M A R Y

  14


About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

15  

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Schedule of Investments  

August 31, 2020

  

iShares® MSCI Austria ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Common Stocks

   
Aerospace & Defense — 0.7%            

FACC AG(a)(b)

    43,579     $ 298,117  
   

 

 

 
Air Freight & Logistics — 3.1%            

Oesterreichische Post AG(b)

    39,986       1,338,996  
   

 

 

 
Banks — 25.3%            

BAWAG Group AG(a)(c)

    51,483       1,943,184  

Erste Group Bank AG(a)

    291,782       7,111,740  

Raiffeisen Bank International AG(a)

    102,226       1,833,859  
   

 

 

 
      10,888,783  
Chemicals — 2.0%            

Lenzing AG(a)(b)

    16,513       858,082  
   

 

 

 
Commercial Services & Supplies — 1.1%            

DO & CO AG(a)(b)

    10,313       452,035  
   

 

 

 
Construction & Engineering — 0.8%            

Porr AG(a)(b)

    23,873       343,182  
   

 

 

 
Construction Materials — 7.2%            

Wienerberger AG(a)

    114,830       3,106,427  
   

 

 

 
Diversified Telecommunication Services — 3.3%  

Telekom Austria AG(a)

    193,650       1,431,262  
   

 

 

 
Electric Utilities — 10.4%            

EVN AG

    47,649       804,640  

Verbund AG

    68,024       3,660,900  
   

 

 

 
      4,465,540  
Electrical Equipment — 0.9%            

Zumtobel Group AG

    51,826       396,061  
   

 

 

 
Electronic Equipment, Instruments & Components — 2.2%  

AT&S Austria Technologie & Systemtechnik AG

    36,719       712,287  

Kapsch TrafficCom AG

    14,506       235,939  
   

 

 

 
      948,226  
Energy Equipment & Services — 1.2%  

Schoeller-Bleckmann Oilfield Equipment AG

    16,841       503,525  
   

 

 

 
Food Products — 1.1%            

Agrana Beteiligungs AG

    23,059       490,327  
   

 

 

 
Insurance — 4.9%            

UNIQA Insurance Group AG

    147,707       983,942  

Vienna Insurance Group AG Wiener Versicherung Gruppe(a)

    46,865       1,148,989  
   

 

 

 
      2,132,931  
Security   Shares     Value  

 

 
Machinery — 6.8%            

ANDRITZ AG

    53,894     $ 1,807,306  

Palfinger AG

    21,030       563,379  

Semperit AG Holding(a)

    26,406       553,286  
   

 

 

 
      2,923,971  
Metals & Mining — 4.2%            

voestalpine AG

    73,409       1,826,983  
   

 

 

 
Oil, Gas & Consumable Fuels — 11.2%            

OMV AG(a)

    148,025       4,825,854  
   

 

 

 
Real Estate Management & Development — 10.1%  

CA Immobilien Anlagen AG

    60,780       1,900,840  

IMMOFINANZ AG(a)

    88,598       1,472,828  

S IMMO AG(a)

    54,826       995,340  
   

 

 

 
      4,369,008  
   

 

 

 

Total Common Stocks — 96.5%
(Cost: $63,056,495)

      41,599,310  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 6.8%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    2,922,382       2,925,304  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    10,000       10,000  
   

 

 

 
      2,935,304  
   

 

 

 

Total Short-Term Investments — 6.8%
(Cost: $2,935,367)

      2,935,304  
   

 

 

 

Total Investments in Securities — 103.3%
(Cost: $65,991,862)

      44,534,614  

Other Assets, Less Liabilities — (3.3)%

      (1,430,283
   

 

 

 

Net Assets — 100.0%

    $   43,104,331  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  16


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Austria ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

   
    Affiliated Issuer   

Value at

08/31/19

    

Purchases

at Cost

   

Proceeds

from Sales

   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

    

Shares

Held at

08/31/20

     Income    

Capital Gain

Distributions from

Underlying Funds

       
 

 

   

    

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 1,211,805      $ 1,714,091 (a)    $     $ (289   $ (303   $ 2,925,304        2,922,382      $ 96,969 (b)    $             
 

BlackRock Cash Funds: Treasury,
SL Agency Shares

     24,000              (14,000 )(a)                  10,000        10,000        319          
           

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   
            $ (289   $ (303   $ 2,935,304         $ 97,288     $    
           

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description   

Number of

Contracts

    

Expiration

Date

    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

           

Euro STOXX 50 Index

     38        09/18/20      $ 1,484      $ 18,061  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 18,061  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
    

Equity

Contracts

 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 140,859  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (20,097
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 1,290,555      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

 

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Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Austria ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                               

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 41,599,310      $      $      $ 41,599,310  

Money Market Funds

     2,935,304                      2,935,304  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 44,534,614      $      $      $ 44,534,614  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Assets

           

Futures Contracts

   $ 18,061      $      $      $ 18,061  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  18


Schedule of Investments

August 31, 2020

  

iShares® MSCI Belgium ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Common Stocks

   
Air Freight & Logistics — 0.7%            

bpost SA(a)

    23,235     $     233,002  
   

 

 

 
Banks — 8.0%            

KBC Group NV

    45,163       2,598,011  
   

 

 

 
Beverages — 22.5%            

Anheuser-Busch InBev SA/NV

    125,991       7,353,889  
   

 

 

 
Biotechnology — 7.7%            

Argenx SE(a)

    6,110       1,415,416  

Galapagos NV(a)(b)

    8,184       1,114,814  
   

 

 

 
      2,530,230  
Capital Markets — 0.8%            

Gimv NV

    4,395       250,984  
   

 

 

 
Chemicals — 9.0%            

Recticel SA

    11,596       118,990  

Solvay SA

    14,254       1,238,300  

Tessenderlo Group SA(a)

    4,706       176,442  

Umicore SA

    30,908       1,422,761  
   

 

 

 
      2,956,493  
Construction & Engineering — 0.5%            

Cie. d’Entreprises CFE(a)

    2,137       153,345  
   

 

 

 
Distributors — 1.0%            

D’ieteren SA/NV

    4,949       323,756  
   

 

 

 
Diversified Financial Services — 11.5%            

Ackermans & van Haaren NV(a)

    4,690       668,033  

Groupe Bruxelles Lambert SA

    20,235       1,877,441  

KBC Ancora(a)

    8,548       313,232  

Sofina SA

    3,016       907,157  
   

 

 

 
      3,765,863  
Diversified Telecommunication Services — 1.8%  

Proximus SADP

    30,452       604,193  
   

 

 

 
Electric Utilities — 2.0%            

Elia Group SA/NV

    6,152       662,910  
   

 

 

 
Electronic Equipment, Instruments & Components — 1.0%  

Barco NV

    15,118       322,771  
   

 

 

 
Entertainment — 0.5%            

Kinepolis Group NV(a)(b)

    3,839       150,823  
   

 

 

 
Equity Real Estate Investment Trusts (REITs) — 9.6%  

Aedifica SA

    5,419       639,661  

Befimmo SA

    5,284       254,040  

Cofinimmo SA

    4,880       716,690  

Intervest Offices & Warehouses NV

    5,601       149,042  

Montea CVA

    2,309       274,488  

Retail Estates NV

    2,586       179,997  

Warehouses De Pauw CVA

    25,637       907,553  
   

 

 

 
      3,121,471  
Food & Staples Retailing — 2.1%            

Colruyt SA

    11,003       697,429  
   

 

 

 
Health Care Equipment & Supplies — 0.6%            

Biocartis Group NV(a)(b)(c)

    17,381       98,426  

Ion Beam Applications(b)

    9,046       98,124  
   

 

 

 
      196,550  
Security   Shares     Value  

 

 
Health Care Providers & Services — 0.9%            

Fagron

    13,493     $ 306,602  
   

 

 

 
Health Care Technology — 0.5%            

AGFA-Gevaert NV(a)

    38,078       161,209  
   

 

 

 
Insurance — 4.3%            

Ageas SA/NV

    33,030       1,390,479  
   

 

 

 
IT Services — 0.4%            

Econocom Group SA/NV

    39,585       119,538  
   

 

 

 
Media — 1.1%            

Telenet Group Holding NV

    9,597       373,938  
   

 

 

 
Metals & Mining — 0.6%            

Bekaert SA

    9,055       183,340  
   

 

 

 
Oil, Gas & Consumable Fuels — 1.2%            

Euronav NV

    37,584       343,632  

Exmar NV(a)(b)

    24,205       60,067  
   

 

 

 
      403,699  
Personal Products — 0.6%            

Ontex Group NV(a)

    15,688       210,135  
   

 

 

 
Pharmaceuticals — 8.7%            

Mithra Pharmaceuticals SA(a)

    5,212       106,714  

UCB SA

    22,880       2,723,200  
   

 

 

 
      2,829,914  
Semiconductors & Semiconductor Equipment — 1.1%  

Melexis NV

    4,326       347,413  
   

 

 

 
Textiles, Apparel & Luxury Goods — 0.5%            

Sioen Industries NV(a)

    3,458       80,437  

Van de Velde NV(a)

    2,714       68,000  
   

 

 

 
      148,437  
Wireless Telecommunication Services — 0.4%  

Orange Belgium SA

    8,402       141,883  
   

 

 

 

Total Common Stocks — 99.6%
(Cost: $39,708,815)

      32,538,307  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 4.1%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    1,339,983       1,341,323  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    10,000       10,000  
   

 

 

 
      1,351,323  
   

 

 

 

Total Short-Term Investments — 4.1%
(Cost: $1,351,373)

      1,351,323  
   

 

 

 

Total Investments in Securities — 103.7%
(Cost: $41,060,188)

      33,889,630  

Other Assets, Less Liabilities — (3.7)%

      (1,204,894
   

 

 

 

Net Assets — 100.0%

    $   32,684,736  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

 

 

19  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Belgium ETF

 

(d)

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

        

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

   
    Affiliated Issuer   

Value at

08/31/19

    

Purchases

at Cost

    

Proceeds

from Sales

   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

    

Shares

Held at

08/31/20

     Income    

Capital Gain

Distributions from

Underlying Funds

       
 

 

   

    

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 1,700,630      $      $ (355,713 )(a)    $ (3,128   $ (466   $ 1,341,323        1,339,983      $ 29,066 (b)    $    
 

BlackRock Cash Funds: Treasury,
SL Agency Shares

     19,000               (9,000 )(a)                  10,000        10,000        210                   
            

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   
             $ (3,128   $ (466   $ 1,351,323         $ 29,276     $    
            

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description   

Number of

Contracts

    

Expiration

Date

    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

           

Euro STOXX 50 Index

     3        09/18/20      $ 117      $ (743
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 743  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
    

Equity

Contracts

 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 26,336  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (743
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 95,859      

 

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  20


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Belgium ETF

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 32,538,307      $      $      $ 32,538,307  

Money Market Funds

     1,351,323                      1,351,323  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 33,889,630      $             —      $             —      $ 33,889,630  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Liabilities

           

Futures Contracts

   $ (743    $      $      $ (743
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

21  

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Schedule of Investments  

August 31, 2020

  

iShares® MSCI France ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 6.3%            

Airbus SE(a)

    339,023     $     27,911,503  

Dassault Aviation SA(a)

    1,433       1,306,770  

Safran SA(a)

    184,638       21,423,754  

Thales SA

    61,366       4,807,091  
   

 

 

 
      55,449,118  
Auto Components — 1.9%            

Cie. Generale des Etablissements Michelin SCA

    97,773       11,064,074  

Faurecia SE(a)

    44,021       1,922,140  

Valeo SA(b)

    132,055       4,043,040  
   

 

 

 
      17,029,254  
Automobiles — 1.0%            

Peugeot SA(a)

    338,921       5,824,632  

Renault SA(a)

    109,970       3,135,405  
   

 

 

 
      8,960,037  
Banks — 4.8%            

BNP Paribas SA(a)

    648,145       28,343,336  

Credit Agricole SA(a)

    663,796       6,817,731  

Societe Generale SA(a)

    467,435       7,592,734  
   

 

 

 
      42,753,801  
Beverages — 2.6%            

Pernod Ricard SA

    122,350       20,997,572  

Remy Cointreau SA

    13,081       2,157,339  
   

 

 

 
      23,154,911  
Building Products — 1.4%            

Cie. de Saint-Gobain(a)

    297,955       12,108,414  
   

 

 

 
Capital Markets — 0.5%            

Amundi SA(a)(c)

    34,960       2,721,859  

Natixis SA(a)

    551,278       1,519,689  
   

 

 

 
      4,241,548  
Chemicals — 5.6%            

Air Liquide SA

    272,923       45,386,254  

Arkema SA

    39,895       4,432,486  
   

 

 

 
      49,818,740  
Construction & Engineering — 4.3%            

Bouygues SA(a)

    131,658       5,235,427  

Eiffage SA(a)

    48,809       4,507,574  

Vinci SA

    296,915       27,903,416  
   

 

 

 
      37,646,417  
Diversified Financial Services — 0.3%            

Eurazeo SE(a)

    22,696       1,200,277  

Wendel SE

    15,630       1,606,638  
   

 

 

 
      2,806,915  
Diversified Telecommunication Services — 1.7%  

Iliad SA

    8,586       1,838,049  

Orange SA

    1,151,589       12,849,682  
   

 

 

 
      14,687,731  
Electric Utilities — 0.4%            

Electricite de France SA

    357,575       3,764,105  
   

 

 

 
Electrical Equipment — 5.9%            

Legrand SA

    154,179       12,888,893  

Schneider Electric SE

    318,933       39,573,164  
   

 

 

 
      52,462,057  
Electronic Equipment, Instruments & Components — 0.7%  

Ingenico Group SA(a)

    34,881       5,932,008  
   

 

 

 
Security   Shares     Value  
Entertainment — 2.2%            

Bollore SA

    511,772     $     1,926,746  

Ubisoft Entertainment SA(a)

    52,130       4,299,304  

Vivendi SA

    478,762       13,627,301  
   

 

 

 
      19,853,351  
Equity Real Estate Investment Trusts (REITs) — 1.4%  

Covivio

    29,961       2,225,159  

Gecina SA

    26,523       3,654,167  

ICADE

    17,385       1,127,944  

Klepierre SA(b)

    113,459       1,871,184  

Unibail-Rodamco-Westfield(b)

    79,904       3,742,178  
   

 

 

 
      12,620,632  
Food & Staples Retailing — 0.7%  

Carrefour SA

    350,055       5,635,008  

Casino Guichard Perrachon SA(a)(b)

    4,428       115,181  
   

 

 

 
      5,750,189  
Food Products — 2.7%            

Danone SA

    355,820       23,447,425  
   

 

 

 
Health Care Equipment & Supplies — 0.4%  

BioMerieux

    23,766       3,609,716  
   

 

 

 
Health Care Providers & Services — 0.4%  

Orpea(a)

    29,801       3,587,218  
   

 

 

 
Hotels, Restaurants & Leisure — 1.0%            

Accor SA(a)

    109,262       3,363,496  

La Francaise des Jeux SAEM(c)

    49,565       1,842,931  

Sodexo SA

    50,915       3,651,073  
   

 

 

 
      8,857,500  
Household Durables — 0.3%            

SEB SA

    13,114       2,307,072  
   

 

 

 
Insurance — 3.0%            

AXA SA

    1,114,503       22,760,437  

CNP Assurances(a)

    99,973       1,341,494  

SCOR SE(a)

    91,434       2,451,639  
   

 

 

 
      26,553,570  
IT Services — 3.7%            

Atos SE(a)

    56,633       4,910,444  

Capgemini SE

    92,627       12,850,168  

Edenred

    140,553       7,273,446  

Worldline SA(a)(c)

    79,041       7,280,633  
   

 

 

 
      32,314,691  
Life Sciences Tools & Services — 1.3%  

Eurofins Scientific SE(a)

    7,597       6,101,913  

Sartorius Stedim Biotech

    15,929       5,711,279  
   

 

 

 
      11,813,192  
Machinery — 0.7%            

Alstom SA(a)

    111,221       6,203,811  
   

 

 

 
Media — 0.8%            

JCDecaux SA(a)

    49,342       943,579  

Publicis Groupe SA(a)

    125,252       4,399,485  

SES SA

    221,153       1,573,704  
   

 

 

 
      6,916,768  
Metals & Mining — 0.6%            

ArcelorMittal SA(a)

    412,724       5,233,121  
   

 

 

 
Multi-Utilities — 2.9%            

Engie SA(a)

    1,054,264       14,695,178  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  22


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI France ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Multi-Utilities (continued)            

Suez SA

    198,209     $     3,438,384  

Veolia Environnement SA

    310,910       7,511,026  
   

 

 

 
          25,644,588  
Oil, Gas & Consumable Fuels — 6.4%            

TOTAL SE

    1,425,417       56,426,503  
   

 

 

 
Personal Products — 5.4%            

L’Oreal SA

    145,096       48,049,802  
   

 

 

 
Pharmaceuticals — 7.7%            

Ipsen SA

    21,854       2,268,631  

Sanofi

    651,753       66,153,138  
   

 

 

 
          68,421,769  
Professional Services — 1.6%            

Bureau Veritas SA(a)

    168,416       3,825,920  

Teleperformance

    33,835       10,456,152  
   

 

 

 
          14,282,072  
Semiconductors & Semiconductor Equipment — 1.3%  

STMicroelectronics NV

    367,511       11,080,424  
   

 

 

 
Software — 1.6%            

Dassault Systemes SE

    76,174       14,380,188  
   

 

 

 
Textiles, Apparel & Luxury Goods — 15.8%            

EssilorLuxottica SA(a)

    163,872       21,969,672  

Hermes International

    18,250       15,701,694  

Kering SA

    43,657       26,868,095  

LVMH Moet Hennessy Louis Vuitton SE

    160,139       75,228,396  
   

 

 

 
          139,767,857  
Transportation Infrastructure — 0.6%            

Aeroports de Paris

    16,869       1,771,320  
Security   Shares     Value  
Transportation Infrastructure (continued)            

Getlink SE(a)

    254,567     $ 3,909,132  
   

 

 

 
          5,680,452  
   

 

 

 

Total Common Stocks — 99.9%
(Cost: $1,002,574,589)

      883,616,967  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 1.0%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    8,560,352       8,568,912  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    529,000       529,000  
   

 

 

 
          9,097,912  
   

 

 

 

Total Short-Term Investments — 1.0%
(Cost: $9,098,682)

      9,097,912  
   

 

 

 

Total Investments in Securities — 100.9%
(Cost: $1,011,673,271)

      892,714,879  
Other Assets, Less Liabilities — (0.9)%         (7,780,359)  
   

 

 

 
Net Assets — 100.0%         $ 884,934,520  
   

 

 

 

 

(a)

Non-income producing security.

(b)

All or a portion of this security is on loan.

(c)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d)

Affiliate of the Fund.

(e)

Annualized 7-day yield as of period-end.

(f)

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer   

Value at

08/31/19

    

Purchases

at Cost

    

Proceeds

from Sales

    

Net Realized

Gain (Loss)

    

Change in

Unrealized

Appreciation

(Depreciation)

    

Value at

08/31/20

    

Shares

Held at

08/31/20

     Income     

Capital Gain

Distributions from

Underlying Funds

 

 

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 9,136,341      $      $ (559,558 )(a)     $ (6,730    $ (1,141    $ 8,568,912        8,560,352      $ 296,487 (b)     $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

     436,000        93,000 (a)                            529,000        529,000        4,527         
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 
            $ (6,730    $ (1,141    $ 9,097,912         $ 301,014      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description   

Number of

Contracts

    

Expiration

Date

    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

           

CAC 40 Index

     22        09/18/20      $ 1,300      $ (8,542
           

 

 

 

 

 

23  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI France ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 8,542  
  

 

 

 

 

  (a)

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
    

Equity

Contracts

 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

     $(70,310
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

     $(62,549
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 1,414,476  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 883,616,967      $      $      $ 883,616,967  

Money Market Funds

     9,097,912                      9,097,912  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 892,714,879      $      $      $ 892,714,879  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Liabilities

           

Futures Contracts

   $ (8,542    $      $      $ (8,542
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  24


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Netherlands ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Air Freight & Logistics — 0.4%            

PostNL NV(a)

    258,623     $     772,323  
   

 

 

 
Banks — 5.4%            

ABN AMRO Bank NV, CVA(b)

    145,885       1,392,978  

ING Groep NV(a)

    1,039,142       8,455,756  

NIBC Holding NV(a)(b)

    34,244       302,651  
   

 

 

 
          10,151,385  
Beverages — 5.9%            

Coca-Cola European Partners PLC

    66,816       2,750,147  

Heineken Holding NV(a)

    25,867       2,123,732  

Heineken NV(a)

    67,303       6,242,886  
   

 

 

 
          11,116,765  
Biotechnology — 0.2%            

Pharming Group NV(a)(c)

    326,400       413,780  
   

 

 

 
Capital Markets — 0.3%            

Flow Traders(b)

    15,265       602,454  
   

 

 

 
Chemicals — 8.6%            

Akzo Nobel NV

    63,595       6,308,124  

Corbion NV

    22,162       1,028,381  

Koninklijke DSM NV

    50,405       8,104,899  

OCI NV(a)(c)

    46,642       634,236  
   

 

 

 
          16,075,640  
Construction & Engineering — 0.9%            

Arcadis NV(a)(c)

    32,428       746,559  

Boskalis Westminster(a)(c)

    33,306       699,456  

Koninklijke BAM Groep NV(a)(c)

    207,885       320,968  
   

 

 

 
          1,766,983  
Distributors — 0.1%            

B&S Group Sarl(a)(b)

    33,497       255,988  
   

 

 

 
Diversified Financial Services — 0.0%            

SNS REAAL NV(a)(c)(d)

    68,952       1  
   

 

 

 
Diversified Telecommunication Services — 2.1%  

Altice Europe NV(a)

    219,435       973,103  

Koninklijke KPN NV

    1,087,650       2,857,804  
   

 

 

 
          3,830,907  
Electrical Equipment — 1.7%            

Alfen Beheer BV(a)(b)

    10,044       730,337  

SIF Holding NV(a)

    14,505       237,658  

Signify NV(a)(b)

    45,433       1,520,854  

TKH Group NV

    16,913       664,663  
   

 

 

 
          3,153,512  
Energy Equipment & Services — 0.7%            

Fugro NV, CVA(a)(c)

    73,035       312,874  

SBM Offshore NV

    58,528       1,013,901  
   

 

 

 
          1,326,775  
Equity Real Estate Investment Trusts (REITs) — 0.8%  

Eurocommercial Properties NV

    29,720       356,858  

NSI NV

    10,950       392,870  

Vastned Retail NV(a)

    13,306       390,672  

Wereldhave NV(a)(c)

    34,140       286,625  
   

 

 

 
          1,427,025  
Food & Staples Retailing — 4.3%            

Koninklijke Ahold Delhaize NV

    269,966       8,142,680  
   

 

 

 
Security   Shares     Value  
Food Products — 0.1%            

ForFarmers NV

    40,323     $     260,894  
   

 

 

 
Health Care Equipment & Supplies — 4.1%            

Koninklijke Philips NV(a)

    162,072       7,682,456  
   

 

 

 
Hotels, Restaurants & Leisure — 0.3%            

Basic-Fit NV(a)(b)

    20,285       572,533  
   

 

 

 
Household Durables — 0.2%            

TomTom NV(a)

    42,566       342,348  
   

 

 

 
Insurance — 3.5%            

Aegon NV

    577,267       1,610,663  

ASR Nederland NV

    46,593       1,618,751  

NN Group NV

    88,776       3,349,717  
   

 

 

 
          6,579,131  
Internet & Direct Marketing Retail — 9.7%            

Just Eat Takeaway.com NV(a)(b)

    37,380       4,168,260  

Prosus NV(a)

    139,826       14,020,142  
   

 

 

 
          18,188,402  
IT Services — 4.4%            

Adyen NV(a)(b)

    4,858       8,209,428  
   

 

 

 
Leisure Products — 0.2%            

Accell Group NV(a)

    12,978       388,026  
   

 

 

 
Machinery — 0.7%            

Aalberts NV

    35,440       1,341,045  
   

 

 

 
Metals & Mining — 0.2%            

AMG Advanced Metallurgical Group NV

    20,255       417,137  
   

 

 

 
Oil, Gas & Consumable Fuels — 0.7%            

Koninklijke Vopak NV

    23,329       1,283,973  
   

 

 

 
Personal Products — 12.9%            

Unilever NV

    415,987       24,133,718  
   

 

 

 
Professional Services — 5.0%            

Brunel International NV(a)

    25,876       199,604  

Intertrust NV(a)(b)

    37,288       670,703  

Randstad NV(a)

    38,111       1,990,429  

Wolters Kluwer NV

    79,493       6,540,795  
   

 

 

 
          9,401,531  
Semiconductors & Semiconductor Equipment — 24.3%  

ASM International NV

    15,046       2,269,078  

ASML Holding NV

    111,656       41,970,066  

BE Semiconductor Industries NV

    26,595       1,273,842  
   

 

 

 
          45,512,986  
Trading Companies & Distributors — 1.7%  

AerCap Holdings NV(a)(c)

    43,784       1,294,693  

IMCD NV

    16,865       1,804,785  
   

 

 

 
          3,099,478  
   

 

 

 

Total Common Stocks — 99.4%
(Cost: $186,162,961)

      186,449,304  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 2.1%            
BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(e)(f)(g)
  3,758,042     3,761,800  
 

 

 

25  

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Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Netherlands ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Money Market Funds (continued)            

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(e)(f)

    90,000     $ 90,000  
   

 

 

 
      3,851,800  
   

 

 

 

Total Short-Term Investments — 2.1%
(Cost: $3,851,227)

      3,851,800  
   

 

 

 

Total Investments in Securities — 101.5%
(Cost: $190,014,188)

      190,301,104  

Other Assets, Less Liabilities — (1.5)%

      (2,782,382
   

 

 

 

Net Assets — 100.0%

    $ 187,518,722  
   

 

 

 

 

(a) 

Non-income producing security.

 

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

All or a portion of this security is on loan.

(d)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e)

Affiliate of the Fund.

(f)

Annualized 7-day yield as of period-end.

(g)

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer   

Value at

08/31/19

    

Purchases

at Cost

     Proceeds
from Sales
     Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
08/31/20
     Shares
Held at
08/31/20
     Income      Capital Gain
Distributions from
Underlying Funds
 

 

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 2,183,511      $ 1,581,494 (a)     $      $ (3,557    $ 352      $ 3,761,800        3,758,042      $ 49,581 (b)     $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

     102,000               (12,000 )(a)                     90,000        90,000        877         
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 
            $ (3,557    $ 352      $ 3,851,800         $ 50,458      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
    

Notional

Amount

(000)

     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

Euro STOXX 50 Index

     26        09/18/20      $ 1,015      $ 5,482  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 5,482  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  26


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Netherlands ETF

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 19,138  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (10,586
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 471,074      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 186,449,303      $                 —      $                 1      $ 186,449,304  

Money Market Funds

     3,851,800                      3,851,800  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 190,301,103      $      $ 1      $ 190,301,104  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Assets

           

Futures Contracts

   $ 5,482      $      $      $ 5,482  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

27  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Sweden ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Banks — 15.8%            

Nordea Bank Abp(a)

    1,678,701     $   13,552,305  

Skandinaviska Enskilda Banken AB,
Class A(a)

    878,440       8,732,508  

Svenska Handelsbanken AB, Class A(a)

    833,746       8,411,942  

Swedbank AB, Class A(a)

    489,893       8,327,945  
   

 

 

 
          39,024,700  
Building Products — 6.3%  

Assa Abloy AB, Class B

    518,793       12,030,052  

Nibe Industrier AB, Class B(a)

    121,423       3,420,981  
   

 

 

 
          15,451,033  
Capital Markets — 0.6%            

EQT AB

    83,274       1,539,974  
   

 

 

 
Commercial Services & Supplies — 1.1%  

Securitas AB, Class B(a)

    184,476       2,632,942  
   

 

 

 
Communications Equipment — 7.1%  

Telefonaktiebolaget LM Ericsson, Class B

    1,513,221       17,588,555  
   

 

 

 
Construction & Engineering — 1.6%  

Skanska AB, Class B(a)

    190,975       3,901,448  
   

 

 

 
Diversified Financial Services — 9.9%  

Industrivarden AB, Class C(a)

    94,715       2,502,687  

Investor AB, Class B

    236,079       15,092,721  

Kinnevik AB, Class B(a)

    125,632       4,865,810  

L E Lundbergforetagen AB, Class B(a)

    42,377       1,940,755  
   

 

 

 
          24,401,973  
Diversified Telecommunication Services — 2.2%  

Telia Co. AB

    1,379,485       5,327,642  
   

 

 

 
Electronic Equipment, Instruments & Components — 4.5%  

Hexagon AB, Class B(a)

    151,452       10,999,430  
   

 

 

 
Food & Staples Retailing — 1.1%            

ICA Gruppen AB

    55,438       2,726,601  
   

 

 

 
Hotels, Restaurants & Leisure — 1.5%            

Evolution Gaming Group AB(b)

    49,323       3,704,536  
   

 

 

 
Household Durables — 2.3%            

Electrolux AB, Series B

    134,893       2,930,909  

Husqvarna AB, Class B

    256,931       2,799,596  
   

 

 

 
          5,730,505  
Household Products — 4.3%  

Essity AB, Class B(a)

    306,802       10,586,064  
   

 

 

 
Industrial Conglomerates — 0.7%  

Investment AB Latour, Class B(c)

    76,581       1,712,761  
   

 

 

 
Machinery — 27.1%            

Alfa Laval AB(a)

    176,998       4,338,272  

Atlas Copco AB, Class A

    348,126       16,141,031  
Security   Shares     Value  
Machinery (continued)            

Atlas Copco AB, Class B

    201,682     $ 8,121,109  

Epiroc AB, Class A

    363,669       5,428,714  

Epiroc AB, Class B

    210,000       3,027,670  

Sandvik AB(a)

    546,787       10,764,634  

SKF AB, Class B

    213,615       4,274,801  

Volvo AB, Class B(a)

    770,308       14,763,206  
   

 

 

 
          66,859,437  
Metals & Mining — 1.9%            

Boliden AB

    154,146       4,609,216  
   

 

 

 
Oil, Gas & Consumable Fuels — 1.1%            

Lundin Energy AB

    107,429       2,633,116  
   

 

 

 
Paper & Forest Products — 1.2%            

Svenska Cellulosa AB SCA, Class B(a)

    227,656       2,941,728  
   

 

 

 
Specialty Retail — 2.8%            

Hennes & Mauritz AB, Class B(c)

    436,307       6,975,894  
   

 

 

 
Tobacco — 2.8%            

Swedish Match AB

    89,372       6,803,710  
   

 

 

 
Wireless Telecommunication Services — 1.5%  

Tele2 AB, Class B

    265,138       3,767,287  
   

 

 

 

Total Common Stocks — 97.4%
(Cost: $252,499,619)

      239,918,552  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 1.5%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    3,682,704       3,686,386  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    80,000       80,000  
   

 

 

 
          3,766,386  
   

 

 

 

Total Short-Term Investments — 1.5%
(Cost: $3,767,187)

      3,766,386  
   

 

 

 

Total Investments in Securities — 98.9% (Cost: $256,266,806)

      243,684,938  

Other Assets, Less Liabilities — 1.1%

      2,818,019  
   

 

 

 

Net Assets — 100.0%

    $ 246,502,957  
   

 

 

 

 

(a) 

Non-income producing security.

(b)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

All or a portion of this security is on loan.

(d)

Affiliate of the Fund.

(e)

Annualized 7-day yield as of period-end.

(f)

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  28


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Sweden ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer   Value at
08/31/19
     Purchases
at Cost
    Proceeds
from Sales
     Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
     Shares
Held at
08/31/20
     Income     Capital Gain
Distributions from
Underlying Funds
 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $      $ 3,688,589 (a)    $      $ (1,402   $ (801   $ 3,686,386        3,682,704      $ 5,334 (b)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

    78,000        2,000 (a)                         80,000        80,000        1,476        
         

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 
          $ (1,402   $ (801   $ 3,766,386         $ 6,810     $  
         

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

OMXS 30 Index

     318        09/18/20      $ 6,508      $ 22,835  
           

 

 

 

Forward Foreign Currency Exchange Contracts

 

 

 
Currency Purchased        Currency Sold        Counterparty      Settlement Date             Unrealized
Appreciation
(Depreciation)
 

 

 

SEK

    4,539,483        USD     484,643        SCB      09/18/20           $ 41,775  
                            

 

 

 

USD

    1,028,517        EUR     904,037        SCB      09/18/20             (53,042

USD

    8,350,700        SEK     77,139,463        SCB      09/18/20             (594,735
                            

 

 

 
                               (647,777
                            

 

 

 
    Net unrealized depreciation                $ (606,002
                            

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

       
     

Equity

Contracts

     Foreign
Currency
Exchange
Contracts
     Total  

Assets — Derivative Financial Instruments

        

Futures contracts

        

Unrealized appreciation on futures contracts(a)

   $ 22,835      $      $ 22,835  

Forward foreign currency exchange contracts
Unrealized appreciation on forward foreign currency exchange contracts

   $      $ 41,775      $ 41,775  
  

 

 

    

 

 

    

 

 

 
   $ 22,835      $ 41,775      $ 64,610  
  

 

 

    

 

 

    

 

 

 

Liabilities — Derivative Financial Instruments

        

Forward foreign currency exchange contracts
Unrealized depreciation on forward foreign currency exchange contracts

   $      $ 647,777      $ 647,777  
  

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

 

 

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Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Sweden ETF

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Total  

 

 

Net Realized Gain (Loss) from:

        

Futures contracts

   $ 1,064,000      $      $ 1,064,000  

Forward foreign currency exchange contracts

            107,393        107,393  
  

 

 

    

 

 

    

 

 

 
   $ 1,064,000      $ 107,393      $ 1,171,393  
  

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

        

Futures contracts

   $ (144,826    $      $ (144,826

Forward foreign currency exchange contracts

            (1,118,246      (1,118,246
  

 

 

    

 

 

    

 

 

 
   $ (144,826    $ (1,118,246    $ (1,263,072
  

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 5,325,986      

Forward foreign currency exchange contracts:

  

Average amounts purchased — in USD

     135,087      

Average amounts sold — in USD

   $ 9,061,755      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Derivative Financial Instruments - Offsetting as of Year End

The Fund’s derivative assets and liabilities (by type) were as follows:

 

 

 
     Assets      Liabilities  

 

 

Derivative Financial Instruments:

     

Futures contracts

   $ 22,835      $  

Forward foreign currency exchange contracts

     41,775        647,777  
  

 

 

    

 

 

 

Total derivative assets and liabilities in the Statement of Assets and Liabilities

   $ 64,610      $ 647,777  

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

     (22,835       
  

 

 

    

 

 

 

Total derivative assets and liabilities subject to an MNA

   $ 41,775      $ 647,777  
  

 

 

    

 

 

 

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

 

 

 

Counterparty

    


Derivative
Assets
Subject to
an MNA by



 
    

Derivatives

Available

 

 

    
Net Amount
of Derivative

     Counterparty           for Offset (a)          Assets  

 

 

Standard Chartered Bank

                  $ 41,775         $ (41,775       $  
    

 

 

       

 

 

       

 

 

 
                

 

 

Counterparty

    



Derivative
Liabilities
Subject to
an MNA by




 

    

Derivatives

Available

 

 

    

Net Amount

of Derivative

 

 

     Counterparty           for Offset (a)          Liabilities (b) 

 

 

Standard Chartered Bank

     $ 647,777         $ (41,775                  $ 606,002  
    

 

 

       

 

 

       

 

 

 

 

  (a) 

The amount of derivatives available for offset is limited to the amount of derivatives assets and/or liabilities that are subject to an MNA.

 
  (b) 

Net amount represents the net amount payable due to the counterparty in the event of default.

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  30


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Sweden ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 239,918,552      $      $      $ 239,918,552  

Money Market Funds

     3,766,386                      3,766,386  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 243,684,938      $      $      $ 243,684,938  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Assets

           

Futures Contracts

   $ 22,835      $      $      $ 22,835  

Forward Foreign Currency Exchange Contracts

            41,775               41,775  

Liabilities

           

Forward Foreign Currency Exchange Contracts

            (647,777             (647,777
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 22,835      $ (606,002    $      $ (583,167
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

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Statements of Assets and Liabilities  

August 31, 2020

 

   

iShares

MSCI Austria

ETF

   

iShares

MSCI

Belgium ETF

      

iShares

MSCI France ETF

   

iShares

MSCI

Netherlands

ETF

 

 

 

ASSETS

          

Investments in securities, at value (including securities on loan)(a):

          

Unaffiliated(b)

  $ 41,599,310     $ 32,538,307        $ 883,616,967     $ 186,449,304  

Affiliated(c)

    2,935,304       1,351,323          9,097,912       3,851,800  

Cash

    8,194       4,440          5,251       8,282  

Foreign currency, at value(d)

    90,598       56,525          1,591,811       443,082  

Foreign currency collateral pledged:

          

Futures contracts(e)

    216,467       17,939          212,879       148,297  

Receivables:

          

Investments sold

    1,254,656       997,685          534,857       1,660,126  

Securities lending income — Affiliated

    12,492       1,471          12,259       4,260  

Dividends

          17,093          17,307       551,582  

Tax reclaims

    1,205,593       53,722                 
 

 

 

   

 

 

      

 

 

   

 

 

 

Total assets

    47,322,614       35,038,505          895,089,243       193,116,733  
 

 

 

   

 

 

      

 

 

   

 

 

 

LIABILITIES

          

Collateral on securities loaned, at value

    2,926,197       1,342,697          8,574,710       3,762,198  

Payables:

          

Investments purchased

    1,250,832       995,318          1,197,356       1,736,715  

Variation margin on futures contracts

    21,703       1,723          21,094       14,876  

Investment advisory fees

    19,551       14,031          361,563       84,222  
 

 

 

   

 

 

      

 

 

   

 

 

 

Total liabilities

    4,218,283       2,353,769          10,154,723       5,598,011  
 

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS

  $ 43,104,331     $ 32,684,736        $ 884,934,520     $ 187,518,722  
 

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS CONSIST OF:

          

Paid-in capital

  $ 106,767,687     $ 58,900,447        $ 1,057,536,930     $ 210,368,411  

Accumulated loss

    (63,663,356     (26,215,711        (172,602,410     (22,849,689
 

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS

  $ 43,104,331     $ 32,684,736        $ 884,934,520     $ 187,518,722  
 

 

 

   

 

 

      

 

 

   

 

 

 

Shares outstanding

    2,750,000       1,840,000          30,200,000       5,300,000  
 

 

 

   

 

 

      

 

 

   

 

 

 

Net asset value

  $ 15.67     $ 17.76        $ 29.30     $ 35.38  
 

 

 

   

 

 

      

 

 

   

 

 

 

Shares authorized

    100 million       136.2 million          340.2 million       255 million  
 

 

 

   

 

 

      

 

 

   

 

 

 

Par value

  $ 0.001     $ 0.001        $ 0.001     $ 0.001  
 

 

 

   

 

 

      

 

 

   

 

 

 

(a) Securities loaned, at value

  $ 2,777,853     $ 1,311,865        $ 8,025,156     $ 3,534,096  

(b) Investments, at cost — Unaffiliated

  $ 63,056,495     $ 39,708,815        $ 1,002,574,589     $ 186,162,961  

(c)  Investments, at cost — Affiliated

  $ 2,935,367     $ 1,351,373        $ 9,098,682     $ 3,851,227  

(d) Foreign currency, at cost

  $ 76,361     $ 55,664        $ 1,557,587     $ 435,879  

(e) Foreign currency collateral pledged, at cost

  $ 215,996     $ 17,900        $ 212,416     $ 147,975  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  32


 

Statements of Assets and Liabilities  (continued)

August 31, 2020

 

   

iShares

MSCI

Sweden ETF

 

 

 

ASSETS

 

Investments in securities, at value (including securities on loan)(a):

 

Unaffiliated(b)

  $ 239,918,552  

Affiliated(c)

    3,766,386  

Cash

    3,745  

Foreign currency, at value(d)

    568,334  

Foreign currency collateral pledged:

 

Futures contracts(e)

    993,142  

Receivables:

 

Investments sold

    361,258  

Securities lending income — Affiliated

    1,172  

Dividends

    8  

Tax reclaims

    445,929  

Foreign withholding tax claims

    15,859,894  

Unrealized appreciation on:

 

Forward foreign currency exchange contracts

    41,775  
 

 

 

 

Total assets

    261,960,195  
 

 

 

 

LIABILITIES

 

Collateral on securities loaned, at value

    3,688,589  

Payables:

 

Investments purchased

    424,680  

Variation margin on futures contracts

    107,911  

Investment advisory fees

    92,274  

Professional fees

    1,625,989  

IRS compliance fee for foreign withholding tax claims

    8,870,018  

Unrealized depreciation on:

 

Forward foreign currency exchange contracts

    647,777  
 

 

 

 

Total liabilities

    15,457,238  
 

 

 

 

NET ASSETS

  $ 246,502,957  
 

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

  $ 296,893,115  

Accumulated loss

    (50,390,158
 

 

 

 

NET ASSETS

  $ 246,502,957  
 

 

 

 

Shares outstanding

    6,900,000  
 

 

 

 

Net asset value

  $ 35.73  
 

 

 

 

Shares authorized

    63.6 million  
 

 

 

 

Par value

  $ 0.001  
 

 

 

 

(a) Securities loaned, at value

  $ 3,489,442  

(b) Investments, at cost — Unaffiliated

  $ 252,499,619  

(c)  Investments, at cost — Affiliated

  $ 3,767,187  

(d) Foreign currency, at cost

  $ 472,889  

(e) Foreign currency collateral pledged, at cost

  $ 990,289  

See notes to financial statements.

 

 

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Statements of Operations

Year Ended August 31, 2020

 

   

iShares

MSCI Austria

ETF

          

iShares

MSCI

Belgium ETF

          

iShares

MSCI France

ETF

          

iShares

MSCI

Netherlands

ETF

 

 

 

INVESTMENT INCOME

                

Dividends — Unaffiliated

  $ 424,401        $ 839,961        $ 15,205,732        $ 3,218,045  

Dividends — Affiliated

    319          210          4,527          877  

Securities lending income — Affiliated — net

    96,969          29,066          296,487          49,581  

Foreign taxes withheld

    (50,537        (126,089        (2,024,572        (475,918
 

 

 

      

 

 

      

 

 

      

 

 

 

Total investment income

    471,152          743,148          13,482,174          2,792,585  
 

 

 

      

 

 

      

 

 

      

 

 

 

EXPENSES

                

Investment advisory fees

    287,457          203,365          4,284,049          923,604  

Miscellaneous

    264          264          264          264  
 

 

 

      

 

 

      

 

 

      

 

 

 

Total expenses

    287,721          203,629          4,284,313          923,868  
 

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income

    183,431          539,519          9,197,861          1,868,717  
 

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

                

Net realized gain (loss) from:

                

Investments — Unaffiliated

    (5,032,776        (2,949,110        (10,699,149        (5,155,977

Investments — Affiliated

    (289        (3,128        (6,730        (3,557

In-kind redemptions — Unaffiliated

    (3,195,101        1,576,251          39,510,106          14,185,893  

Futures contracts

    140,859          26,336          (70,310        19,138  

Foreign currency transactions

    12,521          7,663          139,532          17,879  
 

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss)

    (8,074,786        (1,341,988        28,873,449          9,063,376  
 

 

 

      

 

 

      

 

 

      

 

 

 

Net change in unrealized appreciation (depreciation) on:

                

Investments — Unaffiliated

    (5,847,490        462,191          (43,241,158        7,082,322  

Investments — Affiliated

    (303        (466        (1,141        352  

Futures contracts

    (20,097        (743        (62,549        (10,586

Foreign currency translations

    110,603          7,014          54,208          19,549  
 

 

 

      

 

 

      

 

 

      

 

 

 

Net change in unrealized appreciation (depreciation)

    (5,757,287        467,996          (43,250,640        7,091,637  
 

 

 

      

 

 

      

 

 

      

 

 

 

Net realized and unrealized gain (loss)

    (13,832,073        (873,992        (14,377,191        16,155,013  
 

 

 

      

 

 

      

 

 

      

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (13,648,642      $ (334,473      $ (5,179,330      $ 18,023,730  
 

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  34


 

Statements of Operations  (continued)

Year Ended August 31, 2020

 

   

iShares

MSCI

Sweden ETF

 

 

 

INVESTMENT INCOME

 

Dividends — Unaffiliated

  $ 2,357,580  

Dividends — Affiliated

    1,476  

Non-cash dividends — Unaffiliated

    797,785  

Securities lending income — Affiliated — net

    5,334  

Foreign taxes withheld

    (198,284

Foreign withholding tax claims

    407,350  

IRS Compliance fee for foreign withholding tax claims

    (96,089
 

 

 

 

Total investment income

    3,275,152  
 

 

 

 

EXPENSES

 

Investment advisory fees

    1,016,772  

Professional fees

    75,068  

Miscellaneous

    264  
 

 

 

 

Total expenses

    1,092,104  
 

 

 

 

Net investment income

    2,183,048  
 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

 

Net realized gain (loss) from:

 

Investments — Unaffiliated

    (9,044,532

Investments — Affiliated

    (1,402

In-kind redemptions — Unaffiliated

    (12,382,047

Futures contracts

    1,064,000  

Forward foreign currency exchange contracts

    107,393  

Foreign currency transactions

    117,384  
 

 

 

 

Net realized loss

    (20,139,204
 

 

 

 

Net change in unrealized appreciation (depreciation) on:

 

Investments — Unaffiliated

    57,181,196  

Investments — Affiliated

    (801

Futures contracts

    (144,826

Forward foreign currency exchange contracts

    (1,118,246

Foreign currency translations

    1,795,122  
 

 

 

 

Net change in unrealized appreciation (depreciation)

    57,712,445  
 

 

 

 

Net realized and unrealized gain

    37,573,241  
 

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 39,756,289  
 

 

 

 

See notes to financial statements.

 

 

35  

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Statements of Changes in Net Assets

 

    iShares
MSCI Austria ETF
    iShares
MSCI Belgium ETF
 
   

 

Year Ended
08/31/20

    Year Ended
08/31/19
    Year Ended
08/31/20
    Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 183,431     $ 1,991,632     $ 539,519     $ 1,205,284  

Net realized loss

    (8,074,786     (14,361,944     (1,341,988     (1,884,910

Net change in unrealized appreciation (depreciation)

    (5,757,287     (6,282,218     467,996       (1,629,193
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease in net assets resulting from operations

    (13,648,642     (18,652,530     (334,473     (2,308,819
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (418,122     (2,792,866     (830,721     (1,172,255
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    2,404,148       (70,251,096     (13,455,384     (9,116,599
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total decrease in net assets

    (11,662,616     (91,696,492     (14,620,578     (12,597,673

Beginning of year

    54,766,947       146,463,439       47,305,314       59,902,987  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 43,104,331     $ 54,766,947     $ 32,684,736     $ 47,305,314  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  36


 

Statements of Changes in Net Assets (continued)

 

    iShares
MSCI France ETF
    iShares
MSCI Netherlands ETF
 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/20

   

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 9,197,861     $ 23,186,901     $ 1,868,717     $ 4,692,606  

Net realized gain

    28,873,449       19,210,568       9,063,376       12,102,764  

Net change in unrealized appreciation (depreciation)

    (43,250,640     (81,679,760     7,091,637       (9,530,024
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (5,179,330     (39,282,291     18,023,730       7,265,346  
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (6,248,852     (22,272,214     (1,766,500     (4,709,077
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    (232,837,366     251,536,596       38,219,101       1,318,549  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (244,265,548     189,982,091       54,476,331       3,874,818  

Beginning of year

    1,129,200,068       939,217,977       133,042,391       129,167,573  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 884,934,520     $ 1,129,200,068     $ 187,518,722     $ 133,042,391  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

37  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


 

Statements of Changes in Net Assets (continued)

 

    iShares
MSCI Sweden ETF
 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

   

OPERATIONS

   

Net investment income

  $ 2,183,048     $ 7,235,753  

Net realized loss

    (20,139,204     (6,956,310

Net change in unrealized appreciation (depreciation)

    57,712,445       (21,010,780
 

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    39,756,289       (20,731,337
 

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

   

Decrease in net assets resulting from distributions to shareholders

    (3,366,893     (7,255,549
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Net increase (decrease) in net assets derived from capital share transactions

    4,597,755       (14,965,695
 

 

 

   

 

 

 

NET ASSETS

   

Total increase (decrease) in net assets

    40,987,151       (42,952,581

Beginning of year

    205,515,806       248,468,387  
 

 

 

   

 

 

 

End of year

  $ 246,502,957     $ 205,515,806  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  38


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares MSCI Austria ETF  
 

 

 
   

 

Year Ended
08/31/20

    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

         $ 18.89                $ 22.88                $ 22.87                $ 15.58                $ 15.59  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.06         0.48         0.58         0.53         0.38  

Net realized and unrealized gain (loss)(b)

      (3.16       (3.69       0.11         7.13         (0.06
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      (3.10       (3.21       0.69         7.66         0.32  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (0.12       (0.78       (0.68       (0.37       (0.33
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.12       (0.78       (0.68       (0.37       (0.33
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 15.67       $ 18.89       $ 22.88       $ 22.87       $ 15.58  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      (16.58 )%        (14.07 )%        3.03       49.52       2.11
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.51       0.49       0.47       0.49       0.48
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      0.32       2.34       2.37       2.75       2.47
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 43,104       $ 54,767       $ 146,463       $ 233,322       $ 60,780  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      16       17       19       18       15
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

39  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Belguim ETF  
 

 

 

 
   

 

Year Ended
08/31/20

    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

           $ 18.48          $ 19.70              $ 20.59              $ 18.16              $ 17.00  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.24         0.44         0.50         0.43         0.34  

Net realized and unrealized gain (loss)(b)

      (0.60       (1.22       (0.77       2.51         1.05  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      (0.36       (0.78       (0.27       2.94         1.39  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (0.36       (0.44       (0.62       (0.51       (0.23
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.36       (0.44       (0.62       (0.51       (0.23
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 17.76       $ 18.48       $ 19.70       $ 20.59       $ 18.16  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      (2.02 )%        (3.80 )%        (1.34 )%        16.44       8.20
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.51       0.49       0.47       0.49       0.48
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      1.34       2.43       2.40       2.31       1.92
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 32,685       $ 47,305       $ 59,903       $ 74,128       $ 132,203  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      18       11       13       8       19
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  40


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI France ETF  
 

 

 

 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

    $ 29.41            $ 31.10            $ 29.64            $ 23.84            $ 25.01  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.32         0.83         0.80         0.69         0.67  

Net realized and unrealized gain (loss)(b)

      (0.18       (1.67       1.40         5.69         (1.14
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      0.14         (0.84       2.20         6.38         (0.47
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (0.25       (0.85       (0.74       (0.58       (0.70
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.25       (0.85       (0.74       (0.58       (0.70
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 29.30       $ 29.41       $ 31.10       $ 29.64       $ 23.84  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      0.50       (2.64 )%        7.46       26.93       (1.87 )% 
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.51       0.50       0.47       0.49       0.48
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      1.09       2.84       2.53       2.57       2.77
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 884,935       $ 1,129,200       $ 939,218       $ 640,201       $ 329,054  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      2       2       4       6       6
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

41  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Netherlands ETF  
 

 

 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

         $ 30.58            $ 31.12            $ 30.56            $ 24.78            $ 24.48  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.33         0.88         0.62         0.46         0.71  

Net realized and unrealized gain (loss)(b)

      4.80         (0.56       0.62         5.98         0.08  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase from investment operations

      5.13         0.32         1.24         6.44         0.79  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (0.33       (0.86       (0.68       (0.66       (0.49
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.33       (0.86       (0.68       (0.66       (0.49
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 35.38       $ 30.58       $ 31.12       $ 30.56       $ 24.78  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      16.88       1.16       4.08       26.44       3.32
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.51       0.50       0.47       0.49       0.48
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      1.03       2.97       1.95       1.74       2.97
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 187,519       $ 133,042       $ 129,168       $ 192,540       $ 184,587  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      19       13       7       14       24
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  42


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Sweden ETF  
 

 

 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

         $ 28.25             $ 31.85             $ 34.68             $ 28.54             $ 30.26  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income(a)

      0.34          0.95          1.14          0.86          1.05  

Net realized and unrealized gain (loss)(b)

      7.65          (3.58        (2.19        6.04          (1.63
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) from investment operations

      7.99          (2.63        (1.05        6.90          (0.58
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Distributions(c)

                       

From net investment income

      (0.51        (0.97        (1.78        (0.76        (1.14
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total distributions

      (0.51        (0.97        (1.78        (0.76        (1.14
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net asset value, end of year

    $ 35.73        $ 28.25        $ 31.85        $ 34.68        $ 28.54  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total Return

                       

Based on net asset value

      28.51        (8.41 )%         (2.88 )%         24.30        (1.91 )% 
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Ratios to Average Net Assets

                       

Total expenses

      0.55        0.55        0.53        0.53        0.48
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

      0.51        0.49        0.47        0.49        0.48
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income

      1.09        3.16        3.34        2.74        3.65
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Supplemental Data

                       

Net assets, end of year (000)

    $ 246,503        $ 205,516        $ 248,468        $ 460,315        $ 284,709  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Portfolio turnover rate(d)

      8        4        5        9        7
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

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Notes to Financial Statements

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

iShares ETF  

Diversification   

Classification   

MSCI Austria

  Non-diversified   

MSCI Belgium

  Non-diversified   

MSCI France

  Non-diversified   

MSCI Netherlands

  Non-diversified   

MSCI Sweden

  Non-diversified   

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

Foreign CurrencyTranslation: 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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

 

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Notes to Financial Statements  (continued)

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

   

Forward foreign currency exchange contracts are valued based on that day’s prevailing forward exchange rate for the underlying currencies.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned

 

 

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Notes to Financial Statements  (continued)

 

securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

 

 

iShares ETF and Counterparty

 

 

 

 

Market Value of
Securities on Loan

 

 
 

    
Cash Collateral
Received
 
(a) 
   
Non-Cash Collateral
Received
 
 
     Net Amount  

 

 

 

MSCI Austria

         

Credit Suisse Securities (USA) LLC

  $ 173,151      $ 173,151     $      $  

Deutsche Bank Securities Inc.

    370,815        370,815               

Goldman Sachs & Co.

    166,596        166,596               

Morgan Stanley & Co. LLC

    2,067,291        2,067,291               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 2,777,853      $ 2,777,853     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Belgium

         

Credit Suisse AG

  $ 1,158,341      $ 1,158,341     $      $  

Deutsche Bank Securities Inc.

    24,816        24,816               

Goldman Sachs & Co.

    77,710        77,710               

HSBC Bank PLC

    868        868               

Morgan Stanley & Co. LLC

    50,130        50,130               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 1,311,865      $ 1,311,865     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI France

         

Barclays Capital Inc.

  $ 1,965,084      $ 1,965,084     $      $  

BNP Paribas Securities Corp.

    596,870        596,870               

Goldman Sachs & Co.

    5,138,344        5,138,344               

Morgan Stanley & Co. LLC

    324,858        324,858               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 8,025,156      $ 8,025,156     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Netherlands

         

BofA Securities, Inc.

  $ 598,919      $ 598,919     $      $  

Citigroup Global Markets Inc.

    14,813        14,813               

Credit Suisse AG

    365,214        365,214               

Morgan Stanley & Co. LLC

    1,790,782        1,790,782               

National Financial Services LLC

    1,462        1,462               

UBS AG

    762,906        762,906               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 3,534,096      $ 3,534,096     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Sweden

         

BofA Securities, Inc.

  $ 2,167,449      $ 2,167,449     $      $  

Morgan Stanley & Co. LLC

    1,321,993        1,321,993               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 3,489,442      $ 3,489,442     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the

 

 

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Notes to Financial Statements  (continued)

 

value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

Forward Foreign Currency Exchange Contracts: The iShares MSCI Sweden ETF uses forward foreign currency exchange contracts to better match benchmark currency exposures in order to facilitate tracking of the investment results of its Index. A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency against another currency at an agreed upon price and quantity. The contracts are traded over-the-counter (“OTC”) and not on an organized exchange.

The contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation or depreciation in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts (“NDFs”) are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a contract changes unfavorably due to movements in the value of the referenced foreign currencies. A fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the fund.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help mitigate its counterparty risk, a fund may enter into an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency, or other events.

The collateral requirements under an ISDA Master Agreement are typically calculated by netting the mark-to-market amount for each transaction under such agreement, and comparing that amount to the value of any collateral currently pledged by a fund and the counterparty. Except for NDFs, the forward foreign currency exchange contracts held by the Funds generally do not require collateral. Cash collateral pledged to the counterparty, if any, is presented as cash pledged as collateral for OTC derivatives on the statement of assets and liabilities. Cash received as collateral from the counterparty may be reinvested in money market funds, including those managed by the Funds’ investment adviser, or its affiliates. Such collateral, if any, is presented in the statement of assets and liabilities as affiliated investments at value and as a liability for cash received as collateral on OTC derivatives. To the extent amounts due to the Funds from the counterparty are not fully collateralized, contractually or otherwise, each Fund bears the risk of loss from counterparty non-performance. Each Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

For financial reporting purposes, each Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the statement of assets and liabilities.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

 

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Notes to Financial Statements  (continued)

 

Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $7 billion

    0.59

Over $7 billion, up to and including $11 billion

    0.54  

Over $11 billion, up to and including $24 billion

    0.49  

Over $24 billion, up to and including $48 billion

    0.44  

Over $48 billion, up to and including $72 billion

    0.40  

Over $72 billion, up to and including $96 billion

    0.36  

Over $96 billion

    0.32  

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

   
iShares ETF  

Fees Paid   

to BTC   

 

MSCI Austria

  $ 21,843  

MSCI Belgium

    6,876  

MSCI France

    67,252  

MSCI Netherlands

    11,832  

MSCI Sweden

    1,561    

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

       
iShares ETF   Purchases      Sales      Net Realized
Gain (Loss)
 

 

MSCI Austria

  $ 671,705      $ 786,796      $ (665,243

MSCI Belgium

    4,615,066        513,463        (93,337

MSCI France

    2,591,467        3,116,549        (2,865,025

MSCI Netherlands

    5,798,744        5,406,322        (597,579

MSCI Sweden

    4,107,737        6,154,535        (3,066,697

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the statement of operations.

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  48


Notes to Financial Statements  (continued)

 

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

     
iShares ETF   Purchases      Sales   

MSCI Austria

  $ 8,966,065      $ 9,244,234  

MSCI Belgium

    7,263,056        7,661,470  

MSCI France

        21,364,714            18,236,034  

MSCI Netherlands

    34,102,858        34,093,126  

MSCI Sweden

    18,413,861        16,527,199    

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

iShares ETF  

 

In-kind
Purchases

    

In-kind   

Sales   

MSCI Austria

  $ 35,266,978      $ 32,852,075  

MSCI Belgium

    4,098,060        17,430,820  

MSCI France

        403,206,511            635,798,126  

MSCI Netherlands

    149,965,595        112,070,997  

MSCI Sweden

    100,228,620        98,330,334    

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions, were reclassified to the following accounts:

 

     
iShares ETF   Paid-in Capital     Accumulated
Loss
 

MSCI Austria

  $ (4,332,145   $ 4,332,145  

MSCI Belgium

    1,173,235       (1,173,235

MSCI France

    38,637,427       (38,637,427

MSCI Netherlands

    13,360,900       (13,360,900

MSCI Sweden

    (14,080,287     14,080,287  

The tax character of distributions paid was as follows:

 

 

 
iShares ETF  

Year Ended

08/31/20

    

Year Ended

08/31/19

 

 

 

MSCI Austria

    

Ordinary income

  $ 418,122      $ 2,792,866  
 

 

 

    

 

 

 

MSCI Belgium

    

Ordinary income

  $ 830,721      $ 1,172,255  
 

 

 

    

 

 

 

MSCI France

    

Ordinary income

  $ 6,248,852      $ 22,272,214  
 

 

 

    

 

 

 

MSCI Netherlands

    

Ordinary income

  $ 1,766,500      $ 4,709,077  
 

 

 

    

 

 

 

MSCI Sweden

    

Ordinary income

  $ 3,366,893      $ 7,255,549  
 

 

 

    

 

 

 

 

 

49  

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Notes to Financial Statements  (continued)

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

 

 

iShares ETF

   
Undistributed
Ordinary Income
 
 
    

Non-expiring
Capital Loss
Carryforwards
 
 
(a) 
   
Net Unrealized
Gains (Losses)
 
(b) 
    Total  

 

 

MSCI Austria

  $ 140,614      $ (41,739,653   $ (22,064,317   $ (63,663,356

MSCI Belgium

    294,046        (18,501,985     (8,007,772     (26,215,711

MSCI France

    3,624,604        (50,747,309     (125,479,705     (172,602,410

MSCI Netherlands

    777,386        (23,177,633     (449,442     (22,849,689

MSCI Sweden

    1,385,802        (36,604,434     (15,171,526     (50,390,158 )   

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts and foreign currency contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and foreign withholding tax reclaims.

 

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

         
iShares ETF   Tax Cost      Gross Unrealized
Appreciation
     Gross Unrealized
Depreciation
   

Net Unrealized   

Appreciation   

(Depreciation)   

MSCI Austria

  $ 66,656,665      $ 401,815      $ (22,523,866   $ (22,122,051

MSCI Belgium

    41,903,855        3,518,107        (11,532,332     (8,014,225

MSCI France

    1,018,221,201        57,376,638        (182,891,502     (125,514,864

MSCI Netherlands

    190,764,191        21,088,084        (21,551,171     (463,087

MSCI Sweden

    259,698,734        19,564,079        (35,555,040     (15,990,961 )   

 

9.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  50


Notes to Financial Statements  (continued)

 

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Investment percentages in specific sectors are presented in the schedule of investments.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

10.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

 
 

 

 

   

 

 

 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

 

MSCI Austria

       

Shares sold

    2,000,000     $ 36,144,704       1,000,000     $ 21,691,523  

Shares redeemed

    (2,150,000     (33,740,556     (4,500,000     (91,942,619
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (150,000   $ 2,404,148       (3,500,000   $ (70,251,096
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Belgium

       

Shares sold

    240,000     $ 4,113,227       560,000     $ 9,945,400  

Shares redeemed

    (960,000     (17,568,611     (1,040,000     (19,061,999
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease

    (720,000   $ (13,455,384     (480,000   $ (9,116,599
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI France

       

Shares sold

    13,600,000     $ 404,731,082       19,200,000     $ 569,122,479  

Shares redeemed

    (21,800,000     (637,568,448     (11,000,000     (317,585,883
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (8,200,000   $ (232,837,366     8,200,000     $ 251,536,596  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

 

51  

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Notes to Financial Statements  (continued)

 

 

 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

 
 

 

 

   

 

 

 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

 

MSCI Netherlands

       

Shares sold

    4,600,000     $ 150,728,480       4,050,000     $ 117,319,587  

Shares redeemed

    (3,650,000     (112,509,379     (3,850,000     (116,001,038
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    950,000     $ 38,219,101       200,000     $ 1,318,549  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Sweden

       

Shares sold

    3,225,000     $ 105,874,093       2,400,000     $ 71,346,070  

Shares redeemed

    (3,600,000     (101,276,338     (2,925,000     (86,311,765
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (375,000   $ 4,597,755       (525,000   $ (14,965,695
 

 

 

   

 

 

   

 

 

   

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

11.

FOREIGN WITHHOLDING TAX CLAIMS

The iShares MSCI Sweden ETF has filed claims to recover taxes withheld by Sweden on dividend income based upon certain provisions in the Treaty on the Functioning of the European Union. The Fund has recorded receivables for all recoverable taxes withheld by Sweden based upon previous determinations made by the Swedish tax authorities. Professional and other fees associated with the filing of these claims for foreign withholding taxes have been approved by the Board as appropriate expenses of the Fund. Swedish tax claim receivables and related liabilities are disclosed in the statement of assets and liabilities. Collection of these receivables, and any payment of associated liabilities, depends upon future determinations made by the Swedish tax authorities, the outcome of which is uncertain. If such future determinations are unfavorable, the potential negative impact to the Fund, as of August 31, 2020, is $8,160,576 or $1.18 per share.

The Fund, under the approval of the Board, is seeking a closing agreement with the Internal Revenue Service (“IRS”) to address any prior years’ U.S. income tax liabilities attributable to Fund shareholders resulting from the recovery of foreign taxes. The closing agreement would result in the Fund paying a compliance fee to the IRS, on behalf of its shareholders, representing the estimated tax savings generated from foreign tax credits claimed by Fund shareholders on their tax returns in prior years. The Fund has accrued a liability for the estimated IRS compliance fee related to foreign withholding tax claims, which is disclosed in the statement of assets and liabilities. The actual IRS compliance fee may differ from the estimate and that difference may be material.

 

12.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

13.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  52


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares MSCI Austria ETF, iShares MSCI Belgium ETF,

iShares MSCI France ETF, iShares MSCI Netherlands ETF and iShares MSCI Sweden ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares MSCI Austria ETF, iShares MSCI Belgium ETF, iShares MSCI France ETF, iShares MSCI Netherlands ETF and iShares MSCI Sweden ETF (five of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

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Important Tax Information (unaudited)

 

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

iShares ETF  

 

Qualified Dividend    
Income    

 

 

MSCI Austria

  $ 328,903      

MSCI Belgium

    762,251      

MSCI France

    15,093,771      

MSCI Netherlands

    3,070,356      

MSCI Sweden

    2,843,326      

For the fiscal year ended August 31, 2020, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders:

 

iShares ETF  

 

Foreign Source
Income Earned

     Foreign    
Taxes Paid    
 

 

MSCI Austria

  $ 426,835      $ 36,336      

MSCI Belgium

    840,461        126,088      

MSCI France

    15,216,502         2,021,665      

MSCI Netherlands

    3,219,721        441,793      

MSCI Sweden

    3,160,838        6,177      

 

 

M P O R T A N T  A X  N F O R  M A T I O N

  54


Board Review and Approval of Investment Advisory Contract

 

iShares MSCI Austria ETF, iShares MSCI Belgium ETF, iShares MSCI Netherlands ETF, iShares MSCI Sweden ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI France ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

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Supplemental Information (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

     

 

Total Cumulative Distributions

for the Fiscal Year

 

                

 

% Breakdown of the Total Cumulative

Distributions for the Fiscal Year

 

 
iShares ETF   

 

Net

Investment

Income

      

Net Realized

Capital Gains

      

Return of

Capital

      

Total Per

Share

                

 

Net

Investment

Income

    

Net Realized

Capital Gains

    

Return of

Capital

    

Total Per

Share

 

MSCI Austria(a)

   $  0.085837        $        $  0.030308        $  0.116145               74           26      100

MSCI Belgium(a)

     0.283588                   0.071921          0.355509               80               20        100  

MSCI Sweden(a)

     0.373126                   0.138030          0.511156                     73               27        100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

 

 

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Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFAor its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., ParkAvenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       
  Name (Age)        Position(s)   

Principal Occupation(s)

During the Past 5 Years

         Other Directorships Held by Director        
Robert S.
Kapito(a) (63)
   Director (since 2009).    President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).      Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).
Salim Ramji(b)
(50)
   Director (since 2019).    Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).      Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

 

(a) 

Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b) 

Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

 

Independent Directors
       
  Name (Age)        Position(s)   

Principal Occupation(s)

During the Past 5 Years

         Other Directorships Held by Director        
Cecilia H.
Herbert (71)
   Director (since 2005); Independent Board Chair (since 2016).    Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.      Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).
Jane D.
Carlin (64)
   Director (since 2015); Risk Committee Chair (since 2016).    Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).      Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).
Richard L.
Fagnani (65)
   Director (since 2017); Audit Committee Chair (since 2019).    Partner, KPMG LLP (2002-2016).      Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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  60


Director and Officer Information  (continued)

 

Independent Directors (continued)
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

John E.

Kerrigan (65)

  

Director (since 2005); Nominating and Governance and Equity Plus Committee Chairs

(since 2019).

   Chief Investment Officer, Santa Clara University (since 2002).    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E.

Lawton (61)

  

Director (since 2017); 15(c) Committee Chair

(since 2017).

   Senior Managing Director of New York Life Insurance Company (2010-2015).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

John E.

Martinez (59)

  

Director (since 2003); Securities Lending Committee Chair

(since 2019).

   Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).    Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

Madhav V.

Rajan (56)

  

Director (since 2011); Fixed Income Plus Committee Chair

(since 2019).

   Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).
Officers
     
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

Armando

Senra (49)

  

President

(since 2019).

   Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

Trent

Walker (46)

  

Treasurer and Chief Financial Officer

(since 2020).

   Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Charles

Park (53)

  

Chief Compliance Officer

(since 2006).

   Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

Deepa

Damre (45)

  

Secretary

(since 2019).

   Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

Scott

Radell (51)

  

Executive Vice President

(since 2012).

   Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

Alan

Mason (59)

  

Executive Vice President

(since 2016).

   Managing Director, BlackRock, Inc. (since 2009).

Marybeth

Leithead (57)

  

Executive Vice President

(since 2019).

   Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

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General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

E N E R A L  N F O R M A T I O N

  62


Glossary of Terms Used in this Report

 

Counterparty Abbreviations
SCB    Standard Chartered Bank
Currency Abbreviations
EUR    Euro
SEK    Swedish Krona
USD    United States Dollar

 

 

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Want to know more?

iShares.com    |    1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-802-0820

 

LOGO

   LOGO             


 

LOGO   AUGUST 31, 2020

 

   2020 Annual Report

 

iShares, Inc.

 

·  

iShares MSCI Eurozone ETF  |  EZU  |  Cboe BZX

·  

iShares MSCI Germany ETF  |  EWG  |  NYSE Arca

·  

iShares MSCI Italy ETF  |  EWI  |  NYSE Arca

·  

iShares MSCI Spain ETF  |  EWP  |  NYSE Arca

·  

iShares MSCI Switzerland ETF  |  EWL  |  NYSE Arca

 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020
     6-Month    12-Month 

U.S. large cap equities
(S&P 500® Index)

  19.63%     21.94%  

U.S. small cap equities
(Russell 2000® Index)

  6.57        6.02     

International equities
(MSCI Europe, Australasia, Far East Index)

  7.10        6.13     

Emerging market equities
(MSCI Emerging Markets Index)

  11.23        14.49     

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

  0.34        1.26     

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

  4.67        8.93     

U.S. investment grade bonds
(Bloomberg Barclays U.S. Aggregate Bond Index)

  2.98        6.47     

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

  0.29        3.15     

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

  3.04        4.65     

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

 

2  

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Table of Contents

 

     Page  

 

 

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     15  

Shareholder Expenses

     15  

Schedules of Investments

     16  

Financial Statements

  

Statements of Assets and Liabilities

     32  

Statements of Operations

     34  

Statements of Changes in Net Assets

     36  

Financial Highlights

     39  

Notes to Financial Statements

     44  

Report of Independent Registered Public Accounting Firm

     53  

Important Tax Information (Unaudited)

     54  

Board Review and Approval of Investment Advisory Contract

     55  

Supplemental Information

     61  

Director and Officer Information

     63  

General Information

     65  

Glossary of Terms Used in this Report

     66  

 

 

 


Market Overview   

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

A R K E T  O V E R V I E W

  4


Fund Summary as of August 31, 2020    iShares® MSCI Eurozone ETF

 

Investment Objective

The iShares MSCI Eurozone ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization equities from developed market countries that use the euro as their official currency, as represented by the MSCI EMU Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns            Cumulative Total Returns  
     1 Year      5 Years      10 Years             1 Year     5 Years      10 Years  

Fund NAV

    5.61      4.39      5.33        5.61     23.96      68.02

Fund Market

    5.22        4.33        5.37          5.22       23.58        68.71  

Index

    5.83        4.50        5.44                5.83       24.62        69.78  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $       1,000.00          $        1,075.90          $        2.71               $      1,000.00          $      1,022.50          $        2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

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Fund Summary as of August 31, 2020 (continued)    iShares® MSCI Eurozone ETF

 

Portfolio Management Commentary

Stocks in the Eurozone advanced for the reporting period despite the deep global recession driven by the coronavirus pandemic. Economic activity was already stagnant at the end of 2019 due to declining exports amid slowing global trade, lower manufacturing activity, and labor strikes. Following pandemic-related closures, leading Eurozone economies posted the steepest economic contraction on record in the second quarter of 2020. The first quarter’s steep equity market declines were reversed during the second quarter amid government stimulus and signs of economic revival. As restrictions eased, consumer and business confidence rebounded, while massive job protection programs supported consumer spending and limited the rise in unemployment seen in other countries around the world. Eurozone equity performance for U.S.-based investors was also helped by U.S. dollar depreciation relative to the euro, driven by the U.S.’s expansive monetary policy, ultralow interest rates, and the rapid spread of the coronavirus.

German stocks contributed the most to the Index’s performance, led by the industrials sector, where strong gains in domestic capital goods orders bolstered industrial production as factories reopened and manufacturing activity resumed. The industrial conglomerates industry advanced amid strong sales of industrial software and high-speed trains. German information technology stocks were also meaningful contributors, as social distancing mandates drove sharply higher use of technology products and services. The software industry gained notably due to increased demand for cloud-based services as remote work arrangements were scaled up during the pandemic.

Information technology stocks in the Netherlands also contributed notably to the Index’s performance. The semiconductor equipment industry continued to supply the expansion of 5G networks, data centers, and cloud computing. Following restrictions on social interaction, businesses increased investment in remote working and communications infrastructure, while consumers staying at home drove demand for computer equipment and gaming consoles, further supporting the semiconductor equipment industry’s gains.

On the downside, Spanish stocks weighed on the Index’s return. The financials sector detracted the most, driven by banks. Lower demand for consumer mortgages and other financial products prompted Spanish banks to increase loan-loss provisions.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Consumer Discretionary

    15.2

Industrials

    14.4  

Financials

    13.6  

Information Technology

    12.7  

Consumer Staples

    9.9  

Health Care

    8.9  

Utilities

    7.4  

Materials

    7.2  

Communication Services

    4.9  

Energy

    3.8  

Real Estate

    2.0  

 

  (a)

Excludes money market funds.

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a) 

France

    33.3

Germany

    29.3  

Netherlands

    14.0  

Spain

    7.1  

Italy

    6.6  

Finland

    3.3  

Belgium

    2.8  

Ireland

    2.1  

Portugal

    0.5  

Austria

    0.5  
 

 

 

U N D  U M M A R Y

  6


Fund Summary as of August 31, 2020     iShares® MSCI Germany ETF

 

Investment Objective

The iShares MSCI Germany ETF (the “Fund”) seeks to track the investment results of an index composed of German equities, as represented by the MSCI Germany Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    15.98      4.98      6.78       15.98      27.53      92.64

Fund Market

    15.91        4.94        6.84         15.91        27.24        93.70  

Index

    16.20        5.16        6.94               16.20        28.62        95.56  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
    $        1,000.00            $        1,173.20            $        2.84                 $        1,000.00            $        1,022.50            $         2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

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Fund Summary as of August 31, 2020 (continued)    iShares® MSCI Germany ETF

 

Portfolio Management Commentary

Stocks in Germany advanced strongly for the reporting period despite a deep recession driven by the coronavirus pandemic. Economic activity, already stagnant at the end of 2019 amid lower manufacturing activity and slowing global trade, diminished sharply following coronavirus closures, leading Europe’s largest economy to post its steepest economic contraction on record in the second quarter of 2020. After a sharp downturn beginning in February 2020, equity markets recovered throughout most of the second half of the reporting period, buoyed by government stimulus and signs of economic revival. U.S. dollar depreciation against the euro, driven by the U.S.’s expansive monetary policy, ultra-low interest rates, and the rapid spread of the coronavirus, also helped German equity performance for U.S.-based investors.

The industrials sector contributed the most to the Index’s return amid gains in domestic capital goods orders, which bolstered industrial production after coronavirus-related restrictions eased. Strength in the industrial conglomerates industry, largely driven by strong sales of industrial software and high-speed trains, benefited the sector’s return.

The information technology sector was also a leading contributor, driven by the software industry, which advanced amid increased demand for cloud-based services along with cost savings from decreased spending on travel and staff. Consolidation activity and recovering demand for chips used by automakers helped semiconductor industry revenues.

The financials and consumer discretionary sectors also bolstered the Index’s return. In the financials sector, capital markets companies benefited from coronavirus-induced market volatility, which led to higher trading volumes for financial exchange operators. In the consumer discretionary sector, internet and direct marketing retailers advanced amid changing consumer habits during the pandemic’s closures, which led to higher online orders for food delivery and apparel.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Consumer Discretionary

    16.3

Information Technology

    16.2  

Financials

    14.9  

Industrials

    14.4  

Health Care

    11.7  

Materials

    8.1  

Communication Services

    5.7  

Real Estate

    5.3  

Utilities

    4.4  

Consumer Staples

    3.0  

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

SAP SE

    12.8

Siemens AG

    7.8  

Allianz SE

    6.7  

Bayer AG

    4.8  

Deutsche Telekom AG

    4.4  

adidas AG

    4.3  

BASF SE

    4.2  

Deutsche Post AG

    3.3  

Daimler AG

    3.2  
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen     3.0  
 

 

  (a)

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  8


Fund Summary as of August 31, 2020    iShares® MSCI Italy ETF

 

Investment Objective

The iShares MSCI Italy ETF (the “Fund”) seeks to track the investment results of an index composed of Italian equities, as represented by the MSCI Italy 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    (2.29 )%       0.41      1.40       (2.29 )%       2.08      14.91

Fund Market

    (2.60      0.32        1.48         (2.60      1.62        15.83  

Index

    (2.08      0.56        1.45               (2.08      2.83        15.45  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Italy Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Italy 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
    $        1,000.00          $        967.80          $        2.57               $        1,000.00          $        1,022.50          $        2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

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Fund Summary as of August 31, 2020 (continued)    iShares® MSCI Italy ETF

 

Portfolio Management Commentary

Stocks in Italy declined for the reporting period amid a deep recession driven by the coronavirus pandemic. Economic activity, already stagnant at the end of 2019 due to weak domestic demand, high government debt, and political uncertainty, came to a standstill during the country’s strict coronavirus lockdown. With non-essential businesses shuttered and tourism stopped, Italy’s economy entered a deep recession, contracting at the steepest rate on record in the second quarter of 2020. After a sharp downturn beginning in February 2020, equity markets recovered throughout most of the second half of the reporting period, buoyed by government stimulus and signs of economic revival. U.S. dollar depreciation against the euro, driven by the U.S.’s expansive monetary policy, ultra-low interest rates, and the rapid spread of the coronavirus, also helped Italian equity performance for U.S.-based investors.

The energy sector detracted the most from the Index’s return. Already low oil prices declined sharply in early 2020 as the coronavirus outbreak precipitated a steep drop in demand for energy, leading integrated oil and gas companies to post large losses and suspend dividends. As oil drillers lowered production, demand for oil well services also declined, weighing on oil and gas equipment and services stocks.

Transportation and capital goods stocks weighed on the industrials sector, which detracted due to a sharp decline in travel activity and temporary closures of vehicle manufacturing facilities. The financials sector detracted more modestly, weighed down by lower profits in the insurance industry due in part to impairments to account for the impact of market losses.

On the upside, the utilities sector advanced. Earnings in the electric utilities industry strengthened amid increased investments in green energy projects and lower reliance on carbon-based fuels.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Utilities

    28.8

Financials

    28.7  

Consumer Discretionary

    14.1  

Industrials

    9.1  

Energy

    7.5  

Communication Services

    3.7  

Health Care

    3.6  

Information Technology

    2.3  

Consumer Staples

    2.2  

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

Enel SpA

    21.8

Intesa Sanpaolo SpA

    10.0  

Ferrari NV

    6.6  

Eni SpA

    6.4  

Assicurazioni Generali SpA

    4.6  

UniCredit SpA

    4.6  

Fiat Chrysler Automobiles NV

    4.1  

Snam SpA

    3.5  

Terna Rete Elettrica Nazionale SpA

    3.4  

FinecoBank Banca Fineco SpA

    3.3  
 

 

  (a)

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  10


Fund Summary as of August 31, 2020     iShares® MSCI Spain ETF

 

Investment Objective

The iShares MSCI Spain ETF (the “Fund”) seeks to track the investment results of an index composed of Spanish equities, as represented by the MSCI Spain 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    (10.44 )%       (2.96 )%       (0.34 )%        (10.44 )%       (13.94 )%       (3.38 )% 

Fund Market

    (10.42      (3.00      (0.28       (10.42      (14.14      (2.80

Index

    (10.03      (2.59      (0.44             (10.03      (12.29      (4.36

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Spain Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Spain 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $       1,000.00          $          898.60          $       2.53               $     1,000.00          $       1,022.50          $        2.69          0.53

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

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Fund Summary as of August 31, 2020 (continued)    iShares® MSCI Spain ETF

 

Portfolio Management Commentary

Spanish stocks declined for the reporting period amid a deep recession driven by the coronavirus pandemic. The economy expanded modestly during 2019, supported by growth in services and exports. However, economic activity came to a standstill following the country’s strict coronavirus lockdowns. With non-essential businesses shuttered and tourism stopped, Spain’s economy entered a deep recession, contracting at the steepest rate on record in the second quarter of 2020. Following sharp first-quarter declines, Spanish equities rebounded, helped by government stimulus for hard-hit sectors like tourism and autos. U.S. dollar depreciation against the euro, driven by the U.S.’s expansive monetary policy, ultra-low interest rates, and the rapid spread of the coronavirus, also benefited U.S.-based investors, but Spanish equities remained below pre-pandemic levels.

The financials sector detracted the most from the Index’s return, led by the banking industry. The pandemic’s uncertainty led to lower demand for consumer mortgages and other financial products and higher provisions for loan defaults. Some banks lowered executive compensation and suspended dividend payments to preserve cash. Higher-than-expected losses from previous U.K.-based acquisitions also weighed on the industry.

The energy sector’s decline was driven by integrated oil and gas stocks, as the coronavirus pandemic precipitated a steep drop in oil demand, leading producers to post large losses. The information technology sector was a modest detractor as lower demand for travel booking services weighed on the data processing and outsourced services industry.

On the upside, the utilities sector advanced. Companies in the electric utilities industry gained amid increasing investments in green energy projects. An E.U. stimulus program passed in July 2020 provided significant support for projects that help reduce carbon emissions, benefiting the industry.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Utilities

    34.2

Financials

    22.3  

Industrials

    13.4  

Consumer Discretionary

    9.5  

Communication Services

    8.8  

Information Technology

    4.9  

Energy

    3.7  

Health Care

    3.2  

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

Iberdrola SA

    22.4

Banco Santander SA

    11.5  

Industria de Diseno Textil SA

    9.5  

Amadeus IT Group SA

    4.9  

Cellnex Telecom SA

    4.6  

Banco Bilbao Vizcaya Argentaria SA

    4.4  

Telefonica SA

    4.2  

Ferrovial SA

    4.1  

Aena SME SA

    3.9  

Repsol SA

    3.7  
 

 

  (a)

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  12


Fund Summary as of August 31, 2020     iShares® MSCI Switzerland ETF

 

Investment Objective

The iShares MSCI Switzerland ETF (the “Fund”) seeks to track the investment results of an index composed of Swiss equities, as represented by the MSCI Switzerland 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    14.07      7.92      9.25       14.07      46.42      142.31

Fund Market

    13.24        7.91        9.24         13.24        46.34        142.07  

Index

    14.05        8.08        9.28               14.05        47.50        142.86  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Switzerland Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Switzerland 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $        1,000.00          $        1,133.40          $       2.79               $         1,000.00          $       1,022.50          $        2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

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Fund Summary as of August 31, 2020 (continued)    iShares® MSCI Switzerland ETF

 

Portfolio Management Commentary

Stocks in Switzerland advanced strongly despite a deep recession driven by the coronavirus pandemic. Economic activity, already slowing during 2019 due to lower exports and investments, diminished sharply following pandemic-related closures, leading to the steepest economic contraction on record in the second quarter of 2020. After a sharp downturn beginning in February 2020, equity markets recovered through most of the second half of the reporting period amid government stimulus and signs of economic revival. Expansive U.S. monetary policy, ultralow interest rates, and the rapid spread of the coronavirus drove U.S. dollar depreciation relative to the Swiss franc, magnifying gains for U.S.-based investors.

The healthcare sector contributed the most to the Index’s return. Sharply higher demand for diagnostic products to detect the coronavirus along with optimism regarding progress in developing a vaccine against COVID-19 bolstered returns in the pharmaceuticals, biotechnology, and life sciences industry. Strong sales of drugs to treat multiple sclerosis as well as several cancer treatments further supported the industry.

The materials sector was a key contributor to the Index’s performance. Increased demand for consumer goods drove higher sales of specialty chemicals, such as flavors and fragrances used in household and personal care products. A resumption of global construction activity also benefited the chemicals industry.

Higher construction demand also supported the industrials sector, which gained amid improving sales of building materials in the capital goods industry. Investor optimism that the pandemic would accelerate the shift toward workplace automation, along with a pickup in orders from China, bolstered makers of industrial robots and electric car charging stations. The consumer staples sector also enhanced performance, advancing as consumers stockpiled food and essential household products during stay-at-home orders.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Health Care

    32.1

Consumer Staples

    24.0  

Financials

    16.7  

Industrials

    10.2  

Materials

    9.0  

Consumer Discretionary

    3.8  

Information Technology

    2.2  

Communication Services

    1.3  

Real Estate

    0.7  

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

Nestle SA

    21.4

Roche Holding AG

    13.6  

Novartis AG

    9.9  

Zurich Insurance Group AG

    4.1  

ABB Ltd.

    3.5  

Lonza Group AG

    3.5  

UBS Group AG

    3.4  

Givaudan SA

    3.0  

Cie. Financiere Richemont SA

    2.7  

Sika AG

    2.7  
 

 

  (a)

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  14


About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

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Schedule of Investments

August 31, 2020

  

iShares® MSCI Eurozone ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Austria — 0.5%  

ANDRITZ AG

    71,919     $ 2,411,764  

Erste Group Bank AG(a)

    271,537       6,618,299  

OMV AG(a)

    141,339       4,607,879  

Raiffeisen Bank International AG(a)

    144,793       2,597,479  

Verbund AG

    67,141       3,613,379  

voestalpine AG

    114,673       2,853,951  
   

 

 

 
        22,702,751  
Belgium — 2.8%            

Ageas SA/NV

    170,559       7,180,100  

Anheuser-Busch InBev SA/NV

    742,059       43,312,770  

Colruyt SA

    54,426       3,449,813  

Elia Group SA/NV

    29,943       3,226,512  

Galapagos NV(a)(b)

    41,347       5,632,237  

Groupe Bruxelles Lambert SA

    109,955       10,201,827  

KBC Group NV

    242,460       13,947,565  

Proximus SADP

    147,336       2,923,267  

Sofina SA

    14,942       4,494,278  

Solvay SA

    72,671       6,313,209  

Telenet Group Holding NV

    43,831       1,707,834  

UCB SA

    122,845       14,621,134  

Umicore SA

    192,702       8,870,485  
   

 

 

 
      125,881,031  
Finland — 3.3%            

Elisa OYJ

    139,085       8,198,838  

Fortum OYJ

    435,538       9,227,423  

Kone OYJ, Class B

    330,803       28,421,630  

Neste OYJ

    412,098       22,084,555  

Nokia OYJ

    5,503,569       26,805,179  

Orion OYJ, Class B

    102,536       4,821,732  

Sampo OYJ, Class A

    458,013       18,475,975  

Stora Enso OYJ, Class R

    569,423       8,396,751  

UPM-Kymmene OYJ

    519,211       15,778,356  

Wartsila OYJ Abp

    432,714       3,707,403  
   

 

 

 
      145,917,842  
France — 33.2%            

Accor SA(a)

    184,135       5,668,369  

Aeroports de Paris

    29,221       3,068,335  

Air Liquide SA

    461,124       76,683,500  

Airbus SE(a)

    573,955       47,253,275  

Alstom SA(a)

    187,715       10,470,580  

Amundi SA(a)(c)

    59,534       4,635,102  

Arkema SA

    67,480       7,497,285  

Atos SE(a)

    96,143       8,336,215  

AXA SA

    1,883,267       38,460,175  

BioMerieux

    40,495       6,150,612  

BNP Paribas SA(a)

    1,095,659       47,913,092  

Bollore SA

    861,631       3,243,913  

Bouygues SA(a)

    221,974       8,826,875  

Bureau Veritas SA(a)

    288,171       6,546,404  

Capgemini SE

    156,795       21,752,211  

Carrefour SA

    591,934       9,528,654  

Casino Guichard Perrachon SA(a)(b)

    7,460       194,049  

Cie. de Saint-Gobain(a)

    503,142       20,446,885  

Cie. Generale des Etablissements Michelin SCA

    164,999       18,671,425  

CNP Assurances(a)

    169,094       2,268,999  

Covivio

    50,621       3,759,547  

Credit Agricole SA(a)

    1,119,403       11,497,190  

Danone SA

    601,300       39,623,790  
Security   Shares     Value  
France (continued)  

Dassault Aviation SA(a)

    2,464     $ 2,246,952  

Dassault Systemes SE

    128,332       24,226,616  

Edenred

    237,829       12,307,360  

Eiffage SA(a)

    80,989       7,479,439  

Electricite de France SA

    607,987       6,400,131  

Engie SA(a)

    1,777,221         24,772,334  

EssilorLuxottica SA(a)

    276,867       37,118,466  

Eurazeo SE(a)

    38,776       2,050,666  

Eurofins Scientific SE(a)

    12,816       10,293,816  

Faurecia SE(a)

    74,292       3,243,897  

Gecina SA

    44,719       6,161,093  

Getlink SE(a)

    430,507       6,610,867  

Hermes International

    30,865       26,555,221  

ICADE

    29,521       1,915,332  

Iliad SA

    14,595       3,124,427  

Ingenico Group SA(a)

    58,960       10,026,983  

Ipsen SA

    36,877       3,828,146  

JCDecaux SA(a)

    84,098       1,608,227  

Kering SA

    73,803       45,421,033  

Klepierre SA(b)

    191,780       3,162,866  

La Francaise des Jeux SAEM(c)

    83,523       3,105,561  

Legrand SA

    259,611       21,702,685  

L’Oreal SA

    245,162       81,187,528  

LVMH Moet Hennessy Louis Vuitton SE

    270,564       127,102,677  

Natixis SA(a)

    932,165       2,569,668  

Orange SA

    1,940,197       21,649,142  

Orpea(a)

    50,175       6,039,686  

Pernod Ricard SA

    207,028       35,529,917  

Peugeot SA(a)(b)

    574,789       9,878,214  

Publicis Groupe SA(a)

    212,385       7,460,037  

Remy Cointreau SA

    22,200       3,661,259  

Renault SA(a)

    185,704       5,294,692  

Safran SA(a)

    312,136       36,217,489  

Sanofi

    1,101,583       111,811,027  

Sartorius Stedim Biotech

    26,981       9,673,929  

Schneider Electric SE

    538,551       66,823,336  

SCOR SE(a)

    155,082       4,158,246  

SEB SA

    22,324       3,927,335  

SES SA

    375,593       2,672,684  

Societe Generale SA(a)(b)

    790,921       12,847,246  

Sodexo SA

    86,506       6,203,275  

STMicroelectronics NV

    620,189       18,698,644  

Suez SA

    333,018       5,776,951  

Teleperformance

    57,064       17,634,694  

Thales SA

    103,787       8,130,130  

TOTAL SE

    2,407,725       95,312,110  

Ubisoft Entertainment SA(a)

    88,773       7,321,353  

Unibail-Rodamco-Westfield(b)

    135,598       6,350,518  

Valeo SA

    222,664       6,817,155  

Veolia Environnement SA

    524,049       12,660,081  

Vinci SA

    501,923       47,169,615  

Vivendi SA

    806,347       22,951,556  

Wendel SE

    25,640       2,635,586  

Worldline SA(a)(c)

    133,096       12,259,753  
   

 

 

 
      1,484,284,133  
Germany — 27.4%            

adidas AG(a)

    185,460       56,470,530  

Allianz SE, Registered

    406,358       88,215,826  

Aroundtown SA(a)

    1,120,552       6,140,452  

BASF SE

    894,668       54,633,110  
 

 

 

C H E D U L E  O F  N V E S T M  E  N T S

  16


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Eurozone ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Germany (continued)  

Bayer AG, Registered

    956,956     $ 63,563,976  

Bayerische Motoren Werke AG

    322,017       23,164,751  

Beiersdorf AG

    98,061       11,352,327  

Brenntag AG

    151,062       9,477,564  

Carl Zeiss Meditec AG, Bearer

    38,903       4,392,060  

Commerzbank AG(a)

    978,277       5,689,568  

Continental AG

    106,948         11,664,892  

Covestro AG(c)

    170,434       8,124,689  

Daimler AG, Registered(b)

    833,499       42,509,541  

Delivery Hero SE(a)(c)

    124,375       13,390,146  

Deutsche Bank AG, Registered(a)

    1,916,560       18,394,190  

Deutsche Boerse AG

    185,276       35,098,419  

Deutsche Lufthansa AG, Registered(a)(b)

    291,741       3,045,965  

Deutsche Post AG, Registered

    962,672       43,887,864  

Deutsche Telekom AG, Registered

    3,246,615       57,271,165  

Deutsche Wohnen SE

    332,251       17,737,961  

E.ON SE

    2,192,303       25,982,889  

Evonik Industries AG

    205,679       5,977,360  

Fraport AG Frankfurt Airport Services Worldwide(a)(b)

    40,744       1,859,453  

Fresenius Medical Care AG & Co. KGaA

    207,233       17,611,540  

Fresenius SE & Co. KGaA

    408,492       18,955,205  

GEA Group AG

    149,498       5,463,890  

Hannover Rueck SE

    58,616       9,996,522  

HeidelbergCement AG

    145,333       9,250,225  

Henkel AG & Co. KGaA

    100,947       9,084,753  

HOCHTIEF AG

    24,389       2,167,185  

Infineon Technologies AG

    1,221,112       33,822,621  

KION Group AG

    63,600       5,389,785  

Knorr-Bremse AG

    46,935       5,976,929  

LANXESS AG

    81,426       4,772,666  

LEG Immobilien AG

    67,085       9,889,192  

Merck KGaA

    125,655       17,078,999  

METRO AG

    177,318       1,758,431  

MTU Aero Engines AG

    51,742       9,607,005  

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen, Registered

    136,706       39,516,406  

Nemetschek SE

    56,031       4,462,886  

Puma SE(a)

    80,935       6,696,227  

RWE AG

    626,770       24,961,211  

SAP SE

    1,017,158       167,921,606  

Scout24 AG(c)

    104,622       9,753,317  

Siemens AG, Registered

    745,168       103,074,347  

Siemens Healthineers AG(c)

    146,520       6,676,288  

Symrise AG

    124,891       17,258,947  

TeamViewer AG(a)(c)

    126,354       6,856,003  

Telefonica Deutschland Holding AG

    1,012,631       2,804,807  

thyssenkrupp AG(a)

    394,765       2,844,047  

Uniper SE

    196,664       6,453,899  

United Internet AG, Registered(d)

    100,771       4,958,075  

Volkswagen AG(a)

    31,877       5,726,122  

Vonovia SE

    502,567       36,062,716  

Zalando SE(a)(c)

    147,691       12,918,801  
   

 

 

 
      1,227,815,351  
Ireland — 2.1%            

CRH PLC

    764,025       28,325,819  

Flutter Entertainment PLC(a)

    150,336       25,404,951  

Kerry Group PLC, Class A

    155,259       20,425,029  

Kingspan Group PLC(a)

    150,569       12,956,257  
Security   Shares     Value  
Ireland (continued)            

Smurfit Kappa Group PLC

    221,128     $ 7,849,118  
   

 

 

 
      94,961,174  
Italy — 6.5%            

Assicurazioni Generali SpA

    1,075,164       16,722,388  

Atlantia SpA(a)

    485,117       7,733,745  

CNH Industrial NV(a)

    996,772       7,908,325  

DiaSorin SpA

    24,885       4,508,826  

Enel SpA

    7,922,494       71,905,098  

Eni SpA

    2,484,173         23,173,394  

Ferrari NV

    123,145       24,035,333  

FinecoBank Banca Fineco SpA(a)

    580,644       8,819,153  

Infrastrutture Wireless Italiane SpA(c)

    233,300       2,278,160  

Intesa Sanpaolo SpA(a)

    16,094,502       34,746,901  

Leonardo SpA

    341,838       2,317,199  

Mediobanca Banca di Credito Finanziario SpA

    603,625       5,256,917  

Moncler SpA(a)

    188,349       7,309,560  

Nexi SpA(a)(c)

    368,687       6,576,492  

Pirelli & C SpA(a)(c)

    393,573       1,704,382  

Poste Italiane SpA(c)

    509,084       4,681,974  

Prysmian SpA

    236,044       6,617,040  

Recordati Industria Chimica e Farmaceutica SpA

    102,436       5,594,958  

Snam SpA

    1,996,430       10,242,939  

Telecom Italia SpA/Milano

    8,132,121       3,878,575  

Tenaris SA

    460,749       2,711,082  

Terna Rete Elettrica Nazionale SpA

    1,382,771       10,018,270  

UniCredit SpA(a)

    2,074,153       20,464,821  
   

 

 

 
      289,205,532  
Netherlands — 13.9%            

ABN AMRO Bank NV, CVA(c)

    416,230       3,974,359  

Adyen NV(a)(c)

    17,575       29,699,607  

Aegon NV

    1,745,465       4,870,114  

AerCap Holdings NV(a)(b)

    127,891       3,781,737  

Akzo Nobel NV

    187,960       18,644,154  

Altice Europe NV(a)

    605,715       2,686,094  

ArcelorMittal SA(a)

    695,295       8,815,970  

Argenx SE(a)

    43,500       10,077,019  

ASML Holding NV

    414,625       155,852,249  

Davide Campari-Milano NV

    565,981       5,815,798  

EXOR NV

    106,271       6,278,486  

Heineken Holding NV(a)

    111,921       9,188,938  

Heineken NV(a)

    252,037       23,378,428  

ING Groep NV(a)

    3,804,024       30,954,284  

Just Eat Takeaway.com NV(a)(c)

    123,122       13,729,387  

Koninklijke Ahold Delhaize NV

    1,071,287       32,312,021  

Koninklijke DSM NV

    167,673       26,961,072  

Koninklijke KPN NV

    3,503,285       9,204,893  

Koninklijke Philips NV(a)

    891,970       42,280,715  

Koninklijke Vopak NV

    69,452       3,822,474  

NN Group NV

    280,768       10,594,005  

Prosus NV(a)

    474,760       47,603,469  

QIAGEN NV(a)

    222,248       11,315,004  

Randstad NV(a)

    116,429       6,080,756  

Unilever NV

    1,422,847       82,547,265  

Wolters Kluwer NV

    265,589       21,853,034  
   

 

 

 
      622,321,332  
Portugal — 0.5%            

EDP - Energias de Portugal SA(b)

    2,724,331       13,821,136  

Galp Energia SGPS SA

    483,257       5,185,380  
 

 

 

17  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Eurozone ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Portugal (continued)            

Jeronimo Martins SGPS SA

    243,424     $ 4,004,398  
   

 

 

 
      23,010,914  
Spain — 7.1%            

ACS Actividades de Construccion y Servicios SA

    266,281       6,534,777  

Aena SME SA(a)(c)

    66,313       9,921,314  

Amadeus IT Group SA

    438,820         24,618,696  

Banco Bilbao Vizcaya Argentaria SA

    6,513,149       19,107,408  

Banco Santander SA(a)

    16,243,072       36,186,586  

Bankinter SA

    664,673       3,582,686  

CaixaBank SA

    3,521,915       7,758,570  

Cellnex Telecom SA(c)

    307,999       19,773,112  

Enagas SA

    213,004       5,219,669  

Endesa SA

    311,140       8,644,070  

Ferrovial SA

    473,990       12,686,519  

Grifols SA

    292,806       7,952,621  

Iberdrola SA

    5,798,192       73,157,400  

Industria de Diseno Textil SA

    1,062,549       29,926,304  

Mapfre SA

    1,065,925       2,024,372  

Naturgy Energy Group SA

    288,674       5,579,075  

Red Electrica Corp. SA

    392,304       7,518,548  

Repsol SA

    1,458,662       11,551,997  

Siemens Gamesa Renewable Energy SA

    234,863       6,303,049  

Telefonica SA

    4,755,017       18,828,879  
   

 

 

 
      316,875,652  
United Kingdom — 0.4%            

Coca-Cola European Partners PLC

    200,217       8,240,932  

Fiat Chrysler Automobiles NV(a)

    1,073,827       11,854,856  
   

 

 

 
      20,095,788  
   

 

 

 

Total Common Stocks — 97.7%
(Cost: $4,996,230,503)

 

    4,373,071,500  
   

 

 

 

Preferred Stocks

 

Germany — 1.7%            

Bayerische Motoren Werke AG, Preference Shares, NVS

    55,053       3,101,095  

Fuchs Petrolub SE, Preference Shares, NVS

    68,560       3,248,617  

Henkel AG & Co. KGaA, Preference Shares, NVS

    173,347       17,737,823  
Security   Shares     Value  
Germany (continued)            

Porsche Automobil Holding SE, Preference Shares, NVS

    149,517     $ 9,173,206  

Sartorius AG, Preference Shares, NVS

    34,708       14,735,713  

Volkswagen AG, Preference Shares, NVS

    180,526       30,083,529  
   

 

 

 
      78,079,983  
Italy — 0.1%            

Telecom Italia SpA/Milano, Preference Shares, NVS

    5,871,526       2,779,329  
   

 

 

 

Total Preferred Stocks — 1.8%
(Cost: $102,819,477)

 

    80,859,312  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 2.0%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(e)(f)(g)

      89,385,696       89,475,081  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(e)(f)

    1,650,000       1,650,000  
   

 

 

 
      91,125,081  
   

 

 

 

Total Short-Term Investments — 2.0%
(Cost: $91,095,071)

 

    91,125,081  
   

 

 

 

Total Investments in Securities — 101.5%
(Cost: $5,190,145,051)

 

    4,545,055,893  

Other Assets, Less Liabilities — (1.5)%

      (67,816,233
   

 

 

 

Net Assets — 100.0%

    $  4,477,239,660  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period-end.

(g) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

    Affiliated Issuer    Value at
08/31/19
       Purchases
at Cost
     Proceeds
from Sales
     Net Realized
Gain (Loss)
       Change in
Unrealized
Appreciation
(Depreciation)
       Value at
08/31/20
       Shares
Held at
08/31/20
       Income      Capital Gain
Distributions from
Underlying Funds
       

    

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 40,320,523        $ 49,080,557 (a)     $      $ 55,028        $ 18,973        $ 89,475,081          89,385,696        $ 1,189,990 (b)     $             
 

BlackRock Cash Funds: Treasury,
SL Agency Shares

     2,795,000                 (1,145,000 )(a)                         1,650,000          1,650,000          22,984           
               

 

 

      

 

 

      

 

 

           

 

 

    

 

 

   
                $ 55,028        $ 18,973        $ 91,125,081             $ 1,212,974      $    
               

 

 

      

 

 

      

 

 

           

 

 

    

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  18


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Eurozone ETF

    

 

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

                 

Euro STOXX 50 Index

     560          09/18/20        $ 21,867        $ 78,333  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 78,333  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 1,807,220  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (205,049
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 21,997,944  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

      Level 1              Level 2              Level 3      Total  

Investments

           

Assets

           

Common Stocks

   $ 4,373,071,500      $      $      $ 4,373,071,500  

Preferred Stocks

     80,859,312                      80,859,312  

Money Market Funds

     91,125,081                      91,125,081  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 4,545,055,893      $      $      $ 4,545,055,893  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Assets

           

Futures Contracts

   $ 78,333      $      $      $ 78,333  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

19  

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Schedule of Investments

August 31, 2020

  

iShares® MSCI Germany ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 0.7%            

MTU Aero Engines AG

    113,604     $ 21,093,004  
   

 

 

 
Air Freight & Logistics — 3.3%            

Deutsche Post AG, Registered

    2,116,543       96,492,420  
   

 

 

 
Airlines — 0.2%            

Deutsche Lufthansa AG, Registered(a)(b)

    637,497       6,655,882  
   

 

 

 
Auto Components — 0.9%            

Continental AG

    235,343         25,669,023  
   

 

 

 
Automobiles — 5.4%            

Bayerische Motoren Werke AG

    708,477       50,965,301  

Daimler AG, Registered(b)

    1,831,253       93,396,301  

Volkswagen AG(a)

    69,076       12,408,244  
   

 

 

 
      156,769,846  
Banks — 0.4%            

Commerzbank AG(a)

    2,152,210       12,517,054  
   

 

 

 
Capital Markets — 4.0%            

Deutsche Bank AG, Registered(a)

    4,194,099       40,252,877  

Deutsche Boerse AG

    406,519       77,010,374  
   

 

 

 
      117,263,251  
Chemicals — 6.8%            

BASF SE

    1,965,212       120,006,129  

Covestro AG(c)

    372,624       17,763,205  

Evonik Industries AG

    450,180       13,082,950  

LANXESS AG

    176,869       10,366,917  

Symrise AG

    275,017       38,005,172  
   

 

 

 
      199,224,373  
Construction & Engineering — 0.2%            

HOCHTIEF AG

    53,157       4,723,484  
   

 

 

 
Construction Materials — 0.7%            

HeidelbergCement AG

    319,103       20,310,423  
   

 

 

 
Diversified Telecommunication Services — 4.9%  

Deutsche Telekom AG, Registered

    7,131,463       125,800,933  

Telefonica Deutschland Holding AG

    2,217,332       6,141,614  

United Internet AG, Registered

    227,990       11,217,428  
   

 

 

 
      143,159,975  
Food & Staples Retailing — 0.1%            

METRO AG

    385,803       3,825,940  
   

 

 

 
Health Care Equipment & Supplies — 0.8%            

Carl Zeiss Meditec AG, Bearer

    85,693       9,674,545  

Siemens Healthineers AG(c)

    320,833       14,618,985  
   

 

 

 
      24,293,530  
Health Care Providers & Services — 2.8%            

Fresenius Medical Care AG & Co. KGaA

    456,411       38,787,743  

Fresenius SE & Co. KGaA

    894,477       41,506,309  
   

 

 

 
      80,294,052  
Household Products — 0.7%            

Henkel AG & Co. KGaA

    222,504       20,024,309  
   

 

 

 
Independent Power and Renewable Electricity Producers — 0.5%  

Uniper SE

    431,764       14,169,148  
   

 

 

 
Industrial Conglomerates — 7.8%            

Siemens AG, Registered

    1,636,819       226,410,756  
   

 

 

 
Security   Shares     Value  
Insurance — 10.4%            

Allianz SE, Registered

    892,599     $ 193,773,368  

Hannover Rueck SE

    129,023       22,003,911  

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen, Registered

    300,339       86,816,363  
   

 

 

 
        302,593,642  
Interactive Media & Services — 0.7%            

Scout24 AG(c)

    230,632       21,500,517  
   

 

 

 
Internet & Direct Marketing Retail — 2.0%            

Delivery Hero SE(a)(c)

    276,293       29,745,557  

Zalando SE(a)(c)

    324,601       28,393,440  
   

 

 

 
      58,138,997  
Life Sciences Tools & Services — 0.9%            

QIAGEN NV(a)

    488,293       24,859,784  
   

 

 

 
Machinery — 1.3%            

GEA Group AG

    326,661       11,938,887  

KION Group AG

    138,256       11,716,512  

Knorr-Bremse AG

    103,817       13,220,556  
   

 

 

 
      36,875,955  
Metals & Mining — 0.2%            

thyssenkrupp AG(a)

    861,682       6,207,907  
   

 

 

 
Multi-Utilities — 3.8%            

E.ON SE

    4,803,744       56,933,347  

RWE AG

    1,372,148       54,646,003  
   

 

 

 
      111,579,350  
Personal Products — 0.9%            

Beiersdorf AG

    215,646       24,964,908  
   

 

 

 
Pharmaceuticals — 6.1%            

Bayer AG, Registered

    2,102,035       139,623,663  

Merck KGaA

    276,512       37,583,449  
   

 

 

 
      177,207,112  
Real Estate Management & Development — 5.3%  

Aroundtown SA(a)

    2,471,511       13,543,498  

Deutsche Wohnen SE

    730,368       38,992,325  

LEG Immobilien AG

    147,642       21,764,329  

Vonovia SE

    1,102,254       79,094,474  
   

 

 

 
      153,394,626  
Semiconductors & Semiconductor Equipment — 2.5%  

Infineon Technologies AG

    2,676,519       74,134,796  
   

 

 

 
Software — 13.5%            

Nemetschek SE

    122,901       9,789,102  

SAP SE

    2,234,257       368,851,273  

TeamViewer AG(a)(c)

    278,922       15,134,384  
   

 

 

 
      393,774,759  
Textiles, Apparel & Luxury Goods — 4.8%  

adidas AG(a)

    407,374       124,040,902  

Puma SE(a)

    177,919       14,720,281  
   

 

 

 
      138,761,183  
Trading Companies & Distributors — 0.7%  

Brenntag AG

    331,227       20,781,037  
   

 

 

 
Transportation Infrastructure — 0.1%  

Fraport AG Frankfurt Airport Services Worldwide(a)(b)

    88,592       4,043,115  
   

 

 

 

Total Common Stocks — 93.4%
(Cost: $2,990,182,190)

 

    2,721,714,158  
   

 

 

 
 

 

 

C H E D U L E  O F  N V E S T M  E  N T S

  20


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI Germany ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Preferred Stocks

   
Automobiles — 3.2%            

Bayerische Motoren Werke AG, Preference Shares, NVS

    122,401     $ 6,894,759  

Porsche Automobil Holding SE, Preference Shares, NVS

    327,740       20,107,590  

Volkswagen AG, Preference Shares, NVS

    397,081       66,171,064  
   

 

 

 
        93,173,413  
Chemicals — 0.3%            

Fuchs Petrolub SE, Preference Shares, NVS

    147,961       7,010,919  
   

 

 

 
Health Care Equipment & Supplies — 1.1%  

Sartorius AG, Preference Shares, NVS

    76,078       32,299,861  
   

 

 

 
Household Products — 1.3%            

Henkel AG & Co. KGaA, Preference
Shares, NVS

    380,704       38,955,737  
   

 

 

 

Total Preferred Stocks — 5.9%
(Cost: $196,945,507)

 

    171,439,930  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 3.4%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    95,925,910       96,021,836  
Security   Shares     Value  
Money Market Funds (continued)            

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    2,194,000     $ 2,194,000  
   

 

 

 
        98,215,836  
   

 

 

 

Total Short-Term Investments — 3.4%
(Cost: $98,212,383)

 

    98,215,836  
   

 

 

 

Total Investments in Securities — 102.7%
(Cost: $3,285,340,080)

 

    2,991,369,924  

Other Assets, Less Liabilities — (2.7)%

      (77,518,317
   

 

 

 

Net Assets — 100.0%

    $  2,913,851,607  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

    Affiliated Issuer    Value at
08/31/19
    

Purchases

at Cost

     Proceeds
from Sales
     Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
08/31/20
     Shares
Held at
08/31/20
     Income      Capital Gain
Distributions from
Underlying Funds
       

    

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 39,090,443      $ 56,879,373 (a)     $      $ 52,827      $ (807    $ 96,021,836        95,925,910      $ 984,056 (b)     $             
 

BlackRock Cash Funds: Treasury,
SL Agency Shares

     839,000        1,355,000 (a)                             2,194,000        2,194,000        10,508           
             

 

 

    

 

 

    

 

 

       

 

 

    

 

 

   
              $ 52,827      $ (807    $ 98,215,836         $ 994,564      $    
             

 

 

    

 

 

    

 

 

       

 

 

    

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

                 

DAX Index

     52          09/18/20        $ 20,097        $ 705,064  
                 

 

 

 

 

21  

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Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Germany ETF

    

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 705,064  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 1,606,226  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 872,974  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 13,969,196  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                                       
      Level 1                Level 2                Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 2,721,714,158        $        $        $ 2,721,714,158  

Preferred Stocks

     171,439,930                            171,439,930  

Money Market Funds

     98,215,836                            98,215,836  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 2,991,369,924        $        $        $ 2,991,369,924  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 705,064        $        $        $ 705,064  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

C H E D U L E  O F  N V E S T M E N  T S

  22


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Italy ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 1.0%            

Leonardo SpA

    302,345     $     2,049,490  
   

 

 

 
Auto Components — 0.8%            

Pirelli & C SpA(a)(b)

    409,004       1,771,207  
   

 

 

 
Automobiles — 10.7%            

Ferrari NV

    70,264       13,714,066  

Fiat Chrysler Automobiles NV(b)

    774,419       8,549,446  
   

 

 

 
      22,263,512  
Banks — 19.9%            

FinecoBank Banca Fineco SpA(b)

    447,114       6,791,023  

Intesa Sanpaolo SpA(b)

    9,687,277       20,914,151  

Mediobanca Banca di Credito Finanziario SpA

    502,425       4,375,575  

UniCredit SpA(b)

    967,722       9,548,118  
   

 

 

 
      41,628,867  
Beverages — 2.2%            

Davide Campari-Milano NV

    446,395       4,586,980  
   

 

 

 
Diversified Financial Services — 2.3%            

EXOR NV

    81,745       4,829,491  
   

 

 

 
Diversified Telecommunication Services — 2.5%  

Infrastrutture Wireless Italiane SpA(a)

    193,623       1,890,716  

Telecom Italia SpA/Milano

    6,882,036       3,282,353  
   

 

 

 
      5,173,069  
Electric Utilities — 25.2%            

Enel SpA

    5,001,571       45,394,601  

Terna Rete Elettrica Nazionale SpA

    992,210       7,188,629  
   

 

 

 
      52,583,230  
Electrical Equipment — 2.5%        

Prysmian SpA

    183,460       5,142,949  
   

 

 

 
Energy Equipment & Services — 1.1%        

Tenaris SA

    396,304       2,331,883  
   

 

 

 
Gas Utilities — 3.5%            

Snam SpA

    1,434,175       7,358,218  
   

 

 

 
Health Care Equipment & Supplies — 1.6%  

DiaSorin SpA

    18,329       3,320,967  
   

 

 

 
Insurance — 6.4%            

Assicurazioni Generali SpA

    615,841       9,578,382  

Poste Italiane SpA(a)

    408,576       3,757,616  
   

 

 

 
      13,335,998  
Security   Shares     Value  
IT Services — 2.3%            

Nexi SpA(a)(b)

    266,102     $ 4,746,622  
   

 

 

 
Machinery — 2.9%            

CNH Industrial NV(b)

    758,773       6,020,056  
   

 

 

 
Oil, Gas & Consumable Fuels — 6.4%  

Eni SpA

    1,424,630       13,289,538  
   

 

 

 
Pharmaceuticals — 2.1%            

Recordati Industria Chimica e Farmaceutica SpA

    78,927       4,310,919  
   

 

 

 
Textiles, Apparel & Luxury Goods — 2.6%  

Moncler SpA(b)

    140,345       5,446,592  
   

 

 

 
Transportation Infrastructure — 2.7%  

Atlantia SpA(b)

    357,550       5,700,069  
   

 

 

 

Total Common Stocks — 98.7%
(Cost: $247,675,593)

 

    205,889,657  
   

 

 

 

Preferred Stocks

   
Diversified Telecommunication Services — 1.2%  

Telecom Italia SpA/Milano, Preference Shares, NVS

    5,276,619       2,497,726  
   

 

 

 

Total Preferred Stocks — 1.2%
(Cost: $3,840,099)

      2,497,726  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 0.0%        

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(c)(d)

    100,000       100,000  
   

 

 

 

Total Short-Term Investments — 0.0%
(Cost: $100,000)

 

    100,000  
   

 

 

 

Total Investments in Securities — 99.9%
(Cost: $251,615,692)

 

    208,487,383  

Other Assets, Less Liabilities — 0.1%

 

    157,615  
   

 

 

 

Net Assets — 100.0%

    $  208,644,998  
   

 

 

 

 

(a) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(b) 

Non-income producing security.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

 

 

 

23  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Italy ETF

    

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
08/31/19
     Purchases
at Cost
     Proceeds
from Sales
    Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
08/31/20
     Shares
Held at
08/31/20
     Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares(a)

   $      $      $ (7,657 )(b)    $ 7,657      $      $             $ 6,219 (c)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

     103,000               (3,000 )(b)                    100,000        100,000        1,886        
          

 

 

    

 

 

    

 

 

       

 

 

   

 

 

 
           $ 7,657      $      $ 100,000         $ 8,105     $  
          

 

 

    

 

 

    

 

 

       

 

 

   

 

 

 

 

  (a) 

As of period end, the entity is no longer held.

 
  (b) 

Represents net amount purchased (sold).

 
  (c) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts    

 

Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

           

FTSE/MIB Index

     1        09/18/20      $ 117      $ (6,031
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 6,031  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 108,979  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 192  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 266,623  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

C H E D U L E  O F  N V E S T M E N  T S

  24


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Italy ETF

    

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                           
      Level 1      Level 2      Level 3      Total  

Investments

           

Assets

           

Common Stocks

   $ 205,889,657      $      $      $ 205,889,657  

Preferred Stocks

     2,497,726                      2,497,726  

Money Market Funds

     100,000                      100,000  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 208,487,383      $      $      $ 208,487,383  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Liabilities

           

Futures Contracts

   $ (6,031    $      $      $ (6,031
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

25  

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Schedule of Investments  

August 31, 2020

  

iShares® MSCI Spain ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Banks — 20.8%            

Banco Bilbao Vizcaya Argentaria SA

    7,036,532     $ 20,642,839  

Banco Santander SA(a)

    24,023,253       53,519,402  

Bankinter SA

    1,606,222       8,657,776  

CaixaBank SA

    6,637,867       14,622,828  
   

 

 

 
      97,442,845  
Biotechnology — 3.2%            

Grifols SA

    552,591       15,008,391  
   

 

 

 
Construction & Engineering — 6.8%  

ACS Actividades de Construccion y Servicios SA

    520,601       12,776,020  

Ferrovial SA

    713,628       19,100,519  
   

 

 

 
      31,876,539  
Diversified Telecommunication Services — 8.8%  

Cellnex Telecom SA(b)

    333,413       21,404,656  

Telefonica SA

    4,976,251       19,704,919  
   

 

 

 
      41,109,575  
Electric Utilities — 29.0%            

Endesa SA

    580,411       16,124,938  

Iberdrola SA

    8,297,582       104,692,898  

Red Electrica Corp. SA

    798,923       15,311,445  
   

 

 

 
      136,129,281  
Electrical Equipment — 2.7%        

Siemens Gamesa Renewable Energy SA

    469,731       12,606,232  
   

 

 

 
Gas Utilities — 5.1%            

Enagas SA

    494,080       12,107,443  

Naturgy Energy Group SA

    605,724       11,706,562  
   

 

 

 
      23,814,005  
Insurance — 1.4%            

Mapfre SA

    3,411,073       6,478,205  
   

 

 

 
IT Services — 4.8%            

Amadeus IT Group SA

    406,782       22,821,299  
   

 

 

 
Oil, Gas & Consumable Fuels — 3.7%  

Repsol SA

    2,178,501       17,252,822  
   

 

 

 
Specialty Retail — 9.5%            

Industria de Diseno Textil SA

    1,579,532       44,486,942  
   

 

 

 
Transportation Infrastructure — 3.9%  

Aena SME SA(a)(b)

    121,897       18,237,426  
   

 

 

 

Total Common Stocks — 99.7%
(Cost: $694,784,642)

      467,263,562  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 0.0%            

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(c)(d)

    240,000       240,000  
   

 

 

 

Total Short-Term Investments — 0.0%
(Cost: $240,000)

 

    240,000  
   

 

 

 

Total Investments in Securities — 99.7%
(Cost: $695,024,642)

 

    467,503,562  

Other Assets, Less Liabilities — 0.3%

      1,320,438  
   

 

 

 

Net Assets — 100.0%

    $  468,824,000  
   

 

 

 

    

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

 

 

 

C H E D U L E  O F  N V E S T M  E  N T S

  26


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Spain ETF

    

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
08/31/19
     Purchases
at Cost
     Proceeds
from Sales
     Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
08/31/20
     Shares
Held at
08/31/20
     Income      Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares(a)

   $      $ 764 (b)     $      $ (764    $      $             $ 2,468 (c)     $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

     419,000               (179,000 )(b)                     240,000        240,000        6,927         
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 
            $ (764    $      $ 240,000         $ 9,395      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a) 

As of period end, the entity is no longer held.

 
  (b) 

Represents net amount purchased (sold).

 
  (c) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts    

 

Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

           

IBEX 35 Index

     17        09/18/20      $ 1,414      $ (20,253
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 20,253  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ (217,861
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (44,139
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 1,104,289  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

27  

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Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Spain ETF

    

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                           
      Level 1      Level 2      Level 3      Total  

Investments

           

Assets

           

Common Stocks

   $ 467,263,562      $      $      $ 467,263,562  

Money Market Funds

     240,000                      240,000  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 467,503,562      $      $      $ 467,503,562  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Liabilities

           

Futures Contracts

   $ (20,253    $      $      $ (20,253
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.    

 

C H E D U L E  O F  N V E S T M E N  T S

  28


Schedule of Investments

August 31, 2020

  

iShares® MSCI Switzerland ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Banks — 0.5%            

Banque Cantonale Vaudoise, Registered

    79,631     $ 8,533,946  
   

 

 

 
Building Products — 1.8%            

Geberit AG, Registered

    52,190       30,173,929  
   

 

 

 
Capital Markets — 8.1%            

Credit Suisse Group AG, Registered

    3,297,521       36,379,115  

Julius Baer Group Ltd.

    367,773       17,685,125  

Partners Group Holding AG

    26,923       27,441,756  

UBS Group AG, Registered

    4,727,206       57,669,341  
   

 

 

 
        139,175,337  
Chemicals — 6.9%            

Clariant AG, Registered

    469,409       9,800,532  

EMS-Chemie Holding AG, Registered

    15,156       13,709,325  

Givaudan SA, Registered

    12,070       50,802,710  

Sika AG, Registered

    188,355       45,308,116  
   

 

 

 
      119,620,683  
Construction Materials — 2.0%            

LafargeHolcim Ltd., Registered(a)

    719,589       34,283,267  
   

 

 

 
Diversified Telecommunication Services — 1.3%  

Swisscom AG, Registered

    39,063       21,690,821  
   

 

 

 
Electrical Equipment — 3.5%            

ABB Ltd., Registered

    2,360,407       60,212,726  
   

 

 

 
Food Products — 23.8%            

Barry Callebaut AG, Registered

    5,806       12,895,774  

Chocoladefabriken Lindt & Spruengli AG, Participation Certificates, NVS

    1,852       15,826,687  

Chocoladefabriken Lindt & Spruengli AG, Registered

    175       15,508,912  

Nestle SA, Registered

    3,034,780       365,878,968  
   

 

 

 
      410,110,341  
Health Care Equipment & Supplies — 4.3%  

Alcon Inc.(a)

    660,891       37,695,998  

Sonova Holding AG, Registered(a)

    85,164       19,965,707  

Straumann Holding AG, Registered

    17,108       16,886,657  
   

 

 

 
      74,548,362  
Insurance — 8.0%            

Baloise Holding AG, Registered

    85,444       13,332,092  

Swiss Life Holding AG, Registered(a)

    50,033       20,269,907  

Swiss Re AG

    408,323       32,939,733  

Zurich Insurance Group AG

    190,719       70,742,569  
   

 

 

 
      137,284,301  
Life Sciences Tools & Services — 3.5%            

Lonza Group AG, Registered

    95,806       59,625,390  
   

 

 

 
Machinery — 1.7%            

Schindler Holding AG, Participation Certificates, NVS

    66,740       17,869,970  

Schindler Holding AG, Registered

    42,530       11,231,755  
   

 

 

 
      29,101,725  
Security   Shares     Value  
Marine — 1.0%            

Kuehne & Nagel International AG,
Registered(a)

    90,076     $ 17,511,027  
   

 

 

 
Pharmaceuticals — 24.1%            

Novartis AG, Registered

    1,943,843       168,468,552  

Roche Holding AG, NVS

    664,832       233,091,746  

Vifor Pharma AG

    86,071       12,756,038  
   

 

 

 
      414,316,336  
Professional Services — 2.2%            

Adecco Group AG, Registered

    275,695       14,469,816  

SGS SA, Registered

    9,029       23,443,614  
   

 

 

 
      37,913,430  
Real Estate Management & Development — 0.7%  

Swiss Prime Site AG, Registered

    142,447       12,869,191  
   

 

 

 
Software — 1.0%            

Temenos AG, Registered

    110,486       17,889,787  
   

 

 

 
Technology Hardware, Storage & Peripherals — 1.1%  

Logitech International SA, Registered

    259,162       19,231,723  
   

 

 

 
Textiles, Apparel & Luxury Goods — 3.8%  

Cie. Financiere Richemont SA, Registered

    690,257       45,810,160  

Swatch Group AG (The), Bearer

    56,378       11,958,685  

Swatch Group AG (The), Registered(b)

    187,300       7,413,373  
   

 

 

 
      65,182,218  
   

 

 

 

Total Common Stocks — 99.3%
(Cost: $1,510,906,695)

 

    1,709,274,540  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 0.3%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(c)(d)(e)

    4,433,743       4,438,176  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(c)(d)

    1,330,000       1,330,000  
   

 

 

 
      5,768,176  
   

 

 

 

Total Short-Term Investments — 0.3%
(Cost: $5,768,991)

 

    5,768,176  
   

 

 

 

Total Investments in Securities — 99.6%
(Cost: $1,516,675,686)

 

    1,715,042,716  

Other Assets, Less Liabilities — 0.4%

      6,658,777  
   

 

 

 

Net Assets — 100.0%

    $  1,721,701,493  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

(e) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

29  

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Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Switzerland ETF

    

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
08/31/19
     Purchases
at Cost
     Proceeds
from Sales
     Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
08/31/20
     Shares
Held at
08/31/20
     Income      Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $      $ 4,441,532 (a)     $      $ (2,541    $ (815    $ 4,438,176        4,433,743      $ 9,239 (b)     $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

     516,000        814,000 (a)                             1,330,000        1,330,000        5,435         
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 
            $ (2,541    $ (815    $ 5,768,176         $ 14,674      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

           

Euro STOXX 50 Index

     259        09/18/20      $ 10,113      $ 146,987  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 146,987  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 2,420,467  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (25,906
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 9,538,558  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

C H E D U L E  O F  N V E S T M E N  T S

  30


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Switzerland ETF

    

 

Fair Value Measurements (continued)

 

                                                                                                       
      Level 1                Level 2                Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 1,709,274,540        $        $        $ 1,709,274,540  

Money Market Funds

     5,768,176                            5,768,176  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,715,042,716        $        $        $ 1,715,042,716  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 146,987        $        $        $ 146,987  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

31  

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Statements of Assets and Liabilities

August 31, 2020

 

    

iShares

MSCI Eurozone

ETF

   

iShares

MSCI Germany

ETF

   

iShares

MSCI Italy

ETF

   

iShares

MSCI Spain

ETF

 

ASSETS

       

Investments in securities, at value (including securities on loan)(a):

       

Unaffiliated(b)

  $ 4,453,930,812     $ 2,893,154,088     $ 208,387,383     $ 467,263,562  

Affiliated(c)

    91,125,081       98,215,836       100,000       240,000  

Cash

    46       7,926       6,497       4,188  

Foreign currency, at value(d)

    7,691,062       679,755       96,531       1,900,845  

Foreign currency collateral pledged:

       

Futures contracts(e)

    3,174,052       2,449,546       21,527       271,839  

Receivables:

       

Investments sold

    11,064,752       2,718,442       4,048,192       20,882,853  

Securities lending income — Affiliated

    83,605       106,248             531  

Capital shares sold

    3,289,397                   1,409,340  

Dividends

    3,696,529       4,621,304       11       31  

Tax reclaims

    9,986,679       9,884,737             90,050  

Foreign withholding tax claims

    1,208                    
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    4,584,043,223       3,011,837,882       212,660,141       492,063,239  
 

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES

       

Collateral on securities loaned, at value

    89,406,480       95,979,515              

Payables:

       

Investments purchased

    15,181,107       715,341       3,921,645       22,988,483  

Variation margin on futures contracts

    320,601       135,067       1,200       51,297  

Investment advisory fees

    1,895,363       1,156,352       92,298       199,459  

Professional fees

    12                    
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    106,803,563       97,986,275       4,015,143       23,239,239  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 4,477,239,660     $ 2,913,851,607     $ 208,644,998     $ 468,824,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS CONSIST OF:

       

Paid-in capital

  $ 5,795,404,353     $ 3,486,230,914     $ 462,954,816     $ 995,978,148  

Accumulated loss

    (1,318,164,693     (572,379,307     (254,309,818     (527,154,148
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 4,477,239,660     $ 2,913,851,607     $ 208,644,998     $ 468,824,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding

    113,300,000       96,600,000       8,100,000       20,250,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value

  $ 39.52     $ 30.16     $ 25.76     $ 23.15  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares authorized

    1 billion       482.2 million       295.4 million       127.8 million  
 

 

 

   

 

 

   

 

 

   

 

 

 

Par value

  $ 0.001     $ 0.001     $ 0.001     $ 0.001  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) Securities loaned, at value

  $ 84,460,411     $ 91,262,747     $     $  

(b) Investments, at cost — Unaffiliated

  $ 5,099,049,980     $ 3,187,127,697     $ 251,515,692     $ 694,784,642  

(c)  Investments, at cost — Affiliated

  $ 91,095,071     $ 98,212,383     $ 100,000     $ 240,000  

(d) Foreign currency, at cost

  $ 7,412,593     $ 592,255     $ 92,698     $ 1,866,228  

(e) Foreign currency collateral pledged, at cost

  $ 3,167,151     $ 2,444,220     $ 21,480     $ 271,248  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  32


Statements of Assets and Liabilities   (continued)

August 31, 2020

 

   

iShares
MSCI Switzerland

ETF

 

 

 

ASSETS

 

Investments in securities, at value (including securities on loan)(a):

 

Unaffiliated(b)

  $ 1,709,274,540  

Affiliated(c)

    5,768,176  

Cash

    5,790  

Foreign currency, at value(d)

    1,688,054  

Foreign currency collateral pledged:

 

Futures contracts(e)

    1,524,836  

Receivables:

 

Investments sold

    55,151,071  

Securities lending income — Affiliated

    1,131  

Dividends

    168  

Tax reclaims

    9,286,864  
 

 

 

 

Total assets

    1,782,700,630  
 

 

 

 

LIABILITIES

 

Collateral on securities loaned, at value

    4,441,852  

Payables:

 

Investments purchased

    55,669,188  

Variation margin on futures contracts

    153,524  

Investment advisory fees

    734,573  
 

 

 

 

Total liabilities

    60,999,137  
 

 

 

 

NET ASSETS

  $ 1,721,701,493  
 

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

  $ 1,608,499,662  

Accumulated earnings

    113,201,831  
 

 

 

 

NET ASSETS

  $ 1,721,701,493  
 

 

 

 

Shares outstanding

    41,125,000  
 

 

 

 

Net asset value

  $ 41.87  
 

 

 

 

Shares authorized

    318.625 million  
 

 

 

 

Par value

  $ 0.001  
 

 

 

 

(a) Securities loaned, at value

  $ 4,158,218  

(b) Investments, at cost — Unaffiliated

  $ 1,510,906,695  

(c)  Investments, at cost — Affiliated

  $ 5,768,991  

(d) Foreign currency, at cost

  $ 1,585,213  

(e) Foreign currency collateral pledged, at cost

  $ 1,521,521  

See notes to financial statements.

 

 

33  

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Statements of Operations

Year Ended August 31, 2020

 

   

iShares

MSCI

Eurozone

ETF

   

iShares

MSCI

Germany

ETF

   

iShares

MSCI Italy

ETF

   

iShares

MSCI Spain

ETF

 

 

 

INVESTMENT INCOME

       

Dividends — Unaffiliated

  $ 98,566,002     $ 55,235,533     $ 6,137,023     $ 17,319,178  

Dividends — Affiliated

    22,984       10,508       1,886       6,927  

Non-cash dividends — Unaffiliated

    8,775,337                   9,642,753  

Securities lending income — Affiliated — net

    1,189,990       984,056       6,219       2,468  

Foreign taxes withheld

    (12,708,725     (7,128,367     (912,342     (2,578,919
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    95,845,588       49,101,730       5,232,786       24,392,407  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory fees

    24,691,965       10,601,801       1,237,009       3,529,732  

Professional fees

    1,258                   17,075  

Miscellaneous

    264       264       264       264  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    24,693,487       10,602,065       1,237,273       3,547,071  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    71,152,101       38,499,665       3,995,513       20,845,336  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — Unaffiliated

    (138,698,900     (86,242,056     (23,307,057     (144,715,830

Investments — Affiliated

    55,028       52,827       7,657       (764

In-kind redemptions — Unaffiliated

    (387,995,367     27,084,635       (18,816,213     (128,820,480

Futures contracts

    1,807,220       1,606,226       108,979       (217,861

Foreign currency transactions

    955,954       501,002       17,998       71,383  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized loss

    (523,876,065     (56,997,366     (41,988,636     (273,683,552
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — Unaffiliated

    421,455,186       349,253,177       5,123,656       108,498,243  

Investments — Affiliated

    18,973       (807            

Futures contracts

    (205,049     872,974       192       (44,139

Foreign currency translations

    1,219,303       931,424       7,259       49,366  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    422,488,413       351,056,768       5,131,107       108,503,470  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    (101,387,652     294,059,402       (36,857,529     (165,180,082
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (30,235,551   $ 332,559,067     $ (32,862,016   $ (144,334,746
 

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  34


Statements of Operations  (continued)

Year Ended August 31, 2020

 

   

iShares

MSCI

Switzerland

ETF

 

 

 

INVESTMENT INCOME

 

Dividends — Unaffiliated

  $ 37,194,211  

Dividends — Affiliated

    5,435  

Securities lending income — Affiliated — net

    9,239  

Foreign taxes withheld

    (6,501,380
 

 

 

 

Total investment income

    30,707,505  
 

 

 

 

EXPENSES

 

Investment advisory fees

    6,527,695  

Miscellaneous

    264  
 

 

 

 

Total expenses

    6,527,959  
 

 

 

 

Net investment income

    24,179,546  
 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

 

Net realized gain (loss) from:

 

Investments — Unaffiliated

    (30,860,222

Investments — Affiliated

    (2,541

In-kind redemptions — Unaffiliated

    77,685,534  

Futures contracts

    2,420,467  

Foreign currency transactions

    361,568  
 

 

 

 

Net realized gain

    49,604,806  
 

 

 

 

Net change in unrealized appreciation (depreciation) on:

 

Investments — Unaffiliated

    155,556,351  

Investments — Affiliated

    (815

Futures contracts

    (25,906

Foreign currency translations

    977,052  
 

 

 

 

Net change in unrealized appreciation (depreciation)

    156,506,682  
 

 

 

 

Net realized and unrealized gain

    206,111,488  
 

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 230,291,034  
 

 

 

 

See notes to financial statements.    

 

 

35  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O H A R E H O L D E R  S


Statements of Changes in Net Assets

 

    iShares
MSCI Eurozone ETF
    iShares
MSCI Germany ETF
 
   

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/20

   

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 71,152,101     $ 188,336,497     $ 38,499,665     $ 58,499,817  

Net realized loss

    (523,876,065     (256,286,586     (56,997,366     (85,758,069

Net change in unrealized appreciation (depreciation)

    422,488,413       (541,585,755     351,056,768       (329,119,184
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (30,235,551     (609,535,844     332,559,067       (356,377,436
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (60,025,448     (193,219,136     (21,992,516     (58,677,042
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    (664,010,513     (3,523,968,012     600,600,371       (933,488,410
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (754,271,512     (4,326,722,992     911,166,922       (1,348,542,888

Beginning of year

    5,231,511,172       9,558,234,164       2,002,684,685       3,351,227,573  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 4,477,239,660     $ 5,231,511,172     $ 2,913,851,607     $ 2,002,684,685  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  36


Statements of Changes in Net Assets  (continued)

 

    iShares
MSCI Italy ETF
    iShares
MSCI Spain ETF
 
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/20
    Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 3,995,513     $ 10,103,171     $ 20,845,336     $ 34,269,377  

Net realized loss

    (41,988,636     (42,250,592     (273,683,552     (28,332,161

Net change in unrealized appreciation (depreciation)

    5,131,107       35,984,260       108,503,470       (96,440,348
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (32,862,016     3,836,839       (144,334,746     (90,503,132
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (4,168,452     (10,603,637     (26,056,692     (32,499,998
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    10,218,705       (163,401,382     (185,995,710     72,772,356  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total decrease in net assets

    (26,811,763     (170,168,180     (356,387,148     (50,230,774

Beginning of year

    235,456,761       405,624,941       825,211,148       875,441,922  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 208,644,998     $ 235,456,761     $ 468,824,000     $ 825,211,148  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.    

See notes to financial statements.    

 

 

37  

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Statements of Changes in Net Assets  (continued)

 

    iShares
MSCI Switzerland ETF
 
    Year Ended
08/31/20
    Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

   

OPERATIONS

   

Net investment income

  $ 24,179,546     $ 20,527,971  

Net realized gain

    49,604,806       4,112,266  

Net change in unrealized appreciation (depreciation)

    156,506,682       53,854,421  
 

 

 

   

 

 

 

Net increase in net assets resulting from operations

    230,291,034       78,494,658  
 

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

   

Decrease in net assets resulting from distributions to shareholders

    (23,858,476     (21,371,038
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Net increase in net assets derived from capital share transactions

    377,233,178       46,825,869  
 

 

 

   

 

 

 

NET ASSETS

   

Total increase in net assets

    583,665,736       103,949,489  

Beginning of year

    1,138,035,757       1,034,086,268  
 

 

 

   

 

 

 

End of year

  $ 1,721,701,493     $ 1,138,035,757  
 

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.    

See notes to financial statements.    

 

 

I N A N C I A L  T A T E M E N T  S

  38


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares MSCI Eurozone ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

  $ 37.91     $ 41.29     $ 41.71     $ 34.20     $ 36.04  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.55       1.05       1.03       0.99       0.92 (b)  

Net realized and unrealized gain (loss)(c)

    1.55       (3.22     (0.23     7.38       (1.84
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    2.10       (2.17     0.80       8.37       (0.92
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(d)

         

From net investment income

    (0.49     (1.21     (1.22     (0.86     (0.92
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.49     (1.21     (1.22     (0.86     (0.92
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 39.52     $ 37.91     $ 41.29     $ 41.71     $ 34.20  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    5.61     (5.22 )%      1.87     24.72     (2.53 )%(b)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    0.51     0.49     N/A       0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.46     2.74     2.36     2.63     2.69 %(b)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 4,477,240     $ 5,231,511     $ 9,558,234     $ 13,286,216     $ 8,293,591  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(e)

    5     6     5     4     4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

Reflects the one-time, positive effect of foreign withholding tax claims, net of the associated professional fees, which resulted in the following increases for the year ended August 31, 2016:

   

Net investment income per share by $0.02.

   

Total return by 0.08%.

   

Ratio of net investment income to average net assets by 0.06%.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

39  

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Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Germany ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 26.28     $ 30.36     $ 30.71     $ 26.18     $ 26.34  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.50       0.65       0.64       0.59       0.49  

Net realized and unrealized gain (loss)(b)

    3.66       (3.99     (0.16     4.54       (0.04
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    4.16       (3.34     0.48       5.13       0.45  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.28     (0.74     (0.83     (0.60     (0.61
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.28     (0.74     (0.83     (0.60     (0.61
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 30.16     $ 26.28     $ 30.36     $ 30.71     $ 26.18  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    15.98     (11.07 )%      1.52     19.63     1.81
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.85     2.38     1.99     2.08     1.90
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 2,913,852     $ 2,002,685     $ 3,351,228     $ 4,809,899     $ 3,596,902  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    4     9     6     3     3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  40


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Italy ETF  
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
   
Year Ended
08/31/17
 
(a)  
   
Year Ended
08/31/16
 
(a)  

 

 

Net asset value, beginning of year

  $ 26.83     $ 27.18     $ 30.21     $ 22.60     $ 29.50  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(b)

    0.43       1.00       0.82       0.57       0.66  

Net realized and unrealized gain (loss)(c)

    (1.05     (0.12     (2.86     7.76       (6.82
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (0.62     0.88       (2.04     8.33       (6.16
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(d)

         

From net investment income

    (0.45     (1.23     (0.99     (0.72     (0.72

Return of capital

                            (0.02
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.45     (1.23     (0.99     (0.72     (0.74
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 25.76     $ 26.83     $ 27.18     $ 30.21     $ 22.60  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (2.29 )%      3.46     (6.98 )%      37.37     (20.97 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.64     3.72     2.64     2.59     2.54
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 208,645     $ 235,457     $ 405,625     $ 840,630     $ 461,031  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(e)

    16     13     10     18     16
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Per share amounts reflect a one-for-two reverse stock split effective after the close of trading on November 4, 2016.

(b) 

Based on average shares outstanding.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

41  

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Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Spain ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 26.71     $ 29.85     $ 33.63     $ 26.49     $ 31.96  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.77       1.04       0.99       0.94       1.00  

Net realized and unrealized gain (loss)(b)

    (3.44     (3.26     (3.72     7.19       (5.40
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (2.67     (2.22     (2.73     8.13       (4.40
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.89     (0.92     (1.05     (0.99     (1.07
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.89     (0.92     (1.05     (0.99     (1.07
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 23.15     $ 26.71     $ 29.85     $ 33.63     $ 26.49  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (10.44 )%      (7.53 )%      (8.28 )%      31.48     (13.82 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.50     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    0.51     N/A       N/A       N/A       N/A  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.99     3.65     3.02     3.10     3.53
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 468,824     $ 825,211     $ 875,442     $ 1,528,533     $ 599,944  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    19     12     21     16     9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  42


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Switzerland ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 37.31     $ 34.91     $ 34.27     $ 30.22     $ 31.90  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.73       0.72       0.66       0.69       0.81  

Net realized and unrealized gain (loss)(b)

    4.45       2.43       0.79       4.11       (1.70
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    5.18       3.15       1.45       4.80       (0.89
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.62     (0.75     (0.81     (0.75     (0.79
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.62     (0.75     (0.81     (0.75     (0.79
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 41.87     $ 37.31     $ 34.91     $ 34.27     $ 30.22  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    14.07     9.07     4.43     15.90     (2.76 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.50     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.89     2.06     1.91     2.18     2.68
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 1,721,701     $ 1,138,036     $ 1,034,086     $ 1,259,258     $ 1,091,735  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    16     11     9     13     6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

43  

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Notes to Financial Statements

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

iShares ETF   Diversification  
Classification  

MSCI Eurozone

  Diversified  

MSCI Germany

  Non-diversified  

MSCI Italy

  Non-diversified  

MSCI Spain

  Non-diversified  

MSCI Switzerland

  Non-diversified  

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  44


Notes to Financial Statements  (continued)

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral

 

 

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Notes to Financial Statements  (continued)

 

received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

iShares ETF and Counterparty    
Market Value of
Securities on Loan
 
 
    
Cash Collateral
Received
 
(a)  
   
Non-Cash Collateral
Received
 
 
     Net Amount  

MSCI Eurozone

         

Barclays Capital Inc.

  $ 4,491,606      $ 4,491,606     $      $  

BofA Securities, Inc.

    50,440,618        50,440,618               

Citigroup Global Markets Inc.

    814,416        814,416               

Credit Suisse AG

    145,949        145,949               

Goldman Sachs & Co.

    20,079,067        20,079,067               

HSBC Bank PLC

    39,706        39,706               

JPMorgan Securities LLC

    1,049,160        1,049,160               

Morgan Stanley & Co. LLC

    4,895,359        4,895,359               

UBS AG

    1,250,969        1,250,969               

UBS Securities LLC

    1,253,561        1,253,561               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 84,460,411      $ 84,460,411     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Germany

         

BofA Securities, Inc.

  $ 83,635,671      $ 83,635,671     $      $  

Citigroup Global Markets Inc.

    5,675,891        5,675,891               

Credit Suisse Securities (USA) LLC

    40,906        40,906               

HSBC Bank PLC

    63,604        63,604               

Morgan Stanley & Co. LLC

    1,846,675        1,846,675               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 91,262,747      $ 91,262,747     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Switzerland

         

Goldman Sachs & Co.

  $ 4,158,218      $ 4,158,218     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the

 

 

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Notes to Financial Statements  (continued)

 

statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $7 billion

    0.59

Over $7 billion, up to and including $11 billion

    0.54  

Over $11 billion, up to and including $24 billion

    0.49  

Over $24 billion, up to and including $48 billion

    0.44  

Over $48 billion, up to and including $72 billion

    0.40  

Over $72 billion, up to and including $96 billion

    0.36  

Over $96 billion

    0.32  

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF   Fees Paid
to BTC
 

MSCI Eurozone

  $ 279,954  

MSCI Germany

    235,054  

MSCI Italy

    1,631  

MSCI Spain

    861  

MSCI Switzerland

    2,935  

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

 

 

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Notes to Financial Statements  (continued)

 

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

iShares ETF      Purchases        Sales        Net Realized
Gain (Loss)
 

MSCI Eurozone

     $   82,287,809        $   26,941,548        $   (28,024,160

MSCI Germany

       27,932,114          16,941,920          (11,457,311

MSCI Italy

       2,438,087          10,235,787          (7,978,840

MSCI Spain

       30,241,031          22,549,057          (28,397,254

MSCI Switzerland

       71,602,487          60,239,448          (4,991,104 )   

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

iShares ETF      Purchases        Sales  

MSCI Eurozone

     $   257,669,896        $   218,868,485  

MSCI Germany

       122,183,600          73,533,481  

MSCI Italy

       41,397,526          37,842,776  

MSCI Spain

       128,694,354          143,098,927  

MSCI Switzerland

       222,302,606          207,047,675     

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

iShares ETF      In-kind
Purchases
      

In-kind

Sales

 

MSCI Eurozone

     $   1,140,951,558        $   1,826,388,007  

MSCI Germany

       1,424,074,615          844,711,680  

MSCI Italy

       189,469,038          182,507,209  

MSCI Spain

       326,398,994          513,707,895  

MSCI Switzerland

       742,547,594          374,766,439     

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions is reclassified to the following accounts:

 

iShares ETF      Paid-in Capital        Accumulated
Earnings (Loss)
 

MSCI Eurozone

     $ (400,422,077      $   400,422,077  

MSCI Germany

       25,958,015          (25,958,015 )   

MSCI Italy

       (21,532,380        21,532,380  

MSCI Spain

       (141,111,882        141,111,882  

MSCI Switzerland

       74,460,482          (74,460,482

 

 

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  48


Notes to Financial Statements  (continued)

 

The tax character of distributions paid was as follows:

 

iShares ETF   Year Ended
08/31/20
     Year Ended
08/31/19
 

MSCI Eurozone

    

Ordinary income

  $ 60,025,448      $ 193,219,136  
 

 

 

    

 

 

 

MSCI Germany

    

Ordinary income

  $ 21,992,516      $ 58,677,042  
 

 

 

    

 

 

 

MSCI Italy

    

Ordinary income

  $ 4,168,452      $ 10,603,637  
 

 

 

    

 

 

 

MSCI Spain

    

Ordinary income

  $ 26,056,692      $ 32,499,998  
 

 

 

    

 

 

 

MSCI Switzerland

    

Ordinary income

  $ 23,858,476      $ 21,371,038  
 

 

 

    

 

 

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

iShares ETF     
Undistributed
Ordinary Income
 
 
    

Non-expiring
Capital Loss
Carryforwards
 
 
(a) 
   
Net Unrealized
Gains (Losses)
 
(b) 
    Total  

MSCI Eurozone

   $ 27,549,341      $ (676,024,734   $ (669,689,300   $ (1,318,164,693

MSCI Germany

     16,738,337        (276,948,379     (312,169,265     (572,379,307

MSCI Italy

     1,655,178        (209,359,692     (46,605,304     (254,309,818 )   

MSCI Spain

     6,478,398        (295,884,852     (237,747,694     (527,154,148

MSCI Switzerland

     890,675        (76,676,094     188,987,250       113,201,831  

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the characterization of corporate actions.

 

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

iShares ETF     Tax Cost       
Gross Unrealized
Appreciation
 
 
    
Gross Unrealized
Depreciation
 
 
   

Net Unrealized
Appreciation
(Depreciation)
 
 
 

MSCI Eurozone

  $  5,215,886,330      $ 562,400,600      $ (1,233,231,037   $ (670,830,437

MSCI Germany

    3,304,489,730        316,514,053        (629,633,859     (313,119,806 )   

MSCI Italy

    255,090,536        10,167,429        (56,776,613     (46,609,184

MSCI Spain

    705,271,109        27,914,345        (265,702,145     (237,787,800

MSCI Switzerland

    1,526,966,714        231,184,283        (43,108,281     188,076,002  

 

9.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

 

 

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Notes to Financial Statements  (continued)

 

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the schedule of investments.

Certain Funds invest a significant portion of their assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Funds’ investments.

Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, the United Kingdom has withdrawn from the European Union, and one or more other countries may withdraw from the European Union and/or abandon the Euro, the common currency of the European Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Investment percentages in specific sectors are presented in the schedule of investments.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

 

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Notes to Financial Statements  (continued)

 

10.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
    Year Ended
08/31/20
    Year Ended
08/31/19
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

MSCI Eurozone

       

Shares sold

    30,800,000     $ 1,189,725,798       9,500,000     $ 367,902,543  

Shares redeemed

    (55,500,000     (1,853,736,311     (103,000,000     (3,891,870,555
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease

    (24,700,000   $ (664,010,513     (93,500,000   $ (3,523,968,012
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Germany

       

Shares sold

    54,600,000     $ 1,453,163,218       12,300,000     $ 337,288,125  

Shares redeemed

    (34,200,000     (852,562,847     (46,500,000     (1,270,776,535
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    20,400,000     $ 600,600,371       (34,200,000   $ (933,488,410
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Italy

       

Shares sold

    7,575,000     $ 200,938,363       13,050,000     $ 348,776,931  

Shares redeemed

    (8,250,000     (190,719,658     (19,200,000     (512,178,313
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (675,000   $ 10,218,705       (6,150,000   $ (163,401,382
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Spain

       

Shares sold

    14,400,000     $ 362,119,221       27,900,000     $ 803,958,247  

Shares redeemed

    (25,050,000     (548,114,931     (26,325,000     (731,185,891
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (10,650,000   $ (185,995,710     1,575,000     $ 72,772,356  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Switzerland

       

Shares sold

    20,625,000     $ 762,493,628       9,500,000     $ 333,118,780  

Shares redeemed

    (10,000,000     (385,260,450     (8,625,000     (286,292,911
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    10,625,000     $ 377,233,178       875,000     $ 46,825,869  
 

 

 

   

 

 

   

 

 

   

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

11.

FOREIGN WITHHOLDING TAX CLAIMS

The iShares MSCI Eurozone ETF has filed claims to recover taxes withheld by Finland on dividend income on the basis that Finland had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. The Fund has recorded receivables for all recoverable taxes withheld by Finland based upon recent favorable determinations made by the Finnish tax authorities. Professional and other fees associated with the filing of these claims for foreign withholding taxes have been approved by the Board as appropriate expenses of the Fund. Withholding tax claims may be for the current year and potentially for a limited number of prior calendar years, depending upon statutes of limitation on taxes. The Fund continues to evaluate developments in Finland for potential impact to the receivables and payables recorded. Finnish tax claim receivables and related liabilities are disclosed in the statement of assets and liabilities.

The Internal Revenue Service (“IRS”) has issued guidance to address U.S. income tax liabilities attributable to fund shareholders resulting from the recovery of foreign taxes withheld in prior calendar years. These withheld foreign taxes were passed through to shareholders in the form of foreign tax credits in the year the taxes were withheld. Assuming there are sufficient foreign taxes paid which the Fund is able to pass through to its shareholders as a foreign tax credit in the current year, the Fund will be able to offset the prior years’ withholding taxes recovered against the foreign taxes paid in the current year. Accordingly, no federal income tax liability is recorded by the Fund.

 

 

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Notes to Financial Statements  (continued)

 

12.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

13.

SUBSEQUENT EVENTS

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were available to be issued and the following items were noted:

The iShares MSCI Eurozone ETF has filed claims to recover taxes withheld by France on dividend income on the basis that France had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. On October 15, 2020 the iShares MSCI Eurozone ETF received a payment from the French tax authority. The receipt of this payment is not a guarantee of future payments and Management continues to evaluate developments in France for potential impacts to filed claims and associated professional and IRS compliance fees, if any.

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  52


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares MSCI Eurozone ETF, iShares MSCI Germany ETF,

iShares MSCI Italy ETF, iShares MSCI Spain ETF and iShares MSCI Switzerland ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares MSCI Eurozone ETF, iShares MSCI Germany ETF, iShares MSCI Italy ETF, iShares MSCI Spain ETF and iShares MSCI Switzerland ETF (five of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

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Important Tax Information (unaudited)   

 

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

iShares ETF   Qualified Dividend
Income
 

MSCI Eurozone

  $ 106,697,538  

MSCI Germany

    54,187,605  

MSCI Italy

    6,042,290  

MSCI Spain

    26,564,795  

MSCI Switzerland

    36,183,118  

For the fiscal year ended August 31, 2020, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders:

 

iShares ETF   Foreign Source
Income Earned
     Foreign
   Taxes Paid
 

MSCI Eurozone

  $ 107,454,536      $ 12,526,106  

MSCI Germany

    55,281,503        6,483,440  

MSCI Italy

    6,140,406        911,653  

MSCI Spain

    26,975,939        2,578,677  

MSCI Switzerland

    37,223,807        6,500,527  

 

 

M P O R T A N T  A X  N F O R  M A T I O N

  54


Board Review and Approval of Investment Advisory Contract

 

iShares MSCI Eurozone ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were within range of the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Germany ETF, iShares MSCI Italy ETF, iShares MSCI Spain ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

 

O A R D E V I E W  A N D P P R O V A L  O F  I N V E S T M E N T  A D V I S O R Y  C O N T R A C T

  56


Board Review and Approval of Investment Advisory Contract  (continued)

 

service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Switzerland ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”),

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

 

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  60


Supplemental Information  (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

     Total Cumulative Distributions
for the Fiscal Year
     % Breakdown of the Total Cumulative
Distributions for the Fiscal Year
 
iShares ETF   Net
Investment
Income
     Net Realized
Capital Gains
     Return of
Capital
     Total Per
Share
     Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
 

MSCI Eurozone

  $ 0.487632      $      $      $  0.487632        100             100

MSCI Germany(a)

    0.267678               0.012125        0.279803        96             4       100  

MSCI Spain

    0.891829                      0.891829        100                   100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (the “Directive”) imposes detailed and prescriptive obligations on fund managers established in the European Union (the “EU”). These do not currently apply to managers established outside of the EU, such as BFA (the “Company”). Rather, non-EU managers are only required to comply with certain disclosure, reporting and transparency obligations of the Directive if such managers market a fund to EU investors.

The Company has registered the iShares MSCI Germany ETF (the “Fund”) to be marketed to EU investors in the United Kingdom, the Netherlands, Finland, Sweden, and Luxembourg.

Report on Remuneration

The Company is required under the Directive to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Fund.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well defined pay-for-performance philosophy, and compensation programmes which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

 

 

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Supplemental Information (unaudited) (continued)

 

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2019 was USD 173.77 thousand. This figure is comprised of fixed remuneration of USD 80.34 thousand and variable remuneration of USD 93.43 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 22.16 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 2.6 thousand.

 

 

U P P L E M E N T A L N F O R M A T I O N 

  62


Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFA or its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., ParkAvenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Robert S. Kapito(a)

(63)

  

Director

(since 2009).

   President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(50)

  

Director

(since 2019).

   Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

(a) Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b) Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

Independent Directors
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Cecilia H. Herbert

(71)

  

Director

(since 2005);

Independent Board Chair

(since 2016).

   Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).

Jane D. Carlin

(64)

  

Director

(since 2015);

Risk Committee Chair

(since 2016).

   Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L. Fagnani

(65)

  

Director

(since 2017);

Audit Committee Chair

(since 2019).

  

Partner, KPMG LLP (2002-2016).

   Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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Director and Officer Information (continued)

 

Independent Directors (continued)
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

John E. Kerrigan

(65)

  

Director

(since 2005);

Nominating and Governance and Equity Plus Committee Chairs

(since 2019).

   Chief Investment Officer, Santa Clara University (since 2002).    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E. Lawton

(61)

  

Director

(since 2017);

15(c) Committee Chair

(since 2017).

   Senior Managing Director of New York Life Insurance Company (2010-2015).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

John E. Martinez

(59)

  

Director

(since 2003);

Securities Lending Committee Chair

(since 2019).

   Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).    Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

Madhav V. Rajan

(56)

  

Director

(since 2011);

Fixed Income Plus Committee Chair

(since 2019).

   Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).

 

Officers
     
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

Armando Senra

(49)

  

President

(since 2019).

   Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

Trent Walker

(46)

  

Treasurer and Chief Financial Officer

(since 2020).

   Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Charles Park

(53)

  

Chief Compliance Officer

(since 2006).

   Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

Deepa Damre

(45)

  

Secretary

(since 2019).

   Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

Scott Radell

(51)

   Executive Vice President (since 2012).    Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

Alan Mason

(59)

  

Executive Vice President

(since 2016).

   Managing Director, BlackRock, Inc. (since 2009).

Marybeth Leithead

(57)

  

Executive Vice President

(since 2019).

   Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

I R E C T O R  A N D  O F F I C E R  I N F O R M A T I O N

  64


General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

65  

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Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
NVS    Non-Voting Shares

 

 

L O S S A R Y  O F  T E R M S  U S E D  I N  T H I S  R E P O R T

  66


 

 

 

Want to know more?

iShares.com  |   1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-807-0820

 

 

LOGO

   LOGO


 

LOGO

  AUGUST 31, 2020

 

   2020 Annual Report

 

iShares, Inc.

 

·  

iShares MSCI Hong Kong ETF  |  EWH  |  NYSE Arca

·  

iShares MSCI Japan Small-Cap ETF  |  SCJ  |  NYSE Arca

·  

iShares MSCI Malaysia ETF  |  EWM  |  NYSE Arca

·  

iShares MSCI Pacific ex Japan ETF  |  EPP  |  NYSE Arca

·  

iShares MSCI Singapore ETF  |  EWS  |  NYSE Arca

·  

iShares MSCI Taiwan ETF  |  EWT  |  NYSE Arca

·  

iShares MSCI Thailand ETF  |  THD  |  NYSE Arca

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock, Inc.

 

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020

 

     6-Month     12-Month
   

U.S. large cap equities
(S&P 500® Index)

  19.63%   21.94%
   

U.S. small cap equities
(Russell 2000® Index)

  6.57   6.02
   

International equities
(MSCI Europe, Australasia,
Far East Index)

  7.10   6.13
   

Emerging market equities
(MSCI Emerging Markets Index)

  11.23   14.49
   

3-month Treasury bills
(ICE BofA 3-Month
U.S. Treasury Bill Index)

  0.34   1.26
   

U.S. Treasury securities
(ICE BofA 10-Year
U.S. Treasury Index)

  4.67   8.93
   

U.S. investment grade bonds
(Bloomberg Barclays
U.S. Aggregate Bond Index)

  2.98   6.47
   

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

  0.29   3.15
   

U.S. high yield bonds
(Bloomberg Barclays
U.S. Corporate High Yield 2% Issuer Capped Index)

  3.04   4.65
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
 

 

 

2  

H I S  A G E  I S  N O T  A R T  O F  O U R  U N D  E P O R T


Table of Contents

 

      Page  

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     19  

Shareholder Expenses

     19  

Schedules of Investments

     20  

Financial Statements

  

Statements of Assets and Liabilities

     49  

Statements of Operations

     51  

Statements of Changes in Net Assets

     53  

Financial Highlights

     57  

Notes to Financial Statements

     64  

Report of Independent Registered Public Accounting Firm

     74  

Important Tax Information (Unaudited)

     75  

Board Review and Approval of Investment Advisory Contract

     76  

Supplemental Information

     86  

Director and Officer Information

     88  

General Information

     90  

Glossary of Terms Used in this Report

     91  

 

 

 


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

A R K E T  V E R V I E W

  4


Fund Summary as of August 31, 2020     iShares® MSCI Hong Kong ETF

 

Investment Objective

The iShares MSCI Hong Kong ETF (the “Fund”) seeks to track the investment results of an index composed of Hong Kong equities, as represented by the MSCI Hong Kong Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Effective September 1, 2020, the Fund will change its Index from the MSCI Hong Kong Index to the MSCI Hong Kong 25/50 Index.

Performance

 

    Average Annual Total Returns                 Cumulative Total Returns  
     1 Year     5 Years     10 Years                   1 Year     5 Years     10 Years  

Fund NAV

    2.46     6.73     6.84         2.46     38.46     93.80

Fund Market

    2.20       6.67       6.75           2.20       38.10       92.17  

Index

    3.00       7.26       7.42                       3.00       41.95       104.50  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 19 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(03/01/20)

 

 
 
 

      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
     

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized    
Expense    
Ratio    
 
 
 

 

 

 
  $       1,000.00          $       1,022.90          $         2.64         $       1,000.00          $       1,022.50          $         2.64          0.52%   

 

 

 

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 19 for more information.

 

 

 

5

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Hong Kong ETF

 

Portfolio Management Commentary

Stocks in Hong Kong posted a modest return for the reporting period, as equity markets benefited from increased investor optimism about the Chinese economy and supportive monetary policy. The Hong Kong Monetary Authority maintains a fixed exchange rate between the U.S. dollar and the Hong Kong dollar, so it followed the Fed in reducing interest rates. Hong Kong also responded to the coronavirus pandemic with subsidies for retailers and restaurants, funds for hospitals and masks, cash payments to residents, and wage subsidies.

The financials sector contributed the most to the Index’s return amid a substantial rise in trading volume. Stock, bond, derivatives, and commodities trading increased sharply in highly volatile markets, which drove revenues in the financial exchanges and data industry. Exchange participants also increased their demand for network access to financial markets, leading to higher revenue from usage fees. In addition, the life and health insurance industry benefited from expanded sales in mainland China when lockdowns eased.

The healthcare sector also advanced, as the U.S. Food and Drug Administration approved a new blood cancer drug, and the biotechnology industry raised substantial private equity funding. The consumer discretionary sector was another contributor to performance, as the lifting of certain travel restrictions benefited the casinos and gaming industry.

On the downside, the real estate sector detracted from the Index’s return. Weakness in retail and hotels drove a notable decrease in profits amid delayed rental payments and substantially reduced property valuations. The utilities sector declined as well, as gas sales volumes in Hong Kong and China decreased during lockdowns. The industrials sector was another detractor from performance, as trade tensions and the pandemic significantly reduced revenue from ports.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

   

Percent of

Total Investments

 

(a) 

Financials

    41.6

Real Estate

    20.0  

Industrials

    12.1  

Utilities

    9.7  

Consumer Discretionary

    8.1  

Consumer Staples

    3.3  

Health Care

    2.7  

Communication Services

    1.8  

Information Technology

    0.7  

TEN LARGEST HOLDINGS

 

Security

   

Percent of

Total Investments

 

(a) 

AIA Group Ltd.

    23.4

Hong Kong Exchanges & Clearing Ltd.

    12.7  

Sun Hung Kai Properties Ltd.

    4.3  

CK Hutchison Holdings Ltd.

    3.7  

Techtronic Industries Co. Ltd.

    3.7  

Galaxy Entertainment Group Ltd.

    3.6  

Link REIT

    3.5  

CLP Holdings Ltd.

    3.4  

Hong Kong & China Gas Co. Ltd.

    3.3  

CK Asset Holdings Ltd.

    3.0  
 
  (a)

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  6


Fund Summary as of August 31, 2020    iShares® MSCI Japan Small-Cap ETF

 

Investment Objective

The iShares MSCI Japan Small-Cap ETF (the “Fund”) seeks to track the investment results of an index composed of small-capitalization Japanese equities, as represented by the MSCI Japan Small Cap Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year     5 Years     10 Years            1 Year     5 Years     10 Years  

Fund NAV

    5.72     6.79     8.07       5.72     38.91     117.24

Fund Market

    5.47       6.82       8.04         5.47       39.05       116.73  

Index

    5.92       7.04       8.43               5.92       40.51       124.74  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 19 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(03/01/20)

 

 
 
 

      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
     

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized    
Expense    
Ratio    
 
 
 

 

 

 
  $ 1,000.00        $ 1,108.60        $ 2.76       $ 1,000.00        $ 1,022.50        $ 2.64          0.52%   

 

 

 

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 19 for more information.

 

 

 

7

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Japan Small-Cap ETF

 

Portfolio Management Commentary

Japanese small-capitalization stocks advanced for the reporting period despite a deep recession driven by the coronavirus pandemic. Economic growth was already stagnant at the end of 2019 due to decreased exports amid slowing global trade and lower private consumption following a sales tax increase. Business closures in early 2020 sharply reduced economic activity, and Japan experienced the largest contraction on record in the second quarter of 2020. Following steep declines in the first quarter of 2020, Japanese equities rebounded in the second quarter, bolstered by massive government stimulus and a resumption of global business activity.

The information technology sector contributed the most to the Index’s return. Software and services stocks drove the sector’s gains with higher text-input software sales and increased demand for corporate security and cloud infrastructure services as remote work arrangements scaled up during the pandemic. Similarly, strong demand for semiconductor manufacturing and testing equipment rose further as increases in remote working drove investment in 5G communications infrastructure, data centers, and cloud computing. Meanwhile, purchases of computer equipment and gaming consoles rose as more consumers stayed at home. Expansion of 5G networks also supported companies in the electronic components industry.

The industrials and consumer staples sectors also aided performance. In the industrials sector, the capital goods industry benefited from rising revenues of construction and engineering companies amid a pickup in industrial production near the end of the reporting period. In the consumer staples sector, food and staples retailers advanced as consumers stocked up on essential goods in anticipation of lockdowns. On the downside, canceled office leases and missed rent payments by retailers and hotel operators weighed on the real estate sector.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

   

Percent of

Total Investments

 

(a) 

Industrials

    23.5

Consumer Discretionary

    15.1  

Information Technology

    13.4  

Real Estate

    11.1  

Consumer Staples

    9.9  

Materials

    8.9  

Financials

    6.5  

Health Care

    6.2  

Communication Services

    3.8  

Utilities

    1.0  

Energy

    0.6  

TEN LARGEST HOLDINGS

 

Security

   

Percent of

Total Investments

 

(a) 

Capcom Co. Ltd.

    0.6

Advance Residence Investment Corp.

    0.6  

Azbil Corp.

    0.5  

Haseko Corp.

    0.5  

NET One Systems Co. Ltd.

    0.5  

Alps Alpine Co. Ltd.

    0.5  

Taiyo Yuden Co. Ltd.

    0.5  

Skylark Holdings Co. Ltd.

    0.5  

Ibiden Co. Ltd.

    0.5  

COMSYS Holdings Corp.

    0.4  
 

 

  (a) 

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  8


Fund Summary as of August 31, 2020

   iShares® MSCI Malaysia ETF

 

Investment Objective

The iShares MSCI Malaysia ETF (the “Fund”) seeks to track the investment results of an index composed of Malaysian equities, as represented by the MSCI Malaysia Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year     5 Years     10 Years            1 Year     5 Years     10 Years  

Fund NAV

    (2.27 )%      1.69     0.01       (2.27 )%      8.77     0.10

Fund Market

    (1.94     1.66       0.05         (1.94     8.56       0.49  

Index

    (1.87     2.04       0.39               (1.87     10.62       3.96  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 19 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(03/01/20)

 

 
 
 

      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
     

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized    
Expense    
Ratio    
 
 
 

 

 

 
  $ 1,000.00        $ 1,062.30        $ 2.70       $ 1,000.00        $ 1,022.50        $ 2.64          0.52%   

 

 

 

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 19 for more information.

 

 

 

9

  2 0 2 0  H A R E S  N N U A L   E P O R T  T O  H A R E H O L D E R S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Malaysia ETF

 

Portfolio Management Commentary

Malaysian stocks posted a modest decline for the reporting period amid difficulty implementing plans to alleviate the impact of sharp economic contraction due to coronavirus-related disruption. The government announced a significant fiscal stimulus package, but political disagreements delayed most of that spending. On the other hand, the Malaysian central bank pursued a monetary policy that reduced interest rates to record lows. Disruption to international trade and factory closures led Malaysia’s exports and manufacturing production to decline substantially in the second quarter of 2020, although both showed signs of recovery late in the reporting period.

The financials sector detracted the most from the Index’s return, as a moratorium on some loan repayments weighed on banks. The government’s loan program allowed unemployed Malaysians to defer making payments toward their loans. The credit rating outlook for the banking system also weakened during the pandemic.

The industrials sector also detracted from the Index’s performance, as unsold housing stock negatively affected the construction and engineering industry. The communication services sector was another detractor, weighed down by a mandate to provide data services during movement restrictions. The consumer discretionary sector declined as well, driven by a drop in customer visits in the casinos and gaming industry.

On the upside, the healthcare sector significantly contributed to the Index’s return, as the pandemic led to strong demand for rubber gloves. The medical supplies industry encountered difficulty expanding production due to restrictions that prevented the hiring of additional foreign workers. Fulfilment lead times on orders for some gloves stretched to over a year, even with factories operating at full capacity. These shortages also led to increased investment in glove production automation. In this environment, medical supplies companies reported sharply higher revenues and profits.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

   

Percent of

Total Investments

 

(a) 

Financials

    26.1

Health Care

    23.0  

Consumer Staples

    15.1  

Utilities

    8.5  

Communication Services

    7.9  

Industrials

    7.6  

Materials

    4.4  

Energy

    4.3  

Consumer Discretionary

    3.1  

TEN LARGEST HOLDINGS

 

Security

   

Percent of

Total Investments

 

(a) 

Public Bank Bhd

    10.2

Top Glove Corp. Bhd

    8.8  

Malayan Banking Bhd

    6.1  

Hartalega Holdings Bhd

    6.0  

Tenaga Nasional Bhd

    5.3  

CIMB Group Holdings Bhd

    4.5  

Supermax Corp. Bhd

    3.5  

Dialog Group Bhd

    3.0  

Petronas Chemicals Group Bhd

    2.8  

Petronas Gas Bhd

    2.8  
 
  (a)

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  10


Fund Summary as of August 31, 2020    iShares® MSCI Pacific ex Japan ETF

 

Investment Objective

The iShares MSCI Pacific ex Japan ETF (the “Fund”) seeks to track the investment results of an index composed of Pacific region developed market equities, excluding Japan, as represented by the MSCI Pacific ex Japan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year     5 Years     10 Years            1 Year     5 Years     10 Years  

Fund NAV

    0.72     6.81     5.24       0.72     39.03     66.65

Fund Market

    (0.27     6.64       5.08         (0.27     37.92       64.21  

Index

    1.18       7.26       5.68               1.18       41.96       73.78  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 19 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(03/01/20)

 

 
 
 

      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
     

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized    

Expense    

Ratio    

 

 

 

 

 

 
  $ 1,000.00        $ 1,037.30        $ 2.51       $ 1,000.00        $ 1,022.70        $ 2.49          0.49%   

 

 

 

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 19 for more information.

 

 

 

11

  2 0 2 0  H A R E S  N N U A L   E P O R T  T O  H A R E H O L D E R S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Pacific ex Japan ETF

 

Portfolio Management Commentary

Developed market Pacific equities excluding Japan rose slightly for the reporting period, despite a global recession driven by the coronavirus pandemic. Australian stocks contributed the most to the Index’s return, helped by a government fiscal program in response to the recession. However, monetary stimulus was relatively modest by international standards, and the Australian dollar appreciated substantially against the U.S. dollar. Materials stocks posted significant gains, as Australian exports of iron ore reached record levels, primarily due to strong demand from China amid its economic recovery from the pandemic. The healthcare sector advanced as well, as sales of immunoglobulins and hemophilia treatments grew in the biotechnology industry.

Stocks in Hong Kong also contributed to the Index’s return, as equity markets benefited from increased investor optimism about the Chinese economy and supportive monetary policy. The financials sector led the way amid a substantial rise in trading volume, which drove revenues in the financial exchanges and data industry. Derivatives and commodities trading also increased due to elevated market volatility.

New Zealand stocks advanced, benefiting from largely successful containment of the coronavirus and a New Zealand dollar that rose in value relative to the U.S. dollar. The healthcare sector was a strong contributor, due in part to sharply increased demand for healthcare equipment driven by the pandemic. Higher production also led to the hiring of new workers to manage the increase in global demand.

On the downside, Singaporean equities detracted from the Index’s performance, as the nation entered a deep recession driven by a sharp decline in international trade. The largest detractor was the financials sector, where banks reported a steep drop in profits and increased their reserves in preparation for expected loan defaults. The industrials sector also detracted from the Index’s return, as a significant decrease in international travel negatively affected the transportation industry. The communication services sector declined as well amid a drop in prepaid mobile phone revenue. The real estate sector was another detractor, as customer visits and sales decreased at retail properties.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

   

Percent of

Total Investments

 

(a) 

Financials

    35.7

Materials

    11.7  

Real Estate

    11.6  

Health Care

    9.5  

Industrials

    8.1  

Consumer Discretionary

    6.2  

Consumer Staples

    5.7  

Utilities

    4.3  

Communication Services

    3.0  

Energy

    2.4  

Information Technology

    1.8  

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region

   

Percent of

Total Investments

 

(a) 

Australia

    59.0

Hong Kong

    29.3  

Singapore

    8.9  

New Zealand

    2.8  

Malta

    0.0 (b) 
 
  (a) 

Excludes money market funds.

 
  (b) 

Rounds to less than 0.1%.

 

 

 

U N D  U M M A R Y

  12


Fund Summary as of August 31, 2020     iShares® MSCI Singapore ETF

 

Investment Objective

The iShares MSCI Singapore ETF (the “Fund”) seeks to track the investment results of an index composed of Singaporean equities, as represented by the MSCI Singapore 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year     5 Years     10 Years            1 Year     5 Years     10 Years  

Fund NAV

    (12.84 )%      1.83     1.46       (12.84 )%      9.48     15.65

Fund Market

    (13.11     1.87       1.43         (13.11     9.70       15.27  

Index

    (12.42     2.30       1.86               (12.42     12.02       20.25  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through November 30, 2016 reflects the performance of the MSCI Singapore Index. Index performance beginning on December 1, 2016 reflects the performance of the MSCI Singapore 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 19 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(03/01/20)

 

 
 
 

      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
     

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized    

Expense    

Ratio    

 

 

 

 

 

 
  $ 1,000.00        $ 895.10        $ 2.48       $ 1,000.00        $ 1,022.50        $ 2.64          0.52%   

 

 

 

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 19 for more information.

 

 

 

13

  2 0 2 0  H A R E S  N N U A L  E P O  R T  T O  H A R E H O L D E R S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Singapore ETF

 

Portfolio Management Commentary

Singaporean equities declined substantially as the nation entered a deep recession driven by a sharp decline in international trade during the coronavirus pandemic. Singapore’s central bank, which operates using exchange rates instead of interest rates, acted promptly to substantially ease monetary policy in line with similar actions by other central banks. In this environment, the Singapore dollar appreciated only marginally relative to the U.S. dollar. Furthermore, the government passed significant fiscal stimulus measures, including wage support for businesses negatively affected by the pandemic and related containment measures.

The financials sector detracted the most from the Index’s return, as banks reported a steep drop in profits and increased their reserves in preparation for expected loan defaults. Banks also strengthened lending standards for commodities trading after significant defaults stemming from a sharp decline in oil prices. Furthermore, regulators called on banks to limit their dividends to a fraction of previous payouts to ensure sufficient capital. Lower interest rates also decreased banks’ revenues from loans. In addition, less favorable operating environments in Malaysia, Indonesia, and Thailand weighed on Singaporean banks due to substantial lending in those markets.

The industrials sector also detracted from the Index’s return, as a significant decrease in international travel negatively affected the transportation industry. In the road and rail industry, revenue declined amid a substantial drop in bus and rail ridership. Revenue also decreased in the airline industry due to sharply lower passenger traffic. In addition, lower demand for oil significantly impaired business at dockyards in the capital goods industry.

The communication services sector declined as well amid a drop in prepaid mobile phone revenue in the integrated telecommunication services industry. In the publishing industry, lower advertising revenue led to restructuring and cost cutting.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

   

Percent of

Total Investments

 

(a) 

Financials

    41.7

Real Estate

    24.3  

Industrials

    13.6  

Communication Services

    7.2  

Consumer Discretionary

    5.0  

Consumer Staples

    4.1  

Information Technology

    4.1  

TEN LARGEST HOLDINGS

 

Security

   

Percent of

Total Investments

 

(a) 

DBS Group Holdings Ltd.

    16.5

Oversea-Chinese Banking Corp. Ltd.

    12.1  

United Overseas Bank Ltd.

    9.3  

Singapore Telecommunications Ltd.

    7.2  

Ascendas REIT

    4.5  

Wilmar International Ltd.

    4.1  

Venture Corp. Ltd.

    4.1  

Keppel Corp. Ltd.

    4.0  

Mapletree Logistics Trust

    4.0  

Singapore Exchange Ltd.

    3.9  
 
  (a) 

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  14


Fund Summary as of August 31, 2020    iShares® MSCI Taiwan ETF

 

Investment Objective

The iShares MSCI Taiwan ETF(the “Fund”) seeks to track the investment results of an index composed of Taiwanese equities, as represented by the MSCI Taiwan 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year     5 Years     10 Years            1 Year     5 Years     10 Years  

Fund NAV

    29.34     13.26     8.88       29.34     86.38     134.08

Fund Market

    29.09       13.56       8.86         29.09       88.84       133.73  

Index

    29.84       13.94       9.43               29.84       92.07       146.26  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through November 30, 2016 reflects the performance of the MSCI Taiwan Index. Index performance beginning on December 1, 2016 reflects the performance of the MSCI Taiwan 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 19 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(03/01/20)

 

 
 
 

      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
     

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized    
Expense    
Ratio    
 
 
 

 

 

 
  $ 1,000.00        $ 1,152.70        $ 3.19       $ 1,000.00        $ 1,022.20        $ 3.00          0.59%   

 

 

 

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 19 for more information.

 

 

 

15

  2 0 2 0  H A R E S  N N U A L   E P O R T  T O  H A R E H O L D E R S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Taiwan ETF

 

Portfolio Management Commentary

Taiwanese stocks advanced significantly for the reporting period. While Taiwan’s economy contracted in the second quarter of 2020, the decline was modest compared to that of many other countries. Taiwan was also slow to reduce interest rates and kept them above international levels, leading the Taiwan new dollar to appreciate relative to the U.S. dollar, which helped returns for U.S.-based investors. Taiwan’s economy also benefited from an influx of businesses relocating from the mainland to avoid tariffs arising from trade tensions between the U.S. and China. However, Taiwan’s total exports declined during the first months of the coronavirus pandemic before recovering late in the reporting period. To stimulate the economy, Taiwan introduced a program using cash equivalent coupons that citizens must spend before the end of 2020.

The information technology sector contributed a large majority of the Index’s return, as the pandemic led to a significant increase in global demand for semiconductors. High-performance computing, including data center hardware and 5G equipment, drove substantial growth in revenue for the semiconductors industry. The higher demand for data center hardware coincided with an increase in online data usage, as office workers began working remotely, students turned to remote learning, and consumers spent more time using high-bandwidth streaming services. Companies upgrading their mobile networks to support next-generation 5G phones drove the increase in 5G equipment revenue.

An increase in remote working also drove considerable demand for high-speed Wi-Fi chips in the semiconductors industry. Other sources of demand for semiconductors included power management integrated circuits, display drivers, and flash memory controllers.

The technology hardware and equipment industry benefited from increased sales of laptop and desktop personal computers during the pandemic. Work-at-home demand also contributed to power electronics and automation sales.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

   

Percent of

Total Investments

 

(a) 

Information Technology

    58.7

Financials

    18.3  

Materials

    7.5  

Consumer Discretionary

    4.5  

Communication Services

    3.7  

Industrials

    3.0  

Consumer Staples

    2.9  

Other (each representing less than 1%)

    1.4  

TEN LARGEST HOLDINGS

 

Security

   

Percent of

Total Investments

 

(a) 

Taiwan Semiconductor Manufacturing Co. Ltd.

    22.9

Hon Hai Precision Industry Co. Ltd.

    4.6  

MediaTek Inc.

    4.0  

Chunghwa Telecom Co. Ltd.

    2.0  

Delta Electronics Inc.

    1.9  

Largan Precision Co. Ltd.

    1.7  

CTBC Financial Holding Co. Ltd.

    1.7  

Cathay Financial Holding Co. Ltd.

    1.6  

Uni-President Enterprises Corp.

    1.6  

Mega Financial Holding Co. Ltd.

    1.6  
 
  (a) 

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  16


Fund Summary as of August 31, 2020    iShares® MSCI Thailand ETF

 

Investment Objective

The iShares MSCI Thailand ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Thai equities, as represented by the MSCI Thailand IMI 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year     5 Years     10 Years            1 Year     5 Years     10 Years  

Fund NAV

    (22.57 )%      3.61     4.83       (22.57 )%      19.38     60.31

Fund Market

    (22.16     3.75       4.79         (22.16     20.23       59.59  

Index

    (22.30     3.94       5.13               (22.30     21.34       64.91  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Thailand Investable Market Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Thailand IMI 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 19 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(03/01/20)

 

 
 
 

      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
     

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized    
Expense    
Ratio    
 
 
 

 

 

 
  $ 1,000.00        $ 992.70        $ 2.96       $ 1,000.00        $ 1,022.20        $ 3.00          0.59%   

 

 

 

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 19 for more information.

 

 

 

17

  2 0 2 0  H A R E S  N N U A L   E P O R T  T O  H A R E H O L D E R S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Thailand ETF

 

Portfolio Management Commentary

Thai stocks declined substantially during the reporting period as the nation entered a significant recession driven by the coronavirus pandemic. Business closings and curfews in Thailand considerably reduced consumption and investment. With borders closed to most international visitors, trade and tourism decreased substantially. Rising concerns over unemployment, bad debts, and the continued viability of small and medium-sized enterprises weighed on the Thai economy. However, the government announced a new economic stimulus plan with more support for businesses and their employees.

The financials sector detracted the most from the Index’s return, as banks increased their provisions for loan defaults. Persistently low interest rates, trade tensions between the U.S. and China, slower growth in fee revenue, and a drought also negatively affected banks. The energy sector was another notable detractor, as oil prices and sales volumes declined during the pandemic. Furthermore, an increase in working from home also led to lower demand and to volatility in the price of liquefied natural gas.

The real estate sector also declined significantly, as shopping centers temporarily closed and retail sales decreased substantially. The strong decrease in tourism led some hotel and resort operators to sell their properties to developers for conversion into other businesses. The communication services sector detracted from the Index’s return, as the drop in tourism also led to reduced revenue from prepaid mobile customers. The consumer staples sector was another detractor, partly due to a significant acquisition of retail stores at a time when consumers were shifting to online buying. The industrials sector also declined, as revenue for airport services companies decreased due to the substantial decline in travel.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

   

Percent of

Total Investments

 

(a) 

Energy

    14.7

Consumer Staples

    13.8  

Financials

    11.2  

Industrials

    10.3  

Materials

    10.1  

Communication Services

    9.6  

Utilities

    8.8  

Real Estate

    7.0  

Consumer Discretionary

    6.9  

Health Care

    6.6  

Information Technology

    1.0  

TEN LARGEST HOLDINGS

 

Security

   

Percent of

Total Investments

 

(a) 

PTT PCL

    8.9

CP ALL PCL

    8.0  

Siam Cement PCL (The)

    6.0  

Airports of Thailand PCL

    5.2  

Advanced Info Service PCL

    4.7  

Bangkok Dusit Medical Services PCL

    4.3  

Charoen Pokphand Foods PCL

    2.7  

PTT Exploration & Production PCL

    2.7  

Intouch Holdings PCL

    2.6  

Central Pattana PCL

    2.3  
 
  (a) 

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  18


About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

19  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Hong Kong ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Banks — 5.4%            

Bank of East Asia Ltd. (The)(a)

    3,856,410     $ 8,697,902  

BOC Hong Kong Holdings Ltd.

    10,365,000       29,422,656  

Hang Seng Bank Ltd.

    2,139,300       33,648,468  
   

 

 

 
      71,769,026  
Beverages — 1.2%            

Budweiser Brewing Co. APAC Ltd.(a)(b)

    4,894,800       16,515,683  
   

 

 

 
Biotechnology — 2.1%            

BeiGene Ltd., ADR(c)

    114,174       27,581,013  
   

 

 

 
Capital Markets — 12.7%            

Hong Kong Exchanges & Clearing Ltd.

    3,329,800       168,076,458  
   

 

 

 
Diversified Telecommunication Services — 1.8%        

HKT Trust & HKT Ltd.

    10,723,500       15,330,849  

PCCW Ltd.

    12,614,169       7,910,152  
   

 

 

 
      23,241,001  
Electric Utilities — 6.4%            

CK Infrastructure Holdings Ltd.

    1,898,000       10,040,838  

CLP Holdings Ltd.

    4,584,200       45,042,590  

HK Electric Investments & HK Electric Investments Ltd.

    7,855,500       7,997,251  

Power Assets Holdings Ltd.

    3,901,000       22,348,522  
   

 

 

 
      85,429,201  
Equity Real Estate Investment Trusts (REITs) — 3.5%  

Link REIT

    5,787,100       46,071,892  
   

 

 

 
Food & Staples Retailing — 0.3%            

Dairy Farm International Holdings Ltd.

    1,052,900       4,401,122  
   

 

 

 
Food Products — 1.8%            

WH Group Ltd.(b)

    26,929,000       23,245,358  
   

 

 

 
Gas Utilities — 3.3%            

Hong Kong & China Gas Co. Ltd.

    29,750,805       43,300,979  
   

 

 

 
Health Care Equipment & Supplies — 0.6%        

Microport Scientific Corp

    1,817,000       8,264,259  
   

 

 

 
Hotels, Restaurants & Leisure — 8.0%            

Galaxy Entertainment Group Ltd.

    6,057,000       47,712,606  

Melco Resorts & Entertainment Ltd., ADR

    630,669       12,310,659  

Sands China Ltd.

    6,812,000       30,060,115  

SJM Holdings Ltd.

    5,997,000       8,248,617  

Wynn Macau Ltd.(a)

    4,555,600       8,570,240  
   

 

 

 
      106,902,237  
Industrial Conglomerates — 6.6%            

CK Hutchison Holdings Ltd.

    7,528,767       49,300,326  

Jardine Matheson Holdings Ltd.

    617,100       25,918,200  

Jardine Strategic Holdings Ltd.

    630,700       12,651,842  
   

 

 

 
      87,870,368  
Insurance — 23.3%            

AIA Group Ltd.

    30,094,200         309,867,185  
   

 

 

 
Security   Shares     Value  
Machinery — 3.7%            

Techtronic Industries Co. Ltd.

    3,843,147     $ 48,794,625  
   

 

 

 
Real Estate Management & Development — 16.5%        

CK Asset Holdings Ltd.

    7,220,767       39,224,311  

Hang Lung Properties Ltd.

    5,808,000       16,374,496  

Henderson Land Development Co. Ltd.

    4,115,762       16,223,754  

Hongkong Land Holdings Ltd.

    3,324,400       12,732,452  

Kerry Properties Ltd.

    2,007,500       5,219,399  

New World Development Co. Ltd.

    4,326,266       22,468,237  

Sino Land Co. Ltd.

    8,944,000       10,421,001  

Sun Hung Kai Properties Ltd.

    4,199,000       56,455,139  

Swire Pacific Ltd., Class A

    1,435,500       7,816,378  

Swire Properties Ltd.

    3,396,800       9,204,054  

Wharf Real Estate Investment Co. Ltd.

    5,409,150       22,508,608  
   

 

 

 
      218,647,829  
Road & Rail — 1.7%            

MTR Corp. Ltd.

    4,331,083       22,549,138  
   

 

 

 
Semiconductors & Semiconductor Equipment — 0.7%  

ASM Pacific Technology Ltd.

    885,700       9,525,376  
   

 

 

 

Total Common Stocks — 99.6%
(Cost: $1,471,684,635)

      1,322,052,750  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 1.6%            

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(d)(e)(f)

    21,102,946       21,124,049  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(d)(e)

    495,000       495,000  
   

 

 

 
      21,619,049  
   

 

 

 

Total Short-Term Investments — 1.6%
(Cost: $21,621,159)

      21,619,049  
   

 

 

 

Total Investments in Securities — 101.2%
(Cost: $1,493,305,794)

 

    1,343,671,799  

Other Assets, Less Liabilities — (1.2)%

      (15,390,554
   

 

 

 

Net Assets — 100.0%

    $   1,328,281,245  
   

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

Non-income producing security.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  20


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Hong Kong ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
   

Change in

Unrealized

Appreciation

(Depreciation)

    Value at
08/31/20
   

Shares

Held at

08/31/20

    Income     Capital Gain
Distributions from
Underlying Funds
 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 16,781,709     $ 4,440,680 (a)    $     $ (97,907   $ (433   $ 21,124,049       21,102,946     $ 162,901 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    613,000             (118,000 )(a)                  495,000       495,000       23,109        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (97,907   $ (433   $ 21,619,049       $ 186,010     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

           

Hang Seng Index

     32        09/29/20      $ 5,177      $ (72,670
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 72,670  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 601,798  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (73,121
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 5,773,016  

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

 

21  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Hong Kong ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                                   

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 1,322,052,750        $        $        $ 1,322,052,750  

Money Market Funds

     21,619,049                            21,619,049  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,343,671,799        $        $        $ 1,343,671,799  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Liabilities

                 

Futures Contracts

   $ (72,670      $        $        $ (72,670
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  22


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Air Freight & Logistics — 0.4%            

Kintetsu World Express Inc.

    3,600     $ 74,074  

Konoike Transport Co. Ltd.

    2,700       28,745  

Maruwa Unyu Kikan Co. Ltd.

    1,800       69,763  

Mitsui-Soko Holdings Co. Ltd.

    1,800       30,112  

SBS Holdings Inc.

    1,800       34,729  
   

 

 

 
      237,423  
Auto Components — 2.7%            

Aisan Industry Co. Ltd.

    2,700       12,119  

Daido Metal Co. Ltd.

    3,600       17,992  

Daikyonishikawa Corp.

    3,600       19,520  

Eagle Industry Co. Ltd.

    2,700       18,968  

Exedy Corp.

    2,700       36,205  

FCC Co. Ltd.

    2,700       49,114  

Futaba Industrial Co. Ltd.

    4,500       23,509  

G-Tekt Corp.

    1,800       17,551  

Ichikoh Industries Ltd.

    2,700       12,578  

Keihin Corp.

    3,600       87,348  

KYB Corp.(a)

    1,800       36,070  

Musashi Seimitsu Industry Co. Ltd.

    3,600       36,120  

NHK Spring Co. Ltd.

    18,000       113,216  

Nifco Inc./Japan

    8,100       207,684  

Nippon Seiki Co. Ltd.

    4,500       46,211  

Nissin Kogyo Co. Ltd.

    3,600       75,738  

NOK Corp.

    7,200       78,420  

Pacific Industrial Co. Ltd.

    3,600       33,778  

Piolax Inc.

    2,700       41,603  

Press Kogyo Co. Ltd.

    8,100       23,297  

Riken Corp.

    900       21,973  

Shoei Co. Ltd.

    1,800       54,996  

Showa Corp.

    4,500       96,497  

Sumitomo Riko Co. Ltd.

    2,700       13,953  

Tachi-S Co. Ltd.

    2,700       22,355  

Tokai Rika Co. Ltd.

    4,500       67,556  

Topre Corp.

    2,700       30,044  

Toyo Tire Corp.

    9,900       164,961  

Toyota Boshoku Corp.

    5,400       76,586  

TPR Co. Ltd.

    1,800       24,052  

TS Tech Co. Ltd.

    3,600       105,578  

Unipres Corp.

    3,600       31,232  

Yorozu Corp.

    1,800       15,888  
   

 

 

 
        1,712,712  
Automobiles — 0.1%            

Nissan Shatai Co. Ltd.

    5,400       48,630  
   

 

 

 
Banks — 3.9%            

77 Bank Ltd. (The)

    4,500       66,156  

Aichi Bank Ltd. (The)

    900       26,182  

Akita Bank Ltd. (The)

    1,800       25,410  

Aomori Bank Ltd. (The)

    1,800       37,614  

Awa Bank Ltd. (The)

    2,700       60,852  

Bank of Iwate Ltd. (The)

    900       21,183  

Bank of Nagoya Ltd. (The)

    900       19,800  

Bank of Okinawa Ltd. (The)

    1,800       50,684  

Bank of the Ryukyus Ltd.

    3,600       30,010  

Chugoku Bank Ltd. (The)

    12,600       116,441  

Chukyo Bank Ltd. (The)

    900       17,212  

Daishi Hokuetsu Financial Group Inc.

    3,600       69,220  

Ehime Bank Ltd. (The)

    2,700       29,407  
Security   Shares     Value  
Banks (continued)            

Gunma Bank Ltd. (The)

    31,500     $ 103,668  

Hachijuni Bank Ltd. (The)

    31,500       121,788  

Hiroshima Bank Ltd. (The)

    22,500       113,938  

Hokkoku Bank Ltd. (The)

    1,800       50,328  

Hokuhoku Financial Group Inc.

    10,800       100,214  

Hyakugo Bank Ltd. (The)

    18,000       55,335  

Hyakujushi Bank Ltd. (The)

    1,800       30,570  

Iyo Bank Ltd. (The)

    19,800       125,845  

Juroku Bank Ltd. (The)

    2,700       48,681  

Kansai Mirai Financial Group Inc.

    8,174       34,455  

Keiyo Bank Ltd. (The)

    8,100       37,809  

Kiyo Bank Ltd. (The)

    5,400       79,845  

Kyushu Financial Group Inc.

    31,500       144,660  

Miyazaki Bank Ltd. (The)

    900       20,852  

Musashino Bank Ltd. (The)

    2,700       39,286  

Nanto Bank Ltd. (The)

    2,700       49,929  

Nishi-Nippon Financial Holdings Inc.

    10,800       71,392  

North Pacific Bank Ltd.

    24,300       51,100  

Ogaki Kyoritsu Bank Ltd. (The)

    2,700       56,498  

Oita Bank Ltd. (The)

    900       20,734  

San ju San Financial Group Inc.

    1,800       22,779  

San-in Godo Bank Ltd. (The)

    12,600       62,973  

Senshu Ikeda Holdings Inc.

    18,900       29,586  

Shiga Bank Ltd. (The)

    3,600       84,157  

Shikoku Bank Ltd. (The)

    2,700       19,605  

Suruga Bank Ltd.

    11,700       42,036  

Toho Bank Ltd. (The)

    16,200       34,525  

Tokyo Kiraboshi Financial Group Inc.

    1,830       19,379  

TOMONY Holdings Inc.

    12,600       40,279  

Towa Bank Ltd. (The)

    2,700       17,263  

Yamagata Bank Ltd. (The)

    1,800       22,236  

Yamaguchi Financial Group Inc.

    17,100       113,360  

Yamanashi Chuo Bank Ltd. (The)

    2,700       20,649  
   

 

 

 
        2,455,925  
Beverages — 0.3%            

Sapporo Holdings Ltd.

    5,400       96,344  

Takara Holdings Inc.

    12,600       117,986  
   

 

 

 
      214,330  
Biotechnology — 0.7%            

AnGes Inc.(a)

    10,800       153,784  

GNI Group Ltd.(a)

    3,697       87,156  

HEALIOS KK(a)

    1,800       31,147  

Japan Tissue Engineering Co. Ltd.(a)

    1,800       11,407  

SanBio Co. Ltd.(a)

    2,700       36,256  

Takara Bio Inc.

    4,500       121,406  
   

 

 

 
      441,156  
Building Products — 1.6%            

Aica Kogyo Co. Ltd.

    4,500       154,463  

Bunka Shutter Co. Ltd.

    4,500       31,996  

Central Glass Co. Ltd.

    3,600       71,732  

Maeda Kosen Co. Ltd.

    1,800       43,283  

Nichias Corp.

    5,400       128,068  

Nichiha Corp.

    1,800       42,537  

Nippon Sheet Glass Co. Ltd.(a)

    8,100       32,539  

Nitto Boseki Co. Ltd.

    1,800       72,394  

Noritz Corp.

    2,700       34,372  

Okabe Co. Ltd.

    2,700       20,089  

Sankyo Tateyama Inc.

    1,800       15,582  

Sanwa Holdings Corp.

    17,100       172,217  
 

 

 

23  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Building Products (continued)            

Sekisui Jushi Corp.

    2,700     $ 56,574  

Shin Nippon Air Technologies Co. Ltd.

    900       17,407  

Sinko Industries Ltd.

    1,800       23,152  

Takara Standard Co. Ltd.

    2,700       34,016  

Takasago Thermal Engineering Co. Ltd.

    3,600       49,292  
   

 

 

 
          999,713  
Capital Markets — 0.8%            

GMO Financial Holdings Inc.

    3,600       22,915  

Jafco Co. Ltd.

    2,700       108,845  

M&A Capital Partners Co. Ltd.(a)

    900       33,142  

Marusan Securities Co. Ltd.

    4,500       17,865  

Matsui Securities Co. Ltd.

    10,800       96,242  

Monex Group Inc.

    14,400       37,478  

Okasan Securities Group Inc.

    13,500       40,992  

SPARX Group Co. Ltd.

    8,100       15,658  

Strike Co. Ltd.

    900       40,610  

Tokai Tokyo Financial Holdings Inc.

    17,100       41,281  

Uzabase Inc.(a)

    1,800       49,734  
   

 

 

 
      504,762  
Chemicals — 5.7%            

Achilles Corp.

    900       15,056  

ADEKA Corp.

    7,200       105,238  

C.I. Takiron Corp.

    3,600       22,949  

Chugoku Marine Paints Ltd.

    4,500       41,841  

Dainichiseika Color & Chemicals Manufacturing Co. Ltd.

    900       18,298  

Denka Co. Ltd.

    7,200       202,465  

DIC Corp.

    7,200       171,301  

DKS Co. Ltd.

    900       37,300  

Fujimi Inc.

    1,800       60,257  

Fujimori Kogyo Co. Ltd.

    900       33,524  

Fuso Chemical Co. Ltd.

    1,800       60,852  

Hodogaya Chemical Co. Ltd.

    900       45,151  

Ishihara Sangyo Kaisha Ltd.

    2,700       18,332  

JCU Corp.

    1,800       61,785  

JSP Corp.

    900       13,197  

Kaneka Corp.

    3,600       91,252  

Kanto Denka Kogyo Co. Ltd.

    3,600       25,936  

KH Neochem Co. Ltd.

    2,700       58,611  

Koatsu Gas Kogyo Co. Ltd.

    2,700       19,961  

Konishi Co. Ltd.

    2,700       37,860  

Kumiai Chemical Industry Co. Ltd.

    7,249       70,545  

Kureha Corp.

    1,800       77,146  

Lintec Corp.

    3,600       85,277  

Nihon Nohyaku Co. Ltd.

    2,700       12,705  

Nihon Parkerizing Co. Ltd.

    7,200       69,254  

Nippon Fine Chemical Co. Ltd.

    900       13,053  

Nippon Kayaku Co. Ltd.

    11,700       115,185  

Nippon Shokubai Co. Ltd.

    2,700       142,072  

Nippon Soda Co. Ltd.

    1,800       51,092  

NOF Corp.

    6,300       255,458  

Okamoto Industries Inc.

    900       35,942  

Osaka Soda Co. Ltd.

    900       21,455  

Sakai Chemical Industry Co. Ltd.

    900       16,889  

Sakata INX Corp.

    3,600       33,167  

Sanyo Chemical Industries Ltd.

    900       41,841  

Sekisui Kasei Co. Ltd.

    1,800       9,454  

Shikoku Chemicals Corp.

    2,700       27,472  

Shin-Etsu Polymer Co. Ltd.

    3,600       29,704  

Stella Chemifa Corp.

    900       22,244  
Security   Shares     Value  
Chemicals (continued)            

Sumitomo Bakelite Co. Ltd.

    2,700     $ 71,494  

Sumitomo Seika Chemicals Co. Ltd.

    900       29,280  

T. Hasegawa Co. Ltd.

    2,700       53,901  

Taiyo Holdings Co. Ltd.

    1,800       91,150  

Takasago International Corp.

    900       16,728  

Taki Chemical Co. Ltd.

    500       27,913  

Tayca Corp.

    900       11,177  

Tenma Corp.

    900       16,813  

Toagosei Co. Ltd.

    9,000       88,180  

Tokai Carbon Co. Ltd.

    17,100       160,446  

Tokuyama Corp.

    5,400       126,388  

Tokyo Ohka Kogyo Co. Ltd.

    2,700       131,887  

Toyo Gosei Co. Ltd.

    500       36,588  

Toyo Ink SC Holdings Co. Ltd.

    2,700       47,306  

Toyobo Co. Ltd.

    7,200       103,745  

Ube Industries Ltd.

    9,000       160,828  

Valqua Ltd.

    1,800       29,993  

Zeon Corp.

    11,700       123,129  
   

 

 

 
        3,598,067  
Commercial Services & Supplies — 1.6%            

Aeon Delight Co. Ltd.

    1,800       53,213  

Bell System24 Holdings Inc.

    2,700       43,996  

Central Security Patrols Co. Ltd.

    900       30,214  

Daiseki Co. Ltd.

    3,660       88,286  

Duskin Co. Ltd.

    3,600       90,505  

Japan Elevator Service Holdings Co. Ltd.

    1,800       62,294  

Kokuyo Co. Ltd.

    7,200       80,253  

Matsuda Sangyo Co. Ltd.

    960       14,113  

Mitsubishi Pencil Co. Ltd.

    2,700       33,965  

Nichiban Co. Ltd.

    900       13,384  

Nippon Kanzai Co. Ltd.

    1,800       33,829  

Nippon Parking Development Co. Ltd.

    17,100       21,447  

Okamura Corp.

    5,400       37,937  

Oyo Corp.

    1,800       20,657  

Pilot Corp.

    2,700       79,438  

Prestige International Inc.

    9,000       75,958  

Raksul Inc.(a)

    1,800       52,959  

Relia Inc.

    3,600       42,774  

Sato Holdings Corp.

    2,700       51,584  

Toppan Forms Co. Ltd.

    4,500       40,780  

Uchida Yoko Co. Ltd.

    900       53,722  
   

 

 

 
      1,021,308  
Communications Equipment — 0.1%            

DKK Co. Ltd.

    900       20,072  

Icom Inc.

    900       22,643  
   

 

 

 
      42,715  
Construction & Engineering — 5.0%            

Chiyoda Corp.(a)

    14,400       37,614  

Chudenko Corp.

    2,700       57,618  

COMSYS Holdings Corp.

    9,900       276,522  

Dai-Dan Co. Ltd.

    900       22,830  

Daiho Corp.

    900       22,957  

Fukuda Corp.

    900       41,374  

Hazama Ando Corp.

    17,100       116,263  

Hibiya Engineering Ltd.

    1,800       30,044  

JDC Corp.

    3,600       19,724  

JTOWER Inc.(a)

    900       47,018  

Kandenko Co. Ltd.

    8,100       63,550  

Kinden Corp.

    11,700       193,078  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  24


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Construction & Engineering (continued)            

Kumagai Gumi Co. Ltd.

    3,600     $ 92,372  

Kyowa Exeo Corp.

    9,000       226,517  

Kyudenko Corp.

    3,600       102,862  

Maeda Corp.

    12,600       93,509  

Maeda Road Construction Co. Ltd.

    3,600       66,402  

Meisei Industrial Co. Ltd.

    2,700       20,063  

Mirait Holdings Corp.

    7,200       101,029  

Nichireki Co. Ltd.

    1,800       28,211  

Nippo Corp.

    4,500       116,568  

Nippon Densetsu Kogyo Co. Ltd.

    2,700       53,723  

Nippon Koei Co. Ltd.

    900       23,628  

Nippon Road Co. Ltd. (The)

    900       64,246  

Nishimatsu Construction Co. Ltd.

    4,500       85,634  

Okumura Corp.

    2,700       65,307  

OSJB Holdings Corp.

    9,900       21,472  

Penta-Ocean Construction Co. Ltd.

    24,300       156,050  

Raito Kogyo Co. Ltd.

    3,600       54,588  

Raiznext Corp.

    2,700       33,812  

Sanki Engineering Co. Ltd.

    3,600       38,599  

Shinnihon Corp.

    2,700       21,336  

SHO-BOND Holdings Co. Ltd.

    3,600       170,079  

Sumitomo Densetsu Co. Ltd.

    1,800       37,988  

Sumitomo Mitsui Construction Co. Ltd.

    13,500       54,741  

Taihei Dengyo Kaisha Ltd.

    900       18,799  

Taikisha Ltd.

    1,800       49,089  

Takamatsu Construction Group Co. Ltd.

    1,800       37,631  

Tekken Corp.

    900       17,610  

Toa Corp./Tokyo

    1,800       27,328  

Toda Corp.

    19,800       129,392  

Toenec Corp.

    900       31,529  

Tokyu Construction Co. Ltd.

    7,240       33,249  

Totetsu Kogyo Co. Ltd.

    1,800       44,624  

Toyo Construction Co. Ltd.

    6,300       24,001  

Yahagi Construction Co. Ltd.

    2,700       23,220  

Yokogawa Bridge Holdings Corp.

    2,700       48,860  

Yurtec Corp.

    3,600       21,557  
   

 

 

 
          3,164,217  
Construction Materials — 0.2%            

Krosaki Harima Corp.

    400       11,599  

Sumitomo Osaka Cement Co. Ltd.

    2,700       87,585  
   

 

 

 
          99,184  
Consumer Finance — 0.8%            

AEON Financial Service Co. Ltd.

    9,000       80,032  

Aiful Corp.(a)

    27,000       64,416  

Credit Saison Co. Ltd.

    13,500       153,911  

Hitachi Capital Corp.

    4,500       109,864  

J Trust Co. Ltd.

    5,400       13,800  

Jaccs Co. Ltd.

    1,800       29,619  

Orient Corp.

    45,000       49,649  
   

 

 

 
      501,291  
Containers & Packaging — 0.8%            

FP Corp.

    2,000       152,388  

Fuji Seal International Inc.

    3,600       65,316  

Pack Corp. (The)

    900       22,847  

Rengo Co. Ltd.

    16,200       119,615  

Toyo Seikan Group Holdings Ltd.

    12,600       140,917  
   

 

 

 
      501,083  
Distributors — 0.4%            

Arata Corp.

    900       43,029  
Security   Shares     Value  
Distributors (continued)            

Doshisha Co. Ltd.

    1,800     $ 34,491  

PALTAC Corp.

    2,700       149,201  
   

 

 

 
          226,721  
Diversified Consumer Services — 0.2%            

Japan Best Rescue System Co. Ltd.

    1,800       16,006  

Litalico Inc.(a)

    900       22,397  

Meiko Network Japan Co. Ltd.

    1,800       12,747  

Riso Kyoiku Co. Ltd.

    10,800       30,146  

Studio Alice Co. Ltd.

    900       12,994  
   

 

 

 
      94,290  
Diversified Financial Services — 0.8%            

eGuarantee Inc.

    2,700       57,338  

Financial Products Group Co. Ltd.

    5,400       27,549  

Fuyo General Lease Co. Ltd.

    1,800       108,463  

Japan Investment Adviser Co. Ltd.

    900       8,750  

Japan Securities Finance Co. Ltd.

    7,200       36,799  

Mizuho Leasing Co. Ltd.

    2,700       68,057  

NEC Capital Solutions Ltd.

    900       15,319  

Ricoh Leasing Co. Ltd.

    900       23,000  

Zenkoku Hosho Co. Ltd.

    4,500       159,343  
   

 

 

 
          504,618  
Diversified Telecommunication Services — 0.2%            

ARTERIA Networks Corp.

    2,700       44,633  

Internet Initiative Japan Inc.

    1,800       72,648  

Vision Inc./Tokyo Japan(a)

    1,800       13,732  
   

 

 

 
      131,013  
Electric Utilities — 0.6%            

Hokkaido Electric Power Co. Inc.

    16,200       69,203  

Hokuriku Electric Power Co.

    15,300       112,970  

Okinawa Electric Power Co. Inc. (The)

    3,692       57,828  

Shikoku Electric Power Co. Inc.

    14,400       109,448  
   

 

 

 
      349,449  
Electrical Equipment — 1.6%            

Chiyoda Integre Co. Ltd.

    900       13,622  

Cosel Co. Ltd.

    1,800       14,699  

Daihen Corp.

    1,800       70,951  

Denyo Co. Ltd.

    900       18,527  

Fujikura Ltd.

    20,700       60,902  

Furukawa Electric Co. Ltd.

    6,300       150,185  

Futaba Corp.

    2,700       22,762  

GS Yuasa Corp.

    6,300       104,381  

Idec Corp./Japan

    2,700       45,422  

Mabuchi Motor Co. Ltd.

    4,500       158,494  

Nippon Carbon Co. Ltd.

    900       29,450  

Nissin Electric Co. Ltd.

    4,500       47,782  

Nitto Kogyo Corp.

    1,800       32,233  

Sanyo Denki Co. Ltd.

    900       40,228  

Sinfonia Technology Co. Ltd.

    1,800       18,077  

Tatsuta Electric Wire and Cable Co. Ltd.

    3,600       21,082  

Toyo Tanso Co. Ltd.

    900       14,267  

Ushio Inc.

    9,000       111,519  
   

 

 

 
      974,583  
Electronic Equipment, Instruments & Components — 5.5%        

Ai Holdings Corp.

    2,700       45,168  

Alps Alpine Co. Ltd.

    18,900       300,489  

Amano Corp.

    4,500       93,781  

Anritsu Corp.

    12,600       274,944  

Azbil Corp.

    10,800       339,139  
 

 

 

25  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Electronic Equipment, Instruments & Components (continued)  

Canon Electronics Inc.

    1,800     $ 25,121  

Canon Marketing Japan Inc.

    4,500       80,456  

Citizen Watch Co. Ltd.

    24,300       77,223  

CMK Corp.

    3,600       15,752  

CONEXIO Corp.

    900       11,033  

Daiwabo Holdings Co. Ltd.

    1,800       108,294  

Dexerials Corp.

    4,500       45,023  

Elematec Corp.

    1,800       15,684  

Enplas Corp.

    900       18,052  

ESPEC Corp.

    1,800       31,096  

Hioki E.E. Corp.

    900       29,110  

Hochiki Corp.

    900       10,066  

Horiba Ltd.

    3,200       175,322  

Hosiden Corp.

    4,500       39,464  

Ibiden Co. Ltd.

    9,000       282,192  

I-PEX Inc.

    900       17,466  

Iriso Electronics Co. Ltd.

    1,800       66,453  

Japan Aviation Electronics Industry Ltd.

    4,500       58,602  

Japan Display Inc.(a)

    53,100       26,539  

Kaga Electronics Co. Ltd.

    1,800       35,645  

Koa Corp.

    1,800       18,196  

Macnica Fuji Electronics Holdings Inc.

    4,500       76,128  

Maruwa Co. Ltd./Aichi

    900       75,958  

Meiko Electronics Co. Ltd.

    1,800       28,160  

Nichicon Corp.

    3,600       26,479  

Nippon Ceramic Co. Ltd.

    1,800       42,588  

Nippon Electric Glass Co. Ltd.

    7,200       134,162  

Nippon Signal Co. Ltd.

    3,600       34,797  

Nissha Co. Ltd.

    3,600       39,312  

Nohmi Bosai Ltd.

    1,800       37,869  

Oki Electric Industry Co. Ltd.

    7,200       69,050  

Optex Group Co. Ltd.

    2,700       34,550  

Osaki Electric Co. Ltd.

    2,700       13,800  

Restar Holdings Corp.

    1,800       33,082  

Riken Keiki Co. Ltd.

    900       21,701  

Ryosan Co. Ltd.

    1,800       33,184  

Ryoyo Electro Corp.

    900       25,401  

Sanshin Electronics Co. Ltd.

    900       15,132  

Shinko Shoji Co. Ltd.

    1,800       15,226  

Siix Corp.

    2,700       23,144  

Tachibana Eletech Co. Ltd.

    900       15,896  

Taiyo Yuden Co. Ltd.

    10,800       290,865  

Tamura Corp.

    6,300       30,833  

Topcon Corp.

    9,000       72,479  

V Technology Co. Ltd.

    900       33,099  

Yokowo Co. Ltd.

    900       22,660  
   

 

 

 
        3,485,865  
Energy Equipment & Services — 0.0%            

Modec Inc.

    1,800       30,197  
   

 

 

 
Entertainment — 2.1%            

Akatsuki Inc.

    900       34,415  

Amuse Inc.

    900       19,944  

Avex Inc.

    2,700       23,297  

Capcom Co. Ltd.

    8,100       392,607  

COLOPL Inc.

    5,400       49,190  

Daiichikosho Co. Ltd.

    3,600       112,367  

DeNA Co. Ltd.

    8,100       129,010  

GungHo Online Entertainment Inc.

    3,600       74,346  

HEROZ Inc.(a)

    900       32,717  
Security   Shares     Value  
Entertainment (continued)            

KLab Inc.(a)

    2,700     $ 22,355  

Koei Tecmo Holdings Co. Ltd.

    3,668       145,447  

Marvelous Inc.

    2,700       20,165  

Shochiku Co. Ltd.

    900       120,515  

Toei Animation Co. Ltd.

    900       52,365  

Toei Co. Ltd.

    600       88,321  

UUUM Inc.(a)

    900       19,435  
   

 

 

 
      1,336,496  
Equity Real Estate Investment Trusts (REITs) — 9.0%  

Activia Properties Inc.

    63       237,338  

Advance Residence Investment Corp.

    117       346,438  

AEON REIT Investment Corp.

    135       147,291  

Comforia Residential REIT Inc.

    54       166,514  

CRE Logistics REIT Inc.

    36       53,128  

Daiwa Office Investment Corp.

    27       156,330  

Daiwa Securities Living Investments Corp.

    162       161,626  

Frontier Real Estate Investment Corp.

    45       150,219  

Fukuoka REIT Corp.

    63       81,093  

Global One Real Estate Investment Corp.

    90       90,132  

Hankyu Hanshin REIT Inc.

    54       60,699  

Heiwa Real Estate REIT Inc.

    81       90,743  

Hoshino Resorts REIT Inc.

    18       81,560  

Hulic Reit Inc.

    108       141,053  

Ichigo Office REIT Investment Corp.

    108       77,197  

Industrial & Infrastructure Fund Investment Corp.

    153       267,204  

Invesco Office J-Reit Inc.

    783       109,721  

Invincible Investment Corp.

    540       161,422  

Itochu Advance Logistics Investment Corp.

    36       50,548  

Japan Excellent Inc.

    108       128,017  

Japan Hotel REIT Investment Corp.

    396       183,726  

Japan Logistics Fund Inc.

    81       217,691  

Kenedix Office Investment Corp.

    36       213,532  

Kenedix Residential Next Investment Corp.

    81       144,363  

Kenedix Retail REIT Corp.

    45       92,423  

LaSalle Logiport REIT

    117       196,388  

MCUBS MidCity Investment Corp.

    153       118,453  

Mirai Corp.

    144       50,990  

Mitsubishi Estate Logistics REIT Investment Corp.

    27       110,500  

Mitsui Fudosan Logistics Park Inc.

    36       179,924  

Mori Hills REIT Investment Corp.

    144       179,380  

Mori Trust Hotel Reit Inc.

    36       36,019  

Mori Trust Sogo REIT Inc.

    90       117,969  

Nippon Accommodations Fund Inc.

    36       221,679  

Nippon REIT Investment Corp.

    36       126,286  

One REIT Inc.

    18       43,742  

Premier Investment Corp.

    117       138,134  

Samty Residential Investment Corp.

    27       25,435  

Sekisui House Reit Inc.

    360       254,269  

SOSiLA Logistics REIT Inc.

    45       58,984  

Star Asia Investment Corp.

    118       48,627  

Starts Proceed Investment Corp.

    18       33,778  

Takara Leben Real Estate Investment Corp.

    36       28,822  

Tokyu REIT Inc.

    72       97,498  
   

 

 

 
        5,676,885  
Food & Staples Retailing — 3.4%            

Aeon Hokkaido Corp.

    1,800       13,409  

Ain Holdings Inc.

    2,200       142,317  

Arcs Co. Ltd.

    3,600       88,943  

Axial Retailing Inc.

    1,800       81,560  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  26


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Food & Staples Retailing (continued)            

Belc Co. Ltd.

    900     $ 63,567  

Cawachi Ltd.

    900       25,588  

cocokara fine Inc.

    1,800       100,655  

Create SD Holdings Co. Ltd.

    2,700       97,388  

G-7 Holdings Inc.

    900       27,201  

Genky DrugStores Co. Ltd.

    900       29,238  

Halows Co. Ltd.

    900       33,863  

Heiwado Co. Ltd.

    2,700       55,708  

JM Holdings Co. Ltd.

    900       29,365  

Kansai Super Market Ltd.

    900       10,829  

Kato Sangyo Co. Ltd.

    1,800       61,955  

Kusuri no Aoki Holdings Co. Ltd.

    1,400       119,478  

Life Corp.

    1,800       82,239  

Matsumotokiyoshi Holdings Co. Ltd.

    7,200       251,893  

Maxvalu Tokai Co. Ltd.

    900       20,759  

Ministop Co. Ltd.

    900       12,849  

Mitsubishi Shokuhin Co. Ltd.

    1,800       46,424  

Nihon Chouzai Co. Ltd.

    900       13,902  

Okuwa Co. Ltd.

    1,800       24,850  

Qol Holdings Co. Ltd.

    1,800       19,299  

Retail Partners Co. Ltd.

    1,800       31,487  

San-A Co. Ltd.

    1,800       72,988  

Shoei Foods Corp.

    900       34,966  

Sugi Holdings Co. Ltd.

    3,000       216,418  

United Super Markets Holdings Inc.

    4,500       52,831  

Valor Holdings Co. Ltd.

    3,600       92,033  

YAKUODO Holdings Co. Ltd.

    900       21,353  

Yaoko Co. Ltd.

    1,800       140,714  

Yokohama Reito Co. Ltd.

    3,600       30,621  
   

 

 

 
        2,146,690  
Food Products — 4.6%            

Ariake Japan Co. Ltd.

    1,800       123,740  

Chubu Shiryo Co. Ltd.

    1,800       27,634  

DyDo Group Holdings Inc.

    900       42,138  

Ezaki Glico Co. Ltd.

    3,600       152,765  

Feed One Co. Ltd.

    9,900       17,178  

Fuji Oil Holdings Inc.

    4,500       131,972  

Fujicco Co. Ltd.

    1,800       35,272  

Fujiya Co. Ltd.

    900       18,485  

Hokuto Corp.

    1,800       36,528  

House Foods Group Inc.

    5,400       182,300  

Itoham Yonekyu Holdings Inc.

    12,600       84,004  

J-Oil Mills Inc.

    900       31,317  

Kagome Co. Ltd.

    7,200       223,716  

Kameda Seika Co. Ltd.

    900       44,641  

Kenko Mayonnaise Co. Ltd.

    900       15,141  

Kewpie Corp.

    9,000       170,418  

KEY Coffee Inc.

    1,800       37,020  

Kotobuki Spirits Co. Ltd.

    1,800       83,172  

Marudai Food Co. Ltd.

    1,800       31,419  

Maruha Nichiro Corp.

    3,600       81,407  

Megmilk Snow Brand Co. Ltd.

    3,600       81,475  

Mitsui Sugar Co. Ltd.

    900       16,414  

Morinaga & Co. Ltd./Japan

    3,600       131,887  

Morinaga Milk Industry Co. Ltd.

    3,600       174,831  

Nagatanien Holdings Co. Ltd.

    900       19,087  

Nichirei Corp.

    9,900       258,318  

Nippon Beet Sugar Manufacturing Co. Ltd.

    900       15,582  

Nippon Flour Mills Co. Ltd.

    3,600       57,202  

Nippon Suisan Kaisha Ltd.

    25,200       113,114  
Security   Shares     Value  
Food Products (continued)            

Nisshin Oillio Group Ltd. (The)

    1,800     $ 53,298  

Prima Meat Packers Ltd.

    2,700       78,929  

Riken Vitamin Co. Ltd.

    1,800       37,377  

Rock Field Co. Ltd.

    1,800       22,253  

Rokko Butter Co. Ltd.

    900       14,818  

S Foods Inc.

    1,800       48,885  

Sakata Seed Corp.

    2,700       88,731  

Showa Sangyo Co. Ltd.

    1,800       59,833  

Starzen Co. Ltd.

    900       33,481  

Warabeya Nichiyo Holdings Co. Ltd.

    900       12,697  
   

 

 

 
      2,888,479  
Gas Utilities — 0.3%            

K&O Energy Group Inc.

    900       12,917  

Nippon Gas Co. Ltd.

    3,600       139,526  

Shizuoka Gas Co. Ltd.

    4,500       37,045  
   

 

 

 
      189,488  
Health Care Equipment & Supplies — 2.0%            

CYBERDYNE Inc.(a)

    9,900       44,344  

Eiken Chemical Co. Ltd.

    2,700       48,554  

Hogy Medical Co. Ltd.

    1,800       57,032  

Japan Lifeline Co. Ltd.

    5,400       71,851  

Jeol Ltd.

    3,600       105,578  

Mani Inc.

    6,300       159,691  

Menicon Co. Ltd.

    2,700       164,986  

Nagaileben Co. Ltd.

    1,800       46,237  

Nakanishi Inc.

    6,300       100,876  

Nihon Kohden Corp.

    7,200       246,122  

Nipro Corp.

    12,600       141,987  

Paramount Bed Holdings Co. Ltd.

    1,800       71,715  
   

 

 

 
        1,258,973  
Health Care Providers & Services — 1.2%            

As One Corp.

    1,100       140,450  

BML Inc.

    1,800       45,931  

Elan Corp.

    900       20,776  

H.U. Group Holdings Inc.

    4,500       111,052  

Japan Medical Dynamic Marketing Inc.

    1,800       32,217  

Ship Healthcare Holdings Inc.

    3,600       166,345  

Solasto Corp.

    4,500       53,256  

Toho Holdings Co. Ltd.

    4,500       86,991  

Tokai Corp./Gifu

    1,800       35,662  

Tsukui Corp.

    4,500       26,352  

Vital KSK Holdings Inc.

    3,600       36,358  
   

 

 

 
      755,390  
Health Care Technology — 0.3%            

EM Systems Co. Ltd.

    2,700       22,126  

JMDC Inc.(a)

    900       68,235  

Medical Data Vision Co. Ltd.(a)

    1,800       30,553  

Medley Inc.(a)

    1,800       77,146  
   

 

 

 
      198,060  
Hotels, Restaurants & Leisure — 3.9%            

Aeon Fantasy Co. Ltd.

    900       14,504  

Arcland Service Holdings Co. Ltd.

    1,800       33,710  

Atom Corp.

    8,100       68,744  

BRONCO BILLY Co. Ltd.

    900       18,544  

Colowide Co. Ltd.

    5,400       84,479  

Create Restaurants Holdings Inc.

    7,200       44,743  

Curves Holdings Co. Ltd.

    3,600       23,051  

Daisyo Corp.

    900       10,880  

Doutor Nichires Holdings Co. Ltd.

    2,700       41,832  
 

 

 

27  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Hotels, Restaurants & Leisure (continued)            

Fuji Kyuko Co. Ltd.

    1,800     $ 57,202  

Fujio Food Group Inc.

    900       11,127  

Hiday Hidaka Corp.

    1,884       30,913  

HIS Co. Ltd.

    2,700       48,274  

Ichibanya Co. Ltd.

    900       44,132  

Kappa Create Co. Ltd.(a)

    2,700       37,453  

Kisoji Co. Ltd.

    1,800       40,228  

KNT-CT Holdings Co. Ltd.(a)

    900       8,699  

KOMEDA Holdings Co. Ltd.

    4,500       77,571  

Koshidaka Holdings Co. Ltd.

    3,600       15,548  

Kourakuen Holdings Corp.

    900       14,173  

Kura Sushi Inc.

    900       40,653  

Kyoritsu Maintenance Co. Ltd.

    2,780       102,109  

Matsuyafoods Holdings Co. Ltd.

    900       30,171  

Monogatari Corp. (The)

    600       51,657  

MOS Food Services Inc.

    1,800       49,343  

Ohsho Food Service Corp.

    900       50,073  

Plenus Co. Ltd.

    1,800       29,789  

Resorttrust Inc.

    7,200       102,523  

Ringer Hut Co. Ltd.

    1,800       41,790  

Round One Corp.

    6,300       50,676  

Royal Holdings Co. Ltd.

    2,700       46,950  

Saizeriya Co. Ltd.(a)

    2,700       50,616  

SFP Holdings Co. Ltd.

    900       12,179  

Skylark Holdings Co. Ltd.

    18,000       286,180  

St. Marc Holdings Co. Ltd.

    1,800       27,651  

Sushiro Global Holdings Ltd.

    9,000       209,289  

TKP Corp.(a)

    900       23,891  

Tokyo Dome Corp.

    7,200       54,452  

Tokyotokeiba Co. Ltd.

    1,800       83,172  

Toridoll Holdings Corp.

    3,600       46,814  

Tosho Co. Ltd.

    1,800       22,575  

WATAMI Co. Ltd.(b)

    1,800       17,670  

Yomiuri Land Co. Ltd.

    900       33,821  

Yoshinoya Holdings Co. Ltd.

    5,400       106,834  

Zensho Holdings Co. Ltd.

    8,100       182,402  
   

 

 

 
        2,479,087  
Household Durables — 1.7%            

Chofu Seisakusho Co. Ltd.

    1,800       35,917  

Corona Corp.

    900       8,572  

ES-Con Japan Ltd.

    2,700       19,401  

Foster Electric Co. Ltd.

    1,800       19,741  

France Bed Holdings Co. Ltd.

    1,800       14,513  

Fujitsu General Ltd.

    5,400       141,257  

Haseko Corp.

    24,300       331,577  

JVCKenwood Corp.

    13,500       19,987  

LEC Inc.

    1,800       28,465  

Pressance Corp.

    3,600       47,425  

Sangetsu Corp.

    4,500       68,829  

Sumitomo Forestry Co. Ltd.

    11,700       187,231  

Tama Home Co. Ltd.

    900       10,948  

Tamron Co. Ltd.

    1,800       29,076  

Token Corp.

    920       59,862  

Zojirushi Corp.

    2,700       40,839  
   

 

 

 
      1,063,640  
Household Products — 0.1%            

Earth Corp.

    900       66,368  

S.T. Corp.

    900       17,263  
   

 

 

 
      83,631  
Security   Shares     Value  
Independent Power and Renewable Electricity Producers — 0.2%  

eRex Co. Ltd.

    1,800     $ 21,455  

RENOVA Inc.(a)

    2,700       29,000  

West Holdings Corp.

    1,800       49,241  
   

 

 

 
      99,696  
Industrial Conglomerates — 0.4%            

Katakura Industries Co. Ltd.

    1,800       20,420  

Mie Kotsu Group Holdings Inc.

    4,500       19,562  

Nisshinbo Holdings Inc.

    12,600       87,331  

Noritsu Koki Co. Ltd.

    1,800       27,023  

TOKAI Holdings Corp.

    8,100       77,070  
   

 

 

 
      231,406  
Insurance — 0.1%            

Anicom Holdings Inc.

    1,800       77,062  
   

 

 

 
Interactive Media & Services — 0.6%            

Bengo4.com Inc.(a)

    900       92,084  

COOKPAD Inc.(a)

    4,500       15,701  

Dip Corp.

    2,700       59,782  

giftee Inc.(a)

    900       21,319  

Gree Inc.

    10,800       45,830  

Gurunavi Inc.

    2,700       16,473  

Itokuro Inc.(a)

    900       8,665  

Kamakura Shinsho Ltd.

    1,800       15,972  

Lifull Co. Ltd.

    5,400       23,628  

Mixi Inc.

    3,600       79,710  

MTI Ltd.

    1,800       12,425  

ZIGExN Co. Ltd.

    4,500       14,088  
   

 

 

 
          405,677  
Internet & Direct Marketing Retail — 0.5%            

ASKUL Corp.

    1,800       55,590  

Belluna Co. Ltd.

    4,500       43,071  

Demae-Can Co. Ltd.(a)

    1,800       39,193  

Enigmo Inc.

    1,800       26,360  

Media Do Co. Ltd.

    900       57,372  

Oisix ra daichi Inc.(a)

    1,800       56,947  

Open Door Inc.(a)

    900       11,636  
   

 

 

 
      290,169  
IT Services — 3.3%            

Argo Graphics Inc.

    1,800       59,494  

Change Inc.(a)

    1,300       90,961  

Comture Corp.

    1,800       37,954  

Digital Garage Inc.

    2,700       82,111  

DTS Corp.

    3,600       75,500  

Future Corp.

    1,800       32,607  

GMO Cloud KK

    400       33,005  

GMO internet Inc.

    6,300       169,612  

Ines Corp.

    1,800       22,660  

Infocom Corp.

    1,800       59,833  

Infomart Corp.

    17,100       117,875  

Information Services International-Dentsu Ltd.

    900       48,036  

Kanematsu Electronics Ltd.

    900       34,330  

LAC Co. Ltd.

    1,800       18,977  

Mitsubishi Research Institute Inc.

    900       33,269  

NEC Networks & System Integration Corp.

    5,400       100,214  

NET One Systems Co. Ltd.

    8,100       311,259  

Nihon Unisys Ltd.

    6,300       180,603  

NS Solutions Corp.

    2,700       78,547  

NSD Co. Ltd.

    6,300       109,906  

Oro Co. Ltd.

    900       26,692  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  28


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
IT Services (continued)            

SB Technology Corp.

    900     $ 26,267  

SHIFT Inc.(a)

    900       104,135  

TechMatrix Corp.

    3,600       74,074  

TKC Corp.

    900       50,497  

Transcosmos Inc.

    1,800       49,106  

Zuken Inc.

    900       21,761  
   

 

 

 
        2,049,285  
Leisure Products — 0.6%            

Heiwa Corp.

    5,416       91,369  

Mars Group Holdings Corp.

    900       14,190  

Mizuno Corp.

    1,800       32,267  

Sankyo Co. Ltd.

    4,500       124,334  

Tomy Co. Ltd.

    8,100       65,078  

Universal Entertainment Corp.(a)

    2,700       53,035  

Yonex Co. Ltd.

    4,500       27,583  
   

 

 

 
      407,856  
Life Sciences Tools & Services — 0.1%            

CMIC Holdings Co. Ltd.

    900       11,118  

EPS Holdings Inc.

    2,700       25,614  
   

 

 

 
      36,732  
Machinery — 5.4%            

Aichi Corp.

    2,700       20,903  

Aida Engineering Ltd.

    4,500       29,195  

Anest Iwata Corp.

    2,700       20,802  

Asahi Diamond Industrial Co. Ltd.

    4,500       21,048  

Bando Chemical Industries Ltd.

    2,700       14,818  

CKD Corp.

    3,600       49,666  

Daiwa Industries Ltd.

    2,700       23,424  

DMG Mori Co. Ltd.

    9,900       125,845  

Ebara Corp.

    8,100       208,677  

Fuji Corp./Aichi

    5,400       97,057  

Fujitec Co. Ltd.

    5,400       107,801  

Fukushima Galilei Co. Ltd.

    900       28,389  

Furukawa Co. Ltd.

    2,700       27,167  

Giken Ltd.

    1,800       64,501  

Glory Ltd.

    4,500       94,035  

Harmonic Drive Systems Inc.

    3,600       189,768  

Hirata Corp.

    900       51,601  

Hisaka Works Ltd.

    1,800       13,868  

Hitachi Zosen Corp.

    14,400       56,897  

Hosokawa Micron Corp.

    500       26,640  

IHI Corp.

    11,700       173,771  

Iseki & Co. Ltd.

    1,800       19,673  

Japan Steel Works Ltd. (The)

    5,400       77,910  

Kitz Corp.

    6,300       36,833  

Komori Corp.

    4,500       30,468  

Kyokuto Kaihatsu Kogyo Co. Ltd.

    2,700       33,303  

Makino Milling Machine Co. Ltd.

    1,800       62,209  

Max Co. Ltd.

    1,800       26,988  

Meidensha Corp.

    2,700       41,629  

METAWATER Co. Ltd.

    900       37,809  

Mitsubishi Logisnext Co. Ltd.

    1,800       16,957  

Mitsuboshi Belting Ltd.

    1,800       27,837  

Mitsui E&S Holdings Co. Ltd.(a)

    6,300       25,546  

Morita Holdings Corp.

    2,700       49,420  

Nachi-Fujikoshi Corp.

    900       27,964  

Nikkiso Co. Ltd.

    4,500       44,387  

Nippon Sharyo Ltd.(a)

    900       21,014  

Nippon Thompson Co. Ltd.

    4,500       15,404  
Security   Shares     Value  
Machinery (continued)            

Nissei ASB Machine Co. Ltd.

    900     $ 34,839  

Nitta Corp.

    1,800       40,075  

Nitto Kohki Co. Ltd.

    900       16,957  

Nittoku Co. Ltd.

    900       27,710  

Noritake Co. Ltd./Nagoya Japan

    900       28,856  

NTN Corp.

    36,000       69,254  

Obara Group Inc.

    900       30,638  

Oiles Corp.

    1,896       24,602  

OKUMA Corp.

    1,800       82,239  

Organo Corp.

    900       47,697  

OSG Corp.

    7,200       106,460  

Rheon Automatic Machinery Co. Ltd.

    900       9,336  

Ryobi Ltd.

    1,800       20,114  

Shibaura Machine Co. Ltd.

    1,800       35,696  

Shibuya Corp.

    900       25,215  

Shima Seiki Manufacturing Ltd.

    1,800       25,800  

Shinmaywa Industries Ltd.

    4,500       39,889  

Sintokogio Ltd.

    3,600       24,001  

Sodick Co. Ltd.

    3,600       24,782  

Star Micronics Co. Ltd.

    2,700       33,812  

Tadano Ltd.

    9,000       73,582  

Takeuchi Manufacturing Co. Ltd.

    2,700       56,650  

Takuma Co. Ltd.

    6,300       100,876  

Teikoku Sen-I Co. Ltd.

    1,800       45,626  

Tocalo Co. Ltd.

    5,400       54,333  

Tsubaki Nakashima Co. Ltd.

    3,600       29,059  

Tsubakimoto Chain Co.

    1,800       42,214  

Tsugami Corp.

    3,600       38,565  

Tsukishima Kikai Co. Ltd.

    2,700       31,953  

Tsurumi Manufacturing Co. Ltd.

    1,800       31,232  

Union Tool Co.

    900       24,807  

YAMABIKO Corp.

    2,700       27,498  

Yamashin-Filter Corp.

    3,600       40,432  

Yushin Precision Equipment Co. Ltd.

    1,800       11,916  
   

 

 

 
        3,397,939  
Marine — 0.4%            

Iino Kaiun Kaisha Ltd.

    7,200       23,967  

Kawasaki Kisen Kaisha Ltd.(a)

    4,500       50,200  

Mitsui OSK Lines Ltd.

    9,900       183,259  

NS United Kaiun Kaisha Ltd.

    900       11,653  
   

 

 

 
      269,079  
Media — 0.8%            

Digital Holdings Inc.

    1,800       21,930  

FAN Communications Inc.

    3,600       15,446  

Gakken Holdings Co. Ltd.

    1,800       27,294  

Kadokawa Corp.

    4,508       115,245  

Macromill Inc.

    3,600       29,365  

Proto Corp.

    1,800       20,691  

RPA Holdings Inc.(a)

    1,800       13,579  

SKY Perfect JSAT Holdings Inc.

    11,700       44,684  

Tokyo Broadcasting System Holdings Inc.

    2,700       46,645  

TV Asahi Holdings Corp.

    1,800       28,533  

ValueCommerce Co. Ltd.

    1,800       60,003  

Vector Inc.(a)

    2,700       24,061  

Wowow Inc.

    900       22,983  

Zenrin Co. Ltd.

    2,700       28,287  
   

 

 

 
      498,746  
Metals & Mining — 1.7%            

Aichi Steel Corp.

    900       22,516  
 

 

 

29  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Metals & Mining (continued)            

Asahi Holdings Inc.

    2,700     $ 90,641  

Daido Steel Co. Ltd.

    2,700       89,877  

Dowa Holdings Co. Ltd.

    4,500       139,823  

Godo Steel Ltd.

    900       16,168  

Kobe Steel Ltd.(a)

    27,000       103,626  

Kyoei Steel Ltd.

    1,800       22,626  

Mitsui Mining & Smelting Co. Ltd.

    5,400       129,749  

Neturen Co. Ltd.

    2,700       12,679  

Nippon Light Metal Holdings Co. Ltd.

    49,500       86,821  

Nittetsu Mining Co. Ltd.

    900       35,730  

Osaka Steel Co. Ltd.

    900       9,191  

OSAKA Titanium Technologies Co. Ltd.

    1,800       15,837  

Pacific Metals Co. Ltd.

    1,800       30,943  

Sanyo Special Steel Co. Ltd.

    1,800       15,633  

Toho Titanium Co. Ltd.

    2,700       17,670  

Tokyo Steel Manufacturing Co. Ltd.

    9,000       60,342  

Topy Industries Ltd.

    900       9,650  

UACJ Corp.

    2,714       49,676  

Yamato Kogyo Co. Ltd.

    3,600       86,465  

Yodogawa Steel Works Ltd.

    1,800       31,334  
   

 

 

 
        1,076,997  
Multiline Retail — 1.1%            

Fuji Co. Ltd./Ehime

    1,800       31,622  

H2O Retailing Corp.

    8,135       56,844  

Izumi Co. Ltd.

    3,600       140,374  

J Front Retailing Co. Ltd.

    20,700       144,058  

Kintetsu Department Store Co. Ltd.

    900       24,196  

Matsuya Co. Ltd.

    2,700       15,862  

Seria Co. Ltd.

    3,600       158,876  

Takashimaya Co. Ltd.

    12,600       99,332  
   

 

 

 
      671,164  
Oil, Gas & Consumable Fuels — 0.6%            

Cosmo Energy Holdings Co. Ltd.

    4,500       71,375  

Itochu Enex Co. Ltd.

    4,500       39,846  

Iwatani Corp.

    2,700       97,006  

Japan Petroleum Exploration Co. Ltd.

    2,700       46,950  

Mitsuuroko Group Holdings Co. Ltd.

    2,700       28,847  

San-Ai Oil Co. Ltd.

    4,500       39,677  

Sinanen Holdings Co. Ltd.

    900       25,122  
   

 

 

 
      348,823  
Paper & Forest Products — 0.5%            

Daiken Corp.

    900       14,139  

Daio Paper Corp.

    6,300       85,846  

Hokuetsu Corp.

    9,000       30,723  

Nippon Paper Industries Co. Ltd.

    9,000       114,574  

Tokushu Tokai Paper Co. Ltd.

    900       37,597  
   

 

 

 
      282,879  
Personal Products — 1.3%            

Euglena Co. Ltd.(a)

    7,200       53,638  

Fancl Corp.

    7,200       235,259  

Kitanotatsujin Corp.

    5,400       28,058  

Mandom Corp.

    3,600       57,202  

Milbon Co. Ltd.

    1,800       98,958  

Noevir Holdings Co. Ltd.

    1,800       82,323  

Rohto Pharmaceutical Co. Ltd.

    8,100       257,410  

YA-MAN Ltd.

    2,700       35,441  
   

 

 

 
      848,289  
Pharmaceuticals — 1.8%            

ASKA Pharmaceutical Co. Ltd.

    1,800       20,267  
Security   Shares     Value  
Pharmaceuticals (continued)            

Daito Pharmaceutical Co. Ltd.

    900     $ 29,280  

Fuji Pharma Co. Ltd.

    900       9,285  

JCR Pharmaceuticals Co. Ltd.

    1,200       128,889  

Kaken Pharmaceutical Co. Ltd.

    2,700       124,758  

Kissei Pharmaceutical Co. Ltd.

    2,700       58,866  

KYORIN Holdings Inc.

    3,600       68,133  

Mochida Pharmaceutical Co. Ltd.

    1,800       66,453  

Nichi-Iko Pharmaceutical Co. Ltd.

    4,550       51,058  

Sawai Pharmaceutical Co. Ltd.

    3,600       183,997  

Seikagaku Corp.

    3,600       36,833  

Sosei Group Corp.(a)

    6,300       76,400  

Taiko Pharmaceutical Co. Ltd.

    1,800       43,114  

Torii Pharmaceutical Co. Ltd.

    900       23,415  

Towa Pharmaceutical Co. Ltd.

    2,700       53,519  

Tsumura & Co.

    5,400       153,275  

ZERIA Pharmaceutical Co. Ltd.

    1,800       33,269  
   

 

 

 
      1,160,811  
Professional Services — 2.3%            

Altech Corp.

    980       16,902  

BayCurrent Consulting Inc.

    1,100       117,940  

Benefit One Inc.

    6,300       152,027  

BeNEXT Group Inc.

    1,800       19,113  

en-japan Inc.

    2,700       78,165  

FULLCAST Holdings Co. Ltd.

    1,800       27,447  

Funai Soken Holdings Inc.

    3,600       72,105  

Grace Technology Inc.

    900       34,245  

Insource Co. Ltd.

    900       22,355  

IR Japan Holdings Ltd.

    900       110,246  

JAC Recruitment Co. Ltd.

    900       10,821  

Link And Motivation Inc.

    2,700       9,039  

Meitec Corp.

    1,800       86,737  

Nomura Co. Ltd.

    7,200       50,922  

Outsourcing Inc.

    9,000       74,600  

Pasona Group Inc.

    1,800       23,458  

SMS Co. Ltd.

    6,300       174,305  

S-Pool Inc.

    4,500       30,426  

Tanseisha Co. Ltd.

    3,600       24,205  

TechnoPro Holdings Inc.

    3,300       176,133  

UT Group Co. Ltd.(a)

    2,700       80,456  

WDB Holdings Co. Ltd.

    900       24,001  

World Holdings Co. Ltd.

    900       15,132  

YAMADA Consulting Group Co. Ltd.

    900       9,064  

Yumeshin Holdings Co. Ltd.

    3,600       23,186  
   

 

 

 
        1,463,030  
Real Estate Management & Development — 2.0%            

Daibiru Corp.

    4,500       50,625  

Goldcrest Co. Ltd.

    900       12,501  

Heiwa Real Estate Co. Ltd.

    2,700       71,749  

Ichigo Inc.

    22,500       60,470  

Katitas Co. Ltd.

    4,500       112,367  

Keihanshin Building Co. Ltd.

    2,700       38,420  

Kenedix Inc.

    19,800       96,531  

Leopalace21 Corp.(a)(b)

    14,400       24,850  

Open House Co. Ltd.

    5,400       191,721  

Raysum Co. Ltd.

    900       7,825  

Relo Group Inc.

    9,900       224,989  

SAMTY Co. Ltd.

    2,700       35,569  

Starts Corp. Inc.

    2,700       56,523  

Sun Frontier Fudousan Co. Ltd.

    2,700       20,776  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  30


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Real Estate Management & Development (continued)  

Takara Leben Co. Ltd.

    7,200     $ 23,492  

TOC Co. Ltd.

    3,600       23,152  

Tokyo Tatemono Co. Ltd.

    17,100       208,177  

Tosei Corp.

    2,700       23,679  
   

 

 

 
        1,283,416  
Road & Rail — 2.5%            

Fukuyama Transporting Co. Ltd.

    2,700       133,160  

Hamakyorex Co. Ltd.

    900       28,092  

Hitachi Transport System Ltd.

    3,600       125,437  

Maruzen Showa Unyu Co. Ltd.

    900       29,068  

Nankai Electric Railway Co. Ltd.

    9,000       198,001  

Nikkon Holdings Co. Ltd.

    5,400       119,157  

Nishi-Nippon Railroad Co. Ltd.

    5,400       157,094  

Sakai Moving Service Co. Ltd.

    900       38,828  

Sankyu Inc.

    4,500       187,986  

Seino Holdings Co. Ltd.

    12,600       192,603  

Senko Group Holdings Co. Ltd.

    9,900       87,662  

Sotetsu Holdings Inc.

    6,300       171,513  

Tonami Holdings Co. Ltd.

    900       48,885  

Trancom Co. Ltd.

    900       63,398  
   

 

 

 
      1,580,884  
Semiconductors & Semiconductor Equipment — 1.4%  

Ferrotec Holdings Corp.

    2,700       19,630  

Japan Material Co. Ltd.

    5,400       71,851  

Megachips Corp.

    1,800       35,849  

Micronics Japan Co. Ltd.

    2,700       27,701  

Mimasu Semiconductor Industry Co. Ltd.

    900       18,196  

Mitsui High-Tec Inc.

    1,800       27,158  

Optorun Co. Ltd.

    1,800       35,798  

Rorze Corp.

    900       42,138  

RS Technologies Co. Ltd.

    900       26,692  

Sanken Electric Co. Ltd.

    1,800       37,156  

SCREEN Holdings Co. Ltd.

    3,600       175,510  

Shindengen Electric Manufacturing Co. Ltd.

    900       16,125  

Shinko Electric Industries Co. Ltd.

    5,400       80,304  

Tokyo Seimitsu Co. Ltd.

    3,600       109,991  

Tri Chemical Laboratories Inc.

    500       45,924  

Ulvac Inc.

    3,600       127,983  
   

 

 

 
      898,006  
Software — 2.2%            

Alpha Systems Inc.

    900       31,444  

Broadleaf Co. Ltd.

    8,100       38,650  

Chatwork Co. Ltd.(a)

    900       12,909  

Computer Engineering & Consulting Ltd.

    1,800       27,617  

Cybozu Inc.

    1,800       53,043  

Digital Arts Inc.

    900       69,593  

Ebase Co. Ltd.

    1,800       20,403  

Fixstars Corp.

    1,800       19,707  

Freee KK(a)

    1,800       99,297  

Fuji Soft Inc.

    2,700       122,212  

Fukui Computer Holdings Inc.

    900       23,263  

Justsystems Corp.

    2,700       206,742  

Miroku Jyoho Service Co. Ltd.

    1,800       36,833  

Money Forward Inc.(a)

    1,300       92,678  

OBIC Business Consultants Co. Ltd.

    1,800       106,936  

Optim Corp.(a)

    1,800       51,091  

PKSHA Technology Inc.(a)

    900       23,127  

Rakus Co. Ltd.

    3,600       95,835  

Sansan Inc.(a)

    1,800       94,036  
Security   Shares     Value  
Software (continued)            

Sourcenext Corp.

    7,200     $ 20,097  

Systena Corp.

    6,300       101,886  

UNITED Inc./Japan

    900       11,177  
   

 

 

 
        1,358,576  
Specialty Retail — 2.8%            

Adastria Co. Ltd.

    2,700       42,214  

Alpen Co. Ltd.

    900       15,260  

AOKI Holdings Inc.

    3,600       19,452  

Aoyama Trading Co. Ltd.

    3,600       21,659  

Arcland Sakamoto Co. Ltd.

    2,700       53,723  

Asahi Co. Ltd.

    1,800       31,011  

Autobacs Seven Co. Ltd.

    6,300       81,509  

Bic Camera Inc.

    9,000       99,637  

Chiyoda Co. Ltd.

    1,800       17,127  

DCM Holdings Co. Ltd.

    9,000       110,161  

EDION Corp.

    7,200       81,543  

Geo Holdings Corp.

    2,700       43,767  

IDOM Inc.

    4,500       22,957  

JINS Holdings Inc.

    900       62,125  

Joshin Denki Co. Ltd.

    1,800       40,160  

Joyful Honda Co. Ltd.

    4,500       64,161  

Keiyo Co. Ltd.

    3,600       29,093  

Kohnan Shoji Co. Ltd.

    1,800       65,010  

Komeri Co. Ltd.

    2,700       83,639  

K’s Holdings Corp.

    17,100       242,362  

Nextage Co. Ltd.

    3,600       34,559  

Nishimatsuya Chain Co. Ltd.

    3,600       45,524  

Nojima Corp.

    2,700       79,947  

PAL GROUP Holdings Co. Ltd.

    1,800       19,486  

Sanrio Co. Ltd.

    4,500       75,279  

Shimachu Co. Ltd.

    3,600       100,588  

T-Gaia Corp.

    1,800       35,476  

United Arrows Ltd.

    1,800       27,583  

VT Holdings Co. Ltd.

    6,300       23,169  

World Co. Ltd.

    1,800       26,377  

Xebio Holdings Co. Ltd.

    1,800       12,781  

Yellow Hat Ltd.

    2,700       44,480  
   

 

 

 
      1,751,819  
Technology Hardware, Storage & Peripherals — 0.9%  

Eizo Corp.

    900       33,905  

Elecom Co. Ltd.

    1,800       81,305  

Konica Minolta Inc.

    40,500       130,996  

Maxell Holdings Ltd.

    4,500       43,156  

MCJ Co. Ltd.

    5,400       48,019  

Melco Holdings Inc.

    900       21,795  

Riso Kagaku Corp.

    1,800       22,508  

Toshiba TEC Corp.

    2,700       112,919  

Wacom Co. Ltd.

    12,600       82,341  
   

 

 

 
      576,944  
Textiles, Apparel & Luxury Goods — 1.1%  

Asics Corp.

    13,500       186,374  

Descente Ltd.(a)

    2,700       46,237  

Fujibo Holdings Inc.

    900       30,383  

Goldwin Inc.

    1,800       129,850  

Gunze Ltd.

    900       32,420  

Japan Wool Textile Co. Ltd. (The)

    4,500       41,289  

Kurabo Industries Ltd.

    1,800       34,050  

Onward Holdings Co. Ltd.

    8,100       20,852  

Seiko Holdings Corp.

    1,800       25,393  
 

 

 

31  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Textiles, Apparel & Luxury Goods (continued)  

Seiren Co. Ltd.

    3,600     $ 47,697  

TSI Holdings Co. Ltd.

    5,400       16,397  

Wacoal Holdings Corp.

    3,600       63,992  

Yondoshi Holdings Inc.

    1,800       29,331  
   

 

 

 
      704,265  
Thrifts & Mortgage Finance — 0.1%            

Aruhi Corp.

    2,700       43,284  
   

 

 

 
Trading Companies & Distributors — 1.9%  

Advan Co. Ltd.

    1,800       22,932  

Chori Co. Ltd.

    900       13,409  

Daiichi Jitsugyo Co. Ltd.

    900       30,680  

Gecoss Corp.

    900       8,080  

Hanwa Co. Ltd.

    2,700       54,435  

Inaba Denki Sangyo Co. Ltd.

    4,500       111,604  

Inabata & Co. Ltd.

    3,600       44,472  

Japan Pulp & Paper Co. Ltd.

    900       32,250  

Kamei Corp.

    1,800       16,804  

Kanamoto Co. Ltd.

    2,700       58,611  

Kanematsu Corp.

    7,200       91,048  

Nagase & Co. Ltd.

    9,000       117,205  

Nichiden Corp.

    1,800       33,642  

Nippon Steel Trading Corp.

    944       28,397  

Nishio Rent All Co. Ltd.

    1,800       39,685  

Sojitz Corp.

    113,400       259,854  

Trusco Nakayama Corp.

    3,600       82,086  

Wakita & Co. Ltd.

    3,600       31,979  

Yamazen Corp.

    5,400       50,871  

Yuasa Trading Co. Ltd.

    1,800       52,365  
   

 

 

 
      1,180,409  
Security   Shares     Value  
Transportation Infrastructure — 0.3%  

Mitsubishi Logistics Corp.

    4,500     $ 136,428  

Nissin Corp.

    900       13,656  

Sumitomo Warehouse Co. Ltd. (The)

    5,400       66,860  
   

 

 

 
      216,944  
   

 

 

 

Total Common Stocks — 99.5%
(Cost: $81,353,805)

 

    62,626,258  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 0.1%            

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(c)(d)(e)

    44,368       44,412  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(c)(d)

    30,000       30,000  
   

 

 

 
          74,412  
   

 

 

 

Total Short-Term Investments — 0.1%
(Cost: $74,412)

 

    74,412  
   

 

 

 

Total Investments in Securities — 99.6%
(Cost: $81,428,217)

 

    62,700,670  

Other Assets, Less Liabilities — 0.4%

 

    220,819  
   

 

 

 

Net Assets — 100.0%

    $   62,921,489  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

(e) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer  

Value at

08/31/19

   

Purchases

at Cost

   

Proceeds

from Sales

    Net Realized
Gain (Loss)
   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at

08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 3,096,256     $     $ (3,051,810 )(a)    $ 1,413     $ (1,447   $ 44,412       44,368     $ 35,761 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    48,000             (18,000 )(a)                  30,000       30,000       663        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 1,413     $ (1,447   $ 74,412       $ 36,424     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
    

Expiration

Date

    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

           

TOPIX Index

     19        09/10/20      $ 290      $ 5,199  
           

 

 

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  32


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan Small-Cap ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 5,199  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 109,293  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 18,093  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 523,903      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                               

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 62,626,258      $      $      $ 62,626,258  

Money Market Funds

     74,412                      74,412  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 62,700,670      $      $      $ 62,700,670  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Assets

           

Futures Contracts

   $ 5,199      $      $      $ 5,199  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

33  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Malaysia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Banks — 26.2%            

AMMB Holdings Bhd

    5,103,837     $ 3,577,771  

CIMB Group Holdings Bhd(a)

    19,753,912       15,649,480  

Hong Leong Bank Bhd

    2,011,940       6,762,012  

Hong Leong Financial Group Bhd

    701,100       2,076,960  

Malayan Banking Bhd

    12,019,481       21,150,593  

Public Bank Bhd

    8,894,680       35,061,972  

RHB Bank Bhd

    4,937,602       5,428,932  
   

 

 

 
      89,707,720  
Beverages — 1.7%            

Carlsberg Brewery Malaysia Bhd

    467,000       2,446,271  

Fraser & Neave Holdings Bhd

    451,200       3,316,707  
   

 

 

 
      5,762,978  
Chemicals — 2.8%            

Petronas Chemicals Group Bhd

    7,350,500       9,634,793  
   

 

 

 
Construction & Engineering — 1.3%            

Gamuda Bhd

    5,416,100       4,420,775  

IJM Corp. Bhd

    166,300       47,908  
   

 

 

 
      4,468,683  
Diversified Telecommunication Services — 1.0%        

Telekom Malaysia Bhd(a)

    3,451,200       3,438,358  
   

 

 

 
Electric Utilities — 5.3%            

Tenaga Nasional Bhd

    6,949,212       18,117,499  
   

 

 

 
Energy Equipment & Services — 3.0%            

Dialog Group Bhd

    12,094,454       10,423,500  
   

 

 

 
Food Products — 13.4%            

Genting Plantations Bhd

    822,400       1,962,467  

IOI Corp. Bhd

    7,680,130       8,223,114  

Kuala Lumpur Kepong Bhd

    1,321,000       7,186,138  

Nestle Malaysia Bhd

    214,900       7,181,390  

PPB Group Bhd

    1,980,119       8,556,510  

QL Resources Bhd

    2,230,400       5,140,281  

Sime Darby Plantation Bhd

    6,309,555       7,725,058  
   

 

 

 
      45,974,958  
Gas Utilities — 2.8%            

Petronas Gas Bhd

    2,423,900       9,601,332  
   

 

 

 
Health Care Equipment & Supplies — 20.6%        

Hartalega Holdings Bhd

    5,170,700       20,506,533  

Kossan Rubber Industries

    1,953,500       7,494,161  

Supermax Corp. Bhd(b)

    2,285,600       12,148,166  

Top Glove Corp. Bhd

    4,779,900       30,156,229  
   

 

 

 
      70,305,089  
Health Care Providers & Services — 2.5%            

IHH Healthcare Bhd

    6,702,300       8,624,254  
   

 

 

 
Hotels, Restaurants & Leisure — 3.1%            

Genting Bhd

    6,530,600       5,502,918  

Genting Malaysia Bhd

    9,070,100       4,964,549  
   

 

 

 
        10,467,467  
Security   Shares     Value  
Industrial Conglomerates — 2.2%            

HAP Seng Consolidated Bhd

    1,925,600     $ 3,328,369  

Sime Darby Bhd

    8,311,155       4,369,566  
   

 

 

 
      7,697,935  
Marine — 2.2%            

MISC Bhd

    4,090,920       7,473,749  
   

 

 

 
Metals & Mining — 1.6%            

Press Metal Aluminium Holdings Bhd

    4,317,600       5,400,239  
   

 

 

 
Multi-Utilities — 0.5%            

YTL Corp. Bhd(b)

    10,102,062       1,624,867  
   

 

 

 
Oil, Gas & Consumable Fuels — 1.3%            

Petronas Dagangan Bhd

    910,500       4,502,773  
   

 

 

 
Transportation Infrastructure — 1.9%            

Malaysia Airports Holdings Bhd

    3,320,200       4,065,063  

Westports Holdings Bhd

    2,604,300       2,282,006  
   

 

 

 
      6,347,069  
Wireless Telecommunication Services — 7.0%        

Axiata Group Bhd

    8,508,700       6,148,406  

DiGi.Com Bhd

    9,572,200       9,076,987  

Maxis Bhd(a)

    7,167,300       8,603,169  
   

 

 

 
      23,828,562  
   

 

 

 

Total Common Stocks — 100.4%
(Cost: $228,967,902)

      343,401,825  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 3.2%            

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(c)(d)(e)

    10,664,802       10,675,467  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(c)(d)

    140,000       140,000  
   

 

 

 
      10,815,467  
   

 

 

 

Total Short-Term Investments — 3.2%
(Cost: $10,813,496)

      10,815,467  
   

 

 

 

Total Investments in Securities — 103.6%
(Cost: $239,781,398)

      354,217,292  

Other Assets, Less Liabilities — (3.6)%

      (12,295,313
   

 

 

 

Net Assets — 100.0%

    $   341,921,979  
   

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

Non-income producing security.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

(e) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  34


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Malaysia ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

   
    Affiliated Issuer   Value at
08/31/19
   

Purchases

at Cost

    Proceeds
from Sales
    Net Realized
Gain (Loss)
   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at

08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

       
 

 

   

    

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 3,583,110     $ 7,093,754 (a)    $     $ (2,290   $ 893     $ 10,675,467       10,664,802     $ 106,448 (b)    $    
 

BlackRock Cash Funds: Treasury, SL Agency Shares

    198,000             (58,000 )(a)                  140,000       140,000       3,467          
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ (2,290   $ 893     $ 10,815,467       $ 109,915     $    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 343,401,825      $      $      $ 343,401,825  

Money Market Funds

     10,815,467                      10,815,467  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 354,217,292      $      $      $ 354,217,292  
  

 

 

    

 

 

    

 

 

    

 

 

 

See notes to financial statements.

 

 

35  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Pacific ex Japan ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Australia — 58.6%            

Afterpay Ltd.(a)

    243,890     $ 16,492,923  

AGL Energy Ltd.

    713,253       7,806,794  

AMP Ltd.(a)

    3,921,930       4,437,708  

Ampol Ltd.

    284,161       5,468,134  

APA Group

    1,343,382       10,362,183  

Aristocrat Leisure Ltd.

    653,550       13,712,151  

ASX Ltd.

    219,974       14,208,622  

Aurizon Holdings Ltd.

    2,181,983       7,019,530  

AusNet Services

    2,121,478       2,863,313  

Australia & New Zealand Banking Group Ltd.

    3,228,199       43,641,926  

BHP Group Ltd.

    3,353,768       94,027,355  

BlueScope Steel Ltd.

    573,203       5,379,445  

Brambles Ltd.

    1,727,887       14,171,450  

CIMIC Group Ltd.

    111,808       1,750,496  

Coca-Cola Amatil Ltd.

    576,719       3,881,263  

Cochlear Ltd.

    74,795       10,628,706  

Coles Group Ltd.

    1,520,464       19,936,655  

Commonwealth Bank of Australia

    2,015,367         101,768,899  

Computershare Ltd.

    556,080       5,465,497  

Crown Resorts Ltd.

    423,824       2,824,085  

CSL Ltd.

    517,280       109,414,360  

Dexus

    1,242,303       8,112,518  

Evolution Mining Ltd.

    1,850,169       7,594,021  

Fortescue Metals Group Ltd.

    1,924,755       24,796,537  

Goodman Group

    1,868,106       25,296,316  

GPT Group (The)

    2,216,648       6,278,602  

Insurance Australia Group Ltd.

    2,624,277       9,257,537  

James Hardie Industries PLC

    504,012       11,491,635  

Lendlease Corp. Ltd.

    754,737       6,485,884  

Macquarie Group Ltd.

    383,493       36,217,274  

Magellan Financial Group Ltd.

    145,110       6,358,477  

Medibank Pvt Ltd.

    3,133,905       6,327,263  

Mirvac Group

    4,467,135       6,970,741  

National Australia Bank Ltd.

    3,637,134       48,228,862  

Newcrest Mining Ltd.

    917,785       21,692,777  

Northern Star Resources Ltd.

    846,194       8,542,205  

Oil Search Ltd.

    2,255,205       5,453,825  

Orica Ltd.

    460,704       5,921,601  

Origin Energy Ltd.

    2,004,169       8,300,224  

Qantas Airways Ltd.

    1,040,386       3,031,504  

QBE Insurance Group Ltd.

    1,662,392       13,044,164  

Ramsay Health Care Ltd.

    208,522       10,033,059  

REA Group Ltd.

    60,440       5,103,215  

Rio Tinto Ltd.

    423,044       30,660,486  

Santos Ltd.

    2,010,617       8,431,014  

Scentre Group

    5,909,098       9,876,363  

Seek Ltd.

    380,544       5,817,184  

Sonic Healthcare Ltd.

    513,377       12,168,355  

South32 Ltd.

    5,499,865       8,541,590  

Stockland

    2,713,266       7,946,117  

Suncorp Group Ltd.

    1,434,776       9,868,121  

Sydney Airport

    1,501,696       6,352,512  

Tabcorp Holdings Ltd.

    2,506,759       6,711,021  

Telstra Corp. Ltd.

    4,767,954       10,190,543  

TPG Telecom Ltd.(a)

    426,486       2,595,805  

Transurban Group

    3,115,844       31,016,171  

Treasury Wine Estates Ltd.

    819,038       5,602,904  

Vicinity Centres

    4,435,354       4,739,839  
Security   Shares     Value  
Australia (continued)            

Washington H Soul Pattinson & Co. Ltd.

    122,964     $ 1,903,332  

Wesfarmers Ltd.

    1,290,845       45,364,690  

Westpac Banking Corp.

    4,117,368       53,409,276  

WiseTech Global Ltd.

    165,345       3,445,875  

Woodside Petroleum Ltd.

    1,087,038       15,740,729  

Woolworths Group Ltd.

    1,436,145       42,345,956  
   

 

 

 
        1,102,527,619  
Hong Kong — 29.1%            

AIA Group Ltd.

    13,762,414       141,705,727  

ASM Pacific Technology Ltd.

    347,400       3,736,159  

Bank of East Asia Ltd. (The)(b)

    1,479,520       3,336,969  

BeiGene Ltd., ADR(a)(b)

    45,912       11,090,962  

BOC Hong Kong Holdings Ltd.

    4,202,500       11,929,446  

Budweiser Brewing Co. APAC Ltd.(b)(c)

    1,967,400       6,638,260  

CK Asset Holdings Ltd.

    2,950,732       16,028,827  

CK Hutchison Holdings Ltd.

    3,066,732       20,081,760  

CK Infrastructure Holdings Ltd.

    757,708       4,008,442  

CLP Holdings Ltd.

    1,865,500       18,329,687  

Dairy Farm International Holdings Ltd.

    396,500       1,657,370  

Galaxy Entertainment Group Ltd.

    2,463,000       19,401,708  

Hang Lung Properties Ltd.

    2,317,736       6,534,394  

Hang Seng Bank Ltd.(b)

    868,100       13,654,109  

Henderson Land Development Co. Ltd.

    1,660,442       6,545,229  

HK Electric Investments & HK Electric Investments Ltd.

    3,056,500       3,111,654  

HKT Trust & HKT Ltd.

    4,321,338       6,178,000  

Hong Kong & China Gas Co. Ltd.(b)

    12,109,384       17,624,672  

Hong Kong Exchanges & Clearing Ltd.

    1,370,200       69,162,821  

Hongkong Land Holdings Ltd.

    1,328,900       5,089,687  

Jardine Matheson Holdings Ltd.

    251,100       10,546,200  

Jardine Strategic Holdings Ltd.

    252,900       5,073,174  

Kerry Properties Ltd.

    730,500       1,899,263  

Link REIT

    2,343,986       18,660,792  

Melco Resorts & Entertainment Ltd., ADR

    243,867       4,760,284  

Microport Scientific Corp.

    821,000       3,734,153  

MTR Corp. Ltd.

    1,752,786       9,125,619  

New World Development Co. Ltd.

    1,746,480       9,070,253  

PCCW Ltd.

    4,768,867       2,990,483  

Power Assets Holdings Ltd.

    1,584,000       9,074,611  

Sands China Ltd.

    2,764,800       12,200,559  

Sino Land Co. Ltd.

    3,578,800       4,169,798  

SJM Holdings Ltd.

    2,286,000       3,144,295  

Sun Hung Kai Properties Ltd.

    1,489,000       20,019,458  

Swire Pacific Ltd., Class A

    559,500       3,046,509  

Swire Properties Ltd.

    1,334,800       3,616,807  

Techtronic Industries Co. Ltd.

    1,566,207       19,885,392  

WH Group Ltd.(c)

    10,871,500       9,384,378  

Wharf Real Estate Investment Co. Ltd.(b)

    1,899,600       7,904,634  

Wynn Macau Ltd.(b)

    1,798,800       3,384,000  
   

 

 

 
      547,536,545  
Malta — 0.0%            

BGP Holdings PLC(a)(d)

    27,004,595       323  
   

 

 

 
New Zealand — 2.7%            

a2 Milk Co. Ltd. (The)(a)

    837,904       10,528,246  

Auckland International Airport Ltd.

    1,425,561       6,388,247  

Fisher & Paykel Healthcare Corp. Ltd.

    656,691       16,356,145  

Mercury NZ Ltd.

    787,546       2,762,649  

Meridian Energy Ltd.

    1,458,278       5,007,102  

Ryman Healthcare Ltd.

    453,330       4,118,093  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  36


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Pacific ex Japan ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
New Zealand (continued)            

Spark New Zealand Ltd.

    2,089,500     $ 6,821,374  
   

 

 

 
      51,981,856  
Singapore — 8.9%            

Ascendas REIT

    3,514,905       8,583,028  

CapitaLand Commercial Trust

    3,066,393       3,789,012  

CapitaLand Ltd.

    2,916,600       5,942,176  

CapitaLand Mall Trust

    2,939,300       4,237,296  

City Developments Ltd.

    518,600       3,062,929  

DBS Group Holdings Ltd.

    2,046,600       31,415,521  

Genting Singapore Ltd.

    6,882,100       3,543,299  

Jardine Cycle & Carriage Ltd.

    113,000       1,574,985  

Keppel Corp. Ltd.

    1,656,600       5,580,485  

Mapletree Commercial Trust

    2,451,000       3,461,253  

Mapletree Logistics Trust

    3,039,700       4,627,963  

Oversea-Chinese Banking Corp. Ltd.

    3,768,324       24,030,133  

Singapore Airlines Ltd.

    1,537,750       4,128,264  

Singapore Exchange Ltd.

    920,200       5,827,392  

Singapore Technologies Engineering Ltd.

    1,777,600       4,445,307  

Singapore Telecommunications Ltd.

    9,271,228       15,683,896  

Suntec REIT

    2,229,900       2,296,161  

United Overseas Bank Ltd.

    1,338,300       19,253,566  

UOL Group Ltd.(b)

    516,600       2,496,368  

Venture Corp. Ltd.

    310,100       4,527,424  

Wilmar International Ltd.

    2,187,400       7,014,610  

Yangzijiang Shipbuilding Holdings Ltd.

    2,948,300       1,984,182  
   

 

 

 
      167,505,250  
   

 

 

 

Total Common Stocks — 99.3%
(Cost: $1,997,228,060)

 

    1,869,551,593  
   

 

 

 
Security   Shares     Value  

Short-Term Investments

   
Money Market Funds — 2.5%            

BlackRock Cash Funds: Institutional, SL Agency Shares,
0.37%(e)(f)(g)

    45,185,130     $ 45,230,315  

BlackRock Cash Funds: Treasury, SL Agency Shares,
0.07%(e)(f)

    660,000       660,000  
   

 

 

 
      45,890,315  
   

 

 

 

Total Short-Term Investments — 2.5%
(Cost: $45,877,643)

 

    45,890,315  
   

 

 

 

Total Investments in Securities — 101.8%
(Cost: $2,043,105,703)

 

    1,915,441,908  

Other Assets, Less Liabilities — (1.8)%

 

    (33,061,858
   

 

 

 

Net Assets — 100.0%

    $ 1,882,380,050  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period-end.

(g) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

   
    Affiliated Issuer  

Value at

08/31/19

   

Purchases

at Cost

    Proceeds
from Sales
    Net Realized
Gain (Loss)
   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at

08/31/20

    Income     Capital Gain
Distributions from
Underlying Funds
       
 

 

   

    

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 10,676,602     $ 34,597,899 (a)    $     $ (51,606   $ 7,420     $ 45,230,315       45,185,130     $ 229,842 (b)    $    
 

BlackRock Cash Funds: Treasury, SL Agency Shares

    831,000             (171,000 )(a)                  660,000       660,000       10,970          
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ (51,606   $ 7,420     $ 45,890,315       $ 240,812     $    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
    

Expiration

Date

    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

           

ASX SPI 200 Index

     63        09/17/20      $ 7,024      $ 33,315  

Hang Seng Index

     23        09/29/20        3,721        (40,507

 

 

37  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Pacific ex Japan ETF

 

Futures Contracts (continued)

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

MSCI Singapore Index

     85        09/29/20      $ 1,820      $ (13,903
           

 

 

 
            $ (21,095
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 33,315  
  

 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 54,410  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ (1,869,358
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (132,571
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 12,929,528      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  38


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Pacific ex Japan ETF

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                                   

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 1,869,551,270      $      $ 323      $ 1,869,551,593  

Money Market Funds

     45,890,315                      45,890,315  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,915,441,585      $      $ 323      $ 1,915,441,908  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Assets

           

Futures Contracts

   $ 33,315      $      $      $ 33,315  

Liabilities

           

Futures Contracts

     (54,410                    (54,410
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ (21,095    $      $      $ (21,095
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

39  

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Schedule of Investments

August 31, 2020

  

iShares® MSCI Singapore ETF

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  

Common Stocks

    
Aerospace & Defense — 3.7%             

Singapore Technologies Engineering
Ltd.(a)

    7,812,000      $ 19,535,746  
    

 

 

 
Airlines — 3.5%             

Singapore Airlines Ltd.(a)

    6,838,367        18,358,370  
    

 

 

 
Banks — 37.4%             

DBS Group Holdings Ltd.

    5,574,300        85,566,079  

Oversea-Chinese Banking Corp. Ltd.(a)

    9,882,050        63,016,603  

United Overseas Bank Ltd.(a)

    3,357,300        48,300,079  
    

 

 

 
       196,882,761  
Capital Markets — 3.8%             

Singapore Exchange Ltd.

    3,197,200        20,247,053  
    

 

 

 
Distributors — 1.9%             

Jardine Cycle & Carriage Ltd.

    728,644        10,155,784  
    

 

 

 
Diversified Telecommunication Services — 7.1%  

Singapore Telecommunications Ltd.(a)

    22,034,568        37,275,306  
    

 

 

 
Electronic Equipment, Instruments & Components — 4.1%  

Venture Corp. Ltd.

    1,459,300        21,305,608  
    

 

 

 
Equity Real Estate Investment Trusts (REITs) — 16.1%  

Ascendas REIT

    9,518,849        23,244,027  

CapitaLand Commercial Trust

    4,424,283        5,466,899  

CapitaLand Mall Trust

    4,599,600        6,630,785  

Mapletree Commercial Trust(a)

    11,549,200        16,309,550  

Mapletree Logistics Trust(a)

    13,526,700        20,594,490  

Suntec REIT(a)

    12,260,200        12,624,507  
    

 

 

 
       84,870,258  
Food Products — 4.1%             

Wilmar International Ltd.

    6,646,600        21,314,487  
    

 

 

 
Hotels, Restaurants & Leisure — 3.1%             

Genting Singapore Ltd.

    31,336,342        16,133,745  
    

 

 

 
Security   Shares      Value  
Industrial Conglomerates — 4.0%             

Keppel Corp. Ltd.

    6,254,600      $ 21,069,482  
    

 

 

 
Machinery — 2.2%             

Yangzijiang Shipbuilding Holdings Ltd.(a)

    17,289,200        11,635,494  
    

 

 

 
Real Estate Management & Development — 7.9%         

CapitaLand Ltd.(a)

    6,107,900        12,444,015  

City Developments Ltd.

    2,596,400        15,334,725  

UOL Group Ltd.(a)

    2,803,700        13,548,330  
    

 

 

 
       41,327,070  
    

 

 

 

Total Common Stocks — 98.9%
(Cost: $610,009,785)

       520,111,164  
    

 

 

 

Short-Term Investments

    
Money Market Funds — 6.9%             

BlackRock Cash Funds: Institutional, SL Agency Shares,
0.37%(b)(c)(d)

    35,834,834        35,870,668  

BlackRock Cash Funds: Treasury, SL Agency Shares,
0.07%(b)(c)

    200,000        200,000  
    

 

 

 
       36,070,668  
    

 

 

 

Total Short-Term Investments — 6.9%
(Cost: $36,069,473)

       36,070,668  
    

 

 

 

Total Investments in Securities — 105.8%
(Cost: $646,079,258)

 

     556,181,832  

Other Assets, Less Liabilities — (5.8)%

 

     (30,449,189
    

 

 

 

Net Assets — 100.0%

     $   525,732,643  
    

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

Affiliate of the Fund.

(c) 

Annualized 7-day yield as of period-end.

(d) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

   
       Affiliated Issuer   Value at
08/31/19
   

Purchases

at Cost

    Proceeds
from Sales
    Net Realized
Gain (Loss)
   

Change in

Unrealized
Appreciation
(Depreciation)

    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
       
 

 

   
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 15,450,975     $ 20,415,554 (a)    $     $ 7,620     $ (3,481   $ 35,870,668       35,834,834     $ 302,130 (b)    $    
 

BlackRock Cash Funds: Treasury, SL Agency Shares

    236,000             (36,000 )(a)                  200,000       200,000       3,391          
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ 7,620     $ (3,481   $ 36,070,668       $ 305,521     $    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  40


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Singapore ETF

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

MSCI Singapore Index

     264        09/29/20      $ 5,653      $ (44,957
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 44,957  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 13,496  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (108,054
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 3,623,851      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 520,111,164      $      $      $ 520,111,164  

Money Market Funds

     36,070,668                      36,070,668  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 556,181,832      $      $      $ 556,181,832  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Liabilities

           

Futures Contracts

   $ (44,957    $      $      $ (44,957
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

41  

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Schedule of Investments  

August 31, 2020

  

iShares® MSCI Taiwan ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Airlines — 0.4%            

Eva Airways Corp.

    38,400,101     $ 15,050,395  
   

 

 

 
Auto Components — 0.5%            

Cheng Shin Rubber Industry Co. Ltd.

    17,280,670       21,202,192  
   

 

 

 
Banks — 11.3%            

Chang Hwa Commercial Bank Ltd.(a)

    44,160,199       27,467,022  

CTBC Financial Holding Co. Ltd.

    109,440,325       70,681,259  

E.Sun Financial Holding Co. Ltd.

    71,040,980       65,856,028  

First Financial Holding Co. Ltd.(a)

    68,160,013       49,363,539  

Hua Nan Financial Holdings Co. Ltd.(a)

    59,520,915       36,615,460  

Mega Financial Holding Co. Ltd.(a)

    67,200,271       66,990,710  

Shanghai Commercial & Savings Bank Ltd. (The)

    24,960,306       35,558,536  

SinoPac Financial Holdings Co. Ltd.(a)

    80,640,724       29,682,185  

Taishin Financial Holding Co. Ltd.

    73,920,706       33,381,025  

Taiwan Business Bank(a)

    57,600,547       19,631,085  

Taiwan Cooperative Financial Holding Co. Ltd.

    64,320,412       43,952,227  
   

 

 

 
        479,179,076  
Chemicals — 4.4%            

Formosa Chemicals & Fibre Corp.(a)

    23,040,610       53,240,406  

Formosa Plastics Corp.

    24,966,518       66,539,942  

Nan Ya Plastics Corp.

    31,680,938       66,403,479  
   

 

 

 
      186,183,827  
Communications Equipment — 0.7%            

Accton Technology Corp.(a)

    3,840,000       30,624,201  
   

 

 

 
Construction Materials — 1.8%            

Asia Cement Corp.(a)

    18,240,136       26,420,114  

Taiwan Cement Corp.(a)

    33,600,647       49,127,269  
   

 

 

 
      75,547,383  
Diversified Financial Services — 1.9%            

Chailease Holding Co. Ltd.

    8,640,017       38,133,095  

Yuanta Financial Holding Co. Ltd.

    68,160,657       42,743,421  
   

 

 

 
      80,876,516  
Diversified Telecommunication Services — 2.0%        

Chunghwa Telecom Co. Ltd.

    23,040,648       85,200,494  
   

 

 

 

Electrical Equipment — 0.0%

   

Ya Hsin Industrial Co. Ltd.(b)

    6,845,461       2  
   

 

 

 
Electronic Equipment, Instruments & Components — 12.6%  

AU Optronics Corp.(a)(c)

    76,800,830       27,352,681  

Delta Electronics Inc.(a)

    12,567,180       80,950,088  

Foxconn Technology Co. Ltd.

    10,560,499       18,787,657  

Hon Hai Precision Industry Co. Ltd.(a)

    72,960,002       191,218,041  

Innolux Corp.(a)(c)

    80,640,873       25,065,002  

Largan Precision Co. Ltd.(a)

    612,794       70,695,353  

Pacific Electric Wire & Cable Co. Ltd.(b)

    197       0 (d) 

Synnex Technology International Corp.

    13,440,364       20,017,515  

Walsin Technology Corp.(a)

    3,384,000       18,453,044  

WPG Holdings Ltd.

    15,360,604       21,516,311  

Yageo Corp.(a)

    2,880,125       32,686,864  

Zhen Ding Technology Holding Ltd.(a)

    5,760,072       24,146,307  
   

 

 

 
      530,888,863  
Food & Staples Retailing — 0.9%            

President Chain Store Corp.(a)

    4,150,215       38,190,210  
   

 

 

 
Food Products — 1.9%            

Standard Foods Corp.

    6,720,056       14,589,151  
Security   Shares     Value  
Food Products (continued)            

Uni-President Enterprises Corp.(a)

    29,760,189     $ 67,550,350  
   

 

 

 
      82,139,501  
Household Durables — 0.4%            

Nien Made Enterprise Co. Ltd.

    1,514,000       17,440,554  
   

 

 

 
Industrial Conglomerates — 0.6%            

Far Eastern New Century Corp.(a)

    26,880,843       24,231,832  
   

 

 

 
Insurance — 4.9%            

Cathay Financial Holding Co. Ltd.(a)

    50,880,315       69,102,826  

China Development Financial Holding Corp.

    101,760,508       29,617,938  

China Life Insurance Co. Ltd.

    28,800,479       20,171,084  

Fubon Financial Holding Co. Ltd.(a)

    42,240,515       61,615,597  

Shin Kong Financial Holding Co. Ltd.(a)

    94,080,403       26,613,068  
   

 

 

 
      207,120,513  
Leisure Products — 0.7%            

Giant Manufacturing Co. Ltd.

    2,880,590       29,943,253  
   

 

 

 
Machinery — 1.1%            

Airtac International Group

    1,023,000       22,697,306  

Hiwin Technologies Corp.

    2,290,949       25,141,372  
   

 

 

 
      47,838,678  
Marine — 0.5%            

Evergreen Marine Corp. Taiwan Ltd.(c)

    32,640,533       19,356,382  
   

 

 

 
Metals & Mining — 1.2%            

China Steel Corp.(a)

    76,800,977       52,087,979  
   

 

 

 
Oil, Gas & Consumable Fuels — 0.6%  

Formosa Petrochemical Corp.(a)

    9,600,950       26,831,549  
   

 

 

 
Real Estate Management & Development — 0.8%  

Highwealth Construction Corp.(a)

    10,560,790       16,700,600  

Ruentex Development Co. Ltd.(a)

    12,480,614       18,375,425  
   

 

 

 
      35,076,025  
Semiconductors & Semiconductor Equipment — 36.1%  

ASE Technology Holding Co. Ltd.(a)

    22,080,432       46,054,988  

ASMedia Technology Inc.

    327,000       19,670,262  

Globalwafers Co. Ltd.(a)

    1,920,000       25,781,913  

MediaTek Inc.

    8,909,175       168,822,361  

Nanya Technology Corp.(a)

    12,480,000       22,074,945  

Novatek Microelectronics Corp.(a)

    3,953,544       32,338,175  

Phison Electronics Corp.(a)

    1,920,698       18,132,452  

Powertech Technology Inc.(a)

    7,680,036       22,614,901  

Realtek Semiconductor Corp.(a)

    3,334,063       43,179,249  

Silergy Corp.(a)

    574,000       36,484,501  

Taiwan Semiconductor Manufacturing Co. Ltd.

    66,240,882       962,859,301  

United Microelectronics Corp.

    77,760,501       56,183,993  

Vanguard International Semiconductor Corp.(a)

    8,640,000       27,532,335  

Win Semiconductors Corp.

    2,768,000       26,980,488  

Winbond Electronics Corp.(a)

    40,320,000       16,696,079  
   

 

 

 
        1,525,405,943  
Specialty Retail — 1.0%            

Hotai Motor Co. Ltd.

    1,970,000       40,082,818  
   

 

 

 
Technology Hardware, Storage & Peripherals — 8.9%  

Acer Inc.(c)

    27,840,737       22,155,691  

Advantech Co. Ltd.(a)

    2,880,827       29,798,442  

Asustek Computer Inc.

    4,800,857       39,759,666  

Catcher Technology Co. Ltd.(a)

    5,159,743       35,258,200  

Chicony Electronics Co. Ltd.(a)

    6,720,405       20,270,124  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  42


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Taiwan ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Technology Hardware, Storage & Peripherals (continued)  

Compal Electronics Inc.

    38,400,554     $ 24,211,790  

Inventec Corp.(a)

    25,920,868       20,097,805  

Lite-On Technology Corp.

    17,280,071       27,326,323  

Micro-Star International Co. Ltd.

    5,760,000       26,599,867  

Pegatron Corp.(a)

    15,360,037       32,718,243  

Quanta Computer Inc.

    19,200,240       50,386,602  

Wistron Corp.

    24,960,921       27,137,446  

Wiwynn Corp.(a)

    717,000       19,109,248  
   

 

 

 
      374,829,447  
Textiles, Apparel & Luxury Goods — 1.9%  

Eclat Textile Co. Ltd.

    1,802,601       23,806,141  

Feng TAY Enterprise Co. Ltd.(a)

    3,456,747       20,086,750  

Formosa Taffeta Co. Ltd.(a)

    13,899,515       14,993,086  

Pou Chen Corp.

    24,000,103       22,657,426  
   

 

 

 
      81,543,403  
Transportation Infrastructure — 0.5%  

Taiwan High Speed Rail Corp.

    19,200,000       21,266,806  
   

 

 

 
Wireless Telecommunication Services — 1.6%  

Far EasTone Telecommunications Co. Ltd.

    13,440,259       28,079,269  

Taiwan Mobile Co. Ltd.

    11,520,609       39,852,830  
   

 

 

 
      67,932,099  
   

 

 

 

Total Common Stocks — 99.2%
(Cost: $2,140,856,501)

 

    4,196,069,941  
   

 

 

 
Security   Shares     Value  

Short-Term Investments

   
Money Market Funds — 5.2%            

BlackRock Cash Funds: Institutional, SL Agency Shares,
0.37%(e)(f)(g)

    201,747,319     $ 201,949,066  

BlackRock Cash Funds: Treasury, SL Agency Shares,
0.07%(e)(f)

    18,470,000       18,470,000  
   

 

 

 
      220,419,066  
   

 

 

 

Total Short-Term Investments — 5.2%
(Cost: $220,296,744)

 

    220,419,066  
   

 

 

 

Total Investments in Securities — 104.4%
(Cost: $2,361,153,245)

 

    4,416,489,007  

Other Assets, Less Liabilities — (4.4)%

 

    (185,033,520
   

 

 

 

Net Assets — 100.0%

    $   4,231,455,487  
   

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(c) 

Non-income producing security.

(d) 

Rounds to less than $1.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period-end.

(g) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

   
    Affiliated Issuer  

Value at

08/31/19

    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
   

Shares

Held at
08/31/20

    Income     Capital Gain
Distributions from
Underlying Funds
       
 

 

   

    

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 155,110,554     $ 46,788,080 (a)    $     $ (30,963   $ 81,395     $ 201,949,066       201,747,319     $ 2,526,444 (b)    $    
 

BlackRock Cash Funds: Treasury, SL Agency Shares

    14,551,000       3,919,000 (a)                        18,470,000       18,470,000       68,093          
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ (30,963   $ 81,395     $ 220,419,066       $ 2,594,537     $    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

MSCI Taiwan Index

     702        09/29/20      $ 34,475      $ (481,061
           

 

 

 

 

 

43  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Taiwan ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 481,061  
  

 

 

 

 

  (a)

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 10,261,205  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (757,809
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 13,000,500      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                                   

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 4,196,069,939      $      $ 2      $ 4,196,069,941  

Money Market Funds

     220,419,066                      220,419,066  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 4,416,489,005      $      $ 2      $ 4,416,489,007  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Liabilities

           

Futures Contracts

   $ (481,061    $      $      $ (481,061
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  44


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Thailand ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Airlines — 0.3%            

Asia Aviation PCL, NVDR(a)(b)

    7,782,400     $ 525,120  

Bangkok Airways PCL, NVDR

    2,154,600       398,071  

Thai Airways International PCL, NVDR(a)(b)

    2,615,466       279,005  
   

 

 

 
      1,202,196  
Auto Components — 0.5%            

Sri Trang Agro-Industry PCL, NVDR(a)(b)

    2,673,245       2,233,252  
   

 

 

 
Banks — 7.4%            

Bangkok Bank PCL, Foreign

    1,671,300       5,719,124  

Kasikornbank PCL, NVDR(b)

    1,742,100       4,715,943  

Kasikornbank PCL, Foreign

    3,417,900       9,252,408  

Kiatnakin Phatra Bank PCL, NVDR(a)(b)

    619,573       791,325  

Krung Thai Bank PCL, NVDR(b)

    10,193,800       3,127,988  

Siam Commercial Bank PCL (The), NVDR

    2,471,500       5,757,370  

Thanachart Capital PCL, NVDR

    846,500       877,167  

TMB Bank PCL, NVDR

    70,022,566       2,114,908  
   

 

 

 
        32,356,233  
Beverages — 0.6%            

Osotspa PCL, NVDR

    2,190,000       2,726,725  
   

 

 

 
Building Products — 0.2%            

Dynasty Ceramic PCL, NVDR

    10,763,440       892,270  
   

 

 

 
Capital Markets — 0.9%            

Bangkok Commercial Asset Management PCL, NVDR(b)

    5,171,700       3,871,817  
   

 

 

 
Chemicals — 3.3%            

Eastern Polymer Group PCL, NVDR

    2,829,700       429,149  

Indorama Ventures PCL, NVDR(b)

    4,909,110       3,738,321  

PTT Global Chemical PCL, NVDR

    6,570,607       9,764,337  

Vinythai PCL, NVDR(b)

    692,000       529,186  
   

 

 

 
      14,460,993  
Commercial Services & Supplies — 0.3%            

JMT Network Services PCL, NVDR(b)

    1,036,800       1,074,361  
   

 

 

 
Construction & Engineering — 0.8%            

CH Karnchang PCL, NVDR

    3,456,100       2,143,232  

Sino-Thai Engineering & Construction PCL, NVDR(b)

    3,112,628       1,320,160  
   

 

 

 
      3,463,392  
Construction Materials — 6.4%            

Siam Cement PCL (The), NVDR

    2,273,400       25,858,578  

Tipco Asphalt PCL, NVDR

    2,079,400       1,656,973  

TPI Polene PCL, NVDR(b)

    15,337,000       620,921  
   

 

 

 
      28,136,472  
Consumer Finance — 2.3%            

AEON Thana Sinsap Thailand PCL, NVDR(b)

    220,500       758,085  

Krungthai Card PCL, NVDR

    2,246,000       2,219,118  

Muangthai Capital PCL, NVDR(a)

    2,157,100       3,448,172  

Ratchthani Leasing PCL, NVDR(b)

    3,897,085       458,296  

Srisawad Corp PCL, NVDR

    2,141,960       3,148,676  
   

 

 

 
      10,032,347  
Containers & Packaging — 0.2%            

Polyplex Thailand PCL, NVDR

    788,800       631,091  
   

 

 

 
Diversified Telecommunication Services — 1.1%        

Jasmine International PCL, NVDR(b)

    10,832,268       1,009,353  

True Corp. PCL, NVDR(b)

    33,958,718       3,622,554  
   

 

 

 
      4,631,907  
Security   Shares     Value  
Electrical Equipment — 0.2%            

Gunkul Engineering PCL, NVDR

    11,719,122     $ 956,432  
   

 

 

 
Electronic Equipment, Instruments & Components — 1.0%  

Hana Microelectronics PCL, NVDR

    1,639,400       2,093,860  

KCE Electronics PCL, NVDR(b)

    2,392,100       2,248,178  
   

 

 

 
      4,342,038  
Entertainment — 0.4%            

Major Cineplex Group PCL, NVDR

    1,846,600       1,038,332  

RS PCL, NVDR

    1,273,700       769,397  
   

 

 

 
      1,807,729  
Food & Staples Retailing — 8.9%            

Berli Jucker PCL, NVDR(b)

    3,497,900       4,158,480  

CP ALL PCL, NVDR(a)

    17,020,400       34,727,140  
   

 

 

 
      38,885,620  
Food Products — 4.2%            

Charoen Pokphand Foods PCL, NVDR

    11,293,900       11,703,053  

GFPT PCL, NVDR(b)

    1,467,800       608,390  

Khon Kaen Sugar Industry PCL, NVDR

    4,636,778       303,929  

Taokaenoi Food & Marketing PCL, Class R, NVDR

    1,408,000       484,074  

Thai Union Group PCL, NVDR

    9,024,000       4,088,309  

Thai Vegetable Oil PCL, NVDR

    1,301,653       1,129,236  
   

 

 

 
        18,316,991  
Health Care Providers & Services — 6.2%            

Bangkok Chain Hospital PCL, NVDR

    3,990,025       1,999,980  

Bangkok Dusit Medical Services PCL, NVDR

    27,790,000       18,572,801  

Bumrungrad Hospital PCL, NVDR

    1,274,676       4,525,719  

Chularat Hospital PCL, NVDR

    14,507,300       1,211,952  

Thonburi Healthcare Group PCL, NVDR

    1,492,100       930,091  
   

 

 

 
      27,240,543  
Hotels, Restaurants & Leisure — 2.3%            

Asset World Corp. PCL, NVDR(b)

    18,649,600       2,372,959  

Central Plaza Hotel PCL, NVDR(a)(b)

    1,390,700       1,217,658  

Minor International PCL, NVDR(a)(b)

    9,037,510       6,504,626  
   

 

 

 
      10,095,243  
Independent Power and Renewable Electricity Producers — 8.1%  

B Grimm Power PCL, NVDR

    2,279,300       3,387,184  

BCPG PCL, NVDR

    1,757,600       722,862  

CK Power PCL, NVDR(a)

    7,107,260       1,381,603  

Electricity Generating PCL, NVDR

    844,100       6,021,052  

Energy Absolute PCL, NVDR(b)

    4,348,600       5,868,462  

Global Power Synergy PCL, NVDR

    2,058,100       4,232,256  

Gulf Energy Development PCL, NVDR

    6,234,700       6,310,324  

Ratch Group PCL, NVDR

    2,326,000       4,185,268  

SPCG PCL, NVDR

    1,426,700       820,562  

Super Energy Corp. PCL, NVDR

    48,018,650       1,265,171  

TPI Polene Power PCL, NVDR(b)

    7,388,800       1,025,612  
   

 

 

 
      35,220,356  
Insurance — 0.5%            

Bangkok Life Assurance PCL, NVDR(a)(b)

    1,501,400       776,690  

TQM Corp. PCL, NVDR

    350,000       1,416,981  
   

 

 

 
      2,193,671  
Media — 0.2%            

Plan B Media PCL, NVDR(b)

    5,690,600       1,005,649  
   

 

 

 
Metals & Mining — 0.1%            

STP & I PCL, NVDR(b)

    2,860,300       362,104  
   

 

 

 
Multiline Retail — 1.2%            

Central Retail Corp. PCL, NVDR(a)

    5,271,434       5,038,964  
   

 

 

 
 

 

 

45  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Thailand ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Oil, Gas & Consumable Fuels — 14.6%            

Bangchak Corp. PCL, NVDR

    3,011,000     $ 1,712,417  

Banpu PCL, NVDR

    12,005,500       2,218,062  

Esso Thailand PCL, NVDR(a)(b)

    3,051,700       647,159  

IRPC PCL, NVDR(b)

    32,754,900       2,462,735  

Prima Marine PCL, NVDR

    2,550,200       729,272  

PTT Exploration & Production PCL, NVDR(b)

    4,049,684       11,580,750  

PTT PCL, NVDR

    33,298,400       38,516,906  

Siamgas & Petrochemicals PCL, NVDR

    2,150,400       618,398  

Star Petroleum Refining PCL, NVS

    5,084,800       1,119,154  

Thai Oil PCL, NVDR(b)

    3,266,800       4,356,083  
   

 

 

 
      63,960,936  
Pharmaceuticals — 0.3%            

Mega Lifesciences PCL, NVDR

    1,027,000       1,245,698  
   

 

 

 
Real Estate Management & Development — 6.9%  

Amata Corp. PCL, NVDR

    2,358,000       1,000,100  

AP Thailand PCL, NVDR

    6,917,186       1,400,218  

Bangkok Land PCL, NVDR(b)

    33,113,600       1,053,336  

Central Pattana PCL, NVDR

    6,540,300       9,876,909  

Land & Houses PCL, NVDR

    24,379,000       5,796,597  

MBK PCL, NVDR

    2,732,000       1,097,277  

Origin Property PCL, NVDR(a)(b)

    2,509,700       596,732  

Pruksa Holding PCL, NVDR(b)

    1,916,400       714,282  

Quality Houses PCL, NVDR

    23,366,732       1,666,773  

Sansiri PCL, NVDR(b)

    34,817,337       816,665  

SC Asset Corp. PCL, NVDR

    4,385,604       321,285  

Siam Future Development PCL, NVDR(b)

    3,103,453       444,739  

Singha Estate PCL, NVDR

    9,025,900       417,617  

Supalai PCL, NVDR

    4,368,800       2,358,289  

WHA Corp. PCL, NVDR(b)

    26,112,540       2,684,878  
   

 

 

 
        30,245,697  
Road & Rail — 1.8%            

BTS Group Holdings PCL, NVDR(b)

    23,003,200       7,686,827  
   

 

 

 
Specialty Retail — 2.9%            

Com7 PCL, NVDR(b)

    1,570,300       2,068,674  

Dohome PLC, NVDR(b)

    1,898,349       853,944  

Home Product Center PCL, NVDR

    17,247,973       8,257,524  

PTG Energy PCL, NVDR

    2,447,700       1,517,893  
   

 

 

 
      12,698,035  
Transportation Infrastructure — 6.7%            

Airports of Thailand PCL, NVDR

    12,490,800       22,475,212  

Bangkok Aviation Fuel Services PCL,
NVDR(b)

    563,500       398,329  

Bangkok Expressway & Metro PCL, NVDR

    22,273,853       6,476,934  
   

 

 

 
      29,350,475  
Water Utilities — 0.6%            

Eastern Water Resources Development and Management PCL, NVDR

    1,702,500       544,297  

TTW PCL, NVDR

    4,067,266       1,751,188  

WHA Utilities and Power PCL, NVDR(b)

    3,371,300       439,794  
   

 

 

 
      2,735,279  
Security   Shares     Value  
Wireless Telecommunication Services — 7.8%  

Advanced Info Service PCL, NVDR

    3,466,319     $ 20,381,922  

Intouch Holdings PCL, NVDR

    6,541,600       11,455,288  

Total Access Communication PCL,
NVDR(b)

    2,068,000       2,375,484  
   

 

 

 
      34,212,694  
   

 

 

 

Total Common Stocks — 99.2%
(Cost: $566,294,336)

 

    433,314,037  
   

 

 

 

Rights

   
Consumer Finance — 0.0%            

Ratchthani Leasing PCL,
(Expires 10/07/20)(a)

    2,009,342       171,736  
   

 

 

 
Independent Power and Renewable Electricity Producers — 0.0%  

Gulf Energy Development PCL,
(Expires 09/15/20)(a)

    591,140       28,491  
   

 

 

 

Total Rights — 0.0%
(Cost: $187,303)

      200,227  
   

 

 

 

Warrants

   
Consumer Finance — 0.0%            

Srisawad Corp. PCL,
(Expires 08/17/21)(a)(c)

    87,502       0 (d) 
   

 

 

 

Total Warrants — 0.0%
(Cost: $0)

      0 (d) 
   

 

 

 

Short-Term Investments

   
Money Market Funds — 5.0%            

BlackRock Cash Funds: Institutional, SL Agency Shares,
0.37%(e)(f)(g)

    20,255,535       20,275,791  

BlackRock Cash Funds: Treasury, SL Agency Shares,
0.07%(e)(f)

    1,411,000       1,411,000  
   

 

 

 
      21,686,791  
   

 

 

 

Total Short-Term Investments — 5.0%
(Cost: $21,679,440)

      21,686,791  
   

 

 

 

Total Investments in Securities — 104.2%
(Cost: $588,161,079)

 

    455,201,055  

Other Assets, Less Liabilities — (4.2)%

      (18,412,266
   

 

 

 

Net Assets — 100.0%

    $   436,788,789  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(d) 

Rounds to less than $1.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period-end.

(g) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  46


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Thailand ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

 
       Affiliated Issuer   Value at
08/31/19
   

Purchases

at Cost

    Proceeds
from Sales
    Net Realized
Gain (Loss)
   

Change in

Unrealized

Appreciation

(Depreciation)

    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
       
 

 

 
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 14,307,860     $ 5,972,210 (a)    $     $ (9,046   $ 4,767     $ 20,275,791       20,255,535     $ 947,024 (b)    $    
 

BlackRock Cash Funds: Treasury, SL Agency Shares

    860,000       551,000 (a)                        1,411,000       1,411,000       9,265          
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ (9,046   $ 4,767     $ 21,686,791       $ 956,289     $    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

MSCI Emerging Markets E-Mini Index

     46        09/18/20      $ 2,531      $ 55,419  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 55,419  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ (17,069
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 55,419  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 1,070,108      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

47  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Thailand ETF

 

Fair Value Measurements (continued)

 

                                                                                       

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 433,314,037      $      $      $ 433,314,037  

Rights

            200,227               200,227  

Warrants

                   0 (a)       0 (a) 

Money Market Funds

     21,686,791                      21,686,791  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 455,000,828      $ 200,227      $ 0 (a)     $ 455,201,055  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(b)

           

Assets

           

Futures Contracts

   $ 55,419      $      $      $ 55,419  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 
  (b) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  48


 

Statements of Assets and Liabilities  

August 31, 2020

 

   

iShares
MSCI Hong Kong

ETF

   

iShares

MSCI Japan

Small-Cap

ETF

   

iShares

MSCI

Malaysia

ETF

   

iShares

MSCI Pacific ex

Japan ETF

 

 

 

ASSETS

       

Investments in securities, at value (including securities on loan)(a):

       

Unaffiliated(b)

  $ 1,322,052,750     $ 62,626,258     $ 343,401,825     $ 1,869,551,593  

Affiliated(c)

    21,619,049       74,412       10,815,467       45,890,315  

Cash

    494       2,967       4,603       6,997  

Foreign currency, at value(d)

    3,408,467       147,308       528,252       2,718,069  

Foreign currency collateral pledged:

       

Futures contracts(e)

    483,423       10,930             914,304  

Receivables:

       

Investments sold

    37,056,642       213,114       17,407,989       4,370,819  

Securities lending income — Affiliated

    5,718       11       7,089       50,722  

Variation margin on futures contracts

          468              

Dividends

    2,434,027       140,778       233,111       9,610,849  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    1,387,060,570       63,216,246       372,398,336       1,933,113,668  
 

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES

       

Collateral on securities loaned, at value

    21,132,906       44,412       10,676,279       45,248,146  

Payables:

       

Investments purchased

    37,069,363       223,746       19,651,302       4,692,522  

Variation margin on futures contracts

    11,562                   39,617  

Investment advisory fees

    565,494       26,599       148,776       753,333  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    58,779,325       294,757       30,476,357       50,733,618  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 1,328,281,245     $ 62,921,489     $ 341,921,979     $ 1,882,380,050  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS CONSIST OF:

       

Paid-in capital

  $ 1,966,296,777     $ 90,289,966     $ 358,649,881     $ 2,531,522,289  

Accumulated loss

    (638,015,532     (27,368,477     (16,727,902     (649,142,239
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 1,328,281,245     $ 62,921,489     $ 341,921,979     $ 1,882,380,050  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding

    57,975,000       900,000       12,900,000       43,800,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value

  $ 22.91     $ 69.91     $ 26.51     $ 42.98  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares authorized

    375 million       500 million       300 million       1 billion  
 

 

 

   

 

 

   

 

 

   

 

 

 

Par value

  $ 0.001     $ 0.001     $ 0.001     $ 0.001  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) Securities loaned, at value

  $ 19,273,777     $ 42,094     $ 10,086,579     $ 43,015,397  

(b) Investments, at cost — Unaffiliated

  $ 1,471,684,635     $ 81,353,805     $ 228,967,902     $ 1,997,228,060  

(c)  Investments, at cost — Affiliated

  $ 21,621,159     $ 74,412     $ 10,813,496     $ 45,877,643  

(d) Foreign currency, at cost

  $ 3,408,408     $ 147,546     $ 526,933     $ 2,686,062  

(e) Foreign currency collateral pledged, at cost

  $ 483,420     $ 10,943     $     $ 912,849  

See notes to financial statements.

 

 

49  

2 0 2 0  H  A R E S  N N U A L  E P O R T  T O  H A R E H O L  D E R S


 

Statements of Assets and Liabilities (continued)

August 31, 2020

 

   

iShares

MSCI

Singapore

ETF

    iShares
MSCI Taiwan ETF
    

iShares

MSCI

Thailand ETF

 

 

 

ASSETS

      

Investments in securities, at value (including securities on loan)(a):

      

Unaffiliated(b)

  $ 520,111,164     $ 4,196,069,941      $ 433,514,264  

Affiliated(c)

    36,070,668       220,419,066        21,686,791  

Cash

    8,098       8,141        125,378  

Foreign currency, at value(d)

    2,861,470       867,601        666,389  

Cash pledged:

      

Futures contracts

          1,839,000        199,000  

Foreign currency collateral pledged:

      

Futures contracts(e)

    520,270               

Receivables:

      

Investments sold

    7,692,716       255,722,538        1,195,813  

Securities lending income — Affiliated

    107,361       282,432        109,837  

Variation margin on futures contracts

    89,066               

Dividends

    3,396,748       16,654,162        1,380,188  
 

 

 

   

 

 

    

 

 

 

Total assets

    570,857,561       4,691,862,881        458,877,660  
 

 

 

   

 

 

    

 

 

 

LIABILITIES

      

Collateral on securities loaned, at value

    35,864,037       201,865,780        20,261,616  

Payables:

      

Investments purchased

    9,034,593       255,743,418        1,465,020  

Variation margin on futures contracts

          525,379        47,709  

Capital shares redeemed

                 98,472  

Investment advisory fees

    226,288       2,145,387        216,054  

Foreign taxes

          127,430         
 

 

 

   

 

 

    

 

 

 

Total liabilities

    45,124,918       460,407,394        22,088,871  
 

 

 

   

 

 

    

 

 

 

NET ASSETS

  $ 525,732,643     $ 4,231,455,487      $ 436,788,789  
 

 

 

   

 

 

    

 

 

 

NET ASSETS CONSIST OF:

      

Paid-in capital

  $ 828,194,492     $ 2,310,436,406      $ 655,600,352  

Accumulated earnings (loss)

    (302,461,849     1,921,019,081        (218,811,563
 

 

 

   

 

 

    

 

 

 

NET ASSETS

  $ 525,732,643     $ 4,231,455,487      $ 436,788,789  
 

 

 

   

 

 

    

 

 

 

Shares outstanding

    27,500,000       96,000,000        6,400,000  
 

 

 

   

 

 

    

 

 

 

Net asset value

  $ 19.12     $ 44.08      $ 68.25  
 

 

 

   

 

 

    

 

 

 

Shares authorized

    300 million       900 million        200 million  
 

 

 

   

 

 

    

 

 

 

Par value

  $ 0.001     $ 0.001      $ 0.001  
 

 

 

   

 

 

    

 

 

 

(a) Securities loaned, at value

  $ 32,677,926     $ 192,754,933      $ 18,826,604  

(b) Investments, at cost — Unaffiliated

  $ 610,009,785     $ 2,140,856,501      $ 566,481,639  

(c)  Investments, at cost — Affiliated

  $ 36,069,473     $ 220,296,744      $ 21,679,440  

(d) Foreign currency, at cost

  $ 2,840,168     $ 867,601      $ 665,454  

(e) Foreign currency collateral pledged, at cost

  $ 519,907     $      $  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  50


 

Statements of Operations

Year Ended August 31, 2020

 

   

iShares

MSCI Hong

Kong ETF

   

iShares

MSCI Japan

Small-Cap

ETF

   

iShares

MSCI

Malaysia

ETF

   

iShares

MSCI Pacific

ex Japan

ETF

 

 

 

INVESTMENT INCOME

       

Dividends — Unaffiliated

  $ 44,170,665     $ 2,045,667     $ 12,778,106     $ 70,946,905  

Dividends — Affiliated

    23,109       663       3,467       10,970  

Interest — Unaffiliated

    1,438                    

Securities lending income — Affiliated — net

    162,901       35,761       106,448       229,842  

Foreign taxes withheld

          (199,839           (890,565
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    44,358,113       1,882,252       12,888,021       70,297,152  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory fees

    7,816,588       422,506       1,937,654       9,650,584  

Miscellaneous

    264       264       264       264  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    7,816,852       422,770       1,937,918       9,650,848  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    36,541,261       1,459,482       10,950,103       60,646,304  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — Unaffiliated

    (48,890,338     (666,263     (31,747,745     (78,829,516

Investments — Affiliated

    (97,907     1,413       (2,290     (51,606

In-kind redemptions — Unaffiliated

    (52,097,166     (13,968,544           24,904,780  

Futures contracts

    601,798       109,293             (1,869,358

Foreign currency transactions

    56,120       (3,139     (507,546     (854,029
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized loss

    (100,427,493     (14,527,240     (32,257,581     (56,699,729
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — Unaffiliated

    (23,185,231     15,462,736       (1,044,890     (16,688,370

Investments — Affiliated

    (433     (1,447     893       7,420  

Futures contracts

    (73,121     18,093             (132,571

Foreign currency translations

    (5,454     (6,157     (2,438     257,058  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    (23,264,239     15,473,225       (1,046,435     (16,556,463
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    (123,691,732     945,985       (33,304,016     (73,256,192
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (87,150,471   $ 2,405,467     $ (22,353,913   $ (12,609,888
 

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

51  

2 0 2 0  H  A R E S  N N U A L  E P O R T  T O  H A R E H O L  D E R S


 

Statements of Operations (continued)

Year Ended August 31, 2020

 

   

iShares

MSCI

Singapore

ETF

   

iShares

MSCI Taiwan

ETF

   

iShares

MSCI

Thailand ETF

 

 

 

INVESTMENT INCOME

     

Dividends — Unaffiliated

  $ 20,230,794     $ 138,537,319     $ 13,418,056  

Dividends — Affiliated

    3,391       68,093       9,265  

Interest — Unaffiliated

          5,220       164  

Securities lending income — Affiliated — net(a)

    302,130       2,526,444       947,024  

Foreign taxes withheld

    (223,820     (28,003,300     (1,253,197

Other foreign taxes

          (35,536      
 

 

 

   

 

 

   

 

 

 

Total investment income

    20,312,495       113,098,240       13,121,312  
 

 

 

   

 

 

   

 

 

 

EXPENSES

     

Investment advisory fees

    2,516,744       20,347,753       2,438,585  

Miscellaneous

    264       264       264  
 

 

 

   

 

 

   

 

 

 

Total expenses

    2,517,008       20,348,017       2,438,849  
 

 

 

   

 

 

   

 

 

 

Net investment income

    17,795,487       92,750,223       10,682,463  
 

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

     

Net realized gain (loss) from:

     

Investments — Unaffiliated

    (62,832,640     93,322,422       (26,665,505

Investments — Affiliated

    7,620       (30,963     (9,046

In-kind redemptions — Unaffiliated

    3,196,078             1,897,537  

Futures contracts

    13,496       10,261,205       (17,069

Foreign currency transactions

    150,848       187,556       (165,019
 

 

 

   

 

 

   

 

 

 

Net realized gain (loss)

    (59,464,598     103,740,220       (24,959,102
 

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

     

Investments — Unaffiliated

    (24,733,621     673,434,919       (100,136,151

Investments — Affiliated

    (3,481     81,395       4,767  

Futures contracts

    (108,054     (757,809     55,419  

Foreign currency translations

    48,766       62,745       677  
 

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    (24,796,390     672,821,250       (100,075,288
 

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    (84,260,988     776,561,470       (125,034,390
 

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (66,465,501   $ 869,311,693     $ (114,351,927
 

 

 

   

 

 

   

 

 

 

(a) Net of securities lending income tax paid of

  $     $ 645,846     $  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  52


 

Statements of Changes in Net Assets

 

    iShares
MSCI Hong Kong ETF
           iShares
MSCI Japan Small-Cap ETF
 
   

Year Ended

08/31/20

   

Year Ended

08/31/19

          

Year Ended

08/31/20

   

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

          

OPERATIONS

          

Net investment income

  $ 36,541,261     $ 62,074,964        $ 1,459,482     $ 4,101,539  

Net realized gain (loss)

    (100,427,493     171,568,216          (14,527,240     (35,779,750

Net change in unrealized appreciation (depreciation)

    (23,264,239     (205,108,906        15,473,225       (2,339,583
 

 

 

   

 

 

      

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (87,150,471     28,534,274          2,405,467       (34,017,794
 

 

 

   

 

 

      

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

          

Decrease in net assets resulting from distributions to shareholders

    (37,850,833     (67,889,451        (3,817,217     (4,647,949
 

 

 

   

 

 

      

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

          

Net increase (decrease) in net assets derived from capital share transactions

    28,619,983       (1,265,603,711        (45,662,016     (136,251,360
 

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS

          

Total decrease in net assets

    (96,381,321     (1,304,958,888        (47,073,766     (174,917,103

Beginning of year

    1,424,662,566       2,729,621,454          109,995,255       284,912,358  
 

 

 

   

 

 

      

 

 

   

 

 

 

End of year

  $ 1,328,281,245     $ 1,424,662,566        $ 62,921,489     $ 109,995,255  
 

 

 

   

 

 

      

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

53  

2 0 2 0  H  A R E S  N N U A L  E P O R T  T O  H A R E H O L  D E R S


 

Statements of Changes in Net Assets  (continued)

 

    iShares
MSCI Malaysia ETF
           iShares
MSCI Pacific ex Japan ETF
 
   

Year Ended

08/31/20

   

Year Ended

08/31/19

          

Year Ended

08/31/20

   

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

          

OPERATIONS

          

Net investment income

  $ 10,950,103     $ 17,432,270        $ 60,646,304     $ 89,927,097  

Net realized loss

    (32,257,581     (37,554,258        (56,699,729     (10,840,856

Net change in unrealized appreciation (depreciation)

    (1,046,435     (52,528,128        (16,556,463     (79,567,765
 

 

 

   

 

 

      

 

 

   

 

 

 

Net decrease in net assets resulting from operations

    (22,353,913     (72,650,116        (12,609,888     (481,524
 

 

 

   

 

 

      

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

          

Decrease in net assets resulting from distributions to shareholders

    (12,064,796     (16,938,304        (71,017,208     (103,540,539
 

 

 

   

 

 

      

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

          

Net decrease in net assets derived from capital share transactions

    (14,548,335     (76,742,616        (300,108,597     (4,695,754
 

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS

          

Total decrease in net assets

    (48,967,044     (166,331,036        (383,735,693     (108,717,817

Beginning of year

    390,889,023       557,220,059          2,266,115,743       2,374,833,560  
 

 

 

   

 

 

      

 

 

   

 

 

 

End of year

  $ 341,921,979     $ 390,889,023        $ 1,882,380,050     $ 2,266,115,743  
 

 

 

   

 

 

      

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  54


 

Statements of Changes in Net Assets  (continued)

 

    iShares
MSCI Singapore ETF
           iShares
MSCI Taiwan ETF
 
    Year Ended
08/31/20
    Year Ended
08/31/19
           Year Ended
08/31/20
    Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

          

OPERATIONS

          

Net investment income

  $ 17,795,487     $ 21,402,424        $ 92,750,223     $ 89,438,292  

Net realized gain (loss)

    (59,464,598     (4,573,908        103,740,220       171,832,639  

Net change in unrealized appreciation (depreciation)

    (24,796,390     (21,563,424        672,821,250       (507,317,120
 

 

 

   

 

 

      

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (66,465,501     (4,734,908        869,311,693       (246,046,189
 

 

 

   

 

 

      

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

          

Decrease in net assets resulting from distributions to shareholders

    (20,388,430     (21,305,119        (89,350,677     (104,188,903
 

 

 

   

 

 

      

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

          

Net increase (decrease) in net assets derived from capital share transactions

    98,935,771       (39,601,577        788,999,560       (1,070,161,394
 

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS

          

Total increase (decrease) in net assets

    12,081,840       (65,641,604        1,568,960,576       (1,420,396,486

Beginning of year

    513,650,803       579,292,407          2,662,494,911       4,082,891,397  
 

 

 

   

 

 

      

 

 

   

 

 

 

End of year

  $ 525,732,643     $ 513,650,803        $ 4,231,455,487     $ 2,662,494,911  
 

 

 

   

 

 

      

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

55  

2 0 2 0  H  A R E S  N N U A L  E P O R T  T O  H A R E H O L  D E R S


 

Statements of Changes in Net Assets  (continued)

 

    iShares
MSCI Thailand ETF
 
    

Year Ended

08/31/20

   

Year Ended

08/31/19

 

INCREASE (DECREASE) IN NET ASSETS

   

OPERATIONS

   

Net investment income

  $ 10,682,463     $ 11,152,769  

Net realized gain (loss)

    (24,959,102     13,591,553  

Net change in unrealized appreciation (depreciation)

    (100,075,288     (19,971,905
 

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (114,351,927     4,772,417  
 

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

   

Decrease in net assets resulting from distributions to shareholders

    (10,962,844     (10,822,599
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Net increase in net assets derived from capital share transactions

    95,866,665       36,445,341  
 

 

 

   

 

 

 

NET ASSETS

   

Total increase (decrease) in net assets

    (29,448,106     30,395,159  

Beginning of year

    466,236,895       435,841,736  
 

 

 

   

 

 

 

End of year

  $ 436,788,789     $ 466,236,895  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  56


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares MSCI Hong Kong ETF  
   

Year Ended

08/31/20

    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 23.00     $ 24.18     $ 24.69     $ 21.08     $ 19.42  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.54       0.62       0.71       0.68       0.54  

Net realized and unrealized gain (loss)(b)

    (0.01     (1.08     (0.12     3.54       1.72  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    0.53       (0.46     0.59       4.22       2.26  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.62     (0.72     (1.10     (0.61     (0.60
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.62     (0.72     (1.10     (0.61     (0.60
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 22.91     $ 23.00     $ 24.18     $ 24.69     $ 21.08  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    2.46     (2.00 )%      2.33     20.38     11.94
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.48     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.37     2.52     2.83     3.08     2.73
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 1,328,281     $ 1,424,663     $ 2,729,621     $ 1,855,447     $ 1,596,576  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    16     12     7     8     9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

57  

2 0 2 0  H  A R E S  N N U A L  E P O R T  T O  H A R E H O L  D E R S


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Japan Small-Cap ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 68.75     $ 77.00     $ 72.78     $ 60.95     $ 56.79  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    1.21       1.37       0.94       1.02       0.84  

Net realized and unrealized gain (loss)(b)

    2.78       (7.90     4.24       12.62       4.29  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    3.99       (6.53     5.18       13.64       5.13  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (2.83     (1.72     (0.96     (1.81     (0.97
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (2.83     (1.72     (0.96     (1.81     (0.97
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 69.91     $ 68.75     $ 77.00     $ 72.78     $ 60.95  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    5.72     (8.42 )%      7.09     22.81     9.10
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.75     1.94     1.18     1.53     1.44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 62,921     $ 109,995     $ 284,912     $ 189,216     $ 164,553  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    10     10     9     8     12
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  58


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Malaysia ETF  
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
   
Year Ended
08/31/17
 
(a) 
   
Year Ended
08/31/16
 
(a) 

 

 

Net asset value, beginning of year

  $ 28.02     $ 32.87     $ 32.03     $ 33.13     $ 40.75  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(b)

    0.76       1.03       0.91       0.56       1.00  

Net realized and unrealized gain (loss)(c)

    (1.41     (4.85     2.06       (0.05     2.79  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (0.65     (3.82     2.97       0.51       3.79  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(d)

         

From net investment income

    (0.86     (1.03     (2.13     (1.61     (1.81

From net realized gain

                            (9.60
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.86     (1.03     (2.13     (1.61     (11.41
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 26.51     $ 28.02     $ 32.87     $ 32.03     $ 33.13  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (2.27 )%      (11.69 )%      9.59     2.14     12.58
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.86     3.41     2.69     2.73     2.86
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 341,922     $ 390,889     $ 557,220     $ 437,224     $ 335,455  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(e)

    58 %(f)      48 %(f)      63 %(f)      24 %(f)      72 %(f) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(a) Per share amounts reflect a one-for-four reverse stock split effective after the close of trading on November 4, 2016.

  

(b) Based on average shares outstanding.

  

(c)  The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

   

(d) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

  

(e) Portfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash in U.S. dollars (“cash creations”).

  

(f)  Portfolio turnover rate excluding cash creations was as follows:

    16     9     17     10     17
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

59  

2 0 2 0  H  A R E S  N N U A L  E P O R T  T O  H A R E H O L  D E R S


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Pacific ex Japan ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 44.17     $ 46.02     $ 46.43     $ 40.94     $ 38.01  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    1.29       1.74       1.66       1.60       1.54  

Net realized and unrealized gain (loss)(b)

    (0.98     (1.58     0.03       5.55       2.98  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase from investment operations

    0.31       0.16       1.69       7.15       4.52  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (1.50     (2.01     (2.10     (1.66     (1.59
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.50     (2.01     (2.10     (1.66     (1.59
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 42.98     $ 44.17     $ 46.02     $ 46.43     $ 40.94  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    0.72     0.56     3.63     18.06     12.20
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.48     0.48     0.48     0.49     0.49
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    3.04     3.89     3.52     3.69     4.00
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 1,882,380     $ 2,266,116     $ 2,374,834     $ 3,120,426     $ 2,357,962  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    8     7     6     3     6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  60


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Singapore ETF  
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
   
Year Ended
08/31/17
 
(a)  
   
Year Ended
08/31/16
 
(a)  

 

 

Net asset value, beginning of year

  $ 22.83     $ 23.84     $ 24.70     $ 21.22     $ 21.25  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(b)

    0.76       0.91       1.04       0.56       0.84  

Net realized and unrealized gain (loss)(c)

    (3.57     (1.02     (0.77     3.84       (0.24
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (2.81     (0.11     0.27       4.40       0.60  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(d)

         

From net investment income

    (0.90     (0.90     (1.13     (0.92     (0.63
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.90     (0.90     (1.13     (0.92     (0.63
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 19.12     $ 22.83     $ 23.84     $ 24.70     $ 21.22  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (12.84 )%      (0.41 )%      0.91     21.51     2.87
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.50     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    3.59     3.86     4.03     3.00     3.96
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 525,733     $ 513,651     $ 579,292     $ 600,268     $ 562,418  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(e)

    22     9     26     12     7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Per share amounts reflect a one-for-two reverse stock split effective after the close of trading on November 4, 2016.

(b) 

Based on average shares outstanding.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

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Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Taiwan ETF  
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
   
Year Ended
08/31/17
 
(a)  
   
Year Ended
08/31/16
 
(a)  

 

 

Net asset value, beginning of year

  $ 34.94     $ 37.91     $ 37.35     $ 30.30     $ 27.17  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(b)

    1.05       0.92       0.98       0.87       0.68  

Net realized and unrealized gain (loss)(c)

    9.11       (2.89     0.60       6.88       3.25  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    10.16       (1.97     1.58       7.75       3.93  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(d)

         

From net investment income

    (1.02     (1.00     (1.02     (0.70     (0.80
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.02     (1.00     (1.02     (0.70     (0.80
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 44.08     $ 34.94     $ 37.91     $ 37.35     $ 30.30  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    29.34     (4.92 )%      4.43     26.17     15.02
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.64
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.68     2.70     2.65     3.10     2.51
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 4,231,455     $ 2,662,495     $ 4,082,891     $ 3,764,790     $ 2,656,889  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(e)

    15 %(f)       7 %(f)       12 %(f)       11 %(f)       27 %(f)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(a) Per share amounts reflect a one-for-two reverse stock split effective after the close of trading on November 4, 2016.

(b) Based on average shares outstanding.

(c)  The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) Portfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash in U.S. dollars (“cash creations”).

  

  

   

  

  

(f)  Portfolio turnover rate excluding cash creations was as follows:

    14     6     11     8     9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  62


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Thailand ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 90.53     $ 90.80     $ 82.70     $ 75.94     $ 65.01  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    1.97       2.10       2.12       1.99       2.05  

Net realized and unrealized gain (loss)(b)

    (22.24     (0.33     8.13       6.90       10.54  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (20.27     1.77       10.25       8.89       12.59  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (2.01     (2.04     (2.15     (2.13     (1.66
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (2.01     (2.04     (2.15     (2.13     (1.66
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 68.25     $ 90.53     $ 90.80     $ 82.70     $ 75.94  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (22.57 )%      2.03     12.55     12.01     19.87
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.63
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.57     2.36     2.30     2.63     3.08
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 436,789     $ 466,237     $ 435,842     $ 355,590     $ 448,075  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    11     17     10     7     16
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

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Notes to Financial Statements

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

iShares ETF  

Diversification    

Classification    

 

MSCI Hong Kong

    Non-diversified      

MSCI Japan Small-Cap

    Diversified      

MSCI Malaysia

    Non-diversified      

MSCI Pacific ex Japan

    Diversified      

MSCI Singapore

    Non-diversified      

MSCI Taiwan

    Non-diversified      

MSCI Thailand

    Non-diversified      

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  64


Notes to Financial Statements  (continued)

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral

 

 

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Notes to Financial Statements  (continued)

 

received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

 

 

iShares ETF and Counterparty

   
Market Value of
Securities on Loan
 
 
    

Cash Collateral

Received

 

(a)  

   
Non-Cash Collateral
Received
 
 
     Net Amount  

 

 

MSCI Hong Kong

         

BofA Securities, Inc.

  $ 19,184,378      $ 19,184,378     $      $  

Morgan Stanley & Co. LLC

    89,399        89,399               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 19,273,777      $ 19,273,777     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Japan Small-Cap

         

Macquarie Bank Limited

  $ 42,094      $ 42,094     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Malaysia

         

JPMorgan Securities PLC

  $ 7,658,692      $ 7,658,692     $      $  

Morgan Stanley & Co. International PLC

    2,427,887        2,427,887               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 10,086,579      $ 10,086,579     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Pacific ex Japan

         

BofA Securities, Inc.

  $ 31,861,637      $ 31,861,637     $      $  

Citigroup Global Markets Inc.

    6,822,871        6,822,871               

Morgan Stanley & Co. LLC

    4,308,163        4,308,163               

State Street Bank & Trust Company

    22,726        22,726               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 43,015,397      $ 43,015,397     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Singapore

         

BofA Securities, Inc.

  $ 14,933,288      $ 14,933,288     $      $  

Morgan Stanley & Co. LLC

    17,744,638        17,744,638               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 32,677,926      $ 32,677,926     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Taiwan

         

Citigroup Global Markets Ltd.

  $ 11,561,458      $ 11,561,458     $      $  

Credit Suisse Securities (Europe) Ltd.

    26,053,141        26,053,141               

JPMorgan Securities PLC

    65,263,816        65,263,816               

Macquarie Bank Limited

    15,261,084        15,261,084               

Morgan Stanley & Co. International PLC

    73,541,188        73,530,985              (10,203 )(b)  

UBS Europe SE

    1,074,246        1,074,246               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 192,754,933      $ 192,744,730     $      $ (10,203
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Thailand

         

Barclays Capital Inc.

  $ 1,287,084      $ 1,287,084     $      $  

BofA Securities, Inc.

    378,867        378,867               

Citigroup Global Markets Inc.

    102,820        102,820               

Credit Suisse Securities (USA) LLC

    2,202,355        2,202,355               

Deutsche Bank Securities Inc.

    10,702        8,683              (2,019 )(b)  

Goldman Sachs & Co.

    3,515,569        3,515,569               

JPMorgan Securities LLC

    3,096,533        3,096,533               

Macquarie Bank Limited

    303,639        303,639               

Morgan Stanley & Co. LLC

    7,802,508        7,802,508               

Scotia Capital (USA) Inc.

    2,528        2,528               

SG Americas Securities LLC

    123,999        123,999               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 18,826,604      $ 18,824,585     $      $ (2,019
 

 

 

    

 

 

   

 

 

    

 

 

 

 

 

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Notes to Financial Statements  (continued)

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 
  (b) 

Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each of the iShares MSCI Hong Kong, iShares MSCI Japan Small-Cap, iShares MSCI Malaysia and iShares MSCI Singapore ETFs, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $7 billion

    0.59

Over $7 billion, up to and including $11 billion

    0.54  

Over $11 billion, up to and including $24 billion

    0.49  

Over $24 billion, up to and including $48 billion

    0.44  

Over $48 billion, up to and including $72 billion

    0.40  

Over $72 billion, up to and including $96 billion

    0.36  

Over $96 billion

    0.32  

For its investment advisory services to the iShares MSCI Pacific ex Japan ETF, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $46 billion

    0.5000

Over $46 billion, up to and including $81 billion

    0.4750  

Over $81 billion, up to and including $111 billion

    0.4513  

Over $111 billion, up to and including $141 billion

    0.4287  

Over $141 billion

    0.4073  

 

 

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Notes to Financial Statements  (continued)

 

Each reduced investment advisory fee level reflects a 5% reduction (rounded to the fourth decimal place) from the investment advisory fee at the prior aggregate average daily net asset level.

For its investment advisory services to each of the iShares MSCI Taiwan and iShares MSCI Thailand ETFs, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $2 billion

    0.74

Over $2 billion, up to and including $4 billion

    0.69  

Over $4 billion, up to and including $8 billion

    0.64  

Over $8 billion, up to and including $16 billion

    0.57  

Over $16 billion, up to and including $24 billion

    0.51  

Over $24 billion, up to and including $32 billion

    0.48  

Over $32 billion

    0.45  

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF  

Fees Paid 

to BTC  

 

MSCI Hong Kong

  $ 41,005   

MSCI Japan Small-Cap

    8,184   

MSCI Malaysia

    25,968   

MSCI Pacific ex Japan

    59,827   

MSCI Singapore

    73,898   

MSCI Taiwan

    753,770   

MSCI Thailand

    214,189   

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

 

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Notes to Financial Statements  (continued)

 

iShares ETF   Purchases      Sales     

Net Realized

Gain (Loss)

 

MSCI Hong Kong

    $   30,459,943        $ 10,525,089        $ (17,719,107

MSCI Japan Small-Cap

    1,805,560        5,103,814        1,198,164  

MSCI Pacific ex Japan

    21,734,005        20,940,139        (22,820,537

MSCI Singapore

    32,407,358        17,450,226        (11,930,209

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

iShares ETF   Purchases      Sales      

MSCI Hong Kong

  $ 852,273,311      $   234,237,800      

MSCI Japan Small-Cap

    8,636,249        11,426,589      

MSCI Malaysia

    218,768,516        230,768,460      

MSCI Pacific ex Japan

    160,139,959        168,515,247      

MSCI Singapore

    119,894,891        107,277,418      

MSCI Taiwan

    1,317,595,431        523,765,659      

MSCI Thailand

    48,170,346        45,341,736      

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

iShares ETF  

In-kind

Purchases

    

In-kind     

Sales     

 

MSCI Hong Kong

  $ 70,948,643      $   660,069,418      

MSCI Japan Small-Cap

    14,751,309        59,601,585      

MSCI Pacific ex Japan

    17,408,261        317,779,543      

MSCI Singapore

    108,079,508        32,463,893      

MSCI Thailand

    339,759,411        247,977,899      

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions, were reclassified to the following accounts:

 

iShares ETF   Paid-in Capital     Accumulated
Earnings (Loss)
 

MSCI Hong Kong

  $ (75,642,419   $ 75,642,419  

MSCI Japan Small-Cap

    (15,032,864     15,032,864  

MSCI Pacific ex Japan

    838,400       (838,400

MSCI Singapore

    1,819,139       (1,819,139

MSCI Thailand

    35,263       (35,263

The tax character of distributions paid was as follows:

 

 

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Notes to Financial Statements  (continued)

 

 

 
iShares ETF   Year Ended
08/31/20
     Year Ended
08/31/19
 

 

 

MSCI Hong Kong

    

Ordinary income

  $ 37,850,833      $ 67,889,451  
 

 

 

    

 

 

 

MSCI Japan Small-Cap

    

Ordinary income

  $ 3,817,217      $ 4,647,949  
 

 

 

    

 

 

 

MSCI Malaysia

    

Ordinary income

  $ 12,064,796      $ 16,938,304  
 

 

 

    

 

 

 

MSCI Pacific ex Japan

    

Ordinary income

  $ 71,017,208      $ 103,540,539  
 

 

 

    

 

 

 

MSCI Singapore

    

Ordinary income

  $ 20,388,430      $ 21,305,119  
 

 

 

    

 

 

 

MSCI Taiwan

    

Ordinary income

  $ 89,350,677      $ 104,188,903  
 

 

 

    

 

 

 

MSCI Thailand

    

Ordinary income

  $ 10,962,844      $ 10,822,599  
 

 

 

    

 

 

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

iShares ETF

   
Undistributed
Ordinary Income
 
 
    

Non-expiring
Capital Loss

Carryforwards

 
 

(a) 

   

Net Unrealized

Gains (Losses)

 

(b) 

   
Qualified
Late-Year Losses
 
(c) 
    Total  

MSCI Hong Kong

  $ 3,626,202      $ (473,593,879   $ (168,047,855   $     $ (638,015,532

MSCI Japan Small-Cap

           (7,615,538     (19,190,747     (562,192     (27,368,477 )   

MSCI Malaysia

           (94,623,717     80,669,074       (2,773,259     (16,727,902

MSCI Pacific ex Japan

    9,994,711        (474,051,679     (185,085,271           (649,142,239

MSCI Singapore

    1,069,448        (194,493,442     (109,037,855           (302,461,849

MSCI Taiwan

    98,300,238        (34,101,756     1,856,820,599             1,921,019,081  

MSCI Thailand

    1,764,571        (83,040,018     (137,536,116           (218,811,563

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the characterization of corporate actions.

 
  (c) 

The Funds have elected to defer certain qualified late-year losses and recognize such losses in the next taxable year.

 

For the year ended August 31, 2020, the iShares MSCI Taiwan ETF utilized $112,584,566 of its capital loss carryforwards.

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

iShares ETF   Tax Cost      Gross Unrealized
Appreciation
     Gross Unrealized
Depreciation
    Net Unrealized  
Appreciation  
(Depreciation)  

MSCI Hong Kong

  $   1,511,647,088      $ 130,018,651      $ (298,066,610   $ (168,047,959

MSCI Japan Small-Cap

    81,896,736        3,811,411        (23,002,278     (19,190,867

MSCI Malaysia

    273,549,967        85,824,871        (5,157,546     80,667,325  

MSCI Pacific ex Japan

    2,100,702,837        319,605,697        (504,887,721     (185,282,024

MSCI Singapore

    665,224,569        7,260,480        (116,348,174     (109,087,694

MSCI Taiwan

    2,559,215,505        1,885,230,480        (28,438,039     1,856,792,441  

MSCI Thailand

    592,746,259        3,746,047        (141,291,251     (137,545,204 )  

 

9.

LINE OF CREDIT

The iShares MSCI Malaysia ETF and iShares MSCI Taiwan ETF, along with certain other iShares funds (“Participating Funds”), are parties to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on July 15, 2021. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1 and $200 million with respect to Tier 2, including the

 

 

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Notes to Financial Statements   (continued)

 

Funds. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Credit Agreement.

The Funds did not borrow under the credit agreement during the year ended August 31, 2020.

 

10.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

 

 

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Notes to Financial Statements   (continued)

 

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities.

Certain Funds invest a significant portion of their assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Funds’ investments.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

11.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
    Year Ended
08/31/20
    Year Ended
08/31/19
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

MSCI Hong Kong

       

Shares sold

    32,925,000     $ 785,031,065       26,400,000     $ 641,855,226  

Shares redeemed

    (36,900,000     (756,411,082     (77,325,000     (1,907,458,937
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (3,975,000   $ 28,619,983       (50,925,000   $ (1,265,603,711
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Japan Small-Cap

       

Shares sold

    200,000     $ 14,987,192       2,600,000     $ 188,325,229  

Shares redeemed

    (900,000     (60,649,208     (4,700,000     (324,576,589
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease

    (700,000   $ (45,662,016     (2,100,000   $ (136,251,360
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Malaysia

       

Shares sold

    5,850,000     $ 163,446,410       6,825,000     $ 211,840,133  

Shares redeemed

    (6,900,000     (177,994,745     (9,825,000     (288,582,749
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease

    (1,050,000   $ (14,548,335     (3,000,000   $ (76,742,616
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Pacific ex Japan

       

Shares sold

    900,000     $ 36,795,397       6,000,000     $ 271,812,469  

Shares redeemed

    (8,400,000     (336,903,994     (6,300,000     (276,508,223
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease

    (7,500,000   $ (300,108,597     (300,000   $ (4,695,754
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Singapore

       

Shares sold

    6,850,000     $ 139,406,945       4,000,000     $ 93,905,772  

Shares redeemed

    (1,850,000     (40,471,174     (5,800,000     (133,507,349
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    5,000,000     $ 98,935,771       (1,800,000   $ (39,601,577
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Taiwan

       

Shares sold

    20,800,000     $ 819,142,524       100,000     $ 13,078,670  

Shares redeemed

    (1,000,000     (30,142,964     (31,600,000     (1,083,240,064
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    19,800,000     $ 788,999,560       (31,500,000   $ (1,070,161,394
 

 

 

   

 

 

   

 

 

   

 

 

 

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  72


Notes to Financial Statements  (continued)

 

 

 
    Year Ended
08/31/20
    Year Ended
08/31/19
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

MSCI Thailand

       

Shares sold

    4,450,000     $ 345,464,913       4,300,000     $ 384,240,938  

Shares redeemed

    (3,200,000     (249,598,248     (3,950,000     (347,795,597
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    1,250,000     $ 95,866,665       350,000     $ 36,445,341  
 

 

 

   

 

 

   

 

 

   

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

12.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

13.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

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Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares MSCI Hong Kong ETF, iShares MSCI Japan Small-Cap ETF,

iShares MSCI Malaysia ETF, iShares MSCI Pacific ex Japan ETF, iShares MSCI Singapore ETF,

iShares MSCI Taiwan ETF and iShares MSCI Thailand ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares MSCI Hong Kong ETF, iShares MSCI Japan Small-Cap ETF, iShares MSCI Malaysia ETF, iShares MSCI Pacific ex Japan ETF, iShares MSCI Singapore ETF, iShares MSCI Taiwan ETF and iShares MSCI Thailand ETF (seven of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

E P O R T  O F  N D E P E N D E N T   E G I S T E R E D  U B L I C  C C O U N T I N G   I R M

  74


Important Tax Information (unaudited)   

 

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

iShares ETF   Qualified Dividend    
Income     

MSCI Hong Kong

  $ 246,173  

MSCI Japan Small-Cap

    1,618,773  

MSCI Pacific ex Japan

    44,851,198  

MSCI Thailand

    13,035,193    

For the fiscal year ended August 31, 2020, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders:

 

iShares ETF   Foreign Source
Income Earned
     Foreign    
Taxes Paid    

MSCI Hong Kong

  $ 44,170,665      $  

MSCI Japan Small-Cap

    2,046,393        218,322  

MSCI Malaysia

    12,778,105         

MSCI Pacific ex Japan

    70,947,428        1,059,549  

MSCI Singapore

    20,231,046        207,434  

MSCI Taiwan

    138,537,321        28,831,323  

MSCI Thailand

    13,424,881        1,086,233    

 

 

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Board Review and Approval of Investment Advisory Contract

 

iShares MSCI Hong Kong ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

 

O A R D  E V I E W  A N D  P  P R O V A L  O F  N V E S T M E N T  D V I S O R Y  O N T R A C T

  76


Board Review and Approval of Investment Advisory Contract  (continued)

 

funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Japan Small-Cap ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

 

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including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Malaysia ETF, iShares MSCI Taiwan ETF, iShares MSCI Thailand ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”),

 

 

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with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

 

 

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Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Pacific ex Japan ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were within range of the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through

 

 

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relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Singapore ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

 

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Supplemental Information  (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

     Total Cumulative Distributions
for the Fiscal Year
            % Breakdown of the Total Cumulative
Distributions for the Fiscal  Year
 
iShares ETF   Net
Investment
Income
     Net Realized
Capital Gains
     Return of
Capital
    

Total Per

Share

            Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
 

MSCI Hong Kong(a)

  $ 0.618624      $      $ 0.000577      $ 0.619201          100         0 %(b)      100

MSCI Japan Small-Cap(a)

    2.241636               0.583921        2.825557          79             21       100  

MSCI Pacific ex Japan(a)

    1.479747               0.020008        1.499755          99             1       100  

MSCI Singapore(a)

    0.540497               0.360920        0.901417          60             40       100  

MSCI Taiwan(a)

    0.957024               0.066466        1.023490                94             6       100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 
  (b) 

Rounds to less than 1%.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (the “Directive”) imposes detailed and prescriptive obligations on fund managers established in the European Union (the “EU”). These do not currently apply to managers established outside of the EU, such as BFA (the “Company”). Rather, non-EU managers are only required to comply with certain disclosure, reporting and transparency obligations of the Directive if such managers market a fund to EU investors.

The Company has registered the iShares MSCI Hong Kong ETF, iShares MSCI Japan Small-Cap ETF, iShares MSCI Malaysia ETF, iShares MSCI Taiwan ETF and iShares MSCI Thailand ETF (each a “Fund”, collectively the “Funds”) to be marketed to EU investors in the United Kingdom, the Netherlands, Finland, Sweden, and Luxembourg.

Report on Remuneration

The Company is required under the Directive to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Funds.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the each Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well defined pay-for-performance philosophy, and compensation programmes which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

 

 

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Supplemental Information (unaudited) (continued)

 

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the each Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Hong Kong ETF in respect of the Company’s financial year ending December 31, 2019 was USD 145.24 thousand. This figure is comprised of fixed remuneration of USD 67.15 thousand and variable remuneration of USD 78.09 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Hong Kong ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 18.52 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 2.18 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Japan Small-Cap ETF in respect of the Company’s financial year ending December 31, 2019 was USD 8.02 thousand. This figure is comprised of fixed remuneration of USD 3.71 thousand and variable remuneration of USD 4.31 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Japan Small-Cap ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 1.02 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 0.12 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Malaysia ETF in respect of the Company’s financial year ending December 31, 2019 was USD 39.93 thousand. This figure is comprised of fixed remuneration of USD 18.46 thousand and variable remuneration of USD 21.47 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Malaysia ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 5.09 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 0.6 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Taiwan ETF in respect of the Company’s financial year ending December 31, 2019 was USD 305.74 thousand. This figure is comprised of fixed remuneration of USD 141.35 thousand and variable remuneration of USD 164.39 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Taiwan ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 38.98 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 4.58 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Thailand ETF in respect of the Company’s financial year ending December 31, 2019 was USD 41.77 thousand. This figure is comprised of fixed remuneration of USD 19.31 thousand and variable remuneration of USD 22.46 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Thailand ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 5.33 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 0.63 thousand.

 

 

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Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFA or its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., ParkAvenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Robert S.

Kapito(a) (63)

   Director
(since 2009).
   President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(50)

   Director
(since 2019).
   Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

(a) Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b) Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

 

Independent Directors
       
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Cecilia H.

Herbert (71)

   Director
(since 2005);
Independent Board Chair
(since 2016).
   Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).

Jane D.

Carlin (64)

   Director
(since 2015);
Risk Committee Chair
(since 2016).
   Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L.

Fagnani (65)

   Director
(since 2017);
Audit Committee Chair
(since 2019).
  

Partner, KPMG LLP (2002-2016).

   Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

I R E C T O R  A N D  F F I C E R   N F O R M A T I O N

  88


Director and Officer Information  (continued)

 

Independent Directors (continued)
       
  Name (Age)    Position(s)    Principal Occupation(s)
During the Past 5 Years
   Other Directorships Held by Director

John E.

Kerrigan (65)

   Director
(since 2005);
Nominating and Governance and Equity Plus Committee Chairs
(since 2019).
   Chief Investment Officer, Santa Clara University (since 2002).    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E.

Lawton (61)

   Director
(since 2017);
15(c) Committee Chair
(since 2017).
   Senior Managing Director of New York Life Insurance Company (2010-2015).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

John E.

Martinez (59)

   Director
(since 2003);
Securities Lending Committee Chair
(since 2019).
   Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).    Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

Madhav V.

Rajan (56)

   Director
(since 2011);
Fixed Income Plus Committee Chair
(since 2019).
   Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).

 

Officers

     
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

Armando

Senra (49)

   President
(since 2019).
   Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

Trent

Walker (46)

   Treasurer and Chief Financial Officer
(since 2020).
   Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Charles

Park (53)

   Chief Compliance Officer
(since 2006).
   Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

Deepa

Damre (45)

   Secretary
(since 2019).
   Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

Scott

Radell (51)

   Executive Vice President
(since 2012).
   Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

Alan

Mason (59)

   Executive Vice President
(since 2016).
   Managing Director, BlackRock, Inc. (since 2009).

Marybeth

Leithead (57)

   Executive Vice President
(since 2019).
   Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

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General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

E N E R A L  N F O R M A T I O N

  90


Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
ADR    American Depositary Receipt
NVDR    Non-Voting Depositary Receipt
NVS    Non-Voting Shares

 

 

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Want to know more?

iShares.com    |     1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

 

iS-AR-803-0820

 

 

LOGO

   LOGO


 

LOGO

 

  AUGUST 31, 2020

 

 

    

  

2020 Annual Report

 

iShares, Inc.

 

·  

iShares MSCI Brazil ETF  |  EWZ  |  NYSE Arca

 

·  

iShares MSCI Chile ETF  |  ECH  |  Cboe BZX

 

·  

iShares MSCI Colombia ETF  |  ICOL  |  NYSE Arca

 

·  

iShares MSCI Israel ETF  |  EIS  |  NYSE Arca

 

·  

iShares MSCI Russia ETF  |  ERUS  |  NYSE Arca

 

·  

iShares MSCI South Africa ETF  |  EZA  |  NYSE Arca

 

·  

iShares MSCI Turkey ETF   |   TUR  |  NASDAQ

 

·  

iShares MSCI USA Equal Weighted ETF  |  EUSA  |  NYSE Arca

 

 

 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020
     
     6-Month     12-Month  
   

U.S. large cap equities

(S&P 500® Index)

  19.63%   21.94%
   

U.S. small cap equities

(Russell 2000® Index)

  6.57   6.02
   

International equities

(MSCI Europe, Australasia,

Far East Index)

  7.10   6.13
   

Emerging market equities

(MSCI Emerging Markets Index)

  11.23   14.49
   

3-month Treasury bills

(ICE BofA 3-Month U.S. Treasury Bill Index)

  0.34   1.26
   

U.S. Treasury securities

(ICE BofA 10-Year U.S. Treasury Index)

  4.67   8.93
   

U.S. investment grade bonds (Bloomberg Barclays U.S. Aggregate Bond Index)

  2.98   6.47
   

Tax-exempt municipal bonds (S&P Municipal Bond Index)

  0.29   3.15
   

U.S. high yield bonds (Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

  3.04   4.65
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
 

 

 

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Table of Contents

 

 

      Page  

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     21  

Shareholder Expenses

     21  

Schedules of Investments

     22  

Financial Statements

  

Statements of Assets and Liabilities

     49  

Statements of Operations

     51  

Statements of Changes in Net Assets

     53  

Financial Highlights

     57  

Notes to Financial Statements

     65  

Report of Independent Registered Public Accounting Firm

     75  

Important Tax Information (Unaudited)

     76  

Board Review and Approval of Investment Advisory Contract

     77  

Supplemental Information

     85  

Director and Officer Information

     87  

General Information

     89  

Glossary of Terms Used in this Report

     90  

 

 

 


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

 

A R K E T  V E R V I E W   4


Fund Summary as of August 31, 2020     iShares® MSCI Brazil ETF

 

Investment Objective

The iShares MSCI Brazil ETF (the “Fund”) seeks to track the investment results of an index composed of Brazilian equities, as represented by the MSCI Brazil 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    (25.63 )%       6.24      (5.27 )%        (25.63 )%       35.32      (41.81 )% 

Fund Market

    (25.25      6.23        (5.18       (25.25      35.29        (41.23

Index

    (24.99      7.01        (4.68             (24.99      40.34        (38.05

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Brazil Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Brazil 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 21 for more information.

Expense Example

 

Actual

 

          Hypothetical 5% Return

 

          
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $      1,000.00          $      787.20          $      2.65               $      1,000.00          $      1,022.20          $      3.00          0.59

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 21 for more information.

 

 

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Brazil ETF

 

Portfolio Management Commentary

Brazilian equities declined sharply during the reporting period as the coronavirus pandemic drove Brazil into a deep recession. The country’s deficit continued to rise amid concerns surrounding the government’s limited resources to support the economy, partly due to the strains of previous downturns. The Brazilian real’s significant depreciation relative to the U.S. dollar amid declining interest rates and weakening growth prospects, along with growing capital outflows from foreign investors, pressured stock prices.

The financials sector was the largest detractor from the Index’s return, driven by the banking industry. Bank profits dropped sharply, as declining economic activity led to lower income from interest, fees, and insurance. Deteriorating demand for consumer loans and credit cards also worked against bank stocks. Loan loss provisions rose sharply, weighing on both earnings and expectations for future growth, amid concerns that defaults could rise dramatically when the government’s loan forbearance program ends.

The consumer staples sector also weighed on the Index’s performance. The food, beverage, and tobacco industry declined, as temporary closures of restaurants, bars, and other businesses reduced demand for alcoholic beverages. Despite efforts to build up additional sales channels and recovering sales late in the reporting period, profit margins remained under pressure. Food processors declined amid coronavirus outbreaks in meat plants, higher costs to protect employees, falling prices, and slowing sales, particularly from exports.

The energy sector also weighed on the Index’s return, with the integrated oil and gas industry driving detraction. A steep drop in oil demand precipitated by the pandemic along with increased competition from suppliers in Saudi Arabia and Russia, drove oil prices sharply lower. Despite rebounding demand from China late in the reporting period, producers posted large losses.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

   
Percent of
Total Investments
 
(a) 

Financials

    27.2

Materials

    17.7  

Consumer Discretionary

    12.1  

Energy

    12.0  

Consumer Staples

    10.6  

Industrials

    8.2  

Utilities

    6.2  

Health Care

    2.8  

Communication Services

    2.3  

Other (each representing less than 1%)

    0.9  

TEN LARGEST HOLDINGS

 

   

Security

   
Percent of
Total Investments
 
(a) 

Vale SA

    12.3

B3 SA - Brasil, Bolsa, Balcao

    6.5  

Itau Unibanco Holding SA (Preferred)

    6.3  

Petroleo Brasileiro SA (Preferred)

    5.6  

Banco Bradesco SA (Preferred)

    5.0  

Petroleo Brasileiro SA

    4.5  

Magazine Luiza SA

    4.1  

WEG SA

    3.3  

Ambev SA

    3.2  

Natura & Co. Holding SA

    2.3  
 

 

  (a) 

Excludes money market funds.

 

 

U N D  U M M A R Y

  6


Fund Summary as of August 31, 2020    iShares® MSCI Chile ETF

 

Investment Objective

The iShares MSCI Chile ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Chilean equities, as represented by the MSCI Chile IMI 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    (27.72 )%       (4.18 )%       (7.71 )%        (27.72 )%       (19.23 )%       (55.17 )% 

Fund Market

    (27.45      (4.32      (7.75       (27.45      (19.82      (55.38

Index

    (27.60      (4.08      (7.32             (27.60      (18.78      (53.26

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Chile Investable Market Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Chile IMI 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 21 for more information.

Expense Example

 

Actual

 

          Hypothetical 5% Return

 

          
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $      1,000.00          $      965.50          $      2.91               $      1,000.00          $      1,022.20          $      3.00          0.59

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 21 for more information.

 

 

7  

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Chile ETF

 

Portfolio Management Commentary

Stocks in Chile declined sharply for the reporting period amid a global recession driven by the coronavirus pandemic. Economic activity, already slowing at the end of 2019 due to demonstrations that disrupted businesses and tourism, diminished substantially following pandemic-related closures, leading to a steep economic contraction for the second quarter of 2020. Domestic demand and household consumption declined, and the price of copper, Chile’s main export, dropped sharply as global industrial activity halted. In this environment, the Chilean peso weakened significantly relative to the U.S. dollar, further limiting returns for U.S.-based investors.

The financials sector detracted the most from the Index’s return, led by banks. Higher provisions for loan defaults along with sharply lower mortgage and consumer lending constrained banks’ profits. Multiple interest rate reductions by the central bank to mitigate the effects of the pandemic also worked against the banking industry. The Chilean peso’s weakness weighed on banks with exposure abroad, as servicing loans denominated in U.S. dollars became costlier. Dividend reductions and lowered analyst expectations also pressured banks.

The utilities sector was another detractor from performance. Lower demand for electricity during business closures reduced revenues. Canceled rate increases and payment deferrals also weighed on utilities providers.

The consumer discretionary sector also declined, driven by the retail industry. The temporary closures of brick-and-mortar stores led to sharply reduced revenues, especially for home improvement and department stores. The industrials sector further weighed on the Index’s performance. Movement restrictions sharply curtailed the demand for travel, leading to steep losses for the airline industry. Latin America’s largest air carrier announced mass layoffs and sought bankruptcy protection.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

   
Percent of
Total Investments
 
(a) 

Utilities

    28.8

Financials

    21.9  

Materials

    15.4  

Consumer Staples

    12.5  

Energy

    7.2  

Consumer Discretionary

    6.2  

Real Estate

    3.1  

Communication Services

    2.6  

Information Technology

    1.3  

Industrials

    1.0  

TEN LARGEST HOLDINGS

 

   

Security

   
Percent of
Total Investments
 
(a) 

Enel Americas SA

    12.8

Banco de Chile

    9.7  

Sociedad Quimica y Minera de Chile SA (Preferred), Class B

    9.0  

Empresas COPEC SA

    7.2  

Enel Chile SA

    5.5  

Empresas CMPC SA

    4.5  

Banco de Credito e Inversiones SA

    4.4  

Banco Santander Chile

    4.4  

Falabella SA

    4.4  

Cencosud SA

    4.1  
 
  (a) 

Excludes money market funds.

 

 

U N D  U M M A R Y

  8


Fund Summary as of August 31, 2020     iShares® MSCI Colombia ETF

 

Investment Objective

The iShares MSCI Colombia ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Colombian equities, as represented by the MSCI All Colombia Capped Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
           1 Year      5 Years      Since
Inception
 

Fund NAV

    (26.40 )%       (3.68 )%       (11.62 )%        (26.40 )%       (17.10 )%       (58.92 )% 

Fund Market

    (26.20      (3.86      (11.63       (26.20      (17.85      (58.99

Index

    (26.09      (3.52      (11.34             (26.09      (16.39      (57.95

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 6/18/13. The first day of secondary market trading was 6/20/13.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 21 for more information.

Expense Example

 

Actual

 

          Hypothetical 5% Return

 

          
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $        1,000.00          $           752.80          $           2.69               $        1,000.00          $        1,022.10          $           3.10          0.61

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 21 for more information.

 

 

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Colombia ETF

 

Portfolio Management Commentary

Stocks in Colombia declined sharply for the reporting period amid a steep economic contraction driven by the coronavirus pandemic. The economy expanded in 2019 due to strong private consumption and investment. Stringent government restrictions to contain the spread of the virus led to closed businesses and sharply higher unemployment. Revenue from oil, Colombia’s largest export, diminished amid stark decreases in prices and demand as global industrial activity halted. Declining oil prices along with massive government stimulus, which drove a widening budget deficit, led the Colombian peso to weaken significantly relative to the U.S. dollar, further limiting returns for U.S.-based investors.

The financials sector detracted the most from the Index’s return, led by banks. Despite injections of liquidity from the government and the central bank, the banking industry posted substantial losses. Unemployment and business closures led to increased anticipation of sizable loan defaults, especially on mortgages and consumer debt. Expectations of lower loan income following the central bank’s interest rate reductions also weighed on the banking industry. A decline in transaction volumes and fees from credit cards amid a drop in consumer spending, along with the weak Colombian peso, further pressured banks’ income.

The energy and materials sectors also worked against the Index’s performance. Despite a moderate rebound near the end the reporting period, oil price weakness challenged the energy sector. Business closures and travel restrictions starkly reduced economic activity. The subsequent decline in demand drove oil prices to a 21-year low, weighing heavily on the oil, gas, and consumable fuels industry. Within materials, lower sales and profits in the construction materials industry pressured performance. Both domestic and foreign construction activity slowed, reducing expectations of demand for inputs, such as cement.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

   
Percent of
Total Investments
 
(a) 

Financials

    39.0

Energy

    29.9  

Utilities

    14.3  

Materials

    10.7  

Consumer Staples

    4.7  

Industrials

    1.4  

TEN LARGEST HOLDINGS

 

   

Security

   
Percent of
Total Investments
 
(a) 

Ecopetrol SA

    21.6

Bancolombia SA (Preferred)

    14.8  

Bancolombia SA

    8.2  

Banco Davivienda SA (Preferred)

    4.7  

Grupo Nutresa SA

    4.7  

Grupo Energia Bogota SA ESP

    4.5  

Interconexion Electrica SA ESP

    4.5  

Enel Americas SA

    4.3  

Canacol Energy Ltd.

    4.3  

Empresas COPEC SA

    4.1  
 

 

  (a) 

Excludes money market funds.

 

 

U N D  U M M A R Y

  10


 

Fund Summary as of August 31, 2020     iShares® MSCI Israel ETF

 

Investment Objective

The iShares MSCI Israel ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Israeli equities, as represented by the MSCI Israel Capped Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns            Cumulative Total Returns  
     1 Year     5 Years     10 Years             1 Year     5 Years     10 Years  

Fund NAV

    8.53     4.03     3.49        8.53     21.82     40.91

Fund Market

    8.34       4.00       3.45          8.34       21.67       40.32  

Index

    9.03       4.49       3.83                9.03       24.53       45.58  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 21 for more information.

Expense Example

 

Actual

 

         

Hypothetical 5% Return

 

          
 

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

           

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

      

Annualized
Expense
Ratio
 
 
 
  $        1,000.00          $         1,025.00          $           3.05               $         1,000.00          $       1,022.10          $         3.05          0.60

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 21 for more information.

 

 

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Israel ETF

 

Portfolio Management Commentary

Israeli stocks advanced despite the deep recession driven by the coronavirus pandemic. Economic growth was already weakening in 2019 due to declining exports and tepid investment growth. Coronavirus-related closures in early 2020 reduced economic activity, and Israel experienced an abrupt contraction in the second quarter. Amid sharply rising unemployment, consumer spending and imports decreased. Following steep declines in the first quarter of 2020, Israeli equities rebounded in the second quarter, bolstered by the lifting of stay-at-home orders and optimism about potential vaccines.

The information technology sector contributed the most to the Index’s return, driven almost exclusively by the software and services industry. The shift to working remotely led to sharply higher demand for cloud computing along with growth in premium subscriptions and business services used for e-commerce, driving strong revenue gains. The increase in telecommuting also led to a rise in sophisticated cyberattacks, supporting demand for cybersecurity software.

The healthcare sector also contributed meaningfully to the Index’s performance. The pharmaceuticals industry advanced, as sales of respiratory products to treat complications of COVID-19 rose, and consumers stocked up on medications. Rising international sales of generic and over-the-counter drugs also supported gains. Strength in the capital goods industry drove the industrials sector’s contribution. Rebounding businesses activity bolstered investor sentiment about demand growth for services such as printing solutions, which benefited the machinery industry.

On the downside, the financials and real estate sectors detracted from the Index’s return. Banks’ profits declined as rising loan loss provisions amid high unemployment reduced expectations of consumers’ ability to repay debts. The real estate industry also limited gains as tenants in commercial properties such as shopping malls received reprieves on rent payments during temporary store closures.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   
Sector  

Percent of   

Total Investments(a)

Information Technology

  41.5%

Financials

  19.2   

Real Estate

  9.3   

Health Care

  9.0   

Industrials

  8.4   

Communication Services

  3.1   

Consumer Staples

  2.6   

Materials

  2.3   

Utilities

  1.7   

Consumer Discretionary

  1.5   

Energy

  1.4   

TEN LARGEST HOLDINGS

 

   
Security  

Percent of   

Total Investments(a)

Wix.com Ltd.

  10.6%

Check Point Software Technologies Ltd.

  10.5   

Nice Ltd.

  10.4   

Teva Pharmaceutical Industries Ltd.

  7.9   

Bank Leumi Le-Israel BM

  5.5   

Bank Hapoalim BM

  4.5   

CyberArk Software Ltd.

  3.1   

Israel Discount Bank Ltd., Class A

  3.1   

Elbit Systems Ltd.

  2.7   

Mizrahi Tefahot Bank Ltd.

  2.4   
 
  (a) 

Excludes money market funds.

 

 

U N D  U M M A R Y

  12


 

Fund Summary as of August 31, 2020    iShares® MSCI Russia ETF

 

Investment Objective

The iShares MSCI Russia ETF (the “Fund”) seeks to track the investment results of an index composed of Russian equities, as represented by the MSCI Russia 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years     

Since

Inception

           1 Year      5 Years     

Since

Inception

 

Fund NAV

    (1.28 )%       11.83      (0.01 )%        (1.28 )%       74.87      (0.14 )% 

Fund Market

    (0.16      11.10        0.03         (0.16      69.30        0.28  

Index

    (0.80      12.55        0.57               (0.80      80.59        5.78  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 11/9/10. The first day of secondary market trading was 11/10/10.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 21 for more information.

Expense Example

 

Actual

 

         

Hypothetical 5% Return

 

          
 

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      


Expenses

Paid During
the Period 

 

 
(a) 

           

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

      

Annualized

Expense

Ratio

 

 

 

  $        1,000.00          $           982.40          $           2.94               $        1,000.00          $        1,022.20          $           3.00          0.59

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 21 for more information.

 

 

13  

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Russia ETF

 

Portfolio Management Commentary

Russian equities declined modestly during the reporting period. Stocks advanced in 2019, as global investors sought the strong yields of state-run companies amid easing interest rates and signs of economic growth and stability. Russian stocks declined in 2020, as pandemic-related restrictions drove an economic contraction and increasing unemployment. A dramatic drop in prices for oil, the country’s key export, also weighed on the economy and helped weaken the Russian ruble relative to the U.S. dollar.

The energy sector detracted the most from the Index’s return. Profits in the oil, gas, and consumable fuels industry declined, as a steep drop in oil demand precipitated by the pandemic along with increased competition with Saudi Arabia drove oil prices sharply lower. Natural gas prices and volumes also declined. Reduced capital spending plans and canceled or delayed new projects weighed on the oil and gas exploration and production industry.

The financials sector also constrained the Index’s performance due primarily to weakness in state-owned bank stocks. Low interest rates and fewer new loans along with rising loan-loss provisioning costs amid economic deterioration reduced bank profits.

On the upside, the materials sector bolstered the Index’s return. Gold mining stocks advanced sharply, as economic uncertainty raised the metal’s price to record levels. High prices and continuing sales growth drove strong earnings for gold producers. The diversified metals and mining industry advanced, as stricter emissions requirements fueled strong demand for palladium, which is used in catalytic converters, while ongoing supply constraints boosted the metal’s price.

The consumer staples and communication services sectors were modest contributors. Food retailers advanced amid increasing sales during the pandemic, while the wireless telecommunication services industry benefited from resilient demand for banking and core services.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   
Sector  

Percent of   

Total Investments(a)

Energy

  44.7%

Materials

  22.2   

Financials

  16.4   

Communication Services

  8.3   

Consumer Staples

  6.4   

Utilities

  2.0   

TEN LARGEST HOLDINGS

 

   
Security  

Percent of   

Total Investments(a)

Gazprom PJSC

  14.5%

LUKOIL PJSC

  13.9   

Sberbank of Russia PJSC

  13.5   

Yandex NV, Class A

  5.4   

Polyus PJSC

  4.8   

Novatek PJSC

  4.6   

MMC Norilsk Nickel PJSC

  4.5   

Tatneft PJSC

  4.4   

Polymetal International PLC

  3.9   

Magnit PJSC

  3.3   
 

 

  (a) 

Excludes money market funds.

 

 

U N D  U M M A R Y

  14


 

Fund Summary as of August 31, 2020     iShares® MSCI South Africa ETF

 

Investment Objective

The iShares MSCI South Africa ETF (the “Fund”) seeks to track the investment results of an index composed of South African equities, as represented by the MSCI South Africa 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year     5 Years      10 Years            1 Year     5 Years      10 Years  

Fund NAV

    (13.09 )%      (3.60 )%       (0.65 )%        (13.09 )%      (16.77 )%       (6.29 )% 

Fund Market

    (13.10     (3.64      (0.61       (13.10     (16.91      (5.89

Index

    (12.66     (3.07      (0.05             (12.66     (14.42      (0.54

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through August 31, 2017 reflects the performance of the MSCI South Africa Index. Index performance beginning on September 1, 2017 reflects the performance of the MSCI South Africa 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 21 for more information.

Expense Example

 

Actual

 

         

Hypothetical 5% Return

 

          
 

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

           

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

      

Annualized

Expense

Ratio

 

 

 

  $        1,000.00          $           974.90          $           2.93               $        1,000.00          $        1,022.20          $           3.00          0.59

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 21 for more information.

 

 

15  

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI South Africa ETF

 

Portfolio Management Commentary

South African stocks declined during the reporting period as pandemic-related restrictions compounded existing economic challenges. Already in the midst of its second recession in two years, the economy was further stifled by a strict shutdown, power supply disruptions, and softening global export markets. As the country’s unemployment rate increased to a historic high of 30.1%, officials passed a relief package worth 500 billion South African rand to help offset a projected 7.2% decline in economic activity for 2020. Separately, the South African Reserve Bank reduced its key interest rate to an all-time low of 3.5%. The country’s economic malaise drove the South African rand lower against the U.S. dollar, which also detracted from performance for U.S. investors.

The financials sector detracted significantly from the Index’s return, especially among banks. As the economic contraction hindered borrowers’ ability to repay loans, concerns arose about loan defaults. Low interest rates and decreasing fee revenue further pressured banks’ profit outlook. Diversified financials firms declined amid reduced business financing activity and rising insurance claim volumes.

The communication services sector weighed on performance, as a leading wireless telecommunication services company reported that device sales, prepaid service volumes, and roaming activity decreased amid the weak economy. The real estate sector also detracted, as commercial real estate firms declined due to reduced rent revenues from office, retail, industrial, and warehouse leases.

On the upside, the materials sector contributed to the Index’s return. Metals and mining companies advanced as gold prices reached all-time highs, silver prices rose to seven-year highs, and prices increased significantly for other precious metals such as palladium and rhodium.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   
Sector  

Percent of   

Total Investments(a)

Consumer Discretionary

  26.6%

Materials

  26.4   

Financials

  24.4   

Consumer Staples

  8.4   

Communication Services

  6.8   

Health Care

  2.6   

Real Estate

  2.3   

Industrials

  1.3   

Energy

  1.2   

TEN LARGEST HOLDINGS

 

   
Security  

Percent of   

Total Investments(a)

Naspers Ltd., Class N

  24.0%

AngloGold Ashanti Ltd.

  5.6   

Gold Fields Ltd.

  5.4   

FirstRand Ltd.

  5.0   

Standard Bank Group Ltd.

  3.9   

Impala Platinum Holdings Ltd.

  3.5   

Sibanye Stillwater Ltd.

  3.3   

MTN Group Ltd.

  3.0   

Sanlam Ltd.

  2.8   

Bid Corp. Ltd.

  2.8   
 

 

  (a) 

Excludes money market funds.

 

 

U N D  U M M A R Y

  16


 

Fund Summary as of August 31, 2020     iShares® MSCI Turkey ETF

 

Investment Objective

The iShares MSCITurkey ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Turkish equities, as represented by the MSCI Turkey IMI 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    (15.48 )%       (9.87 )%       (8.41 )%        (15.48 )%       (40.51 )%       (58.48 )% 

Fund Market

    (15.82      (9.87      (8.38       (15.82      (40.54      (58.32

Index

    (15.47      (9.69      (8.11             (15.47      (39.94      (57.07

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through May 28, 2019 reflects the performance of MSCI Turkey Investable Market Index. Index performance beginning on May 29, 2019 reflects the performance of the MSCI Turkey IMI 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 21 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

           

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

      

Annualized

Expense

Ratio

 

 

 

  $        1,000.00          $           847.80          $           2.79               $        1,000.00          $        1,022.10          $          3.05          0.60

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 21 for more information.

 

 

17  

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Turkey ETF

 

Portfolio Management Commentary

Stocks in Turkey declined significantly during the reporting period, as the coronavirus pandemic intensified a significant depreciation of the Turkish lira relative to the U.S. dollar. Strong growth of the money supply, extensive use of foreign exchange reserves, and interest rates well below inflation weighed on the Turkish lira. Furthermore, the credit rating outlook on the nation’s debt turned negative during the reporting period, partly due to a significant trade deficit. A weaker Turkish lira also put pressure on Turkish companies, which have substantial debts denominated in foreign currencies. Turkey’s economy contracted sharply in the second quarter of 2020, as pandemic-related restrictions closed businesses and reduced travel.

The financials sector detracted the most from the Index’s return. Concerns that economic disruption would lower lending volumes, hinder borrowers’ repayment abilities, and drive profits lower led to a negative credit rating outlook for banks. Nonperforming loans to construction and energy companies also continued to weigh on the banking industry. Furthermore, customers significantly increased foreign currency cash withdrawals from banks. Delayed loan repayments by travel and hospitality companies, which were disproportionately impacted by the pandemic, also weighed on banks’ revenues.

The industrials sector also detracted notably from the Index’s return, as airlines reported significantly lower revenue amid a substantial drop in passengers, which also weighed on airport operators. Furthermore, declines in exports pressured the capital goods industry.

The energy sector faltered as weakening energy demand led to production suspensions. The narrowing difference in prices between refined petroleum products and crude oil further reduced profits in the oil, gas, and consumable fuels industry.

On the upside, the materials sector contributed modestly to the Index’s return. The steel industry benefited from the combination of lower coal prices and higher iron ore prices.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   
Sector  

Percent of   

Total Investments(a)

Financials

  23.8%

Consumer Staples

  23.5   

Industrials

  18.9   

Materials

  14.0   

Consumer Discretionary

  5.8   

Energy

  4.7   

Communication Services

  4.4   

Real Estate

  1.8   

Utilities

  1.6   

Health Care

  1.5   

TEN LARGEST HOLDINGS

 

   
Security  

Percent of   

Total Investments(a)

BIM Birlesik Magazalar AS

  14.4%

Turkiye Garanti Bankasi AS

  7.3   

Akbank T.A.S

  7.1   

KOC Holding AS

  5.3   

Tupras Turkiye Petrol Rafinerileri AS

  4.7   

Eregli Demir ve Celik Fabrikalari TAS

  4.7   

Turkcell Iletisim Hizmetleri AS

  4.4   

Aselsan Elektronik Sanayi Ve Ticaret AS

  4.3   

Haci Omer Sabanci Holding AS

  3.3   

Ford Otomotiv Sanayi AS

  3.2   
 

 

  (a) 

Excludes money market funds.

 

 

U N D  U M M A R Y

  18


 

Fund Summary as of August 31, 2020    iShares® MSCI USA Equal Weighted ETF

 

Investment Objective

The iShares MSCI USA Equal Weighted ETF (the “Fund”) seeks to track the investment results of an index composed of equal weighted U.S. equities, as represented by the MSCI USA Equal Weighted Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    10.18      10.09      12.92       10.18      61.72      237.05

Fund Market

    10.33        10.11        12.93         10.33        61.89        237.46  

Index

    10.28        10.24        13.09               10.28        62.83        242.15  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Index performance through August 31, 2015 reflects the performance of the MSCI USA Index. Index performance beginning on September 1, 2015 reflects the performance of the MSCI USA Equal Weighted Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 21 for more information.

Expense Example

 

Actual

 

         

Hypothetical 5% Return

 

          
 

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

           

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period 

 

 

(a) 

      

Annualized

Expense

Ratio

 

 

 

  $        1,000.00          $        1,101.30          $           0.79               $        1,000.00          $        1,024.40          $           0.76          0.15

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 21 for more information.

 

 

19  

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI USA Equal Weighted ETF

 

Portfolio Management Commentary

U.S. equal weighted stocks posted a strong return for the reporting period, despite the onset of a recession driven by the coronavirus pandemic. The information technology sector contributed the most to the Index’s return, advancing strongly as social distancing requirements drove sharply higher use of technology products and services by people staying at home. Software companies that create products that facilitate remote working, such as digital document signatures and video conferencing, were a source of strength. Semiconductor companies also advanced amid high demand for chips to support expanding use of data centers and video gaming, both areas that grew after government-mandated coronavirus restrictions.

The healthcare sector was also a key contributor, benefiting from solid earnings growth in the biotechnology industry. Strong demand for drugs to treat eczema and cancer, along with optimism about potential coronavirus treatments, drove the industry’s gains. Healthcare equipment manufacturers advanced amid strong demand for new continuous blood glucose monitors, which continue to replace more invasive products requiring blood draws. Sales strengthened further as physicians sought tools for remote consultations with diabetic patients, who are at higher risk for complications from COVID-19.

The industrials sector contribution was driven by industrial machinery stocks, which gained amid a recovery in manufacturing as business confidence improved after reaching an all-time low in April 2020. Rising manufacturing output led industrial production higher late in the reporting period, although it remained below pre-pandemic levels. Consumer spending on goods, boosted by stimulus payments, also improved, which helped drive gains in the consumer discretionary sector. Internet and direct marketing retailers gained notably, as consumers increased online shopping. On the downside, the energy sector detracted from the Index’s performance, negatively affected by volatile prices and reduced demand for oil and natural gas.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   
Sector  

Percent of   

Total Investments(a)

Information Technology

  17.8%

Financials

  14.6   

Industrials

  13.2   

Health Care

  12.8   

Consumer Discretionary

  9.9   

Real Estate

  6.4   

Communication Services

  5.8   

Consumer Staples

  5.7   

Utilities

  5.3   

Materials

  5.2   

Energy

  3.3   

TEN LARGEST HOLDINGS

 

   
Security  

Percent of   

Total Investments(a)

salesforce.com Inc.

  0.2%

Tesla Inc.

  0.2   

Workday Inc., Class A

  0.2   

Zoom Video Communications Inc., Class A

  0.2   

Roku Inc.

  0.2   

Aramark

  0.2   

Marvell Technology Group Ltd.

  0.2   

Crowdstrike Holdings Inc., Class A

  0.2   

Slack Technologies Inc., Class A

  0.2   

Uber Technologies Inc.

  0.2   
 

 

  (a) 

Excludes money market funds.

 

 

U N D  U M M A R Y

  20


 

About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not trade in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

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Schedule of Investments

August 31, 2020

  

iShares® MSCI Brazil ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Banks — 3.7%            

Banco Bradesco SA

    17,119,222     $ 59,384,749  

Banco do Brasil SA

    15,877,287       94,495,601  

Banco Santander Brasil SA

    8,225,075       42,400,540  
   

 

 

 
          196,280,890  
Beverages — 3.2%            

Ambev SA

    74,558,655       167,304,734  
   

 

 

 
Capital Markets — 7.1%            

B3 SA - Brasil, Bolsa, Balcao

    32,118,877       344,262,558  

Banco BTG Pactual SA

    2,117,400       31,005,075  
   

 

 

 
      375,267,633  
Containers & Packaging — 1.2%  

Klabin SA

    13,568,500       63,564,857  
   

 

 

 
Diversified Consumer Services — 0.7%  

Cogna Educacao

    34,737,019       36,092,712  
   

 

 

 
Electric Utilities — 2.6%            

Centrais Eletricas Brasileiras SA

    6,030,096       39,032,558  

CPFL Energia SA

    2,568,500       13,456,077  

Energisa SA

    1,953,100       15,469,147  

Equatorial Energia SA

    17,197,800       72,729,900  
   

 

 

 
      140,687,682  
Electrical Equipment — 3.3%            

WEG SA

    14,864,181       175,089,480  
   

 

 

 
Food & Staples Retailing — 2.8%  

Atacadao SA

    9,037,100       32,205,346  

Cia Brasileira de Distribuicao

    3,303,864       38,248,674  

Raia Drogasil SA

    4,083,500       80,242,312  
   

 

 

 
      150,696,332  
Food Products — 2.3%            

BRF SA(a)

    11,272,850       40,255,041  

JBS SA

    20,404,107       83,462,725  
   

 

 

 
      123,717,766  
Health Care Providers & Services — 2.0%  

Hapvida Participacoes e Investimentos
SA(b)

    1,806,700       21,317,868  

Notre Dame Intermedica Participacoes SA

    6,381,500       86,197,187  
   

 

 

 
      107,515,055  
Independent Power and Renewable Electricity Producers — 0.7%  

Engie Brasil Energia SA

    4,573,543       35,540,228  
   

 

 

 
Insurance — 2.9%            

BB Seguridade Participacoes SA

    13,368,695       64,285,929  

IRB Brasil Resseguros S/A

    13,804,000       17,940,998  

IRB Brasil Resseguros S/A(a)

    5,000,528       6,307,744  

Porto Seguro SA

    2,527,320       24,352,273  

Sul America SA

    5,245,449       41,287,389  
   

 

 

 
      154,174,333  
Internet & Direct Marketing Retail — 1.6%  

B2W Cia. Digital(a)

    4,202,188       85,860,707  
   

 

 

 
IT Services — 0.4%            

Cielo SA

    26,473,696       22,005,515  
   

 

 

 
Metals & Mining — 13.0%            

Cia. Siderurgica Nacional SA

    13,713,969       38,022,834  

Vale SA

    59,738,632       649,884,533  
   

 

 

 
      687,907,367  
Security   Shares     Value  
Multiline Retail — 6.3%            

Lojas Renner SA

    14,642,209     $ 116,024,139  

Magazine Luiza SA

    12,839,100       218,170,383  
   

 

 

 
          334,194,522  
Oil, Gas & Consumable Fuels — 6.4%  

Cosan SA

    3,266,450       49,569,253  

Petroleo Brasileiro SA

    58,486,469       237,958,765  

Ultrapar Participacoes SA

    14,736,510       52,220,739  
   

 

 

 
      339,748,757  
Paper & Forest Products — 1.7%  

Suzano SA(a)

    10,152,030       92,898,504  
   

 

 

 
Personal Products — 2.2%            

Natura & Co. Holding SA

    13,185,760       118,592,282  
   

 

 

 
Pharmaceuticals — 0.8%            

Hypera SA

    7,537,600       43,486,947  
   

 

 

 
Real Estate Management & Development — 0.5%  

Multiplan Empreendimentos Imobiliarios SA

    6,582,738       24,982,702  
   

 

 

 
Road & Rail — 3.8%            

Localiza Rent a Car SA

    11,230,237       98,732,082  

Rumo SA(a)

    24,500,890       100,935,146  
   

 

 

 
      199,667,228  
Specialty Retail — 1.5%            

Petrobras Distribuidora SA

    7,728,300       30,062,874  

Via Varejo SA(a)

    13,945,900       52,113,774  
   

 

 

 
      82,176,648  
Transportation Infrastructure — 1.1%            

CCR SA

    24,115,565       58,597,583  
   

 

 

 
Water Utilities — 1.1%            

Cia. de Saneamento Basico do Estado de Sao Paulo

    6,710,000       58,404,728  
   

 

 

 
Wireless Telecommunication Services — 0.9%  

TIM Participacoes SA

    17,718,525       46,251,167  
   

 

 

 

Total Common Stocks — 73.8%
(Cost: $3,185,359,512)

 

    3,920,706,359  
   

 

 

 

Preferred Stocks

   
Banks — 13.4%            

Banco Bradesco SA, Preference Shares, NVS

    70,098,260       265,013,564  

Itau Unibanco Holding SA, Preference Shares, NVS

    78,004,847       334,861,034  

Itausa SA, Preference Shares, NVS

    64,255,527       110,452,181  
   

 

 

 
      710,326,779  
Chemicals — 0.3%            

Braskem SA, Class A, Preference Shares, NVS

    3,980,756       15,448,750  
   

 

 

 
Diversified Telecommunication Services — 1.4%  

Telefonica Brasil SA, Preference Shares, NVS

    8,555,764       74,610,866  
   

 

 

 
Electric Utilities — 1.7%            

Centrais Eletricas Brasileiras SA, Class B, Preference Shares, NVS

    5,767,846       37,734,555  

Cia. Energetica de Minas Gerais, Preference Shares, NVS

    20,246,442       38,862,362  

Cia. Paranaense de Energia, Preference Shares, NVS

    1,270,100       14,303,355  
   

 

 

 
      90,900,272  
Metals & Mining — 1.4%            

Gerdau SA, Preference Shares, NVS

    20,837,926       72,512,442  
   

 

 

 
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  22


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Brazil ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Multiline Retail — 1.8%            

Lojas Americanas SA, Preference Shares, NVS

    16,805,717     $ 98,857,159  
   

 

 

 
Oil, Gas & Consumable Fuels — 5.5%  

Petroleo Brasileiro SA, Preference Shares, NVS

    73,572,083           293,569,496  
   

 

 

 

Total Preferred Stocks — 25.5%
(Cost: $1,356,065,915)

 

    1,356,225,764  
   

 

 

 

Short-Term Investments

 

Money Market Funds — 0.2%  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(c)(d)

    7,890,000       7,890,000  
   

 

 

 

Total Short-Term Investments — 0.2%
(Cost: $7,890,000)

 

    7,890,000  
   

 

 

 

Total Investments in Securities — 99.5%
(Cost: $4,549,315,427)

 

    5,284,822,123  

Other Assets, Less Liabilities — 0.5%

 

    27,545,209  
   

 

 

 

Net Assets — 100.0%

    $ 5,312,367,332  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
   

Proceeds

from Sales

   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at

08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

 

BlackRock Cash Funds: Treasury,
SL Agency Shares

  $ 5,634,000     $ 2,256,000 (a)    $     $     $     $ 7,890,000       7,890,000     $ 193,719     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 

Futures Contracts

 

 

 
Description   

Number of

Contracts

      

Expiration

Date

      

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 
Long Contracts                                    

MSCI Brazil Index

     799          09/18/20        $32,237        $ (1,358,198
                   

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 1,358,198  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

 

 

23  

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Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Brazil ETF

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
    

Equity

Contracts

 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ (26,690,109
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (1,870,151
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 51,121,741  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                                   

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 3,920,706,359        $        $        $ 3,920,706,359  

Preferred Stocks

     1,356,225,764                            1,356,225,764  

Money Market Funds

     7,890,000                            7,890,000  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 5,284,822,123        $        $        $ 5,284,822,123  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Liabilities

                 

Futures Contracts

   $ (1,358,198      $        $        $ (1,358,198
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  24


 

Schedule of Investments

August 31, 2020

  

iShares® MSCI Chile ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

 
Banks — 21.0%            

Banco de Chile

    508,970,540     $ 42,649,916  

Banco de Credito e Inversiones SA

    621,936         19,646,753  

Banco Santander Chile

    509,572,768       19,645,197  

Grupo Security SA

    20,370,859       4,018,646  

Itau CorpBanca Chile SA

    2,224,905,365       6,798,904  
   

 

 

 
      92,759,416  
Beverages — 4.7%            

Cia. Cervecerias Unidas SA

    1,860,757       12,262,613  

Vina Concha y Toro SA

    4,995,061       8,688,239  
   

 

 

 
      20,950,852  
Diversified Financial Services — 1.0%  

Inversiones La Construccion SA

    642,462       4,183,289  
   

 

 

 
Electric Utilities — 20.4%            

Enel Americas SA

    390,565,025       56,335,997  

Enel Chile SA

    316,935,254       24,437,160  

Engie Energia Chile SA

    6,918,502       9,366,566  
   

 

 

 
      90,139,723  
Food & Staples Retailing — 5.5%            

Cencosud SA

    12,147,369       18,011,881  

SMU SA

    38,278,007       6,416,108  
   

 

 

 
      24,427,989  
Independent Power and Renewable Electricity Producers — 4.9%  

AES Gener SA

    41,566,040       6,779,128  

Colbun SA

    96,320,836       14,903,233  
   

 

 

 
      21,682,361  
IT Services — 1.3%            

SONDA SA

    7,336,189       5,675,078  
   

 

 

 
Marine — 0.9%            

Cia. Sud Americana de Vapores SA(a)

    148,764,288       4,047,251  
   

 

 

 
Metals & Mining — 1.9%            

CAP SA(a)

    931,515       8,287,393  
   

 

 

 
Multiline Retail — 5.6%            

Falabella SA

    6,202,303       19,592,870  

Ripley Corp. SA

    13,470,486       4,950,022  
   

 

 

 
      24,542,892  
Oil, Gas & Consumable Fuels — 7.2%  

Empresas COPEC SA

    4,322,299       31,772,021  
   

 

 

 
Paper & Forest Products — 4.5%            

Empresas CMPC SA

    9,575,059       19,938,523  
   

 

 

 
Real Estate Management & Development — 3.1%  

Cencosud Shopping SA

    1,375,522       2,059,284  

Parque Arauco SA

    7,453,696       11,580,777  
   

 

 

 
      13,640,061  
Security   Shares     Value  
Textiles, Apparel & Luxury Goods — 0.6%  

Forus SA

    2,173,070     $ 2,787,891  
   

 

 

 
Water Utilities — 3.6%            

Aguas Andinas SA, Class A

    33,580,336       10,088,346  

Inversiones Aguas Metropolitanas SA

    6,886,365       5,589,217  
   

 

 

 
      15,677,563  
Wireless Telecommunication Services — 2.6%  

Empresa Nacional de Telecomunicaciones SA

    1,905,424       11,562,705  
   

 

 

 

Total Common Stocks — 88.8%
(Cost: $423,525,982)

 

    392,075,008  
   

 

 

 

Preferred Stocks

   
Beverages — 2.2%            

Embotelladora Andina SA, Class B, Preference Shares .

    4,621,120       9,867,033  
   

 

 

 
Chemicals — 9.0%            

Sociedad Quimica y Minera de Chile SA, Class B, Preference Shares

    1,265,765       39,663,585  
   

 

 

 

Total Preferred Stocks — 11.2%
(Cost: $40,485,713)

 

    49,530,618  
   

 

 

 

Rights

   
Marine — 0.1%            

Cia Sud Americana de Vapores SA, (Expires 09/25/20)(a)

    57,486,147       222,512  
   

 

 

 

Total Rights — 0.1%
(Cost: $0)

 

    222,512  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 0.5%            

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(b)(c)

    2,080,000       2,080,000  
   

 

 

 

Total Short-Term Investments — 0.5%
(Cost: $2,080,000)

 

    2,080,000  
   

 

 

 

Total Investments in Securities — 100.6%
(Cost: $466,091,695)

 

    443,908,138  

Other Assets, Less Liabilities — (0.6)%

 

    (2,484,950
   

 

 

 

Net Assets — 100.0%

 

  $   441,423,188  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Affiliate of the Fund.

(c) 

Annualized 7-day yield as of period-end.

 

 

 

25  

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Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Chile ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer  

Value at

08/31/19

   

Purchases

at Cost

   

Proceeds

from Sales

   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at

08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

 

BlackRock Cash Funds: Treasury,
SL Agency Shares

  $     $ 2,080,000 (a)    $     $     $     $ 2,080,000       2,080,000     $ 8,488     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 

Futures Contracts

 

 

 
Description   

Number of

Contracts

    

Expiration

Date

    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

           

MSCI Emerging Markets E-Mini Index

     7        09/18/20      $ 385      $ 15,781  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 15,781  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
    

Equity

Contracts

 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 645,231  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 15,781  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 1,247,019      

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  26


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Chile ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 392,075,008        $        $        $ 392,075,008  

Preferred Stocks

     49,530,618                            49,530,618  

Rights

              222,512                   222,512  

Money Market Funds

     2,080,000                            2,080,000  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 443,685,626        $ 222,512        $        $ 443,908,138  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 15,781        $        $        $ 15,781  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

27  

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Schedule of Investments

August 31, 2020

  

iShares® MSCI Colombia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Banks — 8.7%            

Banco de Bogota SA

    3,196     $ 58,807  

Bancolombia SA

    221,073       1,532,781  

Grupo Aval Acciones y Valores SA

    84,572       20,974  
   

 

 

 
      1,612,562  
Capital Markets — 2.4%            

Bolsa de Valores de Colombia

    159,975       456,464  
   

 

 

 
Construction & Engineering — 1.4%  

Construcciones El Condor SA

    498,000       137,449  

Constructora Conconcreto SA(a)

    1,256,766       121,320  
   

 

 

 
      258,769  
Construction Materials — 7.8%            

Cementos Argos SA

    134,584       179,446  

CEMEX Latam Holdings SA(a)

    586,581       340,219  

Grupo Argos SA

    142,579       453,214  

Tecnoglass Inc.

    87,345       481,271  
   

 

 

 
      1,454,150  
Diversified Financial Services — 5.1%  

Corp. Financiera Colombiana SA(a)

    28,878       208,693  

Grupo de Inversiones Suramericana SA

    133,009       744,854  
   

 

 

 
      953,547  
Electric Utilities — 9.6%            

Celsia SA ESP

    122,791       151,934  

Enel Americas SA

    5,526,039       797,089  

Interconexion Electrica SA ESP

    150,107       838,202  
   

 

 

 
      1,787,225  
Food Products — 4.7%            

Grupo Nutresa SA

    148,356       870,360  
   

 

 

 
Gas Utilities — 4.7%            

Grupo Energia Bogota SA ESP(a)

    1,282,843       841,549  

Promigas SA ESP

    13,910       26,003  
   

 

 

 
      867,552  
Metals & Mining — 2.2%            

Mineros SA

    403,464       414,225  
   

 

 

 
Oil, Gas & Consumable Fuels — 30.0%  

Canacol Energy Ltd.(b)

    294,804       796,431  

Ecopetrol SA

    6,890,437       4,024,037  

Empresas COPEC SA

    102,708       754,978  
   

 

 

 
      5,575,446  
   

 

 

 

Total Common Stocks — 76.6%
(Cost: $13,675,045)

 

    14,250,300  
   

 

 

 
Security   Shares     Value  

Preferred Stocks

   
Banks — 22.4%            

Banco Davivienda SA, Preference Shares, NVS

    112,663     $ 870,664  

Bancolombia SA, Preference Shares, NVS

    387,127       2,758,424  

Grupo Aval Acciones y Valores SA, Preference Shares, NVS

    2,195,992       547,537  
   

 

 

 
      4,176,625  
Construction Materials — 0.7%            

Cementos Argos SA, Preference Shares, NVS

    23,544       23,419  

Grupo Argos SA/Colombia, Preference Shares, NVS

    42,195       99,018  
   

 

 

 
      122,437  
Diversified Financial Services — 0.4%            

Grupo de Inversiones Suramericana SA, Preference Shares, NVS

    14,976       71,885  
   

 

 

 

Total Preferred Stocks — 23.5%
(Cost: $4,448,888)

 

    4,370,947  
   

 

 

 

Short-Term Investments

 

Money Market Funds — 0.3%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(c)(d)(e)

    56,029       56,085  
   

 

 

 

Total Short-Term Investments — 0.3%
(Cost: $56,091)

 

    56,085  
   

 

 

 

Total Investments in Securities — 100.4%
(Cost: $18,180,024)

 

    18,677,332  

Other Assets, Less Liabilities — (0.4)%

 

    (65,871
   

 

 

 

Net Assets — 100.0%

    $ 18,611,461  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

(e) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  28


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Colombia ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer  

Value at

08/31/19

   

Purchases

at Cost

    Proceeds
from Sales
   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at

08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $       $55,872 (a)    $     $ 219     $ (6   $ 56,085       56,029     $ 492 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency
Shares(c)

          0 (a)                                     297        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 219     $ (6   $ 56,085       $ 789     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 
  (c) 

As of period end, the entity is no longer held.

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                               

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 14,250,300        $        $        $ 14,250,300  

Preferred Stocks

     4,370,947                            4,370,947  

Money Market Funds

     56,085                            56,085  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 18,677,332        $        $        $ 18,677,332  
  

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

29  

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Schedule of Investments

August 31, 2020

  

iShares® MSCI Israel ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 2.7%  

Elbit Systems Ltd.

    21,198     $ 2,864,979  
   

 

 

 
Banks — 16.5%            

Bank Hapoalim BM

    773,781           4,695,668  

Bank Leumi Le-Israel BM

    1,114,310       5,718,246  

FIBI Holdings Ltd.

    3,098       81,523  

First International Bank of Israel Ltd.

    45,232       1,061,385  

Israel Discount Bank Ltd., Class A

    997,757       3,203,062  

Mizrahi Tefahot Bank Ltd.

    124,264       2,536,257  
   

 

 

 
      17,296,141  
Biotechnology — 0.2%            

UroGen Pharma Ltd.(a)(b)

    9,174       230,176  
   

 

 

 
Building Products — 0.3%            

Caesarstone Ltd.

    24,124       266,208  
   

 

 

 
Chemicals — 2.3%            

ICL Group Ltd.

    560,768       2,089,652  

Israel Corp. Ltd. (The)(a)

    2,407       286,966  
   

 

 

 
      2,376,618  
Communications Equipment — 1.6%  

AudioCodes Ltd.

    9,381       290,239  

Gilat Satellite Networks Ltd.(a)

    15,289       82,700  

Ituran Location and Control Ltd.(b)

    18,561       269,135  

Radware Ltd.(a)

    41,719       1,081,356  
   

 

 

 
      1,723,430  
Construction & Engineering — 3.1%  

Ashtrom Group Ltd.(b)

    14,948       201,938  

Elco Ltd.

    7,475       273,643  

Electra Ltd./Israel

    2,135       970,759  

Shapir Engineering and Industry Ltd.(a)

    113,732       795,708  

Shikun & Binui Ltd.(a)

    231,177       1,034,580  
   

 

 

 
      3,276,628  
Consumer Finance — 0.2%            

Isracard Ltd.

    69,040       192,407  
   

 

 

 
Diversified Telecommunication Services — 2.1%  

Bezeq The Israeli Telecommunication Corp. Ltd.(a)

    1,963,474       2,245,393  
   

 

 

 
Equity Real Estate Investment Trusts (REITs) — 0.7%  

REIT 1 Ltd.

    179,313       722,227  
   

 

 

 
Food & Staples Retailing — 1.4%            

Rami Levy Chain Stores Hashikma Marketing 2006 Ltd.

    7,736       465,995  

Shufersal Ltd.

    120,119       946,115  
   

 

 

 
      1,412,110  
Food Products — 1.3%            

Mehadrin Ltd.(a)

    0 (c)       24  

Strauss Group Ltd.

    45,686       1,335,788  
   

 

 

 
      1,335,812  
Health Care Equipment & Supplies — 0.1%  

Inmode Ltd.(a)

    4,157       131,486  
   

 

 

 
Hotels, Restaurants & Leisure — 0.1%  

Fattal Holdings 1998 Ltd.(a)(b)

    2,283       151,621  
   

 

 

 
Household Durables — 0.3%            

Maytronics Ltd.

    22,852       337,624  
   

 

 

 
Security   Shares     Value  
Independent Power and Renewable Electricity Producers — 1.7%  

Energix-Renewable Energies Ltd.(a)

    77,490     $ 365,747  

Enlight Renewable Energy Ltd.(a)

    439,013       834,344  

Kenon Holdings Ltd./Singapore

    22,237       494,399  

OPC Energy Ltd.

    9,435       76,454  
   

 

 

 
      1,770,944  
Insurance — 2.5%            

Clal Insurance Enterprises Holdings Ltd.(a)

    33,844       333,215  

Harel Insurance Investments & Financial Services Ltd.

    116,348       835,532  

IDI Insurance Co. Ltd.

    7,883       212,401  

Menora Mivtachim Holdings Ltd.

    31,894       415,262  

Migdal Insurance & Financial Holdings Ltd.

    439,852       358,915  

Phoenix Holdings Ltd. (The)(a)

    92,669       464,208  
   

 

 

 
      2,619,533  
Internet & Direct Marketing Retail — 0.6%  

Fiverr International Ltd.(a)

    5,404       651,993  
   

 

 

 
IT Services — 12.0%            

Formula Systems 1985 Ltd.

    4,739       435,902  

Matrix IT Ltd.

    40,857       1,052,951  

Wix.com Ltd.(a)

    37,704       11,108,729  
   

 

 

 
      12,597,582  
Life Sciences Tools & Services — 0.8%  

Compugen Ltd.(a)(b)

    45,887       793,386  
   

 

 

 
Machinery — 2.2%            

Kornit Digital Ltd.(a)

    37,815       2,341,883  
   

 

 

 
Oil, Gas & Consumable Fuels — 1.4%  

Delek Group Ltd.(a)(b)

    6,504       151,357  

Equital Ltd.(a)

    10,083       202,057  

Naphtha Israel Petroleum Corp. Ltd.(a)

    46,568       172,283  

Oil Refineries Ltd.

    1,044,319       213,117  

Paz Oil Co. Ltd.

    7,309       743,166  
   

 

 

 
      1,481,980  
Pharmaceuticals — 7.9%            

Teva Pharmaceutical Industries Ltd., ADR(a)

    839,042       8,281,345  
   

 

 

 
Real Estate Management & Development — 8.6%  

AFI Properties Ltd.(a)

    29,463       803,540  

Airport City Ltd.(a)

    72,574       846,397  

Alony Hetz Properties & Investments Ltd.

    107,030       1,258,143  

Amot Investments Ltd.

    134,625       691,651  

Azrieli Group Ltd.

    37,655       2,033,432  

Bayside Land Corp.

    883       533,449  

Big Shopping Centers Ltd.

    2,497       205,914  

Blue Square Real Estate Ltd.

    3,992       174,127  

Brack Capital Properties NV(a)

    1,326       103,156  

Gazit-Globe Ltd.

    72,452       376,986  

Mega Or Holdings Ltd.

    6,035       153,137  

Melisron Ltd.

    18,555       745,120  

Mivne Real Estate KD Ltd.(a)

    344,856       715,074  

Norstar Holdings Inc

    16,474       93,583  

Property & Building Corp. Ltd.

    1,299       85,069  

Summit Real Estate Holdings Ltd.

    15,653       154,113  

YH Dimri Construction & Development Ltd.

    2,526       77,323  
   

 

 

 
      9,050,214  
Semiconductors & Semiconductor Equipment — 2.4%  

Nova Measuring Instruments Ltd.(a)

    16,413       893,674  

Tower Semiconductor Ltd.(a)

    84,386       1,661,403  
   

 

 

 
      2,555,077  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  30


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Israel ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Software — 25.4%            

Check Point Software Technologies Ltd.(a)

    87,548     $ 11,053,810  

CyberArk Software Ltd.(a)(b)

    29,224       3,229,252  

Hilan Ltd.

    7,435       350,261  

Nice Ltd.(a)

    47,763         10,944,129  

Sapiens International Corp. NV

    31,539       1,052,947  
   

 

 

 
      26,630,399  
Specialty Retail — 0.3%            

Delek Automotive Systems Ltd.

    47,297       263,314  
   

 

 

 
Textiles, Apparel & Luxury Goods — 0.2%            

Delta-Galil Industries Ltd.(b)

    11,662       182,250  
   

 

 

 
Wireless Telecommunication Services — 1.0%  

Cellcom Israel Ltd.(a)

    98,286       359,216  

Partner Communications Co. Ltd.(a)

    147,894       638,922  
   

 

 

 
      998,138  
   

 

 

 

Total Common Stocks — 99.9%
(Cost: $121,021,743)

      104,780,898  
   

 

 

 

Short-Term Investments

   

Money Market Funds — 3.1%

   

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    3,211,565       3,214,776  

 

Security   Shares     Value  
Money Market Funds (continued)            

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    46,000     $ 46,000  
   

 

 

 
      3,260,776  
   

 

 

 

Total Short-Term Investments — 3.1%
(Cost: $3,259,210)

 

    3,260,776  
   

 

 

 

Total Investments in Securities — 103.0%
(Cost: $124,280,953)

 

    108,041,674  

Other Assets, Less Liabilities — (3.0)%

      (3,138,332
   

 

 

 

Net Assets — 100.0%

    $   104,903,342  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Rounds to less than 1.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 7,811,637     $     $ (4,602,306 )(a)    $ 5,084     $ 361     $ 3,214,776       3,211,565     $ 50,497 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    92,000             (46,000 )(a)                   46,000       46,000       789        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 5,084     $ 361     $ 3,260,776       $ 51,286     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
    

Expiration

Date

    

Notional

Amount

(000)

     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

Euro STOXX 50 Index

     3        09/18/20      $ 117      $ (158
           

 

 

 

 

 

31  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Israel ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 158  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 30,754  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (158
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 71,368      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 104,780,898        $        $        $ 104,780,898  

Money Market Funds

     3,260,776                            3,260,776  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 108,041,674        $        $        $ 108,041,674  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Liabilities

                 

Futures Contracts

   $ (158      $        $        $ (158
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  32


Schedule of Investments

August 31, 2020

  

iShares® MSCI Russia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Banks — 14.4%

   

Sberbank of Russia PJSC(a)

    20,724,080     $ 62,952,303  

VTB Bank PJSC(a)

    9,137,105,016       4,324,266  
   

 

 

 
        67,276,569  
Capital Markets — 2.0%            

Moscow Exchange MICEX-RTS PJSC

    5,048,440       9,313,666  
   

 

 

 
Chemicals — 1.6%            

PhosAgro PJSC, GDR, Registered Shares(b)

    603,943       7,199,001  
   

 

 

 
Electric Utilities — 2.0%            

Inter RAO UES PJSC

    133,706,000       9,386,595  
   

 

 

 
Food & Staples Retailing — 6.4%            

Magnit PJSC, GDR(b)

    1,066,791       15,649,824  

X5 Retail Group NV, GDR(b)

    399,616       14,385,942  
   

 

 

 
      30,035,766  
Interactive Media & Services — 5.4%            

Yandex NV, Class A(a)

    363,050       25,315,739  
   

 

 

 
Metals & Mining — 20.7%            

Alrosa PJSC

    10,060,390       8,916,684  

Magnitogorsk Iron & Steel Works PJSC

    12,588,525       6,381,733  

MMC Norilsk Nickel PJSC

    81,431       21,162,860  

Novolipetsk Steel PJSC

    4,466,570       9,302,107  

Polymetal International PLC

    687,754       18,365,944  

Polyus PJSC

    92,733       22,525,145  

Severstal PAO

    802,871       10,071,840  
   

 

 

 
      96,726,313  
Oil, Gas & Consumable Fuels — 42.7%            

Gazprom PJSC

    27,808,060       67,847,016  

LUKOIL PJSC

    972,954       65,283,366  

Novatek PJSC, GDR(b)

    144,981       21,471,686  

Rosneft Oil Co. PJSC, GDR(b)

    717,987       3,647,374  

Rosneft Oil Co. PJSC

    2,110,230       10,593,792  
Security   Shares     Value  
Oil, Gas & Consumable Fuels (continued)  

Surgutneftegas PJSC

    20,109,646     $ 9,916,274  

Tatneft PJSC

    2,805,856       20,626,099  
   

 

 

 
      199,385,607  
Wireless Telecommunication Services — 2.9%  

Mobile TeleSystems PJSC, ADR

    1,434,978       13,373,995  
   

 

 

 

Total Common Stocks — 98.1% (Cost: $449,250,121)

      458,013,251  
   

 

 

 
Preferred Stocks            
Oil, Gas & Consumable Fuels — 2.1%  

Surgutneftegas PJSC, Preference Shares, NVS

    19,762,600       9,899,890  
   

 

 

 

Total Preferred Stocks — 2.1%
(Cost: $10,822,232)

      9,899,890  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 0.3%            

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(c)(d)

    1,490,000       1,490,000  
   

 

 

 

Total Short-Term Investments — 0.3%
(Cost: $1,490,000)

 

    1,490,000  
   

 

 

 

Total Investments in Securities — 100.5%
(Cost: $461,562,353)

 

    469,403,141  

Other Assets, Less Liabilities — (0.5)%

      (2,200,255
   

 

 

 

Net Assets — 100.0%

    $   467,202,886  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

 

 

BlackRock Cash Funds: Treasury,
SL Agency Shares

  $ 653,000     $ 837,000 (a)    $     $     $     $ 1,490,000       1,490,000     $ 16,283     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

MSCI Emerging Markets E-Mini Index

     38        09/18/20      $ 2,091      $ 37,335  
           

 

 

 

 

 

33  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Russia ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 37,335  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 439,151  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 37,335  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 1,164,543      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 458,013,251        $        $        $ 458,013,251  

Preferred Stocks

     9,899,890                            9,899,890  

Money Market Funds

     1,490,000                            1,490,000  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 469,403,141        $        $        $ 469,403,141  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 37,335        $        $        $ 37,335  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  34


Schedule of Investments

August 31, 2020

  

iShares® MSCI South Africa ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Banks — 8.8%

   

Absa Group Ltd.

    1,239,474     $ 5,651,848  

Capitec Bank Holdings Ltd.(a)

    131,712       6,491,819  

Nedbank Group Ltd.

    694,379       3,934,387  

Standard Bank Group Ltd.

    2,006,767       12,507,609  
   

 

 

 
        28,585,663  
Capital Markets — 1.6%            

Reinet Investments SCA

    263,418       5,024,164  
   

 

 

 
Chemicals — 2.4%            

Sasol Ltd.(b)

    934,004       7,639,633  
   

 

 

 
Diversified Financial Services — 6.4%            

FirstRand Ltd.

    7,260,482       16,221,308  

Remgro Ltd.

    890,011       4,618,890  
   

 

 

 
      20,840,198  
Equity Real Estate Investment Trusts (REITs) — 1.2%  

Growthpoint Properties Ltd.

    5,583,348       4,024,064  
   

 

 

 
Food & Staples Retailing — 7.4%            

Bid Corp. Ltd.

    540,735       8,934,236  

Clicks Group Ltd.

    422,836       5,740,561  

Pick n Pay Stores Ltd.

    42,133       103,783  

Shoprite Holdings Ltd.

    856,660       5,587,600  

SPAR Group Ltd. (The)

    370,403       3,534,530  
   

 

 

 
        23,900,710  
Food Products — 1.0%            

Tiger Brands Ltd.

    323,622       3,293,862  
   

 

 

 
Health Care Providers & Services — 0.9%            

Life Healthcare Group Holdings Ltd.

    2,944,672       2,874,928  
   

 

 

 
Industrial Conglomerates — 1.3%            

Bidvest Group Ltd. (The)

    524,838       4,216,672  
   

 

 

 
Insurance — 7.6%            

Discovery Ltd.

    699,671       4,998,520  

Momentum Metropolitan Holdings

    2,389,362       2,138,138  

Old Mutual Ltd.

    8,021,986       5,298,666  

Rand Merchant Investment Holdings Ltd.

    1,597,299       2,835,138  

Sanlam Ltd.

    2,824,446       9,166,268  
   

 

 

 
      24,436,730  
Internet & Direct Marketing Retail — 24.0%            

Naspers Ltd., Class N

    425,486       77,675,604  
   

 

 

 
Media — 1.4%            

MultiChoice Group Ltd.(b)

    789,603       4,515,879  
   

 

 

 
Metals & Mining — 24.1%            

Anglo American Platinum Ltd.

    89,700       6,693,488  

AngloGold Ashanti Ltd.

    621,558       18,148,594  

Gold Fields Ltd.

    1,342,329       17,357,870  

Harmony Gold Mining Co. Ltd.(b)

    576,868       3,766,391  

Impala Platinum Holdings Ltd.

    1,243,093       11,473,914  
Security   Shares     Value  
Metals & Mining (continued)            

Kumba Iron Ore Ltd.

    121,954     $ 3,822,479  

Northam Platinum Ltd.(b)

    615,381       5,813,723  

Sibanye Stillwater Ltd.(b)

    3,575,416       10,824,649  
   

 

 

 
      77,901,108  
Multiline Retail — 1.1%            

Woolworths Holdings Ltd.

    1,906,401       3,577,333  
   

 

 

 
Oil, Gas & Consumable Fuels — 1.2%            

Exxaro Resources Ltd.

    474,161       3,839,469  
   

 

 

 
Pharmaceuticals — 1.7%            

Aspen Pharmacare Holdings Ltd.(b)

    678,876       5,444,633  
   

 

 

 
Real Estate Management & Development — 1.1%  

NEPI Rockcastle PLC

    750,526       3,512,681  
   

 

 

 
Specialty Retail — 1.5%            

Mr. Price Group Ltd.

    492,345       3,367,693  

Pepkor Holdings Ltd.(c)

    2,768,458       1,585,128  
   

 

 

 
      4,952,821  
Wireless Telecommunication Services — 5.4%  

MTN Group Ltd.

    2,673,099       9,636,016  

Vodacom Group Ltd.

    1,039,922       7,849,175  
   

 

 

 
      17,485,191  
   

 

 

 

Total Common Stocks — 100.1%
(Cost: $431,075,236)

      323,741,343  
   

 

 

 

Short-Term Investments

   

Money Market Funds — 1.4%

   

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    4,402,147       4,406,550  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    130,000       130,000  
   

 

 

 
      4,536,550  
   

 

 

 

Total Short-Term Investments — 1.4%
(Cost: $4,536,550)

 

    4,536,550  
   

 

 

 

Total Investments in Securities — 101.5%
(Cost: $435,611,786)

 

    328,277,893  

Other Assets, Less Liabilities — (1.5)%

      (4,859,565
   

 

 

 

Net Assets — 100.0%

    $   323,418,328  
   

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

Non-income producing security.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

35  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI South Africa ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

 

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 14,423,842     $     $ (10,020,688 )(a)    $ 4,980     $ (1,584   $ 4,406,550       4,402,147     $ 41,529 (b)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

    242,000             (112,000 )(a)                   130,000       130,000       3,724        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 4,980     $ (1,584   $ 4,536,550       $ 45,253     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

FTSE/JSE Top 40 Index

     13        09/17/20      $ 392      $ (3,699
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 3,699  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 182,711  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (1,442
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 350,178      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  36


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI South Africa ETF

 

Fair Value Measurements (continued)

 

                                                                                       

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 323,741,343        $        $        $ 323,741,343  

Money Market Funds

     4,536,550                            4,536,550  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 328,277,893        $        $        $ 328,277,893  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Liabilities

                 

Futures Contracts

   $ (3,699      $        $        $ (3,699
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

37  

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Schedule of Investments

August 31, 2020

  

iShares® MSCI Turkey ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Aerospace & Defense — 4.3%

   

Aselsan Elektronik Sanayi Ve Ticaret AS

    3,461,598     $ 7,639,129  
   

 

 

 
Airlines — 4.0%            

Pegasus Hava Tasimaciligi AS(a)(b)

    289,808           1,803,670  

Turk Hava Yollari AO(a)(b)

    3,684,577       5,287,285  
   

 

 

 
      7,090,955  
Automobiles — 3.2%            

Ford Otomotiv Sanayi AS

    491,623       5,645,080  
   

 

 

 
Banks — 20.0%            

Akbank T.A.S.(a)

    19,095,810       12,689,022  

Turkiye Garanti Bankasi AS(a)

    14,138,392       12,987,570  

Turkiye Is Bankasi AS, Class C(a)

    7,804,922       5,207,524  

Yapi ve Kredi Bankasi AS(a)

    18,087,788       4,989,565  
   

 

 

 
      35,873,681  
Beverages — 4.1%            

Anadolu Efes Biracilik Ve Malt Sanayii AS

    1,475,345       3,895,360  

Coca-Cola Icecek AS

    572,054       3,359,719  
   

 

 

 
      7,255,079  
Building Products — 0.4%            

Trakya Cam Sanayii AS

    1,414,877       755,601  
   

 

 

 
Chemicals — 4.4%            

Petkim Petrokimya Holding AS(a)(b)

    7,547,430       4,010,117  

Sasa Polyester Sanayi AS(a)

    1,401,066       2,871,053  

Soda Sanayii AS

    982,963       909,631  
   

 

 

 
      7,790,801  
Construction & Engineering — 1.6%            

Tekfen Holding AS(b)

    1,429,939       2,881,641  
   

 

 

 
Containers & Packaging — 0.3%            

Anadolu Cam Sanayii AS

    861,282       596,893  
   

 

 

 
Diversified Financial Services — 3.7%            

Haci Omer Sabanci Holding AS(b)

    5,618,074       5,901,306  

Turkiye Sinai Kalkinma Bankasi AS(a)(b)

    4,410,518       653,277  
   

 

 

 
      6,554,583  
Electric Utilities — 1.2%            

Enerjisa Enerji AS(c)

    1,924,124       2,133,558  
   

 

 

 
Equity Real Estate Investment Trusts (REITs) — 1.8%            

Emlak Konut Gayrimenkul Yatirim Ortakligi AS

    13,439,262       3,214,173  
   

 

 

 
Food & Staples Retailing — 17.4%            

BIM Birlesik Magazalar AS

    2,787,605       25,701,726  

Migros Ticaret AS(a)(b)

    561,352       2,991,741  

Sok Marketler Ticaret AS(a)

    1,450,439       2,532,700  
   

 

 

 
      31,226,167  
Food Products — 1.9%            

Ulker Biskuvi Sanayi AS(a)

    1,094,678       3,406,458  
   

 

 

 
Gas Utilities — 0.4%            

Aygaz AS(b)

    457,102       708,729  
   

 

 

 
Health Care Providers & Services — 1.5%            

MLP Saglik Hizmetleri AS(a)(c)

    753,189       1,565,945  

Selcuk Ecza Deposu Ticaret ve Sanayi AS

    1,013,638       1,100,553  
   

 

 

 
      2,666,498  
Security   Shares     Value  
Household Durables — 1.0%            

Vestel Elektronik Sanayi ve Ticaret AS(a)

    702,724     $ 1,753,228  
   

 

 

 
Industrial Conglomerates — 6.6%            

Dogan Sirketler Grubu Holding AS

    8,440,266       2,408,555  

Enka Insaat ve Sanayi AS

    2       2  

KOC Holding AS

    4,655,841       9,426,829  
   

 

 

 
      11,835,386  
Machinery — 0.5%            

Otokar Otomotiv Ve Savunma Sanayi AS

    51,245       974,902  
   

 

 

 
Metals & Mining — 9.2%            

Eregli Demir ve Celik Fabrikalari TAS(b)

    7,005,428       8,301,038  

Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS, Class D

    6,287,618       2,605,957  

Koza Altin Isletmeleri AS(a)(b)

    284,539       3,004,305  

Koza Anadolu Metal Madencilik Isletmeleri AS(a)(b)

    1,505,508       2,628,859  
   

 

 

 
      16,540,159  
Oil, Gas & Consumable Fuels — 4.7%            

Tupras Turkiye Petrol Rafinerileri AS(a)(b)

    766,243       8,329,860  
   

 

 

 
Textiles, Apparel & Luxury Goods — 1.6%            

Aksa Akrilik Kimya Sanayii AS

    1,507,403       1,372,415  

Mavi Giyim Sanayi Ve Ticaret AS,
Class B(a)(c)

    307,832       1,555,265  
   

 

 

 
      2,927,680  
Transportation Infrastructure — 1.4%            

TAV Havalimanlari Holding AS

    1,268,216       2,585,031  
   

 

 

 
Wireless Telecommunication Services — 4.4%  

Turkcell Iletisim Hizmetleri AS

    4,060,851       7,902,077  
   

 

 

 

Total Common Stocks — 99.6%
(Cost: $343,963,248)

 

    178,287,349  
   

 

 

 

Short-Term Investments

   

Money Market Funds — 8.7%

   

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    15,042,151       15,057,193  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    401,000       401,000  
   

 

 

 
      15,458,193  
   

 

 

 

Total Short-Term Investments — 8.7%
(Cost: $15,448,061)

 

    15,458,193  

Total Investments in Securities — 108.3%
(Cost: $359,411,309)

 

    193,745,542  

Other Assets, Less Liabilities — (8.3)%

      (14,798,188
   

 

 

 

Net Assets — 100.0%

    $   178,947,354  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  38


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Turkey ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 37,010,582     $     $ (21,953,929 )(a)    $ (4,651   $ 5,191     $ 15,057,193       15,042,151     $ 1,344,974 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

          401,000 (a)                        401,000       401,000       2,874        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (4,651   $ 5,191     $ 15,458,193       $ 1,347,848     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

           

MSCI Emerging Markets E-Mini Index

     11        09/18/20      $ 605      $ 22,783  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 22,783  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 116,904  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 22,783  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 352,018      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.    

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

39  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI Turkey ETF

 

Fair Value Measurements (continued)

 

                                                                                       
         
      Level 1        Level 2        Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 178,287,349        $        $        $ 178,287,349  

Money Market Funds

     15,458,193                            15,458,193  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 193,745,542        $        $        $ 193,745,542  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 22,783        $        $        $ 22,783  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  40


 

Schedule of Investments

August 31, 2020

  

iShares® MSCI USA Equal Weighted ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 1.9%  

Boeing Co. (The)

    2,145     $ 368,554  

General Dynamics Corp.

    2,381             355,602  

HEICO Corp.

    1,441       158,395  

HEICO Corp., Class A

    2,411       215,495  

Howmet Aerospace Inc.

    21,207       371,547  

Huntington Ingalls Industries Inc.

    2,230       337,890  

L3Harris Technologies Inc.

    2,004       362,203  

Lockheed Martin Corp.

    931       363,332  

Northrop Grumman Corp.

    1,074       367,963  

Raytheon Technologies Corp.

    5,890       359,290  

Teledyne Technologies Inc.(a)

    1,146       359,397  

Textron Inc.

    9,628       379,632  

TransDigm Group Inc.

    752       375,752  
   

 

 

 
      4,375,052  
Air Freight & Logistics — 0.8%            

CH Robinson Worldwide Inc.

    3,804       373,933  

Expeditors International of Washington Inc.

    4,165       368,144  

FedEx Corp.

    1,746       383,841  

United Parcel Service Inc., Class B

    2,264       370,436  

XPO Logistics Inc.(a)

    4,341       383,180  
   

 

 

 
      1,879,534  
Airlines — 0.4%            

Delta Air Lines Inc.

    13,121       404,783  

Southwest Airlines Co.

    10,594       398,122  
   

 

 

 
      802,905  
Auto Components — 0.7%            

Aptiv PLC

    4,250       366,010  

Autoliv Inc.

    5,108       400,161  

BorgWarner Inc.

    8,853       359,343  

Lear Corp.

    3,196       364,120  
   

 

 

 
      1,489,634  
Automobiles — 0.5%            

Ford Motor Co.

    52,846       360,410  

General Motors Co.

    12,425       368,153  

Tesla Inc.(a)

    966       481,377  
   

 

 

 
      1,209,940  
Banks — 3.2%            

Bank of America Corp.

    14,237       366,460  

Citigroup Inc.

    7,219       369,035  

Citizens Financial Group Inc.

    14,639       378,711  

Comerica Inc.

    9,150       361,700  

East West Bancorp. Inc.

    9,757       358,863  

Fifth Third Bancorp.

    18,009       372,066  

First Republic Bank/CA

    3,167       357,586  

Huntington Bancshares Inc./OH

    38,136       358,860  

JPMorgan Chase & Co.

    3,684       369,100  

KeyCorp.

    29,832       367,530  

M&T Bank Corp.

    3,477       359,035  

People’s United Financial Inc.

    33,616       355,657  

PNC Financial Services Group Inc. (The)

    3,412       379,414  

Regions Financial Corp.

    31,791       367,504  

Signature Bank/New York NY

    3,558       345,233  

SVB Financial Group(a)

    1,494       381,538  

Truist Financial Corp.

    9,567       371,295  

U.S. Bancorp

    10,040       365,456  

Wells Fargo & Co.

    15,083       364,254  
Security   Shares     Value  
Banks (continued)            

Zions Bancorp. N.A.

    11,032     $ 354,789  
   

 

 

 
          7,304,086  
Beverages — 1.1%            

Brown-Forman Corp., Class B, NVS

    4,992       365,265  

Coca-Cola Co. (The)

    7,664       379,598  

Constellation Brands Inc., Class A

    2,017       372,096  

Keurig Dr Pepper Inc.

    12,374       369,116  

Molson Coors Beverage Co., Class B

    9,592       361,043  

Monster Beverage Corp.(a)

    4,392       368,313  

PepsiCo Inc.

    2,661       372,700  
   

 

 

 
      2,588,131  
Biotechnology — 2.6%            

AbbVie Inc.

    3,778       361,819  

Alexion Pharmaceuticals Inc.(a)

    3,570       407,765  

Alnylam Pharmaceuticals Inc.(a)

    2,646       350,965  

Amgen Inc.

    1,510       382,513  

Biogen Inc.(a)

    1,297       373,069  

BioMarin Pharmaceutical Inc.(a)

    4,733       369,316  

Exact Sciences Corp.(a)(b)

    4,449       334,965  

Gilead Sciences Inc.

    5,526       368,860  

Incyte Corp.(a)

    3,771       363,336  

Ionis Pharmaceuticals Inc.(a)

    6,944       378,448  

Moderna Inc.(a)

    5,339       346,448  

Neurocrine Biosciences Inc.(a)

    3,209       373,592  

Regeneron Pharmaceuticals Inc.(a)

    577       357,700  

Sarepta Therapeutics Inc.(a)

    2,442       357,558  

Seattle Genetics Inc.(a)

    2,302       364,499  

Vertex Pharmaceuticals Inc.(a)

    1,344       375,137  
   

 

 

 
      5,865,990  
Building Products — 1.5%            

Allegion PLC

    3,605       372,721  

AO Smith Corp.

    7,340       359,440  

Carrier Global Corp.

    12,412       370,498  

Fortune Brands Home & Security Inc.

    4,339       364,823  

Johnson Controls International PLC

    9,024       367,548  

Lennox International Inc.

    1,298       363,868  

Masco Corp.

    6,206       361,810  

Owens Corning

    5,413       366,135  

Trane Technologies PLC

    3,092       366,062  
   

 

 

 
      3,292,905  
Capital Markets — 4.7%            

Ameriprise Financial Inc.

    2,315       362,992  

Apollo Global Management Inc.

    7,613       356,821  

Bank of New York Mellon Corp. (The)

    9,815       362,959  

BlackRock Inc.(c)

    616       366,021  

Blackstone Group Inc. (The), Class A

    6,724       356,036  

Carlyle Group Inc. (The)

    13,357       344,744  

Cboe Global Markets Inc.

    4,078       374,320  

Charles Schwab Corp. (The)

    10,167       361,233  

CME Group Inc.

    2,108       370,734  

E*TRADE Financial Corp.

    6,813       368,583  

FactSet Research Systems Inc.

    1,006       352,502  

Franklin Resources Inc.

    16,754       352,839  

Goldman Sachs Group Inc. (The)

    1,788       366,308  

Intercontinental Exchange Inc.

    3,507       372,549  

Invesco Ltd.

    35,146       358,489  

KKR & Co. Inc.

    10,150       363,573  

MarketAxess Holdings Inc.

    738       358,624  

Moody’s Corp.

    1,289       379,791  
 

 

 

41  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI USA Equal Weighted ETF

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  
Capital Markets (continued)             

Morgan Stanley

    7,067      $ 369,321  

MSCI Inc.(b)

    978        365,058  

Nasdaq Inc.

    2,796        375,838  

Northern Trust Corp.

    4,374        358,187  

Raymond James Financial Inc.

    4,850        367,242  

S&P Global Inc.

    1,014        371,550  

SEI Investments Co.

    6,946        363,693  

State Street Corp.

    5,153        350,868  

T Rowe Price Group Inc.

    2,647        368,489  

TD Ameritrade Holding Corp.

    9,396        360,618  

Tradeweb Markets Inc., Class A

    6,576        376,739  
    

 

 

 
         10,556,721  
Chemicals — 2.9%             

Air Products & Chemicals Inc.

    1,265        369,709  

Albemarle Corp.

    3,936        358,215  

Axalta Coating Systems Ltd.(a)

    15,293        364,738  

Celanese Corp.

    3,621        366,264  

CF Industries Holdings Inc.

    10,812        352,795  

Corteva Inc.

    12,712        362,928  

Dow Inc.

    8,133        366,961  

DuPont de Nemours Inc.

    6,452        359,763  

Eastman Chemical Co.

    5,051        369,279  

Ecolab Inc.

    1,871        368,737  

FMC Corp.

    3,345        357,447  

International Flavors & Fragrances Inc.

    2,976        368,399  

Linde PLC

    1,468        366,618  

LyondellBasell Industries NV, Class A

    5,368        351,497  

Mosaic Co. (The)

    20,248        369,121  

PPG Industries Inc.

    3,060        368,424  

RPM International Inc.

    4,274        362,307  

Sherwin-Williams Co. (The)

    546        366,393  
    

 

 

 
       6,549,595  
Commercial Services & Supplies — 1.0%  

Cintas Corp.

    1,140        379,894  

Copart Inc.(a)

    3,612        373,192  

Republic Services Inc.

    4,072        377,556  

Rollins Inc.(b)

    6,679        368,280  

Waste Connections Inc.

    3,646        364,709  

Waste Management Inc.

    3,284        374,376  
    

 

 

 
       2,238,007  
Communications Equipment — 0.8%  

Arista Networks Inc.(a)

    1,645        367,575  

Cisco Systems Inc.

    8,671        366,089  

F5 Networks Inc.(a)

    2,696        356,762  

Juniper Networks Inc.

    15,242        381,050  

Motorola Solutions Inc.

    2,413        373,412  
    

 

 

 
       1,844,888  
Construction & Engineering — 0.2%  

Jacobs Engineering Group Inc.

    4,044        365,052  
    

 

 

 
Construction Materials — 0.3%             

Martin Marietta Materials Inc.

    1,711        347,111  

Vulcan Materials Co.

    2,858        342,960  
    

 

 

 
       690,071  
Consumer Finance — 0.8%  

Ally Financial Inc.

    16,302        372,990  

American Express Co.

    3,747        380,658  

Capital One Financial Corp.

    5,526        381,460  

Discover Financial Services

    7,145        379,256  
Security   Shares     Value  
Consumer Finance (continued)            

Synchrony Financial

    15,058     $ 373,589  
   

 

 

 
          1,887,953  
Containers & Packaging — 1.3%  

Amcor PLC(a)

    32,157       355,656  

Avery Dennison Corp.

    3,178       366,709  

Ball Corp.

    4,785       384,571  

Crown Holdings Inc.(a)

    4,875       374,644  

International Paper Co.

    10,029       363,752  

Packaging Corp. of America

    3,700       374,588  

Sealed Air Corp.

    8,731       343,128  

Westrock Co.

    12,412       376,456  
   

 

 

 
      2,939,504  
Distributors — 0.3%            

Genuine Parts Co.

    3,902       368,505  

LKQ Corp.(a)(b)

    11,584       367,676  
   

 

 

 
      736,181  
Diversified Financial Services — 0.5%  

Berkshire Hathaway Inc., Class B(a)

    1,752       382,006  

Equitable Holdings Inc.

    17,305       366,693  

Voya Financial Inc.

    7,152       371,260  
   

 

 

 
      1,119,959  
Diversified Telecommunication Services — 0.6%  

AT&T Inc.

    12,212       364,039  

CenturyLink Inc.

    32,157       345,688  

Liberty Global PLC, Class A(a)

    4,946       115,588  

Liberty Global PLC, Class C, NVS(a)

    11,789       271,265  

Verizon Communications Inc.

    6,148       364,392  
   

 

 

 
      1,460,972  
Electric Utilities — 2.7%            

Alliant Energy Corp.

    6,775       366,866  

American Electric Power Co. Inc.

    4,487       353,710  

Duke Energy Corp.

    4,446       357,192  

Edison International

    6,948       364,631  

Entergy Corp.

    3,668       363,645  

Evergy Inc.

    7,048       375,094  

Eversource Energy

    4,211       360,925  

Exelon Corp.

    9,807       361,976  

FirstEnergy Corp.

    12,677       362,435  

NextEra Energy Inc.

    1,286       359,013  

NRG Energy Inc.

    10,253       352,806  

OGE Energy Corp.

    11,317       360,560  

PG&E Corp.(a)

    39,334       364,233  

Pinnacle West Capital Corp.

    4,776       350,320  

PPL Corp.

    12,811       353,968  

Southern Co. (The)

    6,826       356,181  

Xcel Energy Inc.

    5,216       362,381  
   

 

 

 
      6,125,936  
Electrical Equipment — 0.8%            

AMETEK Inc.

    3,594       361,916  

Eaton Corp. PLC

    3,613       368,887  

Emerson Electric Co.

    5,314       369,163  

Rockwell Automation Inc.

    1,588       366,082  

Sensata Technologies Holding PLC(a)

    8,936       372,095  
   

 

 

 
      1,838,143  
Electronic Equipment, Instruments & Components — 1.8%  

Amphenol Corp., Class A

    3,327       365,305  

Arrow Electronics Inc.(a)

    4,764       374,260  

CDW Corp./DE

    3,242       368,453  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  42


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI USA Equal Weighted ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Electronic Equipment, Instruments & Components (continued)  

Cognex Corp.

    5,343     $ 369,682  

Corning Inc.

    11,265               365,662  

FLIR Systems Inc.

    9,752       359,849  

IPG Photonics Corp.(a)

    2,354       380,712  

Keysight Technologies Inc.(a)

    3,491       343,933  

TE Connectivity Ltd.

    3,855       372,393  

Trimble Inc.(a)

    7,167       375,623  

Zebra Technologies Corp., Class A(a)

    1,282       367,331  
   

 

 

 
      4,043,203  
Energy Equipment & Services — 0.6%  

Baker Hughes Co.

    22,232       317,473  

Halliburton Co.

    22,017       356,235  

National Oilwell Varco Inc.

    29,068       348,816  

Schlumberger Ltd.

    18,411       349,993  
   

 

 

 
      1,372,517  
Entertainment — 1.4%            

Activision Blizzard Inc.

    4,429       369,910  

Electronic Arts Inc.(a)

    2,559       356,904  

Liberty Media Corp.-Liberty Formula One, Class C, NVS(a)

    9,705       378,301  

Live Nation Entertainment Inc.(a)(b)

    7,041       399,929  

Netflix Inc.(a)

    749       396,640  

Roku Inc.(a)

    2,464       427,455  

Take-Two Interactive Software Inc.(a)

    2,103       360,012  

Walt Disney Co. (The)

    2,841       374,643  
   

 

 

 
      3,063,794  
Equity Real Estate Investment Trusts (REITs) — 6.1%  

Alexandria Real Estate Equities Inc.

    2,118       356,629  

American Tower Corp.

    1,480       368,742  

AvalonBay Communities Inc.

    2,386       377,131  

Boston Properties Inc.

    4,313       374,670  

Camden Property Trust

    4,180       380,129  

Crown Castle International Corp.

    2,232       364,374  

Digital Realty Trust Inc.

    2,377       369,980  

Duke Realty Corp.

    9,582       369,386  

Equinix Inc.

    466       368,037  

Equity LifeStyle Properties Inc.

    5,598       371,091  

Equity Residential

    6,705       378,497  

Essex Property Trust Inc.

    1,723       373,047  

Extra Space Storage Inc.

    3,552       378,466  

Federal Realty Investment Trust

    4,646       368,149  

Healthpeak Properties Inc.

    13,451       371,786  

Host Hotels & Resorts Inc.

    33,647       377,856  

Invitation Homes Inc.

    12,650       362,169  

Iron Mountain Inc.

    12,102       364,149  

Medical Properties Trust Inc.

    19,477       361,883  

Mid-America Apartment Communities Inc.

    3,205       375,370  

National Retail Properties Inc.

    10,469       371,021  

Omega Healthcare Investors Inc.

    12,175       377,060  

Prologis Inc.

    3,568       363,436  

Public Storage

    1,839       390,604  

Realty Income Corp.

    6,046       375,033  

Regency Centers Corp.

    9,031       358,621  

SBA Communications Corp.

    1,217       372,487  

Simon Property Group Inc.

    5,683       385,592  

Sun Communities Inc.

    2,521       375,831  

UDR Inc.

    10,622       369,752  

Ventas Inc.

    8,993       370,602  

VEREIT Inc.

    55,598       373,619  

VICI Properties Inc.

    15,710       350,961  
Security   Shares     Value  
Equity Real Estate Investment Trusts (REITs) (continued)  

Vornado Realty Trust

    10,613     $ 380,264  

Welltower Inc.

    6,729       387,052  

Weyerhaeuser Co.

    12,532       379,845  

WP Carey Inc.

    5,233       363,013  
   

 

 

 
        13,756,334  
Food & Staples Retailing — 0.8%            

Costco Wholesale Corp.

    1,065       370,258  

Kroger Co. (The)

    10,024       357,656  

Sysco Corp.

    6,251       375,935  

Walgreens Boots Alliance Inc.

    9,020       342,941  

Walmart Inc.

    2,742       380,727  
   

 

 

 
      1,827,517  
Food Products — 2.4%            

Archer-Daniels-Midland Co.

    8,240       368,822  

Bunge Ltd.

    7,776       354,741  

Campbell Soup Co.

    6,931       364,640  

Conagra Brands Inc.

    9,569       367,067  

General Mills Inc.

    5,632       360,166  

Hershey Co. (The)

    2,457       365,209  

Hormel Foods Corp.

    6,925       353,037  

Ingredion Inc.

    4,659       374,770  

JM Smucker Co. (The)

    3,260       391,787  

Kellogg Co.

    5,273       373,908  

Kraft Heinz Co. (The)

    10,247       359,055  

Lamb Weston Holdings Inc.

    5,667       356,171  

McCormick & Co. Inc./MD, NVS

    1,793       369,717  

Mondelez International Inc., Class A

    6,396       373,654  

Tyson Foods Inc., Class A

    5,719       359,153  
   

 

 

 
      5,491,897  
Gas Utilities — 0.3%            

Atmos Energy Corp.

    3,537       353,063  

UGI Corp.

    10,545       364,119  
   

 

 

 
      717,182  
Health Care Equipment & Supplies — 3.9%  

Abbott Laboratories

    3,613       395,515  

ABIOMED Inc.(a)(b)

    1,155       355,301  

Align Technology Inc.(a)

    1,204       357,564  

Baxter International Inc.

    4,380       381,367  

Becton Dickinson and Co.

    1,386       336,479  

Boston Scientific Corp.(a)

    9,226       378,450  

Cooper Companies Inc. (The)

    1,188       373,483  

Danaher Corp.

    1,763       364,007  

Dentsply Sirona Inc.

    8,538       383,100  

DexCom Inc.(a)

    839       356,919  

Edwards Lifesciences Corp.(a)

    4,609       395,637  

Hologic Inc.(a)

    5,416       323,444  

IDEXX Laboratories Inc.(a)

    952       372,289  

Insulet Corp.(a)

    1,731       377,791  

Intuitive Surgical Inc.(a)

    525       383,691  

Masimo Corp.(a)

    1,664       372,736  

Medtronic PLC

    3,601       386,999  

ResMed Inc.

    1,979       357,764  

Steris PLC

    2,313       369,247  

Stryker Corp.

    1,951       386,610  

Teleflex Inc.

    976       383,519  

Varian Medical Systems Inc.(a)

    2,099       364,533  

West Pharmaceutical Services Inc.

    1,321       375,111  

Zimmer Biomet Holdings Inc.

    2,645       372,628  
   

 

 

 
      8,904,184  
 

 

 

43  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI USA Equal Weighted ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Health Care Providers & Services — 2.5%  

AmerisourceBergen Corp.

    3,570     $ 346,397  

Anthem Inc.

    1,281       360,627  

Cardinal Health Inc.

    7,031       356,894  

Centene Corp.(a)

    5,720       350,750  

Cigna Corp.

    2,003       355,272  

CVS Health Corp.

    5,562       345,511  

DaVita Inc.(a)

    4,211       365,346  

HCA Healthcare Inc.

    2,729       370,380  

Henry Schein Inc.(a)

    5,573       370,270  

Humana Inc.

    869       360,783  

Laboratory Corp. of America Holdings(a)

    1,987       349,215  

McKesson Corp.

    2,368       363,346  

Molina Healthcare Inc.(a)

    1,876       347,004  

Quest Diagnostics Inc.

    3,086       343,287  

UnitedHealth Group Inc.

    1,151       359,745  

Universal Health Services Inc., Class B

    3,245       358,086  
   

 

 

 
          5,702,913  
Health Care Technology — 0.5%  

Cerner Corp.

    5,012       367,731  

Teladoc Health Inc.(a)

    1,677       361,712  

Veeva Systems Inc., Class A(a)

    1,360       383,887  
   

 

 

 
      1,113,330  
Hotels, Restaurants & Leisure — 2.6%  

Aramark

    15,456       425,967  

Carnival Corp.

    24,867       409,808  

Chipotle Mexican Grill Inc.(a)

    298       390,464  

Darden Restaurants Inc.

    4,546       394,002  

Domino’s Pizza Inc.

    876       358,249  

Hilton Worldwide Holdings Inc.

    4,297       388,277  

Las Vegas Sands Corp.

    7,648       387,830  

Marriott International Inc./MD, Class A

    3,862       397,438  

McDonald’s Corp.

    1,733       370,030  

MGM Resorts International

    17,371       390,848  

Royal Caribbean Cruises Ltd.

    5,943       409,116  

Starbucks Corp.

    4,677       395,066  

Vail Resorts Inc.(b)

    1,721       374,610  

Wynn Resorts Ltd.

    4,468       390,727  

Yum! Brands Inc.

    3,865       370,460  
   

 

 

 
      5,852,892  
Household Durables — 1.3%            

DR Horton Inc.

    4,904       349,998  

Garmin Ltd.

    3,491       361,703  

Lennar Corp., Class A

    4,727       353,674  

Mohawk Industries Inc.(a)

    4,026       371,721  

Newell Brands Inc.

    21,675       346,366  

NVR Inc.(a)

    87       362,646  

PulteGroup Inc.

    7,863       350,611  

Whirlpool Corp.

    1,969       349,931  
   

 

 

 
      2,846,650  
Household Products — 0.8%            

Church & Dwight Co. Inc.

    3,770       361,279  

Clorox Co. (The)

    1,593       356,036  

Colgate-Palmolive Co.

    4,658       369,193  

Kimberly-Clark Corp.

    2,309       364,268  

Procter & Gamble Co. (The)

    2,674       369,894  
   

 

 

 
      1,820,670  
Independent Power and Renewable Electricity Producers — 0.3%  

AES Corp. (The)

    20,605       365,739  
Security   Shares     Value  
Independent Power and Renewable Electricity Producers (continued)  

Vistra Corp.

    18,401     $ 353,851  
   

 

 

 
      719,590  
Industrial Conglomerates — 0.7%            

3M Co.

    2,214       360,926  

General Electric Co.

    56,905       360,778  

Honeywell International Inc.

    2,315       383,248  

Roper Technologies Inc.

    836       357,131  
   

 

 

 
          1,462,083  
Insurance — 5.0%            

Aflac Inc.

    9,804       356,081  

Alleghany Corp.

    683       378,764  

Allstate Corp. (The)

    3,851       358,143  

American Financial Group Inc./OH

    5,489       366,940  

American International Group Inc.

    12,159       354,313  

Aon PLC, Class A

    1,838       367,582  

Arch Capital Group Ltd.(a)

    11,562       364,665  

Arthur J Gallagher & Co.

    3,405       358,546  

Assurant Inc.

    2,939       357,265  

Athene Holding Ltd., Class A(a)

    9,941       363,443  

Brown & Brown Inc.

    7,899       366,514  

Chubb Ltd.

    2,930       366,250  

Cincinnati Financial Corp.

    4,642       368,621  

Erie Indemnity Co., Class A, NVS

    1,630       347,907  

Everest Re Group Ltd.

    1,670       367,534  

Fidelity National Financial Inc.

    11,258       369,600  

Globe Life Inc.

    4,415       364,149  

Hartford Financial Services Group Inc. (The)

    8,901       360,045  

Lincoln National Corp.

    9,971       359,455  

Loews Corp.

    10,057       360,644  

Markel Corp.(a)

    338       367,349  

Marsh & McLennan Companies Inc.

    3,127       359,324  

MetLife Inc.

    9,504       365,524  

Principal Financial Group Inc.

    8,310       349,934  

Progressive Corp. (The)

    4,016       381,681  

Prudential Financial Inc.

    5,256       356,199  

Reinsurance Group of America Inc.

    3,897       357,277  

RenaissanceRe Holdings Ltd.

    2,077       381,628  

Travelers Companies Inc. (The)

    3,207       372,140  

Willis Towers Watson PLC

    1,786       367,077  

WR Berkley Corp.

    5,988       371,555  
   

 

 

 
      11,286,149  
Interactive Media & Services — 1.3%  

Alphabet Inc., Class A(a)

    117       190,655  

Alphabet Inc., Class C, NVS(a)

    118       192,833  

Facebook Inc., Class A(a)

    1,383       405,496  

IAC/InterActiveCorp.(a)(b)

    2,853       379,421  

Match Group Inc(a)(b)

    3,181       355,254  

Pinterest Inc., Class A(a)

    10,514       386,810  

Snap Inc., Class A, NVS(a)

    16,563       374,158  

Twitter Inc.(a)

    9,335       378,814  

Zillow Group Inc., Class C, NVS(a)

    4,331       371,427  
   

 

 

 
      3,034,868  
Internet & Direct Marketing Retail — 1.0%  

Amazon.com Inc.(a)

    111       383,057  

Booking Holdings Inc.(a)

    205       391,642  

eBay Inc.

    6,291       344,621  

Expedia Group Inc.

    4,141       406,439  

MercadoLibre Inc.(a)

    299       349,409  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  44


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI USA Equal Weighted ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Internet & Direct Marketing Retail (continued)  

Wayfair Inc., Class A(a)(b)

    1,090     $ 323,250  
   

 

 

 
          2,198,418  
IT Services — 4.5%            

Accenture PLC, Class A

    1,547       371,172  

Akamai Technologies Inc.(a)

    3,324       387,013  

Automatic Data Processing Inc.

    2,614       363,581  

Black Knight Inc.(a)

    4,503       378,702  

Booz Allen Hamilton Holding Corp.

    4,212       370,909  

Broadridge Financial Solutions Inc.

    2,644       363,286  

Cognizant Technology Solutions Corp., Class A

    5,428       362,916  

EPAM Systems Inc.(a)

    1,195       390,884  

Fidelity National Information Services Inc.

    2,546       384,064  

Fiserv Inc.(a)

    3,615       359,982  

FleetCor Technologies Inc.(a)

    1,483       372,900  

Gartner Inc.(a)

    2,845       369,338  

Global Payments Inc.

    2,143       378,497  

GoDaddy Inc., Class A(a)

    4,445       371,958  

International Business Machines Corp.

    2,932       361,545  

Jack Henry & Associates Inc.

    2,108       348,705  

Leidos Holdings Inc.

    3,921       354,811  

Mastercard Inc., Class A

    1,092       391,143  

MongoDB Inc.(a)(b)

    1,707       399,097  

Okta Inc.(a)

    1,769       380,990  

Paychex Inc.

    4,897       374,474  

PayPal Holdings Inc.(a)

    1,887       385,212  

Square Inc., Class A(a)

    2,414       385,178  

Twilio Inc., Class A(a)(b)

    1,446       390,073  

VeriSign Inc.(a)

    1,761       378,263  

Visa Inc., Class A(b)

    1,806       382,854  

Western Union Co. (The)

    15,319       361,375  
   

 

 

 
      10,118,922  
Leisure Products — 0.3%            

Hasbro Inc.

    4,622       364,861  

Peloton Interactive Inc., Class A(a)

    5,371       411,794  
   

 

 

 
      776,655  
Life Sciences Tools & Services — 1.5%  

Agilent Technologies Inc.

    3,706       372,157  

Avantor Inc.(a)

    17,413       393,011  

Bio-Rad Laboratories Inc., Class A(a)

    697       354,487  

Illumina Inc.(a)

    1,027       366,865  

IQVIA Holdings Inc.(a)

    2,267       371,221  

Mettler-Toledo International Inc.(a)

    374       363,072  

PerkinElmer Inc.

    3,085       363,166  

Thermo Fisher Scientific Inc.

    863       370,210  

Waters Corp.(a)

    1,673       361,803  
   

 

 

 
      3,315,992  
Machinery — 2.7%            

Caterpillar Inc.

    2,630       374,275  

Cummins Inc.

    1,719       356,263  

Deere & Co.

    1,891       397,224  

Dover Corp.

    3,279       360,165  

Fortive Corp.

    5,084       366,607  

IDEX Corp.

    2,073       373,617  

Illinois Tool Works Inc.

    1,854       366,258  

Ingersoll Rand Inc.(a)

    10,545       369,708  

Nordson Corp.

    1,778       331,579  

Otis Worldwide Corp.

    5,770       362,933  

PACCAR Inc.

    4,120       353,661  

Parker-Hannifin Corp.

    1,761       362,784  
Security   Shares     Value  
Machinery (continued)            

Pentair PLC

    7,979     $ 360,172  

Snap-on Inc.

    2,416       358,220  

Stanley Black & Decker Inc.

    2,284       368,409  

Westinghouse Air Brake Technologies Corp.

    5,498       365,892  

Xylem Inc./NY

    4,574       366,743  
   

 

 

 
          6,194,510  
Media — 2.3%            

Altice USA Inc., Class A(a)

    13,446       370,841  

Cable One Inc.

    194       357,024  

Charter Communications Inc., Class A(a)

    594       365,672  

Comcast Corp., Class A

    8,381       375,553  

Discovery Inc., Class A(a)(b)

    5,727       126,366  

Discovery Inc., Class C, NVS(a)

    11,566       230,973  

DISH Network Corp., Class A(a)

    10,662       378,714  

Fox Corp., Class A, NVS

    9,384       261,438  

Fox Corp., Class B(a)

    4,648       129,214  

Interpublic Group of Companies Inc. (The)

    19,796       351,577  

Liberty Broadband Corp., Class A(a)

    496       68,542  

Liberty Broadband Corp., Class C, NVS(a)

    2,110       295,590  

Liberty Media Corp.-Liberty SiriusXM, Class A(a)

    3,467       125,887  

Liberty Media Corp.-Liberty SiriusXM, Class C, NVS(a)

    6,891       248,042  

News Corp., Class A, NVS

    23,854       360,672  

Omnicom Group Inc.

    6,757       365,486  

Sirius XM Holdings Inc.(b)

    61,849       363,054  

ViacomCBS Inc., Class B, NVS

    13,289       370,099  
   

 

 

 
      5,144,744  
Metals & Mining — 0.7%            

Freeport-McMoRan Inc.(a)

    24,301       379,339  

Newmont Corp.

    5,503       370,242  

Nucor Corp.

    7,929       360,452  

Steel Dynamics Inc.

    12,034       355,244  
   

 

 

 
      1,465,277  
Mortgage Real Estate Investment — 0.3%  

AGNC Investment Corp.

    26,044       367,481  

Annaly Capital Management Inc.

    48,995       360,113  
   

 

 

 
      727,594  
Multi-Utilities — 1.6%            

Ameren Corp.

    4,474       353,938  

CenterPoint Energy Inc.

    17,929       359,835  

CMS Energy Corp.

    5,983       361,912  

Consolidated Edison Inc.

    4,944       352,705  

Dominion Energy Inc.

    4,658       365,373  

DTE Energy Co.

    3,103       368,233  

NiSource Inc.

    15,489       343,236  

Public Service Enterprise Group Inc.

    6,681       349,015  

Sempra Energy

    2,832       350,177  

WEC Energy Group Inc.

    3,958       372,369  
   

 

 

 
      3,576,793  
Multiline Retail — 0.5%            

Dollar General Corp.

    1,814       366,210  

Dollar Tree Inc.(a)

    3,640       350,423  

Target Corp.

    2,354       355,949  
   

 

 

 
      1,072,582  
Oil, Gas & Consumable Fuels — 2.6%  

Cabot Oil & Gas Corp.

    18,062       342,636  

Cheniere Energy Inc.(a)

    7,025       365,651  

Chevron Corp.

    4,203       352,758  

Concho Resources Inc.

    7,258       377,271  
 

 

 

45  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI USA Equal Weighted ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Oil, Gas & Consumable Fuels (continued)  

ConocoPhillips

    9,157     $ 346,959  

Diamondback Energy Inc.

    8,385       326,680  

EOG Resources Inc.

    7,960       360,906  

Exxon Mobil Corp.

    8,652       345,561  

Hess Corp.

    7,487       344,701  

Kinder Morgan Inc./DE

    25,712       355,340  

Marathon Petroleum Corp.

    9,765       346,267  

Occidental Petroleum Corp.

    26,270       334,680  

ONEOK Inc.

    13,031       358,092  

Phillips 66

    5,911       345,616  

Pioneer Natural Resources Co.

    3,463       359,909  

Valero Energy Corp.

    6,691       351,880  

Williams Companies Inc. (The)

    16,769       348,124  
   

 

 

 
          5,963,031  
Personal Products — 0.2%            

Estee Lauder Companies Inc. (The), Class A

    1,708       378,698  
   

 

 

 
Pharmaceuticals — 1.8%            

Bristol-Myers Squibb Co.

    5,755       357,961  

Catalent Inc.(a)

    4,167       385,447  

Elanco Animal Health Inc.(a)

    14,072       408,932  

Eli Lilly & Co.

    2,384       353,762  

Jazz Pharmaceuticals PLC(a)

    2,922       392,688  

Johnson & Johnson

    2,414       370,332  

Merck & Co. Inc.

    4,270       364,103  

Mylan NV(a)

    21,990       360,196  

Perrigo Co. PLC

    6,757       353,391  

Pfizer Inc.

    9,489       358,589  

Zoetis Inc.

    2,289       366,469  
   

 

 

 
      4,071,870  
Professional Services — 1.1%            

CoStar Group Inc.(a)

    439       372,536  

Equifax Inc.

    2,244       377,598  

IHS Markit Ltd.

    4,375       349,650  

Nielsen Holdings PLC

    22,762       347,803  

Robert Half International Inc.

    6,402       340,586  

TransUnion

    4,290       372,029  

Verisk Analytics Inc.

    1,939       361,953  
   

 

 

 
      2,522,155  
Real Estate Management & Development — 0.3%  

CBRE Group Inc., Class A(a)

    8,227       386,916  

Jones Lang LaSalle Inc.

    3,753       386,709  
   

 

 

 
      773,625  
Road & Rail — 1.5%            

AMERCO

    1,038       368,376  

CSX Corp.

    4,903       374,884  

JB Hunt Transport Services Inc.

    2,626       369,058  

Kansas City Southern

    2,009       365,718  

Knight-Swift Transportation Holdings Inc.

    8,128       369,499  

Norfolk Southern Corp.

    1,768       375,753  

Old Dominion Freight Line Inc.

    1,852       374,437  

Uber Technologies Inc.(a)

    12,340       414,994  

Union Pacific Corp.

    1,901       365,829  
   

 

 

 
      3,378,548  
Semiconductors & Semiconductor Equipment — 3.3%  

Advanced Micro Devices Inc.(a)

    4,477       406,601  

Analog Devices Inc.

    3,073       359,172  

Applied Materials Inc.

    5,512       339,539  

Broadcom Inc.

    1,103       382,907  
Security   Shares     Value  
Semiconductors & Semiconductor Equipment (continued)  

Intel Corp.

    7,512     $ 382,736  

KLA Corp.

    1,724       353,661  

Lam Research Corp.

    975       327,932  

Marvell Technology Group Ltd.

    10,965       425,223  

Maxim Integrated Products Inc.

    5,265       360,337  

Microchip Technology Inc.

    3,358       368,373  

Micron Technology Inc.(a)

    8,242       375,093  

NVIDIA Corp.

    748       400,165  

NXP Semiconductors NV

    2,934       368,980  

ON Semiconductor Corp.(a)

    16,762       358,204  

Qorvo Inc.(a)

    2,741       351,588  

QUALCOMM Inc.

    3,270       389,457  

Skyworks Solutions Inc.

    2,556       370,237  

Teradyne Inc.

    4,023       341,834  

Texas Instruments Inc.

    2,622       372,717  

Xilinx Inc.

    3,546       369,351  
   

 

 

 
          7,404,107  
Software — 6.2%            

Adobe Inc.(a)

    786       403,524  

ANSYS Inc.(a)

    1,136       385,115  

Autodesk Inc.(a)

    1,504       369,533  

Avalara Inc.(a)

    2,974       393,787  

Cadence Design Systems Inc.(a)

    3,345       370,994  

CDK Global Inc.

    7,843       365,641  

Citrix Systems Inc.

    2,584       375,197  

Coupa Software Inc.(a)

    1,216       398,532  

Crowdstrike Holdings Inc., Class A(a)

    3,357       422,076  

Datadog Inc., Class A(a)

    4,402       367,787  

DocuSign Inc.(a)

    1,744       388,912  

Dropbox Inc., Class A(a)

    18,027       381,632  

Dynatrace Inc.(a)

    9,240       408,685  

Fair Isaac Corp.(a)

    849       357,251  

Fortinet Inc.(a)

    2,803       370,010  

Guidewire Software Inc.(a)

    3,298       370,398  

Intuit Inc.

    1,169       403,761  

Microsoft Corp.

    1,731       390,392  

NortonLifeLock Inc.

    16,001       376,343  

Oracle Corp.

    6,460       369,641  

Palo Alto Networks Inc.(a)

    1,347       346,731  

Paycom Software Inc.(a)

    1,239       371,031  

PTC Inc.(a)

    4,100       374,781  

RingCentral Inc., Class A(a)

    1,259       366,079  

salesforce.com Inc.(a)

    1,774       483,681  

ServiceNow Inc.(a)

    831       400,559  

Slack Technologies Inc., Class A(a)(b)

    12,708       417,331  

Splunk Inc.(a)

    1,857       407,296  

SS&C Technologies Holdings Inc.

    5,822       370,978  

Synopsys Inc.(a)

    1,832       405,422  

Trade Desk Inc. (The), Class A(a)

    782       376,377  

Tyler Technologies Inc.(a)

    1,074       370,863  

VMware Inc., Class A(a)

    2,607       376,555  

Workday Inc., Class A(a)

    1,899       455,209  

Zoom Video Communications Inc., Class A(a)

    1,327       431,408  

Zscaler Inc.(a)

    2,831       405,795  
   

 

 

 
      14,029,307  
Specialty Retail — 2.1%            

Advance Auto Parts Inc.

    2,258       352,948  

AutoZone Inc.(a)

    300       358,893  

Best Buy Co. Inc.

    3,243       359,681  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  46


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI USA Equal Weighted ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Specialty Retail (continued)            

Burlington Stores Inc.(a)

    1,857     $ 365,699  

CarMax Inc.(a)

    3,400       363,562  

Home Depot Inc. (The)

    1,284       365,991  

Lowe’s Companies Inc.

    2,294       377,799  

O’Reilly Automotive Inc.(a)

    779       362,726  

Ross Stores Inc.

    4,022       366,324  

Tiffany & Co.

    2,853       349,493  

TJX Companies Inc. (The)

    6,679       365,942  

Tractor Supply Co.

    2,359       351,090  

Ulta Beauty Inc.(a)

    1,702       395,170  
   

 

 

 
          4,735,318  
Technology Hardware, Storage & Peripherals — 1.2%  

Apple Inc.

    3,138       404,928  

Dell Technologies Inc., Class C(a)

    6,066       400,841  

Hewlett Packard Enterprise Co.

    38,541       372,691  

HP Inc.

    20,014       391,274  

NetApp Inc.

    8,750       414,663  

Seagate Technology PLC

    7,997       383,776  

Western Digital Corp.

    10,539       404,908  
   

 

 

 
      2,773,081  
Textiles, Apparel & Luxury Goods — 0.7%  

Lululemon Athletica Inc.(a)

    1,006       377,924  

Nike Inc., Class B

    3,350       374,832  

Ralph Lauren Corp.

    5,375       369,961  

VF Corp.

    5,913       388,780  
   

 

 

 
      1,511,497  
Tobacco — 0.3%            

Altria Group Inc.

    8,317       363,786  

Philip Morris International Inc.

    4,613       368,071  
   

 

 

 
      731,857  
Trading Companies & Distributors — 0.7%  

Fastenal Co.

    7,561       369,430  

HD Supply Holdings Inc.(a)

    8,947       354,838  

United Rentals Inc.(a)

    2,070       366,494  
Security   Shares     Value  
Trading Companies & Distributors (continued)  

WW Grainger Inc.

    1,035     $ 378,220  
   

 

 

 
      1,468,982  
Water Utilities — 0.3%            

American Water Works Co. Inc.

    2,523       356,601  

Essential Utilities Inc.

    8,257       350,922  
   

 

 

 
      707,523  
Wireless Telecommunication Services — 0.2%  

T-Mobile U.S. Inc.(a)

    3,153       367,892  
   

 

 

 

Total Common Stocks — 99.8%
(Cost: $207,241,168)

 

    225,585,910  
   

 

 

 

Short-Term Investments

 

Money Market Funds — 1.9%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(c)(d)(e)

    3,931,101       3,935,032  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(c)(d)

    370,000       370,000  
   

 

 

 
      4,305,032  
   

 

 

 

Total Short-Term Investments — 1.9%
(Cost: $4,299,231)

 

    4,305,032  
   

 

 

 

Total Investments in Securities — 101.7%
(Cost: $211,540,399)

 

    229,890,942  

Other Assets, Less Liabilities — (1.7)%

 

    (3,829,310
   

 

 

 

Net Assets — 100.0%

 

  $ 226,061,632  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

(e) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer  

Value at

08/31/19

   

Purchases

at Cost

   

Proceeds

from Sales

   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at

08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 10,643,927     $     $ (6,709,034 )(a)    $ (3,990   $ 4,129     $ 3,935,032       3,931,101     $ 71,506 (b)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

    619,000             (249,000 )(a)                   370,000       370,000       5,872        

BlackRock Inc

    490,170       130,720       (378,192     36,250       87,073       366,021       616       13,617        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 32,260     $ 91,202     $ 4,671,053       $ 90,995     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

 

 

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Schedule of Investments  (continued)

August 31, 2020

   iShares® MSCI USA Equal Weighted ETF

 

Futures Contracts

 

 

 

 
Description   

Number of

Contracts

    

Expiration

Date

    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

           

S&P 500 E-Mini Index

     1        09/18/20      $ 175      $ 13,630  

S&P MidCap 400 E-Mini Index

     1        09/18/20        193        728  
           

 

 

 
            $ 14,358  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 14,358  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:    

 

 

 
    

Equity

Contracts

 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 12,970  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 11,038  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 599,087      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.    

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 225,585,910        $        $        $ 225,585,910  

Money Market Funds

     4,305,032                            4,305,032  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 229,890,942        $        $        $ 229,890,942  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 14,358        $        $        $ 14,358  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E S T M E N  T S

  48


 

Statements of Assets and Liabilities

August 31, 2020

 

    

iShares

MSCI Brazil ETF

   

iShares

MSCI Chile

ETF

   

iShares

MSCI

Colombia

ETF

   

iShares

MSCI Israel

ETF

 

ASSETS

       

Investments in securities, at value (including securities on loan)(a):

       

Unaffiliated(b)

  $ 5,276,932,123     $ 441,828,138     $ 18,621,247     $ 104,780,898  

Affiliated(c)

    7,890,000       2,080,000       56,085       3,260,776  

Cash

    1,374,167       1,198             707  

Foreign currency, at value(d)

    5,153,983       102,937       18,089       72,459  

Cash pledged:

       

Futures contracts

    5,656,000       38,000              

Foreign currency collateral pledged:

       

Futures contracts(e)

                      11,960  

Receivables:

       

Investments sold

    100,432,605       14,005,853       571,885       1,392,475  

Securities lending income — Affiliated

                19       5,386  

Capital shares sold

          3,805,699              

Dividends

    19,863,538       247,809       2,927       17,521  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    5,417,302,416       462,109,634       19,270,252       109,542,182  
 

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES

       

Bank overdraft

                4,230        

Collateral on securities loaned, at value

                55,872       3,201,306  

Payables:

       

Investments purchased

    101,567,639       20,454,760       589,353       1,379,938  

Variation margin on futures contracts

    623,232       8,680             1,211  

Investment advisory fees

    2,744,213       223,006       9,336       51,406  

Foreign taxes

                      4,979  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    104,935,084       20,686,446       658,791       4,638,840  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 5,312,367,332     $ 441,423,188     $ 18,611,461     $ 104,903,342  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS CONSIST OF:

       

Paid-in capital

  $ 8,887,700,974     $ 746,816,241     $ 36,409,673     $ 157,198,614  

Accumulated loss

    (3,575,333,642     (305,393,053     (17,798,212     (52,295,272
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 5,312,367,332     $ 441,423,188     $ 18,611,461     $ 104,903,342  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding

    179,350,000       17,400,000       2,100,000       1,850,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value

  $ 29.62     $ 25.37     $ 8.86     $ 56.70  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares authorized

    800 million       200 million       50 million       500 million  
 

 

 

   

 

 

   

 

 

   

 

 

 

Par value

  $ 0.001     $ 0.001     $ 0.001     $ 0.001  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) Securities loaned, at value

  $     $     $ 51,870     $ 3,118,406  

(b) Investments, at cost — Unaffiliated

  $ 4,541,425,427     $ 464,011,695     $ 18,123,933     $ 121,021,743  

(c)  Investments, at cost — Affiliated

  $ 7,890,000     $ 2,080,000     $ 56,091     $ 3,259,210  

(d) Foreign currency, at cost

  $ 5,071,275     $ 102,937     $ 17,826     $ 71,214  

(e) Foreign currency collateral pledged, at cost

  $     $     $     $ 11,934  

See notes to financial statements.

 

 

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Statements of Assets and Liabilities  (continued)

August 31, 2020

 

   

iShares

MSCI Russia

ETF

   

iShares

MSCI South

Africa ETF

   

iShares

MSCI Turkey

ETF

   

iShares

MSCI USA

Equal

Weighted

ETF

 

 

 

ASSETS

       

Investments in securities, at value (including securities on loan)(a):

       

Unaffiliated(b)

  $ 467,913,141     $ 323,741,343     $ 178,287,349     $ 225,219,889  

Affiliated(c)

    1,490,000       4,536,550       15,458,193       4,671,053  

Cash

    9,011       2,076       8,563       8,965  

Foreign currency, at value(d)

          409,749       29,178        

Cash pledged:

       

Futures contracts

    124,000             70,000       44,000  

Foreign currency collateral pledged:

       

Futures contracts(e)

          38,545              

Receivables:

       

Investments sold

    32,288,093       13,344,150       4,527,072       12,624,637  

Securities lending income — Affiliated

          37       146,258       1,574  

Dividends

    340,669       76,397       296,142       334,161  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    502,164,914       342,148,847       198,822,755       242,904,279  
 

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES

       

Collateral on securities loaned, at value

          4,406,550       15,046,992       3,933,716  

Payables:

       

Investments purchased

    34,693,433       14,155,208       4,723,400       12,876,653  

Variation margin on futures contracts

    31,570       10,470       15,635       4,062  

Investment advisory fees

    237,025       158,291       89,374       28,216  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    34,962,028       18,730,519       19,875,401       16,842,647  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 467,202,886     $ 323,418,328     $ 178,947,354     $ 226,061,632  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS CONSIST OF:

       

Paid-in capital

  $ 590,930,575     $ 679,839,944     $ 557,532,094     $ 226,171,941  

Accumulated loss

    (123,727,689     (356,421,616     (378,584,740     (110,309
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 467,202,886     $ 323,418,328     $ 178,947,354     $ 226,061,632  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding

    13,400,000       8,700,000       8,950,000       3,600,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value

  $ 34.87     $ 37.17     $ 19.99     $ 62.79  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares authorized

    1 billion       400 million       200 million       500 million  
 

 

 

   

 

 

   

 

 

   

 

 

 

Par value

  $ 0.001     $ 0.001     $ 0.001     $ 0.001  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) Securities loaned, at value

  $     $ 3,898,581     $ 13,755,087     $ 3,846,921  

(b) Investments, at cost — Unaffiliated

  $ 460,072,353     $ 431,075,236     $ 343,963,248     $ 206,963,710  

(c)  Investments, at cost — Affiliated

  $ 1,490,000     $ 4,536,550     $ 15,448,061     $ 4,576,689  

(d) Foreign currency, at cost

  $     $ 409,531     $ 29,220     $  

(e) Foreign currency collateral pledged, at cost

  $     $ 38,522     $     $  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  50


 

Statements of Operations

Year Ended August 31, 2020

 

   

iShares

MSCI Brazil ETF

   

iShares

MSCI Chile

ETF

   

iShares

MSCI

Colombia

ETF

   

iShares

MSCI Israel

ETF

 

 

 

INVESTMENT INCOME

       

Dividends — Unaffiliated

  $ 239,874,559     $ 15,870,718     $ 943,785     $ 1,208,776  

Dividends — Affiliated

    193,719       8,488       297       789  

Non-cash dividends — Unaffiliated

                      203,421  

Interest — Unaffiliated

          145              

Securities lending income — Affiliated — net

                492       50,497  

Foreign taxes withheld

    (19,659,379     (4,761,135     (102,298     (330,472
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    220,408,899       11,118,216       842,276       1,133,011  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory fees

    43,908,323       2,423,582       127,091       651,322  

Commitment fees

                55        

Miscellaneous

    264       264       264       264  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    43,908,587       2,423,846       127,410       651,586  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    176,500,312       8,694,370       714,866       481,425  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — Unaffiliated(a)

    (1,329,140,271     (91,036,888     (3,351,089     (4,003,554

Investments — Affiliated

                219       5,084  

In-kind redemptions — Unaffiliated

                23,879       7,532,952  

Futures contracts

    (26,690,109     645,231             30,754  

Foreign currency transactions

    (16,062,574     194,408       (49,029     4,053  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized gain (loss)

    (1,371,892,954     (90,197,249     (3,376,020     3,569,289  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — Unaffiliated(b)

    (1,684,282,509     (72,915,135     (1,583,780     5,944,700  

Investments — Affiliated

                (6     361  

Futures contracts

    (1,870,151     15,781             (158

Foreign currency translations

    83,414             221       1,417  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    (1,686,069,246     (72,899,354     (1,583,565     5,946,320  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    (3,057,962,200     (163,096,603     (4,959,585     9,515,609  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (2,881,461,888   $ (154,402,233   $ (4,244,719   $ 9,997,034  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) Net of foreign capital gain tax of

  $     $     $     $ 15,395  

(b) Net of deferred foreign capital gain tax of

  $     $     $     $ (82,689

See notes to financial statements.

 

 

51  

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Statements of Operations  (continued)

Year Ended August 31, 2020

 

   

iShares

MSCI Russia

ETF

   

iShares

MSCI South

Africa ETF

   

iShares

MSCI Turkey

ETF

   

iShares

MSCI USA

Equal

Weighted

ETF

 

 

 

INVESTMENT INCOME

       

Dividends — Unaffiliated

  $ 33,508,920     $ 10,198,759     $ 4,320,468     $ 5,530,438  

Dividends — Affiliated

    16,283       3,724       2,874       19,489  

Non-cash dividends — Unaffiliated

          31,852,736              

Interest — Unaffiliated

    350             79       208  

Securities lending income — Affiliated — net

          41,529       1,344,974       71,506  

Foreign taxes withheld

    (3,410,602     (1,430,200     (632,649     (686
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    30,114,951       40,666,548       5,035,746       5,620,955  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory fees

    3,175,548       1,924,587       1,629,118       422,915  

Miscellaneous

    264       264       264       264  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    3,175,812       1,924,851       1,629,382       423,179  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    26,939,139       38,741,697       3,406,364       5,197,776  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — Unaffiliated

    (21,105,914     (104,137,267     (36,541,420     (12,581,458

Investments — Affiliated

          4,980       (4,651     (8,030

In-kind redemptions — Unaffiliated

    35,253,530       (21,629,237     (3,282,563     14,148,016  

In-kind redemptions — Affiliated

                      40,290  

Futures contracts

    439,151       182,711       116,904       12,970  

Foreign currency transactions

    (231,080     319,801       (52,643      
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized gain (loss)

    14,355,687       (125,259,012     (39,764,373     1,611,788  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — Unaffiliated

    (45,269,985     34,636,285       296,922       (3,545,954

Investments — Affiliated

          (1,584     5,191       91,202  

Futures contracts

    37,335       (1,442     22,783       11,038  

Foreign currency translations

    3,828       (991     (19,995      
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    (45,228,822     34,632,268       304,901       (3,443,714
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized loss

    (30,873,135     (90,626,744     (39,459,472     (1,831,926
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (3,933,996   $ (51,885,047   $ (36,053,108   $ 3,365,850  
 

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  52


 

Statements of Changes in Net Assets

 

    iShares
MSCI Brazil ETF
    iShares
MSCI Chile ETF
 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/20

   

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 176,500,312     $ 220,475,060     $ 8,694,370     $ 7,102,577  

Net realized gain (loss)

    (1,371,892,954     5,485,759       (90,197,249     (24,033,169

Net change in unrealized appreciation (depreciation)

    (1,686,069,246     1,552,041,207       (72,899,354     (51,312,409
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (2,881,461,888     1,778,002,026       (154,402,233     (68,243,001
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

From net investment income

    (213,084,247     (220,258,100     (8,685,975     (7,045,063

Return of capital

                      (197,183
 

 

 

   

 

 

   

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (213,084,247     (220,258,100     (8,685,975     (7,242,246
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase in net assets derived from capital share transactions

    201,169,553       1,146,968,776       274,371,517       12,273,938  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (2,893,376,582     2,704,712,702       111,283,309       (63,211,309

Beginning of year

    8,205,743,914       5,501,031,212       330,139,879       393,351,188  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 5,312,367,332           $ 8,205,743,914           $ 441,423,188           $ 330,139,879        
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

53  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


 

Statements of Changes in Net Assets (continued)

 

    iShares
MSCI Colombia ETF
    iShares
MSCI Israel ETF
 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/20

   

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 714,866     $ 547,978     $ 481,425     $ 762,089  

Net realized gain (loss)

    (3,376,020     (2,444,444     3,569,289       17,699,076  

Net change in unrealized appreciation (depreciation)

    (1,583,565     (153,891     5,946,320       (24,641,152
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (4,244,719     (2,050,357     9,997,034       (6,179,987
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (623,029     (580,532     (2,326,790     (616,740
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    (125,777     401,594       (17,320,093     (385,452
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total decrease in net assets

    (4,993,525     (2,229,295     (9,649,849     (7,182,179

Beginning of year

    23,604,986       25,834,281       114,553,191       121,735,370  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 18,611,461           $ 23,604,986           $ 104,903,342           $ 114,553,191        
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  54


 

Statements of Changes in Net Assets (continued)

 

    iShares
MSCI Russia ETF
    iShares
MSCI South Africa ETF
 
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/20

   

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 26,939,139     $ 37,401,597     $ 38,741,697     $ 11,108,795  

Net realized gain (loss)

    14,355,687       (12,393,198     (125,259,012     (8,135,491

Net change in unrealized appreciation (depreciation)

    (45,228,822     93,343,563       34,632,268       (46,627,365
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (3,933,996     118,351,962       (51,885,047     (43,654,061
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (40,113,639     (32,427,517     (42,715,529     (18,209,216
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    (116,330,464     62,796,717       43,951,479       62,816,771  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (160,378,099     148,721,162       (50,649,097     953,494  

Beginning of year

    627,580,985       478,859,823       374,067,425       373,113,931  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 467,202,886           $ 627,580,985           $ 323,418,328           $ 374,067,425        
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

55  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


 

Statements of Changes in Net Assets (continued)

 

    iShares
MSCI Turkey ETF
    iShares
MSCI USA Equal Weighted ETF
 
   

 

Year Ended
08/31/20

    Year Ended
08/31/19
    Year Ended
08/31/20
    Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 3,406,364     $ 10,801,241     $ 5,197,776     $ 3,880,060  

Net realized gain (loss)

    (39,764,373     (66,447,393     1,611,788       3,288,858  

Net change in unrealized appreciation (depreciation)

    304,901       155,589,697       (3,443,714     (3,125,494
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (36,053,108     99,943,545       3,365,850       4,043,424  
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (5,455,619     (10,891,206     (5,421,593     (4,050,996
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    (93,734,165     (161,658,897     (79,972,567     115,277,153  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (135,242,892     (72,606,558     (82,028,310     115,269,581  

Beginning of year

    314,190,246       386,796,804       308,089,942       192,820,361  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 178,947,354           $ 314,190,246           $ 226,061,632           $ 308,089,942        
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  56


 

Financial Highlights

(For a share outstanding throughout each period)

 

    iShares MSCI Brazil ETF  
   

 

Year Ended
08/31/20

    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 40.92     $ 32.03     $ 40.06     $ 33.52     $ 24.71  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.86       1.12       1.14       0.76       0.63  

Net realized and unrealized gain (loss)(b)

    (11.13     8.88       (8.22     6.45       8.62  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (10.27     10.00       (7.08     7.21       9.25  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (1.03     (1.11     (0.95     (0.67     (0.44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.03     (1.11     (0.95     (0.67     (0.44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 29.62     $ 40.92     $ 32.03     $ 40.06     $ 33.52  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (25.63 )%      31.36     (17.87 )%      22.03     38.22
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.63
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.35     2.75     2.86     2.10     2.41
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 5,312,367     $ 8,205,744     $ 5,501,031     $ 6,327,919     $ 3,899,630  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    29 %(e)       16 %(e)       30 %(e)       20 %(e)       18 %(e)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(a) Based on average shares outstanding.

  

(b) The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) Portfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash in U.S. dollars (“cash creations”).

  

  

  

(e) Portfolio turnover rate excluding cash creations was as follows:

    11     10     13     13     4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

57  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Chile ETF  
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

  $ 35.88     $ 43.71     $ 47.96     $ 36.77     $ 34.75  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.61       0.74       0.78       0.69       0.78  

Net realized and unrealized gain (loss)(b)

    (10.54     (7.76     (4.06     11.21       2.03  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (9.93     (7.02     (3.28     11.90       2.81  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.58     (0.79     (0.92     (0.67     (0.75

Return of capital

          (0.02     (0.05     (0.04     (0.04
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.58     (0.81     (0.97     (0.71     (0.79
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 25.37     $ 35.88     $ 43.71     $ 47.96     $ 36.77  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (27.72 )%      (16.22 )%      (7.03 )%      32.65     8.17
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.64
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.10     1.74     1.55     1.68     2.20
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 441,423     $ 330,140     $ 393,351     $ 467,645     $ 327,244  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    51 %(e)       75 %(e)       54 %(e)       54 %(e)       73 %(e)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(a) Based on average shares outstanding.

  

(b) The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) Portfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash in U.S. dollars (“cash creations”).

  

  

  

(e) Portfolio turnover rate excluding cash creations was as follows:

    21     12     11     8     11
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  58


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Colombia ETF  
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

  $ 12.42     $ 13.96     $ 14.58     $ 13.18     $ 11.88  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.37       0.35       0.30       0.23       0.25  

Net realized and unrealized gain (loss)(b)

    (3.60     (1.50     (0.70     1.34       1.23  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (3.23     (1.15     (0.40     1.57       1.48  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.33     (0.39     (0.22     (0.17     (0.18
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.33     (0.39     (0.22     (0.17     (0.18
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 8.86     $ 12.42     $ 13.96     $ 14.58     $ 13.18  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (26.40 )%      (8.18 )%      (2.69 )%      12.05     12.49
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.61     0.61     0.61     0.61     0.61
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    3.43     2.71     2.01     1.72     2.16
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 18,611     $ 23,605     $ 25,834     $ 22,594     $ 17,136  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    75     88     26     14     68
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

59  

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Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Israel ETF  
   

 

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

  $ 53.28     $ 56.62     $ 48.19     $ 49.36     $ 50.51  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.23       0.33       0.59       0.62       0.71  

Net realized and unrealized gain (loss)(b)

    4.31       (3.42     8.88       (0.98     (0.87
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    4.54       (3.09     9.47       (0.36     (0.16
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (1.12     (0.25     (1.04     (0.81     (0.99
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.12     (0.25     (1.04     (0.81     (0.99
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 56.70     $ 53.28     $ 56.62     $ 48.19     $ 49.36  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    8.53     (5.45 )%      19.91     (0.77 )%      (0.23 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.64
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    0.43     0.60     1.15     1.25     1.46
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 104,903     $ 114,553     $ 121,735     $ 89,152     $ 93,793  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    7     17     6     28     46
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  60


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Russia ETF  
   

Year Ended

08/31/20

 

 

   

Year Ended

08/31/19

 

 

   

Year Ended

08/31/18

 

 

   

Year Ended

08/31/17

 

(a) 

   

Year Ended

08/31/16

 

(a) 

 

 

Net asset value, beginning of year

  $ 37.81     $ 32.47     $ 32.13     $ 27.92     $ 25.03  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(b)

    1.87       2.33       1.21       1.14       1.06  

Net realized and unrealized gain (loss)(c)

    (1.99     5.04       0.22       4.07       2.65  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (0.12     7.37       1.43       5.21       3.71  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(d)

         

From net investment income

    (2.82     (2.03     (1.09     (1.00     (0.82
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (2.82     (2.03     (1.09     (1.00     (0.82
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 34.87     $ 37.81     $ 32.47     $ 32.13     $ 27.92  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (1.28 )%      23.64     4.37     18.73     15.62
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.64
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    4.97     6.60     3.50     4.27     4.17
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 467,203     $ 627,581     $ 478,860     $ 530,076     $ 319,629  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(e)

    30     18     32     18     23
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Per share amounts reflect a one-for-two reverse stock split effective after the close of trading on November 4, 2016.

(b) 

Based on average shares outstanding.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

61  

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Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI South Africa ETF  
   

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

  $ 47.96     $ 54.87     $ 62.62     $ 52.78     $ 57.44  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    4.94       1.31       1.41       1.07       1.02  

Net realized and unrealized gain (loss)(b)

    (10.38     (5.84     (7.69     9.79       (3.24
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (5.44     (4.53     (6.28     10.86       (2.22
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (5.35     (2.38     (1.47     (1.02     (2.44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (5.35     (2.38     (1.47     (1.02     (2.44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 37.17     $ 47.96     $ 54.87     $ 62.62     $ 52.78  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (13.09 )%      (8.45 )%      (10.20 )%      20.91     (3.64 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.64
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    11.79     2.48     2.20     1.91     1.96
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 323,418     $ 374,067     $ 373,114     $ 419,587     $ 406,443  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    46     12     15     13     12
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  62


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Turkey ETF  
   

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

  $ 24.08     $ 20.09     $ 46.17     $ 38.16     $ 38.27  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.30       0.60       1.01       0.97       0.96  

Net realized and unrealized gain (loss)(b)

    (3.94     4.06       (26.05     8.12       (0.17
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (3.64     4.66       (25.04     9.09       0.79  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.45     (0.67     (1.04     (1.08     (0.90
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.45     (0.67     (1.04     (1.08     (0.90
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 19.99     $ 24.08     $ 20.09     $ 46.17     $ 38.16  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (15.48 )%      23.38     (54.97 )%      24.23     1.98
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.64
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.22     2.43     2.76     2.58     2.45
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 178,947     $ 314,190     $ 386,797     $ 424,727     $ 368,225  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    12     20     7     6     6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

63  

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Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI USA Equal Weighted ETF  
   

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

   

Year Ended

08/31/16

 

 

 

Net asset value, beginning of year

  $ 58.13     $ 59.33     $ 51.30     $ 46.05     $ 42.51  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    1.09       0.92       0.98       0.85       0.77  

Net realized and unrealized gain (loss)(b)

    4.65       (1.11     7.94       5.18       3.63  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    5.74       (0.19     8.92       6.03       4.40  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (1.08     (1.01     (0.89     (0.78     (0.86
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.08     (1.01     (0.89     (0.78     (0.86
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 62.79     $ 58.13     $ 59.33     $ 51.30     $ 46.05  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    10.18     (0.23 )%      17.55     13.22     10.54
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.15     0.15     0.15     0.15     0.15
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.84     1.63     1.76     1.72     1.79
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 226,062     $ 308,090     $ 192,820     $ 135,945     $ 73,673  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    30     24     23     27     28
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  64


Notes to Financial Statements

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

   
iShares ETF   Diversification  
Classification  

MSCI Brazil

    Non-diversified   

MSCI Chile

    Non-diversified  

MSCI Colombia

    Non-diversified  

MSCI Israel

    Non-diversified  

MSCI Russia

    Non-diversified  

MSCI South Africa

    Non-diversified  

MSCI Turkey

    Non-diversified  

MSCI USA Equal Weighted

    Diversified  

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

Foreign CurrencyTranslation: 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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

 

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Notes to Financial Statements  (continued)

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral

 

 

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Notes to Financial Statements  (continued)

 

received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

 

 

iShares ETF and Counterparty

   
Market Value of
Securities on Loan
 
 
    

Cash Collateral

Received

 

(a) 

   
Non-Cash Collateral
Received
 
 
     Net Amount  

 

 

MSCI Colombia

         

JPMorgan Securities LLC

  $ 51,870      $ 51,870     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Israel

         

BNP Paribas Prime Brokerage International Ltd.

  $ 994,500      $ 994,500     $      $  

Jefferies LLC

    784,550        784,550               

JPMorgan Securities LLC

    911,661        911,661               

Scotia Capital (USA) Inc.

    2,900        2,900               

UBS AG

    424,795        424,795               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 3,118,406      $ 3,118,406     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI South Africa

         

HSBC Bank PLC

  $ 3,898,581      $ 3,898,581     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Turkey

         

Barclays Capital Inc.

  $ 262,498      $ 262,498     $      $  

BofA Securities, Inc.

    2,010,829        2,010,829               

Credit Suisse Securities (USA) LLC

    1,182,054        1,182,054               

Goldman Sachs & Co.

    4,684,027        4,684,027               

HSBC Bank PLC

    432,265        432,265               

JPMorgan Securities LLC

    247,004        247,004               

Morgan Stanley & Co. LLC

    4,720,989        4,720,989               

SG Americas Securities LLC

    215,421        215,421               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 13,755,087      $ 13,755,087     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI USA Equal Weighted

         

BNP Paribas Prime Brokerage International Ltd.

  $ 106,392      $ 106,392     $      $  

Citigroup Global Markets Inc.

    184,572        184,572               

Credit Suisse Securities (USA) LLC

    475,604        475,604               

Goldman Sachs & Co.

    1,118,726        1,118,726               

Morgan Stanley & Co. LLC

    701,591        701,591               

SG Americas Securities LLC

    281,133        279,214              (1,919 )(b) 

State Street Bank & Trust Company

    505,307        505,307               

UBS AG

    473,596        473,596               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 3,846,921      $ 3,845,002     $      $ (1,919
 

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 
  (b) 

Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

 

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Notes to Financial Statements  (continued)

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each of the iShares MSCI Brazil, iShares MSCI Chile, iShares MSCI Israel, iShares MSCI Russia, iShares MSCI South Africa and iShares MSCI Turkey ETFs, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

   
Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $2 billion

    0.74

Over $2 billion, up to and including $4 billion

    0.69  

Over $4 billion, up to and including $8 billion

    0.64  

Over $8 billion, up to and including $16 billion

    0.57  

Over $16 billion, up to and including $24 billion

    0.51  

Over $24 billion, up to and including $32 billion

    0.48  

Over $32 billion

    0.45  

For its investment advisory services to each of the following Funds, BFAis entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on the average daily net assets of each Fund as follows:

 

   
iShares ETF   Investment Advisory Fee  

MSCI Colombia

    0.61

MSCI USA Equal Weighted

    0.15  

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

 

 

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Notes to Financial Statements  (continued)

 

Pursuant to the current securities lending agreement, the iShares MSCI USA Equal Weighted ETF (the “Group 1 Fund”), retains 75% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

Pursuant to the current securities lending agreement, each of iShares MSCI Brazil ETF, iShares MSCI Chile ETF, iShares MSCI Colombia ETF, iShares MSCI Israel ETF, iShares MSCI Russia ETF, iShares MSCI South Africa ETF and iShares MSCI Turkey ETF (the “Group 2 Funds”), retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds a specified threshold: (1) the Group 1 Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 80% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees, and (2) each Group 2 Fund will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

Prior to January 1, 2020, the Group 1 Fund retained 73.5% of securities lending income (which excludes collateral investment fees) and the amount retained was not less than 70% of the total of securities lending income plus the collateral investment fees. Each Group 2 Fund retained 82% of securities lending income (which excludes collateral investment fees) and the amount retained was not less than 70% of the total of securities lending income plus the collateral investment fees. In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across the iShares ETF Complex in a calendar year exceeded a specified threshold: (1) the Group 1 Fund, pursuant to the securities lending agreement, retained for the remainder of that calendar year 80% of securities lending income (which excludes collateral investment fees), and the amount retained could never be less than 70% of the total of securities lending income plus the collateral investment fees, and (2) Each Group 2 Fund, pursuant to the securities lending agreement, retained for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained could never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

   
iShares ETF  

Fees Paid   

to BTC   

MSCI Colombia

  $ 136    

MSCI Israel

    14,850  

MSCI South Africa

    11,979  

MSCI Turkey

    302,414  

MSCI USA Equal Weighted

    27,731  

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

       
iShares ETF   Purchases      Sales      Net Realized
Gain (Loss)
 

MSCI Israel

  $ 309,603      $ 737,731      $ (2,161,795

MSCI Russia

    8,018,863        868,991        (242,115

MSCI South Africa

           28,469,713        (2,519,170

MSCI USA Equal Weighted

    33,800,424        30,425,838        (2,243,363

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

 

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Notes to Financial Statements  (continued)

 

     
iShares ETF   Purchases      Sales   

MSCI Brazil

  $   2,246,199,638      $   2,110,462,539    

MSCI Chile

    480,361,986        204,248,488  

MSCI Colombia

    15,716,199        15,767,134  

MSCI Israel

    7,774,054        10,327,675  

MSCI Russia

    161,590,571        206,784,768  

MSCI South Africa

    148,694,910        159,256,696  

MSCI Turkey

    35,638,243        35,159,123  

MSCI USA Equal Weighted

    83,416,731        83,027,670  

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

     
iShares ETF  

In-kind

Purchases

    

In-kind   

Sales   

MSCI Colombia

  $ 712,742      $ 668,931    

MSCI Israel

    11,388,188        27,834,009  

MSCI Russia

    57,331,057        140,311,002  

MSCI South Africa

    230,360,849        167,610,451  

MSCI Turkey

    87,008,732        183,589,942  

MSCI USA Equal Weighted

    75,577,271        155,129,485  

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to distributions paid in excess of taxable income and realized gains (losses) from in-kind redemptions, were reclassified to the following accounts:

 

     
iShares ETF   Paid-in Capital    

Accumulated   

Loss   

MSCI Colombia

  $ 19,888     $ (19,888 )  

MSCI Israel

    5,951,589       (5,951,589

MSCI Russia

    31,984,868       (31,984,868

MSCI South Africa

    (29,594,698     29,594,698  

MSCI Turkey

    (11,612,804     11,612,804  

MSCI USA Equal Weighted

    13,047,361       (13,047,361

The tax character of distributions paid was as follows:

 

       
iShares ETF   Year Ended
08/31/20
            Year Ended
08/31/19

MSCI Brazil

      

Ordinary income

  $ 213,084,247        $220,258,100
 

 

 

      

 

MSCI Chile

      

Ordinary income

  $ 8,685,975        $    7,045,063

Return of capital

           197,183
 

 

 

      

 

  $ 8,685,975        $    7,242,246
 

 

 

      

 

MSCI Colombia

      

Ordinary income

  $ 623,029        $       580,532
 

 

 

      

 

MSCI Israel

      

Ordinary income

  $ 2,326,790        $       616,740
 

 

 

      

 

MSCI Russia

      

Ordinary income

  $ 40,113,639        $  32,427,517
 

 

 

      

 

 

 

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Notes to Financial Statements  (continued)

 

       
iShares ETF   Year Ended
08/31/20
            Year Ended
08/31/19

MSCI South Africa

      

Ordinary income

  $ 42,715,529        $    18,209,216
 

 

 

      

 

MSCI Turkey

      

Ordinary income

  $ 5,455,619        $    10,891,206
 

 

 

      

 

MSCI USA Equal Weighted

      

Ordinary income

  $ 5,421,593        $      4,050,996
 

 

 

      

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

           

iShares ETF

   
Undistributed
Ordinary Income
 
 
    

Non-expiring
Capital Loss
Carryforwards
 
 
(a) 
   

Net Unrealized

Gains (Losses)

 

(b) 

   
Qualified
Late-Year Losses
 
 
    Total   

MSCI Brazil

  $      $   (3,742,902,913   $ 173,416,759     $ (5,847,488   $   (3,575,333,642 )  

MSCI Chile

    125,767        (193,015,291     (112,503,529           (305,393,053

MSCI Colombia

    66,418        (14,462,662     (3,401,968           (17,798,212

MSCI Israel

           (33,786,237     (17,687,595     (821,440     (52,295,272

MSCI Russia

    6,825,310        (107,794,095     (22,758,904           (123,727,689

MSCI South Africa

    11,761,891        (239,809,605     (128,373,902           (356,421,616

MSCI Turkey

    970,408        (206,672,869     (172,882,279           (378,584,740

MSCI USA Equal Weighted

    463,736        (17,749,445     17,175,400             (110,309

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the characterization of corporate actions.

 

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

         
iShares ETF   Tax Cost      Gross Unrealized
Appreciation
    Gross Unrealized
Depreciation
    Net Unrealized
Appreciation
(Depreciation)
 

MSCI Brazil

  $   5,109,991,094      $ 722,579,969     $ (547,748,940   $ 174,831,029  

MSCI Chile

    556,411,667        17,770,612       (130,274,141     (112,503,529 )  

MSCI Colombia

    22,079,637        (2,660,117     (742,188     (3,402,305

MSCI Israel

    125,730,660        20,492,915       (38,181,901     (17,688,986

MSCI Russia

    492,165,549        12,910,476       (35,672,884     (22,762,408

MSCI South Africa

    456,648,328        21,517,023       (149,891,157     (128,374,134

MSCI Turkey

    366,606,859        4,151,491       (177,012,808     (172,861,317

MSCI USA Equal Weighted

    212,715,542        32,059,666       (14,884,266     17,175,400  

 

9.

LINE OF CREDIT

The iShares MSCI Brazil ETF, iShares MSCI Colombia ETF and iShares MSCI Russia ETF, along with certain other iShares funds (“Participating Funds”), are parties to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on July 15, 2021. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1, iShares MSCI Colombia ETF, and $200 million with respect to Tier 2, iShares MSCI Brazil ETF and iShares MSCI Russia ETF. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Credit Agreement.

The Funds did not borrow under the credit agreement during the year ended August 31, 2020.

 

 

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Notes to Financial Statements  (continued)

 

10.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities.

Certain Funds invest a significant portion of their assets in securities of issuers located in Russia or with significant exposure to Russian issuers or countries. The United States and the European Union, along with the regulatory bodies of a number of countries including Japan, Australia, Norway, Switzerland and Canada, have imposed economic sanctions, which can consist of prohibiting certain securities trades, prohibiting certain private transactions in the energy sector, asset freezes and prohibition of all business, on certain Russian individuals and Russian corporate entities. Broader sanctions on Russia could also be instituted. These sanctions, or even

 

 

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  72


Notes to Financial Statements  (continued)

 

the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy, and may negatively impact a fund. Current or future sanctions may result in Russia taking counter measures or retaliatory actions, which may further impair the value and liquidity of Russian securities. These retaliatory measures may include the immediate freeze of Russian assets held by a fund.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Investment percentages in specific sectors are presented in the schedule of investments.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

11.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
    Year Ended
08/31/20
    Year Ended
08/31/19
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

MSCI Brazil

       

Shares sold

    35,400,000     $ 1,520,040,076       39,900,000     $ 1,597,335,848  

Shares redeemed

    (56,600,000     (1,318,870,523     (11,100,000     (450,367,072
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (21,200,000   $ 201,169,553       28,800,000     $ 1,146,968,776  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Chile

       

Shares sold

    13,200,000     $ 401,087,421       6,150,000     $ 266,264,905  

Shares redeemed

    (5,000,000     (126,715,904     (5,950,000     (253,990,967
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    8,200,000     $ 274,371,517       200,000     $ 12,273,938  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Colombia

       

Shares sold

    1,150,000     $ 10,176,860       1,050,000     $ 13,424,743  

Shares redeemed

    (950,000     (10,302,637     (1,000,000     (13,023,149
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    200,000     $ (125,777     50,000     $ 401,594  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Israel

       

Shares sold

    250,000     $ 11,627,251       900,000     $ 48,475,728  

Shares redeemed

    (550,000     (28,947,344     (900,000     (48,861,180
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease

    (300,000   $ (17,320,093         $ (385,452
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Russia

       

Shares sold

    2,250,000     $ 86,401,136       3,000,000     $ 102,646,729  

Shares redeemed

    (5,450,000     (202,731,600     (1,150,000     (39,850,012
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (3,200,000   $ (116,330,464     1,850,000     $ 62,796,717  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI South Africa

       

Shares sold

    5,500,000     $ 212,642,906       8,400,000     $ 448,398,024  

Shares redeemed

    (4,600,000     (168,691,427     (7,400,000     (385,581,253
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    900,000     $ 43,951,479       1,000,000     $ 62,816,771  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Turkey

       

Shares sold

    3,850,000     $ 91,603,249       6,500,000     $ 152,434,904  

Shares redeemed

    (7,950,000     (185,337,414     (12,700,000     (314,093,801
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease

    (4,100,000   $ (93,734,165     (6,200,000   $ (161,658,897
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI USA Equal Weighted

       

Shares sold

    1,350,000     $ 75,965,854       2,450,000     $ 138,103,245  

Shares redeemed

    (3,050,000     (155,938,421     (400,000     (22,826,092
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (1,700,000   $ (79,972,567     2,050,000     $ 115,277,153  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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Notes to Financial Statements  (continued)

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

12.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

13.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  74


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares MSCI Brazil ETF, iShares MSCI Chile ETF, iShares MSCI Colombia ETF,

iShares MSCI Israel ETF, iShares MSCI Russia ETF, iShares MSCI South Africa ETF,

iShares MSCI Turkey ETF and iShares MSCI USA Equal Weighted ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares MSCI Brazil ETF, iShares MSCI Chile ETF, iShares MSCI Colombia ETF, iShares MSCI Israel ETF, iShares MSCI Russia ETF, iShares MSCI South Africa ETF, iShares MSCI Turkey ETF and iShares MSCI USA Equal Weighted ETF (eight of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

 

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Important Tax Information (unaudited)

 

For corporate shareholders, the percentage of ordinary income distributions paid during the fiscal year ended August 31, 2020 that qualified for the dividends-received deduction were as follows:

 

   
iShares ETF   Dividends-Received
Deduction
 

MSCI USA Equal Weighted

    89.17

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

   
iShares ETF   Qualified Dividend
Income
 

MSCI Colombia

  $ 32,814    

MSCI Israel

    1,270,442  

MSCI Russia

    32,154,068  

MSCI South Africa

    16,266,579  

MSCI Turkey

    4,366,803  

MSCI USA Equal Weighted

    4,823,389  

The following maximum amounts are hereby designated as qualified business income for individuals for the fiscal year ended August 31, 2020:

 

   
iShares ETF   Qualified Business
Income
 

MSCI USA Equal Weighted

  $ 163,785    

For the fiscal year ended August 31, 2020, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders:

 

     
iShares ETF   Foreign Source
Income Earned
     Foreign
Taxes Paid
 

MSCI Brazil

  $ 239,881,804      $   21,073,181    

MSCI Chile

    15,870,719        4,625,794  

MSCI Colombia

    943,783        102,097  

MSCI Israel

    1,413,203        338,741  

MSCI Russia

    33,508,918        3,372,820  

MSCI South Africa

    52,709,687        1,479,657  

MSCI Turkey

    4,320,470        568,403  

 

 

M P O R T A N T  A X  N F O R  M A T I O N

  76


Board Review and Approval of Investment Advisory Contract

 

iShares MSCI Brazil ETF, iShares MSCI Chile ETF, iShares MSCI Israel ETF, iShares MSCI South Africa ETF, iShares MSCI Turkey ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

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funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Colombia ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

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service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Russia ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”),

 

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with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI USA Equal Weighted ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

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Supplemental Information (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

       
    Total Cumulative Distributions
for the Fiscal Year
          % Breakdown of the Total Cumulative
Distributions for the Fiscal Year
 
iShares ETF   Net
Investment
Income
    Net Realized
Capital Gains
   

Return of

Capital

    Total Per
Share
           Net
Investment
Income
    Net Realized
Capital Gains
    Return
of Capital
    Total Per
Share
 

MSCI Brazil(a)

  $ 1.012456     $     $   0.019606     $ 1.032062         98         2     100

MSCI Chile

    0.579917                     0.579917         100                   100  

MSCI Colombia

      0.331541                   0.331541         100                   100  

MSCI Israel(a)

    1.002971             0.115098       1.118069         90             10       100  

MSCI Russia(a)

    2.284813             0.539720       2.824533         81             19       100  

MSCI Turkey(a)

    0.333411             0.119223       0.452634         74             26       100  

MSCI USA Equal Weighted(a)

    1.078980             0.002127       1.081107               100             0 (b)      100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 
  (b) 

Rounds to less than 1%.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (the “Directive”) imposes detailed and prescriptive obligations on fund managers established in the European Union (the “EU”). These do not currently apply to managers established outside of the EU, such as BFA (the “Company”). Rather, non-EU managers are only required to comply with certain disclosure, reporting and transparency obligations of the Directive if such managers market a fund to EU investors.

The Company has registered the iShares MSCI Brazil ETF and iShares MSCI USA Equal Weighted ETF (each a “Fund”, collectively the “Funds”) to be marketed to EU investors in the United Kingdom, the Netherlands, Finland, Sweden and Luxembourg.

Report on Remuneration

The Company is required under the Directive to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Funds.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the each Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well defined pay-for-performance philosophy, and compensation programmes which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.

 

 

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Supplemental Information (unaudited) (continued)

 

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the each Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Brazil ETF in respect of the Company’s financial year ending December 31, 2019 was USD 906.51 thousand. This figure is comprised of fixed remuneration of USD 419.1 thousand and variable remuneration of USD 487.41 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Brazil ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 115.59 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 13.59 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI USA Equal Weighted ETF in respect of the Company’s financial year ending December 31, 2019 was USD 29.74 thousand. This figure is comprised of fixed remuneration of USD 13.75 thousand and variable remuneration of USD 15.99 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI USA Equal Weighted ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 3.79 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 0.45 thousand.

 

 

U P P L E M E N T A L  N F O R M A T  I O N

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Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFAor its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., ParkAvenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       
  Name (Age)            Position(s)   

Principal Occupation(s)

During the Past 5 Years

         Other Directorships Held by Director      

 

Robert S.
Kapito(a) (63)

  

 

Director
(since 2009).

  

 

President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).

  

 

Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

 

Salim Ramji(b) (50)

  

 

Director

(since 2019).

  

 

Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).

  

 

Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

(a)  Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b)  Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

Independent Directors
       
  Name (Age)            Position(s)   

Principal Occupation(s)

During the Past 5 Years

         Other Directorships Held by Director      

 

Cecilia H. Herbert (71)

  

 

Director
(since 2005);
Independent Board Chair
(since 2016).

  

 

Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.

  

 

Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).

 

Jane D. Carlin (64)

  

 

Director
(since 2015);
Risk Committee Chair
(since 2016).

  

 

Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).

  

 

Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).

 

Richard L. Fagnani (65)

  

 

Director
(since 2017);
Audit Committee Chair    

(since 2019).

  

 

Partner, KPMG LLP (2002-2016).

  

 

Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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Director and Officer Information  (continued)

 

Independent Directors (continued)
       
  Name (Age)            Position(s)   

Principal Occupation(s)

During the Past 5 Years

         Other Directorships Held by Director      

 

John E.
Kerrigan (65)

  

 

Director
(since 2005);
Nominating and Governance and Equity Plus Committee Chairs
(since 2019).

  

 

Chief Investment Officer, Santa Clara University (since 2002).

  

 

Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

 

Drew E.
Lawton (61)

  

 

Director
(since 2017); 15(c)
Committee Chair
(since 2017).

  

 

Senior Managing Director of New York Life Insurance Company (2010-2015).

  

 

Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

John E.
Martinez (59)

  

 

Director
(since 2003);
Securities Lending Committee Chair    

(since 2019).

  

 

Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

  

 

Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

 

Madhav V.
Rajan (56)

 

  

 

Director
(since 2011);
Fixed Income Plus Committee Chair
(since 2019).

  

 

Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).

  

 

Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).

Officers
     
  Name (Age)            Position(s)   

Principal Occupation(s)

During the Past 5 Years

 

Armando
Senra (49)

  

 

President
(since 2019).

  

 

Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

 

Trent
Walker (46)

  

 

Treasurer and Chief Financial Officer
(since 2020).

  

 

Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

 

Charles
Park (53)

  

 

Chief Compliance Officer
(since 2006).

  

 

Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

 

Deepa
Damre (45)

  

 

Secretary
(since 2019).

  

 

Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

 

 

Scott
Radell (51)

  

 

Executive Vice President
(since 2012).

  

 

Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

 

Alan
Mason (59)

  

 

Executive Vice President
(since 2016).

  

 

Managing Director, BlackRock, Inc. (since 2009).

 

Marybeth
Leithead (57)

  

 

Executive Vice President
(since 2019).

  

 

Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

I R E C T O R  A N D  F F I C E R   N F O R M A T I O N

  88


General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

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Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
ADR    American Depositary Receipt
GDR    Global Depositary Receipt
NVS    Non-Voting Shares
PJSC    Public Joint Stock Company

 

 

 

L O S S A R Y  F  E R M S   S E D  I N  T H I S  E P O R T

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Want to know more?

iShares.com    |    1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-804-0820

 

 

LOGO

 

  

LOGO

 


 

LOGO

  AUGUST 31, 2020

 

  

2020 Annual Report

 

 

iShares, Inc.

 

·  

iShares MSCI Australia ETF | EWA | NYSE Arca

 

·  

iShares MSCI Canada ETF | EWC | NYSE Arca

 

·  

iShares MSCI Japan ETF | EWJ | NYSE Arca

 

·  

iShares MSCI Mexico ETF | EWW | NYSE Arca

 

·  

iShares MSCI South Korea ETF | EWY | NYSE Arca

 

 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020

 

     6-Month    12-Month
   

U.S. large cap equities
(S&P 500® Index)

  19.63%   21.94%
   

U.S. small cap equities
(Russell 2000® Index)

    6.57        6.02   
   

International equities
(MSCI Europe, Australasia, Far East Index)

    7.10        6.13   
   

Emerging market equities
(MSCI Emerging Markets Index)

  11.23      14.49   
   

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

    0.34        1.26   
   

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

    4.67        8.93   
   

U.S. investment grade bonds
(Bloomberg Barclays U.S. Aggregate Bond Index)

    2.98        6.47   
   

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

    0.29        3.15   
   

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

    3.04        4.65   
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
 

 

 

2  

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Table of Contents

 

      Page  

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     15  

Shareholder Expenses

     15  

Schedules of Investments

     16  

Financial Statements

  

Statements of Assets and Liabilities

     35  

Statements of Operations

     37  

Statements of Changes in Net Assets

     39  

Financial Highlights

     42  

Notes to Financial Statements

     47  

Report of Independent Registered Public Accounting Firm

     56  

Important Tax Information (Unaudited)

     57  

Board Review and Approval of Investment Advisory Contract

     58  

Supplemental Information

     64  

Director and Officer Information

     66  

General Information

     68  

Glossary of Terms Used in this Report

     69  

 

 

 


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

A R K E T    V E R V I E W    4


Fund Summary as of August 31, 2020       iShares® MSCI Australia ETF

 

Investment Objective

The iShares MSCI Australia ETF (the “Fund”) seeks to track the investment results of an index composed of Australian equities, as represented by the MSCI Australia Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

     Average Annual Total Returns            Cumulative Total Returns  
      1 Year      5 Years      10 Years             1 Year      5 Years      10 Years  

Fund NAV

     0.99      7.26      4.97        0.99      41.97      62.44

Fund Market

     (0.64      6.93        4.72          (0.64      39.83        58.56  

Index

     1.43        7.66        5.37                1.43        44.60        68.76  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

     

 

 

      
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
    $        1,000.00            $        1,063.20          $        2.70               $        1,000.00            $        1,022.50          $        2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Australia ETF

 

Portfolio Management Commentary

Australian stocks posted modest gains during the reporting period, helped by fiscal stimulus measures passed by the government in response to the coronavirus recession. The centerpiece of the legislation was a biweekly payment to employers to help cover wages and reduce unemployment. The monetary policy response was more subdued but included interest rate reductions, significant lending to banks, and some quantitative easing. In this environment, the Australian dollar appreciated substantially against the U.S. dollar, which contributed to the Index’s return.

The materials sector contributed significantly to the Index’s performance, as the metals and mining industry benefited from high iron ore prices. Australian exports of iron ore reached record levels, primarily due to strong demand from China amid economic recovery from the pandemic.

The healthcare sector advanced, driven by solid gains in the biotechnology industry. Sales grew for hemophilia and immunodeficiency treatments, particularly immunoglobulin therapy products that can be self-administered in the home. The consumer discretionary sector also posted gains amid significant increases in online shopping. The information technology sector was another contributor to the Index’s return, as electronic payment services expanded globally in the IT services industry. In addition, the consumer staples sector benefited from consumer stockpiling of food and personal products.

On the downside, the financials sector detracted the most from the Index’s performance, as a weak economic outlook led banks to increase provisions for bad and doubtful debts. Banks also closed a significant number of branches and thousands of ATMs amid a pandemic-driven shift away from cash. Moreover, regulators required banks to reduce dividend payouts. The energy sector was another detractor, partly due to lower oil prices stemming from pandemic-related reductions in demand. The real estate sector also declined, as coronavirus-related restrictions negatively impacted rent collections from retailers.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Financials

    31.5

Materials

    19.8  

Health Care

    12.9  

Real Estate

    6.9  

Consumer Staples

    6.5  

Consumer Discretionary

    6.2  

Industrials

    5.8  

Energy

    4.1  

Information Technology

    2.3  

Communication Services

    2.1  

Utilities

    1.9  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

CSL Ltd.

    9.9

Commonwealth Bank of Australia

    9.2  

BHP Group Ltd.

    8.5  

Westpac Banking Corp.

    4.8  

National Australia Bank Ltd.

    4.4  

Wesfarmers Ltd.

    4.1  

Australia & New Zealand Banking Group Ltd.

    4.0  

Woolworths Group Ltd.

    3.8  

Macquarie Group Ltd.

    3.3  

Transurban Group

    2.8  
 

 

 

U N D    U M M A R Y    6


Fund Summary as of August 31, 2020       iShares® MSCI Canada ETF

 

Investment Objective

The iShares MSCI Canada ETF (the “Fund”) seeks to track the investment results of an index composed of Canadian equities, as represented by the MSCI Canada Custom Capped Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

     Average Annual Total Returns            Cumulative Total Returns  
      1 Year      5 Years      10 Years             1 Year      5 Years      10 Years  

Fund NAV

     4.32      5.95      3.18        4.32      33.54      36.70

Fund Market

     4.32        5.70        3.16          4.32        31.93        36.52  

Index

     4.40        6.10        3.36                4.40        34.44        39.14  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

 

LOGO

Index performance through August 31, 2017 reflects the performance of the MSCI Canada Index. Index performance beginning on September 1, 2017 reflects the performance of the MSCI Canada Custom Capped Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

     

 

 

      
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
    $        1,000.00            $        1,054.10          $        2.68               $        1,000.00            $        1,022.50          $        2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Canada ETF

 

Portfolio Management Commentary

Canadian equities posted a positive return for the reporting period, as the government loosened monetary policy and passed a notable fiscal stimulus package to mitigate the economic impact of the coronavirus pandemic. The Bank of Canada instituted quantitative easing, reduced interest rates, and launched a plan to provide liquidity to banks. Canadian fiscal stimulus programs included substantial unemployment payments, wage subsidies, and rent subsidies for temporarily closed businesses.

The information technology sector contributed the most to the Index’s return, supported by a pandemic-driven shift toward online shopping. The internet services and infrastructure industry led the way with initiatives to help brick-and-mortar merchants set up operations for their online storefronts. Sales volumes at these digital storefronts increased significantly. Not only did the number of merchants with e-commerce stores rise sharply, the online storefronts also helped companies rapidly scale up their e-commerce operations.

The materials sector bolstered performance, as the metals and mining industry benefited from improved profitability due to higher gold prices. Investment demand for gold rose, driven by expansionary monetary policy, concerns over economic growth, and pandemic-related uncertainty. The industrials sector was another contributor, as strong global demand for grain benefited railroad companies, which transported record grain shipments.

On the downside, the energy sector detracted from the Index’s return, as fuel consumption declined. Oil, gas, and consumable fuels companies responded to surplus oil and lower prices by reducing output to levels significantly below capacity. They also took measures to retain cash reserves, which included reducing dividends. The financials sector also weighed on performance, as write-downs of the value of loans to energy companies negatively impacted banks.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Financials

    35.0

Materials

    14.2  

Energy

    13.3  

Information Technology

    11.6  

Industrials

    9.5  

Consumer Staples

    4.7  

Utilities

    3.7  

Consumer Discretionary

    3.7  

Communication Services

    3.0  

Other (each representing less than 1%)

    1.3  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

Shopify Inc., Class A

    7.7

Royal Bank of Canada

    7.6  

Toronto-Dominion Bank (The)

    6.3  

Canadian National Railway Co.

    4.5  

Enbridge Inc.

    3.9  

Barrick Gold Corp.

    3.7  

Bank of Nova Scotia (The)

    3.6  

Brookfield Asset Management Inc., Class A

    3.2  

TC Energy Corp.

    3.1  

Canadian Pacific Railway Ltd.

    2.8  
 

 

 

U N D    U M M A R Y    8


Fund Summary as of August 31, 2020      iShares® MSCI Japan ETF

 

Investment Objective

The iShares MSCI Japan ETF (the “Fund”) seeks to track the investment results of an index composed of Japanese equities, as represented by the MSCI Japan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

     Average Annual Total Returns            Cumulative Total Returns  
      1 Year      5 Years      10 Years             1 Year      5 Years      10 Years  

Fund NAV

     9.76      5.42      6.13        9.76      30.20      81.22

Fund Market

     9.71        5.42        6.14          9.71        30.20        81.46  

Index

     10.16        5.80        6.58                10.16        32.59        89.06  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

     

 

 

      
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
    $        1,000.00            $        1,095.60          $        2.74               $        1,000.00            $        1,022.50          $        2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

9  

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Japan ETF

 

Portfolio Management Commentary

Stocks in Japan advanced for the reporting period despite a deep recession driven by the coronavirus pandemic. Economic growth was already stagnant at the end of 2019 due to decreased exports amid slowing global trade and lower private consumption following a sales tax increase. Business closures in early 2020 sharply reduced economic activity, and Japan experienced the largest contraction on record in the second quarter of 2020. Following steep declines in the first quarter of 2020, Japanese equities rebounded in the second quarter, bolstered by massive government stimulus and a resumption of global business activity.

The healthcare and information technology sectors contributed the most to the Index’s return. Among healthcare stocks, pharmaceuticals companies posted strong gains amid positive investor sentiment about new cancer drugs and treatments for coronavirus patients. Solid profit growth among medical equipment manufacturers and companies producing technology solutions that reduce patient contact with healthcare providers boosted returns in the healthcare equipment and services industry. The information technology sector’s key drivers included stocks in the electronic equipment, instruments, and components industry, which advanced amid ongoing adoption of robotics and automated systems in manufacturing. Semiconductor equipment makers also buoyed the information technology sector’s gains, benefiting from a ban on sales of semiconductors made on equipment manufactured in the U.S. to China, which drove demand for equipment produced in Japan.

The communication services sector’s contribution was driven by wireless telecommunication services stocks, which advanced amid expectations of 5G service rollouts and gains in the portfolio companies of a large technology investment conglomerate. Entertainment companies advanced as consumers staying at home purchased more video games and gaming consoles. Machinery and building products stocks bolstered the industrials sector’s contribution, gaining amid solid sales of automatic control equipment to China and rising demand for air-purifying air conditioners.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Industrials

    20.7

Consumer Discretionary

    18.0  

Information Technology

    12.2  

Health Care

    11.5  

Communication Services

    10.1  

Financials

    9.1  

Consumer Staples

    7.9  

Materials

    4.8  

Real Estate

    3.6  

Utilities

    1.5  

Energy

    0.6  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

Toyota Motor Corp.

    4.0

Sony Corp.

    2.8  

SoftBank Group Corp.

    2.8  

Keyence Corp.

    2.1  

Nintendo Co. Ltd.

    1.7  

Takeda Pharmaceutical Co. Ltd.

    1.7  

Mitsubishi UFJ Financial Group Inc.

    1.5  

Daiichi Sankyo Co. Ltd.

    1.4  

Recruit Holdings Co. Ltd.

    1.4  

Daikin Industries Ltd.

    1.3  
 

 

 

U N D    U M M A R Y    10


Fund Summary as of August 31, 2020      iShares® MSCI Mexico ETF

 

Investment Objective

The iShares MSCI Mexico ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Mexican equities, as represented by the MSCI Mexico IMI 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

     Average Annual Total Returns            Cumulative Total Returns  
      1 Year      5 Years      10 Years             1 Year      5 Years      10 Years  

Fund NAV

     (19.36 )%       (6.96 )%       (1.98 )%         (19.36 )%       (30.27 )%       (18.15 )% 

Fund Market

     (19.64      (7.06      (1.99        (19.64      (30.64      (18.20

Index

     (19.03      (6.67      (1.98              (19.03      (29.20      (18.15

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Mexico Investable Market Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Mexico IMI 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

     

 

 

      
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
    $        1,000.00            $           804.20          $        2.36               $        1,000.00            $        1,022.50          $        2.64          0.52

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

11  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Mexico ETF

 

Portfolio Management Commentary

Mexican equities declined significantly during the reporting period amid limited economic stimulus measures in response to the coronavirus pandemic. The government’s muted response to the pandemic was unable to prevent a protracted recession, which was driven in part by a decline in foreign investment. Policy uncertainty regarding energy market reforms also deterred foreign investment and weighed on Mexico’s economic outlook. Furthermore, the pandemic-driven decrease in demand for oil pressured the Mexican government’s considerable oil revenues. Concerns over increasing debt at state-owned oil and power companies factored into a lower credit rating for Mexico, and the Mexican peso dropped sharply relative to the U.S. dollar.

The consumer staples sector detracted substantially from the Index’s return, as higher taxes and the pandemic negatively affected the beverages industry. Stay-at-home restrictions temporarily halted most beer production in the country and led to the closure of some stores. Production disruptions created a beer shortage in Mexico and reduced export earnings.

The financials sector was another significant detractor from performance, as a lower growth outlook and weakened government finances led to credit-rating downgrades for banks. Banks posted meaningful declines in net income, suspended dividends, and prepared for a prolonged recession by substantially increasing provisions for bad loans. Furthermore, a bank failure raised concerns that banking regulations were insufficient.

The communication services sector also declined substantially, as the number of prepaid wireless customers dropped at some wireless telecommunication services companies. Moreover, the depreciation of the Mexican peso against the U.S. dollar negatively impacted earnings, as financing costs rose. The industrials sector further detracted from the Index’s performance, as reduced air travel during the pandemic drove down demand for airport services.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Consumer Staples

    32.8

Communication Services

    21.9  

Materials

    13.7  

Financials

    11.4  

Industrials

    10.9  

Real Estate

    6.4  

Utilities

    1.4  

Other (each representing less than 1%)

    1.5  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

America Movil SAB de CV, Series L

    17.0

Wal-Mart de Mexico SAB de CV

    10.3  

Fomento Economico Mexicano SAB de CV

    9.2  

Grupo Financiero Banorte SAB de CV, Class O

    6.6  

Grupo Mexico SAB de CV, Series B

    4.5  

Cemex SAB de CV

    4.3  

Grupo Bimbo SAB de CV, Series A

    2.7  

Grupo Televisa SAB

    2.6  

Grupo Aeroportuario del Pacifico SAB de CV, Class B

    2.6  

Gruma SAB de CV, Class B

    2.3  
 

 

 

U N D    U M M A R Y    12


Fund Summary as of August 31, 2020      iShares® MSCI South Korea ETF

 

Investment Objective

The iShares MSCI South Korea ETF (the “Fund”) seeks to track the investment results of an index composed of South Korean equities, as represented by the MSCI Korea 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

     Average Annual Total Returns            Cumulative Total Returns  
      1 Year      5 Years      10 Years             1 Year      5 Years      10 Years  

Fund NAV

     20.77      7.65      4.34        20.77      44.60      52.99

Fund Market

     20.94        7.81        4.34          20.94        45.61        52.91  

Index

     21.16        8.03        4.88                21.16        47.13        61.07  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

 

LOGO

Index performance through February 11, 2013 reflects the performance of the MSCI Korea Index. Index performance beginning on February 12, 2013 reflects the performance of the MSCI Korea 25/50 Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

     

 

 

      
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
    $        1,000.00            $        1,172.00          $        3.22               $        1,000.00            $        1,022.20          $        3.00          0.59

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

13  

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI South Korea ETF

 

Portfolio Management Commentary

South Korean stocks rose significantly during the reporting period, as the country took measures to counter the coronavirus pandemic and the ensuing economic disruption. The monetary policy response included interest rate reductions and a weekly repurchase program to supply needed liquidity to markets. The government also targeted substantial fiscal stimulus toward alleviating pandemic-related disruptions. Specific programs supported hospitals, small businesses, job retraining, companies in financial difficulty, exporters, and unemployment benefits.

Information technology stocks advanced strongly, benefiting the Index’s performance, as technology hardware and equipment companies responded to the pandemic by expanding online sales channels. Profits from sales of computer memory strengthened due to higher prices and substantial demand driven by data centers. The industry mitigated the impact of lower smartphone purchases by reducing marketing and other expenses. However, mobile manufacturing capabilities continued to expand. The electronic components industry also advanced, as higher demand for electric car batteries helped offset decreases in polymer batteries amid slower smartphone sales.

The communication services sector contributed substantially to the Index’s return, as firms in the interactive media and services industry began to recover from the pandemic’s negative impact on advertising revenue. The number of users and user engagement increased significantly, with instant message traffic volume rising considerably. The substantial growth of online storefronts for small businesses was another source of strength for the industry.

The healthcare sector bolstered performance, as the biotechnology industry benefited from regulatory approval of trials for an innovative COVID-19 treatment. Furthermore, an agreement to manufacture coronavirus antibodies helped the life sciences tools and services industry. The materials sector also contributed meaningfully to the Index’s return. The chemicals industry led the way higher, partly due to a substantial increase in electric car battery sales.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Information Technology

    32.4

Consumer Discretionary

    12.3  

Communication Services

    11.5  

Financials

    9.7  

Materials

    9.3  

Industrials

    8.8  

Health Care

    7.1  

Consumer Staples

    6.4  

Energy

    1.7  

Utilities

    0.8  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

Samsung Electronics Co. Ltd.

    21.3

SK Hynix Inc.

    4.9  

NAVER Corp.

    4.8  

LG Chem Ltd.

    4.1  

Celltrion Inc.

    3.4  

Hyundai Motor Co.

    3.3  

Samsung SDI Co. Ltd.

    3.1  

Kakao Corp.

    2.7  

Hyundai Mobis Co. Ltd.

    1.9  

NCSoft Corp.

    1.8  
 

 

 

U N D    U M M A R Y    14


About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

15    2 0 2 0    H A R E S    N N U  A L    E P O R T    T O    H A R E H O L D E R  S


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Australia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Airlines — 0.3%            

Qantas Airways Ltd.

    1,182,092     $ 3,444,411  
   

 

 

 
Banks — 22.2%            

Australia & New Zealand Banking Group Ltd.

    3,665,401       49,552,447  

Commonwealth Bank of Australia

    2,288,351       115,553,624  

National Australia Bank Ltd.

    4,131,572       54,785,173  

Westpac Banking Corp.

    4,670,196       60,580,397  
   

 

 

 
      280,471,641  
Beverages — 0.8%            

Coca-Cola Amatil Ltd.

    654,063       4,401,780  

Treasury Wine Estates Ltd.

    932,798       6,381,118  
   

 

 

 
      10,782,898  
Biotechnology — 9.8%            

CSL Ltd.

    586,895       124,139,230  
   

 

 

 
Capital Markets — 5.1%            

ASX Ltd.

    249,852       16,138,510  

Macquarie Group Ltd.

    435,486       41,127,519  

Magellan Financial Group Ltd.

    165,312       7,243,695  
   

 

 

 
      64,509,724  
Chemicals — 0.5%            

Orica Ltd.

    524,181       6,737,495  
   

 

 

 
Commercial Services & Supplies — 1.3%  

Brambles Ltd.

    1,961,932       16,090,996  
   

 

 

 
Construction & Engineering — 0.1%  

CIMIC Group Ltd.

    121,926       1,908,906  
   

 

 

 
Construction Materials — 1.0%            

James Hardie Industries PLC

    573,952       13,086,289  
   

 

 

 
Diversified Financial Services — 0.4%            

AMP Ltd.(a)

    4,452,484       5,038,036  
   

 

 

 
Diversified Telecommunication Services — 1.1%  

Telstra Corp. Ltd.

    5,366,963       11,470,804  

TPG Telecom Ltd.(a)

    480,674       2,925,620  
   

 

 

 
      14,396,424  
Electric Utilities — 0.3%            

AusNet Services

    2,387,263       3,222,037  
   

 

 

 
Equity Real Estate Investment Trusts (REITs) — 6.2%  

BGP Holdings PLC(a)(b)

    18,888,372       226  

Dexus

    1,410,574       9,211,365  

Goodman Group

    2,126,423       28,794,227  

GPT Group (The)

    2,523,752       7,148,466  

Mirvac Group

    5,096,845       7,953,372  

Scentre Group

    6,709,493       11,214,130  

Stockland

    3,089,184       9,047,037  

Vicinity Centres

    4,966,342       5,307,279  
   

 

 

 
      78,676,102  
Food & Staples Retailing — 5.6%  

Coles Group Ltd.

    1,723,319       22,596,534  

Woolworths Group Ltd.

    1,631,807       48,115,217  
   

 

 

 
      70,711,751  
Gas Utilities — 0.9%            

APA Group

    1,528,678       11,791,464  
   

 

 

 
Security   Shares     Value  
Health Care Equipment & Supplies — 1.0%  

Cochlear Ltd.

    84,913     $ 12,066,519  
   

 

 

 
Health Care Providers & Services — 2.0%  

Ramsay Health Care Ltd.

    236,696       11,388,654  

Sonic Healthcare Ltd.

    582,242       13,800,632  
   

 

 

 
      25,189,286  
Hotels, Restaurants & Leisure — 2.1%  

Aristocrat Leisure Ltd.

    744,571       15,621,865  

Crown Resorts Ltd.

    478,627       3,189,256  

Tabcorp Holdings Ltd.

    2,843,374       7,612,196  
   

 

 

 
      26,423,317  
Insurance — 3.5%            

Insurance Australia Group Ltd.

    2,994,208       10,562,525  

Medibank Pvt Ltd.

    3,568,102       7,203,894  

QBE Insurance Group Ltd.

    1,899,225       14,902,503  

Suncorp Group Ltd.

    1,624,835       11,175,312  
   

 

 

 
      43,844,234  
Interactive Media & Services — 1.0%  

REA Group Ltd.

    68,265       5,763,914  

Seek Ltd.

    433,333       6,624,143  
   

 

 

 
      12,388,057  
IT Services — 2.0%            

Afterpay Ltd.(a)

    276,714       18,712,628  

Computershare Ltd.

    630,574       6,197,670  
   

 

 

 
      24,910,298  
Metals & Mining — 18.1%            

BHP Group Ltd.

    3,808,040       106,763,476  

BlueScope Steel Ltd.

    648,098       6,082,326  

Evolution Mining Ltd.

    2,097,824       8,610,521  

Fortescue Metals Group Ltd.

    2,187,969       28,187,511  

Newcrest Mining Ltd.

    1,044,174       24,680,109  

Northern Star Resources Ltd.

    958,811       9,679,058  

Rio Tinto Ltd.

    480,102       34,795,815  

South32 Ltd.

    6,264,669       9,729,373  
   

 

 

 
      228,528,189  
Multi-Utilities — 0.7%            

AGL Energy Ltd.

    809,864       8,864,234  
   

 

 

 
Multiline Retail — 4.1%            

Wesfarmers Ltd.

    1,465,403       51,499,253  
   

 

 

 
Oil, Gas & Consumable Fuels — 4.1%  

Ampol Ltd.

    323,522       6,225,561  

Oil Search Ltd.

    2,556,729       6,183,009  

Origin Energy Ltd.

    2,281,839       9,450,188  

Santos Ltd.

    2,294,040       9,619,477  

Washington H Soul Pattinson & Co. Ltd.

    137,368       2,126,289  

Woodside Petroleum Ltd.

    1,233,680       17,864,161  
   

 

 

 
      51,468,685  
Real Estate Management & Development — 0.6%  

Lendlease Corp. Ltd.

    856,939       7,364,164  
   

 

 

 
Road & Rail — 0.6%            

Aurizon Holdings Ltd.

    2,477,536       7,970,336  
   

 

 

 
Software — 0.3%            

WiseTech Global Ltd.

    188,327       3,924,831  
   

 

 

 
Transportation Infrastructure — 3.4%            

Sydney Airport

    1,711,354       7,239,412  
 

 

 

C H E D U L E    O F    N V E S T  M E N T S

  16


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Australia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Transportation Infrastructure (continued)            

Transurban Group

    3,537,644     $ 35,214,912  
   

 

 

 
      42,454,324  
   

 

 

 

Total Common Stocks — 99.1%
(Cost: $1,492,530,903)

      1,251,903,131  
   

 

 

 

Short-Term Investments

   

Money Market Funds — 0.0%

   

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(c)(d)

    494,000       494,000  
   

 

 

 

Total Short-Term Investments — 0.0%
(Cost: $494,000)

      494,000  
   

 

 

 

Total Investments in Securities — 99.1%
(Cost: $1,493,024,903)

      1,252,397,131  

Other Assets, Less Liabilities — 0.9%

      10,861,674  
   

 

 

 

Net Assets — 100.0%

    $ 1,263,258,805  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares(a)

   $     $     $ (91 )(b)     $ 91     $     $           $ 2,211 (c)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

     603,000             (109,000 )(b)                  494,000       494,000       9,715        
        

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
         $ 91     $     $ 494,000       $ 11,926     $  
        

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

As of period end, the entity is no longer held.

 
  (b) 

Represents net amount purchased (sold).

 
  (c) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
  Value/
Unrealized
Appreciation
(Depreciation)
 
Long Contracts                             

ASX SPI 200 Index

     101          09/17/20        $11,260   $ 49,740  
              

 

 

 

 

 

17  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Australia ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 49,740  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ (3,101,199
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (57,156
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:        

Average notional value of contracts — long

   $ 11,464,242  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

      Level 1        Level 2        Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 1,251,902,905        $        $ 226        $ 1,251,903,131  

Money Market Funds

     494,000                            494,000  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,252,396,905        $        $ 226        $ 1,252,397,131  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 49,740        $             —        $             —        $ 49,740  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E    O F    N V E S T  M E N T S

  18


Schedule of Investments

August 31, 2020

  

iShares® MSCI Canada ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 0.3%            

CAE Inc.

    442,231     $ 7,018,947  
   

 

 

 
Airlines — 0.2%            

Air Canada(a)(b)

    264,465       3,572,343  
   

 

 

 
Auto Components — 1.0%            

Magna International Inc.

    464,479       22,643,775  
   

 

 

 
Banks — 24.0%            

Bank of Montreal

    1,008,983       64,103,467  

Bank of Nova Scotia (The)

    1,897,946       82,111,529  

Canadian Imperial Bank of Commerce

    704,442       55,989,880  

National Bank of Canada

    533,946       29,382,500  

Royal Bank of Canada

    2,242,076       170,923,987  

Toronto-Dominion Bank (The)

    2,845,519       142,106,697  
   

 

 

 
      544,618,060  
Capital Markets — 3.6%            

Brookfield Asset Management Inc., Class A

    2,102,731       71,040,499  

CI Financial Corp.

    372,749       5,298,217  

IGM Financial Inc.

    148,146       3,619,085  

TMX Group Ltd.

    25,155       2,647,265  
   

 

 

 
      82,605,066  
Chemicals — 1.5%            

Nutrien Ltd.

    908,926       33,700,614  
   

 

 

 
Commercial Services & Supplies — 0.1%        

Ritchie Bros Auctioneers Inc.

    38,818       2,273,756  
   

 

 

 
Construction & Engineering — 0.5%            

WSP Global Inc.

    183,605       12,469,555  
   

 

 

 
Containers & Packaging — 0.4%            

CCL Industries Inc., Class B, NVS

    247,732       9,166,246  
   

 

 

 
Diversified Financial Services — 0.3%            

Onex Corp.

    143,118       6,956,263  
   

 

 

 
Diversified Telecommunication Services — 1.0%  

BCE Inc.

    250,378       10,772,624  

TELUS Corp.

    644,552       11,882,374  
   

 

 

 
      22,654,998  
Electric Utilities — 2.4%            

Emera Inc.

    387,786       15,848,348  

Fortis Inc.

    697,717       27,936,525  

Hydro One Ltd.(c)

    533,616       11,057,701  
   

 

 

 
      54,842,574  
Equity Real Estate Investment Trusts (REITs) — 0.5%  

Canadian Apartment Properties REIT(b)

    141,995       4,904,083  

First Capital Real Estate Investment Trust

    203,096       2,132,356  

RioCan REIT

    272,070       3,176,012  

SmartCentres Real Estate Investment Trust

    136,669       2,154,481  
   

 

 

 
      12,366,932  
Food & Staples Retailing — 4.2%  

Alimentation Couche-Tard Inc., Class B

    1,375,782       44,949,568  

Empire Co. Ltd., Class A, NVS

    290,131       7,559,728  

George Weston Ltd.

    125,824       9,099,655  

Loblaw Companies Ltd.

    291,740       15,093,590  

Metro Inc.

    408,329       18,464,826  
   

 

 

 
      95,167,367  
Security   Shares     Value  
Food Products — 0.4%            

Saputo Inc.

    399,521     $ 9,977,676  
   

 

 

 
Gas Utilities — 0.3%            

AltaGas Ltd.

    477,490       6,182,322  
   

 

 

 
Hotels, Restaurants & Leisure — 1.1%  

Restaurant Brands International Inc.

    452,791       24,558,686  
   

 

 

 
Insurance — 6.9%            

Fairfax Financial Holdings Ltd.

    43,110       13,303,734  

Great-West Lifeco Inc.

    459,492       9,384,153  

iA Financial Corp. Inc.

    180,149       6,491,420  

Intact Financial Corp.

    222,402       23,847,257  

Manulife Financial Corp.

    3,085,671       45,564,534  

Power Corp. of Canada

    907,271       18,132,190  

Sun Life Financial Inc.

    931,597       38,924,088  
   

 

 

 
      155,647,376  
IT Services — 8.9%            

CGI Inc.(a)

    382,110       26,868,965  

Shopify Inc., Class A(a)

    163,137       174,440,587  
   

 

 

 
      201,309,552  
Media — 1.0%            

Quebecor Inc., Class B

    296,697       7,364,198  

Shaw Communications Inc., Class B, NVS

    763,637       14,294,567  
   

 

 

 
      21,658,765  
Metals & Mining — 12.2%  

Agnico Eagle Mines Ltd.

    382,142       31,540,390  

B2Gold Corp.

    541,168       3,638,384  

Barrick Gold Corp.

    2,801,880       83,091,940  

First Quantum Minerals Ltd.

    1,154,499       11,439,105  

Franco-Nevada Corp.

    298,171       44,892,133  

Kinross Gold Corp.(a)

    2,038,123       18,113,868  

Kirkland Lake Gold Ltd.(b)

    439,471       23,441,601  

Lundin Mining Corp.

    1,118,843       7,015,578  

Pan American Silver Corp.

    106,391       3,845,084  

Teck Resources Ltd., Class B

    819,405       9,458,422  

Wheaton Precious Metals Corp.

    712,208       38,076,986  

Yamana Gold Inc.

    399,453       2,477,133  
   

 

 

 
      277,030,624  
Multi-Utilities — 1.0%            

Algonquin Power & Utilities Corp.

    944,475       13,105,728  

Atco Ltd., Class I, NVS

    131,685       4,016,395  

Canadian Utilities Ltd., Class A, NVS

    221,188       5,557,922  
   

 

 

 
      22,680,045  
Multiline Retail — 1.3%            

Canadian Tire Corp. Ltd., Class A, NVS

    96,879       10,145,546  

Dollarama Inc.

    481,706       18,825,335  
   

 

 

 
      28,970,881  
Oil, Gas & Consumable Fuels — 13.3%  

Cameco Corp.

    669,667       7,765,968  

Canadian Natural Resources Ltd.

    1,882,423       37,158,693  

Cenovus Energy Inc.

    1,782,687       8,428,069  

Enbridge Inc.

    2,767,673       88,641,156  

Imperial Oil Ltd.

    445,794       7,359,476  

Inter Pipeline Ltd.

    710,417       7,507,918  

Keyera Corp.

    371,788       6,796,876  

Parkland Corp./Canada

    251,244       7,128,816  

Pembina Pipeline Corp.

    878,966       21,789,479  

Suncor Energy Inc.

    2,431,111       39,052,269  
 

 

 

19  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Canada ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Oil, Gas & Consumable Fuels (continued)            

TC Energy Corp.

    1,472,592     $ 68,930,800  
   

 

 

 
      300,559,520  
Pharmaceuticals — 0.7%            

Bausch Health Companies Inc.(a)

    519,352       8,629,625  

Canopy Growth Corp.(a)(b)

    358,134       5,912,324  

Cronos Group Inc.(a)(b)

    360,040       1,997,843  
   

 

 

 
      16,539,792  
Professional Services — 1.0%            

Thomson Reuters Corp.

    306,114       23,425,785  
   

 

 

 
Road & Rail — 7.3%            

Canadian National Railway Co.

    963,330       101,334,671  

Canadian Pacific Railway Ltd.

    216,700       64,179,257  
   

 

 

 
      165,513,928  
Software — 2.7%            

BlackBerry Ltd.(a)

    921,114       4,807,226  

Constellation Software Inc.

    31,868       36,931,856  

Open Text Corp.

    434,460       19,726,508  
   

 

 

 
      61,465,590  
Textiles, Apparel & Luxury Goods — 0.3%            

Gildan Activewear Inc.(b)

    347,089       6,736,928  
   

 

 

 
Wireless Telecommunication Services — 1.1%  

Rogers Communications Inc., Class B, NVS

    573,644       23,888,809  
   

 

 

 

Total Common Stocks — 99.5%
(Cost: $2,549,116,378)

      2,256,202,775  
   

 

 

 
Security   Shares     Value  
Short-Term Investments            

Money Market Funds — 0.6%

   

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(d)(e)(f)

    12,131,561     $ 12,143,692  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(d)(e)

    945,000       945,000  
   

 

 

 
      13,088,692  
   

 

 

 

Total Short-Term Investments — 0.6%
(Cost: $13,073,890)

      13,088,692  
   

 

 

 

Total Investments in Securities — 100.1%
(Cost: $2,562,190,268)

 

    2,269,291,467  

Other Assets, Less Liabilities — (0.1)%

      (3,257,054
   

 

 

 

Net Assets — 100.0%

    $   2,266,034,413  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 52,333,598     $     $ (40,209,917 )(a)    $ 17,029     $ 2,982     $ 12,143,692       12,131,561     $ 2,045,033 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    986,000             (41,000 )(a)                   945,000       945,000       13,958        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 17,029     $ 2,982     $ 13,088,692       $ 2,058,991     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
   Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

               

S&P/TSX 60 Index

     62          09/17/20        $ 9,412    $ 520,021  
               

 

 

 

 

 

C H E D U L E    O F    N V E S T  M E N T S

  20


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Canada ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 520,021  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 546,718  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 451,059  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:        

Average notional value of contracts — long

   $ 9,883,341  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

      Level 1        Level 2        Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 2,256,202,775        $        $        $ 2,256,202,775  

Money Market Funds

     13,088,692                            13,088,692  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 2,269,291,467        $             —        $             —        $ 2,269,291,467  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 520,021        $        $        $ 520,021  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

21  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments

August 31, 2020

  

iShares® MSCI Japan ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Air Freight & Logistics — 0.4%            

SG Holdings Co. Ltd.

    447,100     $ 20,553,657  

Yamato Holdings Co. Ltd.

    862,800       22,553,459  
   

 

 

 
      43,107,116  
Airlines — 0.1%            

ANA Holdings Inc.(a)

    322,000       8,038,993  

Japan Airlines Co. Ltd.

    313,400       6,247,608  
   

 

 

 
      14,286,601  
Auto Components — 2.2%            

Aisin Seiki Co. Ltd.

    452,900       15,567,170  

Bridgestone Corp.

    1,499,300       47,518,952  

Denso Corp.

    1,212,600       50,964,762  

JTEKT Corp.

    578,800       4,470,151  

Koito Manufacturing Co. Ltd.

    292,500       14,177,472  

NGK Spark Plug Co. Ltd.

    435,100       7,487,930  

Stanley Electric Co. Ltd.

    366,800       10,515,083  

Sumitomo Electric Industries Ltd.

    2,111,800       24,872,820  

Sumitomo Rubber Industries Ltd.

    481,800       4,638,765  

Toyoda Gosei Co. Ltd.

    180,200       3,933,830  

Toyota Industries Corp.

    408,800       23,823,697  

Yokohama Rubber Co. Ltd. (The)

    334,500       5,239,328  
   

 

 

 
      213,209,960  
Automobiles — 6.6%            

Honda Motor Co. Ltd.

    4,572,500       117,670,352  

Isuzu Motors Ltd.

    1,545,700       15,290,106  

Mazda Motor Corp.

    1,579,500       10,128,342  

Mitsubishi Motors Corp.

    1,878,000       4,515,913  

Nissan Motor Co. Ltd.

    6,501,800       26,456,002  

Subaru Corp.

    1,723,400       35,794,130  

Suzuki Motor Corp.

    1,031,800       42,315,038  

Toyota Motor Corp.

    5,948,700       393,008,555  

Yamaha Motor Co. Ltd.

    785,700       12,380,637  
   

 

 

 
      657,559,075  
Banks — 4.7%            

Aozora Bank Ltd.

    330,000       5,928,144  

Bank of Kyoto Ltd. (The)

    161,400       6,879,419  

Chiba Bank Ltd. (The)

    1,503,600       7,798,387  

Concordia Financial Group Ltd.

    2,883,800       9,572,329  

Fukuoka Financial Group Inc.

    486,000       8,043,095  

Japan Post Bank Co. Ltd.

    1,123,900       9,040,376  

Mebuki Financial Group Inc.

    2,606,880       6,317,772  

Mitsubishi UFJ Financial Group Inc.

    34,284,480       143,060,799  

Mizuho Financial Group Inc.

    67,658,180       91,746,393  

Resona Holdings Inc.

    5,836,800       21,465,906  

Seven Bank Ltd.

    1,656,500       4,155,113  

Shinsei Bank Ltd.

    430,800       5,033,346  

Shizuoka Bank Ltd. (The)

    1,168,400       8,120,240  

Sumitomo Mitsui Financial Group Inc.

    3,658,800       107,578,277  

Sumitomo Mitsui Trust Holdings Inc.

    948,032       27,454,442  
   

 

 

 
      462,194,038  
Beverages — 1.1%            

Asahi Group Holdings Ltd.

    1,082,000       37,884,540  

Coca-Cola Bottlers Japan Holdings Inc.

    344,100       5,736,893  

Ito En Ltd.

    150,900       9,121,307  

Kirin Holdings Co. Ltd.

    2,304,100       45,301,980  

Suntory Beverage & Food Ltd.

    391,600       15,103,437  
   

 

 

 
      113,148,157  
Security   Shares     Value  
Biotechnology — 0.1%            

PeptiDream Inc.(a)

    263,300     $ 10,688,920  
   

 

 

 
Building Products — 1.8%            

AGC Inc.

    539,200       15,279,325  

Daikin Industries Ltd.

    698,000       131,411,854  

LIXIL Group Corp.

    746,600       13,728,794  

TOTO Ltd.

    396,700       17,413,725  
   

 

 

 
      177,833,698  
Capital Markets — 1.2%            

Daiwa Securities Group Inc.

    4,049,000       18,250,950  

Japan Exchange Group Inc.

    1,423,700       36,893,089  

Nomura Holdings Inc.

    8,799,900       45,184,078  

SBI Holdings Inc.

    661,710       15,056,874  
   

 

 

 
      115,384,991  
Chemicals — 3.9%            

Air Water Inc.

    513,600       7,216,408  

Asahi Kasei Corp.

    3,509,900       29,457,410  

Daicel Corp.

    664,600       4,825,706  

JSR Corp.

    569,000       12,126,361  

Kansai Paint Co. Ltd.

    498,500       11,888,410  

Kuraray Co. Ltd.

    889,300       9,098,878  

Mitsubishi Chemical Holdings Corp.

    3,575,100       20,895,346  

Mitsubishi Gas Chemical Co. Inc.

    444,600       7,940,708  

Mitsui Chemicals Inc.

    516,600       12,144,691  

Nippon Paint Holdings Co. Ltd.

    409,100       35,105,946  

Nissan Chemical Corp.

    348,200       18,453,336  

Nitto Denko Corp.

    443,500       26,933,283  

Shin-Etsu Chemical Co. Ltd.

    993,300       120,690,938  

Showa Denko KK

    378,300       7,373,720  

Sumitomo Chemical Co. Ltd.

    4,173,300       13,577,146  

Taiyo Nippon Sanso Corp.

    425,800       7,492,506  

Teijin Ltd.

    500,600       7,855,141  

Toray Industries Inc.

    3,872,600       18,394,348  

Tosoh Corp.

    724,800       10,764,864  
   

 

 

 
      382,235,146  
Commercial Services & Supplies — 1.0%            

Dai Nippon Printing Co. Ltd.

    679,300       14,438,608  

Park24 Co. Ltd.

    306,100       5,530,554  

Secom Co. Ltd.

    588,400       55,624,593  

Sohgo Security Services Co. Ltd.

    199,000       9,298,364  

Toppan Printing Co. Ltd.

    732,200       11,378,807  
   

 

 

 
      96,270,926  
Construction & Engineering — 0.7%            

JGC Holdings Corp.

    611,000       6,746,956  

Kajima Corp.

    1,261,000       15,708,247  

Obayashi Corp.

    1,813,500       17,733,976  

Shimizu Corp.

    1,541,700       11,863,145  

Taisei Corp.

    534,500       18,472,747  
   

 

 

 
      70,525,071  
Construction Materials — 0.1%            

Taiheiyo Cement Corp.

    337,300       8,575,235  
   

 

 

 
Consumer Finance — 0.0%            

Acom Co. Ltd.

    1,110,200       4,334,224  
   

 

 

 
Diversified Consumer Services — 0.0%            

Benesse Holdings Inc.

    199,400       5,078,782  
   

 

 

 
Diversified Financial Services — 0.6%            

Mitsubishi UFJ Lease & Finance Co. Ltd.

    1,126,500       5,322,047  
 

 

 

C H E D U L E    O F    N V E S T  M E N T S

  22


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Diversified Financial Services (continued)  

ORIX Corp.

    3,685,300     $ 45,942,445  

Tokyo Century Corp.

    119,900       6,150,748  
   

 

 

 
      57,415,240  
Diversified Telecommunication Services — 0.8%  

Nippon Telegraph & Telephone Corp.

    3,610,400       82,101,745  
   

 

 

 
Electric Utilities — 0.9%            

Chubu Electric Power Co. Inc.

    1,801,500       22,245,879  

Chugoku Electric Power Co. Inc. (The)

    813,300       9,908,846  

Kansai Electric Power Co. Inc. (The)

    1,965,200       19,347,153  

Kyushu Electric Power Co. Inc.

    1,061,400       9,398,412  

Tohoku Electric Power Co. Inc.

    1,199,000       12,154,510  

Tokyo Electric Power Co. Holdings Inc.(a)

    4,035,700       11,873,623  
   

 

 

 
      84,928,423  
Electrical Equipment — 1.9%            

Fuji Electric Co. Ltd.

    355,400       11,109,916  

Mitsubishi Electric Corp.

    5,110,300       70,501,852  

Nidec Corp.

    1,254,300       105,399,286  
   

 

 

 
      187,011,054  
Electronic Equipment, Instruments & Components — 5.9%  

Hamamatsu Photonics KK

    395,000       17,990,947  

Hirose Electric Co. Ltd.

    90,458       10,244,713  

Hitachi Ltd.

    2,714,700       90,366,269  

Keyence Corp.

    511,604       210,729,999  

Kyocera Corp.

    898,500       51,574,044  

Murata Manufacturing Co. Ltd.

    1,608,900       95,279,287  

Omron Corp.

    518,600       37,998,227  

Shimadzu Corp.

    622,200       18,570,069  

TDK Corp.

    363,400       37,729,587  

Yokogawa Electric Corp.

    636,500       10,401,759  
   

 

 

 
      580,884,901  
Entertainment — 2.4%            

Konami Holdings Corp.

    260,800       10,046,377  

Nexon Co. Ltd.

    1,357,100       31,775,938  

Nintendo Co. Ltd.

    313,900       167,954,038  

Square Enix Holdings Co. Ltd.

    259,000       17,072,092  

Toho Co. Ltd.

    312,800       11,887,255  
   

 

 

 
      238,735,700  
Equity Real Estate Investment Trusts (REITs) — 1.5%  

Daiwa House REIT Investment Corp.

    5,530       14,444,905  

GLP J-REIT

    10,184       15,711,277  

Japan Prime Realty Investment Corp.

    2,284       6,902,937  

Japan Real Estate Investment Corp.

    3,687       20,652,346  

Japan Retail Fund Investment Corp.

    7,335       11,060,083  

Nippon Building Fund Inc.

    3,562       21,463,699  

Nippon Prologis REIT Inc.

    5,889       19,269,961  

Nomura Real Estate Master Fund Inc.(a)

    11,839       15,172,051  

Orix JREIT Inc.

    7,306       10,864,786  

United Urban Investment Corp.

    8,257       9,187,854  
   

 

 

 
      144,729,899  
Food & Staples Retailing — 1.7%            

Aeon Co. Ltd.

    1,831,400       45,402,901  

Cosmos Pharmaceutical Corp.

    56,100       9,866,236  

Kobe Bussan Co. Ltd.

    171,600       10,113,631  

Lawson Inc.

    141,100       6,958,867  

Seven & i Holdings Co. Ltd.

    2,113,280       68,413,317  

Sundrug Co. Ltd.

    199,800       7,432,797  

Tsuruha Holdings Inc.

    103,300       13,793,465  
Security   Shares     Value  
Food & Staples Retailing (continued)  

Welcia Holdings Co. Ltd.

    264,000     $ 11,289,924  
   

 

 

 
      173,271,138  
Food Products — 1.6%            

Ajinomoto Co. Inc.

    1,305,000       24,316,847  

Calbee Inc.

    245,500       7,651,256  

Kikkoman Corp.

    405,600       22,030,798  

MEIJI Holdings Co. Ltd.

    320,456       25,867,352  

NH Foods Ltd.

    231,500       10,489,486  

Nisshin Seifun Group Inc.

    553,175       9,133,947  

Nissin Foods Holdings Co. Ltd.

    177,900       17,782,451  

Toyo Suisan Kaisha Ltd.

    248,900       14,129,643  

Yakult Honsha Co. Ltd.

    334,800       19,100,759  

Yamazaki Baking Co. Ltd.

    336,500       5,476,911  
   

 

 

 
      155,979,450  
Gas Utilities — 0.5%            

Osaka Gas Co. Ltd.

    1,050,700       20,539,404  

Toho Gas Co. Ltd.

    205,900       9,067,405  

Tokyo Gas Co. Ltd.

    1,052,100       23,379,449  
   

 

 

 
      52,986,258  
Health Care Equipment & Supplies — 3.0%  

Asahi Intecc Co. Ltd.

    547,300       16,231,397  

Hoya Corp.

    1,054,200       103,536,169  

Olympus Corp.

    3,262,100       64,568,324  

Sysmex Corp.

    469,400       40,975,395  

Terumo Corp.

    1,807,400       73,458,381  
   

 

 

 
      298,769,666  
Health Care Providers & Services — 0.3%  

Alfresa Holdings Corp.

    523,600       10,516,932  

Medipal Holdings Corp.

    512,300       9,792,372  

Suzuken Co. Ltd.

    188,240       6,993,876  
   

 

 

 
      27,303,180  
Health Care Technology — 0.7%            

M3 Inc.

    1,234,800       71,494,856  
   

 

 

 
Hotels, Restaurants & Leisure — 0.9%  

McDonald’s Holdings Co. Japan Ltd.

    184,300       9,037,295  

Oriental Land Co. Ltd.

    559,900       75,976,812  
   

 

 

 
      85,014,107  
Household Durables — 4.3%            

Casio Computer Co. Ltd.

    543,100       8,752,491  

Iida Group Holdings Co. Ltd.

    412,480       8,051,616  

Nikon Corp.

    844,600       6,626,500  

Panasonic Corp.

    6,180,915       56,997,659  

Rinnai Corp.

    101,200       9,361,799  

Sekisui Chemical Co. Ltd.

    1,002,400       16,041,047  

Sekisui House Ltd.

    1,728,300       34,160,185  

Sharp Corp.

    590,800       7,337,297  

Sony Corp.

    3,536,900       277,128,597  
   

 

 

 
      424,457,191  
Household Products — 0.8%            

Lion Corp.

    628,400       13,309,316  

Pigeon Corp.

    322,200       14,720,722  

Unicharm Corp.

    1,129,800       49,157,407  
   

 

 

 
      77,187,445  
Independent Power and Renewable Electricity Producers — 0.1%  

Electric Power Development Co. Ltd.

    386,600       5,829,350  
   

 

 

 
Industrial Conglomerates — 0.4%            

Keihan Holdings Co. Ltd.

    269,900       11,631,317  
 

 

 

23  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Industrial Conglomerates (continued)  

Toshiba Corp.

    1,080,400     $ 31,124,730  
   

 

 

 
      42,756,047  
Insurance — 2.6%            

Dai-ichi Life Holdings Inc.

    3,019,600       45,716,137  

Japan Post Holdings Co. Ltd.

    4,401,700       32,529,702  

Japan Post Insurance Co. Ltd.

    632,500       10,103,777  

MS&AD Insurance Group Holdings Inc.

    1,245,840       34,551,515  

Sompo Holdings Inc.

    941,550       35,337,536  

T&D Holdings Inc.

    1,505,100       15,754,265  

Tokio Marine Holdings Inc.

    1,772,000       81,711,349  
   

 

 

 
        255,704,281  
Interactive Media & Services — 0.7%            

Kakaku.com Inc.

    380,000       10,130,228  

LINE Corp.(a)

    169,200       8,615,965  

Z Holdings Corp.

    7,430,300       49,397,534  
   

 

 

 
      68,143,727  
Internet & Direct Marketing Retail — 0.4%  

Mercari Inc.(a)

    238,600       10,822,443  

Rakuten Inc.

    2,412,800       21,228,181  

ZOZO Inc.

    305,200       8,588,022  
   

 

 

 
      40,638,646  
IT Services — 2.5%            

Fujitsu Ltd.

    551,600       71,885,633  

GMO Payment Gateway Inc.

    114,548       12,108,851  

Itochu Techno-Solutions Corp.

    269,300       9,751,634  

NEC Corp.

    694,000       36,583,149  

Nomura Research Institute Ltd.

    895,712       23,810,761  

NTT Data Corp.

    1,764,000       20,160,950  

Obic Co. Ltd.

    195,500       34,640,436  

Otsuka Corp.

    291,500       14,293,932  

SCSK Corp.

    147,200       7,967,636  

TIS Inc.

    625,000       12,494,695  
   

 

 

 
      243,697,677  
Leisure Products — 1.0%            

Bandai Namco Holdings Inc.

    559,198       34,734,662  

Sega Sammy Holdings Inc.

    489,500       5,673,021  

Shimano Inc.

    208,000       44,034,136  

Yamaha Corp.

    376,900       18,374,964  
   

 

 

 
      102,816,783  
Machinery — 5.3%            

Amada Co. Ltd.

    906,500       8,069,555  

Daifuku Co. Ltd.

    282,700       24,872,375  

FANUC Corp.

    538,000       94,389,080  

Hino Motors Ltd.

    806,300       5,428,810  

Hitachi Construction Machinery Co. Ltd.

    302,100       10,597,501  

Hoshizaki Corp.

    142,300       10,882,673  

Kawasaki Heavy Industries Ltd.

    396,700       5,618,779  

Komatsu Ltd.

    2,449,800       53,225,887  

Kubota Corp.

    2,903,900       52,480,780  

Kurita Water Industries Ltd.

    277,300       8,681,560  

Makita Corp.

    626,000       28,925,456  

MINEBEA MITSUMI Inc.

    1,014,100       17,586,213  

MISUMI Group Inc.

    796,900       20,905,991  

Mitsubishi Heavy Industries Ltd.

    895,400       22,236,182  

Miura Co. Ltd.

    246,000       10,067,801  

Nabtesco Corp.

    313,800       9,927,851  

NGK Insulators Ltd.

    723,000       10,274,516  

NSK Ltd.

    994,100       7,621,324  
Security   Shares     Value  
Machinery (continued)            

SMC Corp.

    160,600     $ 88,216,795  

Sumitomo Heavy Industries Ltd.

    309,100       7,033,413  

THK Co. Ltd.

    336,500       7,888,528  

Yaskawa Electric Corp.

    673,200       24,218,568  
   

 

 

 
      529,149,638  
Marine — 0.1%            

Nippon Yusen KK

    430,200       6,726,122  
   

 

 

 
Media — 0.4%            

CyberAgent Inc.

    284,100       15,136,640  

Dentsu Group Inc.

    608,500       15,974,954  

Hakuhodo DY Holdings Inc.

    650,500       8,097,129  
   

 

 

 
      39,208,723  
Metals & Mining — 0.7%            

Hitachi Metals Ltd.

    594,900       8,925,323  

JFE Holdings Inc.

    1,368,050       10,359,226  

Maruichi Steel Tube Ltd.

    159,800       4,284,138  

Mitsubishi Materials Corp.

    313,300       6,582,417  

Nippon Steel Corp.

    2,264,570       22,305,091  

Sumitomo Metal Mining Co. Ltd.

    650,100       19,844,158  
   

 

 

 
      72,300,353  
Multiline Retail — 0.5%            

Isetan Mitsukoshi Holdings Ltd.

    948,060       5,221,058  

Marui Group Co. Ltd.

    530,000       9,680,890  

Pan Pacific International Holdings Corp.

    1,155,900       27,152,123  

Ryohin Keikaku Co. Ltd.

    665,100       10,411,297  
   

 

 

 
      52,465,368  
Oil, Gas & Consumable Fuels — 0.6%  

ENEOS Holdings Inc.

    8,576,195       33,610,888  

Idemitsu Kosan Co. Ltd.

    547,829       12,067,788  

Inpex Corp.

    2,860,300       18,174,078  
   

 

 

 
      63,852,754  
Paper & Forest Products — 0.1%  

Oji Holdings Corp.

    2,419,800       10,930,116  
   

 

 

 
Personal Products — 2.0%            

Kao Corp.

    1,351,900       102,866,529  

Kobayashi Pharmaceutical Co. Ltd.

    138,800       12,355,811  

Kose Corp.

    93,300       10,936,103  

Pola Orbis Holdings Inc.

    254,600       4,612,067  

Shiseido Co. Ltd.

    1,119,600       65,152,073  
   

 

 

 
      195,922,583  
Pharmaceuticals — 7.3%            

Astellas Pharma Inc.

    5,212,750       81,820,193  

Chugai Pharmaceutical Co. Ltd.

    1,883,700       83,860,132  

Daiichi Sankyo Co. Ltd.

    1,590,869       141,722,282  

Eisai Co. Ltd.

    706,400       61,717,158  

Hisamitsu Pharmaceutical Co. Inc.

    143,000       6,594,087  

Kyowa Kirin Co. Ltd.

    756,200       19,553,024  

Nippon Shinyaku Co. Ltd.

    128,800       10,627,564  

Ono Pharmaceutical Co. Ltd.

    1,035,900       31,249,414  

Otsuka Holdings Co. Ltd.

    1,092,400       47,973,094  

Santen Pharmaceutical Co. Ltd.

    1,006,000       19,172,295  

Shionogi & Co. Ltd.

    742,800       41,207,906  

Sumitomo Dainippon Pharma Co. Ltd.

    504,800       6,388,246  

Taisho Pharmaceutical Holdings Co. Ltd.

    94,400       5,804,027  

Takeda Pharmaceutical Co. Ltd.

    4,421,300       165,061,311  
   

 

 

 
        722,750,733  
 

 

 

C H E D U L E    O F    N V E S T  M E N T S

  24


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Professional Services — 1.7%  

Nihon M&A Center Inc.

    418,400     $ 20,832,213  

Persol Holdings Co. Ltd.

    494,900       7,723,697  

Recruit Holdings Co. Ltd.

    3,567,900         135,455,377  
   

 

 

 
      164,011,287  
Real Estate Management & Development — 2.1%  

Aeon Mall Co. Ltd.

    289,200       3,826,183  

Daito Trust Construction Co. Ltd.

    183,600       16,276,332  

Daiwa House Industry Co. Ltd.

    1,585,500       42,468,884  

Hulic Co. Ltd.

    843,200       7,680,996  

Mitsubishi Estate Co. Ltd.

    3,311,400       51,882,607  

Mitsui Fudosan Co. Ltd.

    2,604,700       47,159,451  

Nomura Real Estate Holdings Inc.

    326,000       6,237,484  

Sumitomo Realty & Development Co. Ltd.

    865,100       25,542,252  

Tokyu Fudosan Holdings Corp.

    1,698,100       7,301,934  
   

 

 

 
      208,376,123  
Road & Rail — 3.2%            

Central Japan Railway Co.

    404,400       60,596,124  

East Japan Railway Co.

    847,700       55,133,075  

Hankyu Hanshin Holdings Inc.

    641,300       20,833,406  

Keikyu Corp.

    618,700       9,229,887  

Keio Corp.

    286,200       17,299,656  

Keisei Electric Railway Co. Ltd.

    361,900       10,647,631  

Kintetsu Group Holdings Co. Ltd.

    481,900       21,176,425  

Kyushu Railway Co.

    417,800       9,211,338  

Nagoya Railroad Co. Ltd.

    522,900       14,590,609  

Nippon Express Co. Ltd.

    201,900       11,937,508  

Odakyu Electric Railway Co. Ltd.

    826,400       20,440,824  

Seibu Holdings Inc.

    589,700       6,483,947  

Tobu Railway Co. Ltd.

    529,600       16,530,492  

Tokyu Corp.

    1,398,000       18,693,611  

West Japan Railway Co.

    454,500       23,876,840  
   

 

 

 
      316,681,373  
Semiconductors & Semiconductor Equipment — 2.1%  

Advantest Corp.

    558,600       26,706,606  

Disco Corp.

    80,700       18,819,473  

Lasertec Corp.

    211,200       15,932,859  

Renesas Electronics Corp.(a)

    2,151,600       13,533,096  

Rohm Co. Ltd.

    247,600       15,923,731  

SUMCO Corp.

    738,000       10,007,487  

Tokyo Electron Ltd.

    418,852       107,235,907  
   

 

 

 
      208,159,159  
Software — 0.4%            

Oracle Corp. Japan

    107,100       12,563,761  

Trend Micro Inc.

    374,600       23,172,955  
   

 

 

 
      35,736,716  
Specialty Retail — 1.9%            

ABC-Mart Inc.

    91,500       4,814,654  

Fast Retailing Co. Ltd.

    163,600       97,624,669  

Hikari Tsushin Inc.

    58,800       14,205,818  

Nitori Holdings Co. Ltd.

    224,300       46,913,801  

Shimamura Co. Ltd.

    61,100       5,041,492  

USS Co. Ltd.

    608,900       10,283,746  
Security   Shares     Value  
Specialty Retail (continued)  

Yamada Denki Co. Ltd.

    2,029,800     $ 10,891,190  
   

 

 

 
      189,775,370  
Technology Hardware, Storage & Peripherals — 1.3%  

Brother Industries Ltd.

    619,900       10,259,084  

Canon Inc.

    2,800,050       48,372,781  

FUJIFILM Holdings Corp.

    1,008,400       47,983,275  

Ricoh Co. Ltd.

    1,880,600       14,063,047  

Seiko Epson Corp.

    778,500       9,293,988  
   

 

 

 
      129,972,175  
Tobacco — 0.6%            

Japan Tobacco Inc.

    3,358,900       62,794,278  
   

 

 

 
Trading Companies & Distributors — 3.7%  

ITOCHU Corp.

    3,772,600       96,889,774  

Marubeni Corp.

    4,619,600       27,862,664  

Mitsubishi Corp.

    3,750,300       88,855,003  

Mitsui & Co. Ltd.

    4,574,200       82,559,468  

MonotaRO Co. Ltd.

    350,200       13,836,937  

Sumitomo Corp.

    3,326,100       43,111,174  

Toyota Tsusho Corp.

    593,700       17,299,571  
   

 

 

 
      370,414,591  
Transportation Infrastructure — 0.1%  

Japan Airport Terminal Co. Ltd.

    142,500       6,409,779  

Kamigumi Co. Ltd.

    278,300       5,747,343  
   

 

 

 
      12,157,122  
Wireless Telecommunication Services — 5.7%  

KDDI Corp.

    4,523,800       131,305,167  

NTT DOCOMO Inc.

    3,169,400       88,436,556  

Softbank Corp.

    5,362,100       70,410,903  

SoftBank Group Corp.

    4,396,000       273,514,150  
   

 

 

 
      563,666,776  
   

 

 

 

Total Common Stocks — 99.2%
(Cost: $10,859,180,714)

 

    9,831,340,064  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 0.1%            

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(b)(c)

    4,320,000       4,320,000  
   

 

 

 

Total Short-Term Investments — 0.1%
(Cost: $4,320,000)

 

    4,320,000  
   

 

 

 

Total Investments in Securities — 99.3%
(Cost: $10,863,500,714)

 

    9,835,660,064  

Other Assets, Less Liabilities — 0.7%

 

    73,366,284  
   

 

 

 

Net Assets — 100.0%

    $   9,909,026,348  
   

 

 

 

 

(a)

Non-income producing security.

(b) 

Affiliate of the Fund.

(c) 

Annualized 7-day yield as of period-end.

 

 

 

25  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares(a)

  $ 53,779,438     $     $ (53,778,604 )(b)    $ 11,409     $ (12,243   $           $ 223,509 (c)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

    5,212,000             (892,000 )(b)                   4,320,000       4,320,000       64,061        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 11,409     $ (12,243   $ 4,320,000       $ 287,570     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

As of period end, the entity is no longer held.

 
  (b) 

Represents net amount purchased (sold).

 
  (c) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

         
Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

                 

TOPIX Index

     431          09/10/20        $ 65,679        $ (61,167
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

   
      Equity
Contracts
 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 61,167  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

   
      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 15,247,664  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 713,047  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 79,199,717  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

 

C H E D U L E    O F    N V E S T  M E N T S

  26


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Japan ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

         
      Level 1        Level 2        Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 9,831,340,064        $        $        $ 9,831,340,064  

Money Market Funds

     4,320,000                            4,320,000  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 9,835,660,064        $             —        $             —        $ 9,835,660,064  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Liabilities

                 

Futures Contracts

   $ (61,167      $        $        $ (61,167
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

27  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments

August 31, 2020

  

iShares® MSCI Mexico ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Airlines — 0.5%  

Controladora Vuela Cia. de Aviacion SAB de CV, Class A(a)

    5,695,200     $ 4,598,108  
   

 

 

 
Banks — 9.3%            

Banco del Bajio SA(a)(b)(c)

    5,938,830       4,748,676  

Grupo Financiero Banorte SAB de CV, Class O(a)

    15,926,461       55,065,124  

Grupo Financiero Inbursa SAB de CV, Class O(a)

    17,587,292       12,865,418  

Regional SAB de CV(a)

    1,907,200       4,755,365  
   

 

 

 
      77,434,583  
Beverages — 13.4%            

Arca Continental SAB de CV(c)

    3,353,529       15,296,665  

Becle SAB de CV

    4,172,688       7,971,310  

Coca-Cola Femsa SAB de CV(c)

    2,920,346       12,249,281  

Fomento Economico Mexicano SAB de CV

    13,175,010       76,668,613  
   

 

 

 
      112,185,869  
Building Products — 0.3%            

Grupo Rotoplas SAB de CV(c)

    3,048,445       2,232,778  
   

 

 

 
Capital Markets — 0.9%            

Bolsa Mexicana de Valores SAB de CV

    3,719,187       7,833,981  
   

 

 

 
Chemicals — 1.9%            

Alpek SAB de CV(c)

    3,726,200       2,790,479  

Orbia Advance Corp. SAB de CV

    8,034,042       12,906,740  
   

 

 

 
      15,697,219  
Construction Materials — 5.1%            

Cemex SAB de CV, CPO, NVS

    111,028,929       35,612,861  

Grupo Cementos de Chihuahua SAB de
CV(c)

    1,456,000       6,620,722  
   

 

 

 
      42,233,583  
Consumer Finance — 0.3%            

Gentera SAB de CV(a)(c)

    9,097,406       2,984,528  
   

 

 

 
Diversified Telecommunication Services — 1.5%  

Axtel SAB de CV, CPO(a)

    12,123,291       3,871,964  

Telesites SAB de CV(a)

    11,247,646       8,489,953  
   

 

 

 
      12,361,917  
Equity Real Estate Investment Trusts (REITs) — 5.5%  

Concentradora Fibra Danhos SA de CV

    2,950,556       2,775,836  

Fibra Uno Administracion SA de CV

    23,130,300       18,051,061  

Macquarie Mexico Real Estate Management SA de CV(a)(b)

    6,742,700       7,834,545  

PLA Administradora Industrial S. de RL de CV

    6,586,000       8,510,102  

Prologis Property Mexico SA de CV

    4,264,766       8,464,838  
   

 

 

 
      45,636,382  
Food & Staples Retailing — 11.6%  

Grupo Comercial Chedraui SA de CV

    3,399,000       3,930,764  

La Comer SAB de CV(c)

    4,524,155       6,846,386  

Wal-Mart de Mexico SAB de CV

    35,741,533       85,785,558  
   

 

 

 
      96,562,708  
Food Products — 5.5%            

Gruma SAB de CV, Class B

    1,632,235       19,301,779  

Grupo Bimbo SAB de CV, Series A(c)

    12,262,204       22,646,362  

Grupo Herdez SAB de CV

    2,242,744       3,827,401  
   

 

 

 
      45,775,542  
Gas Utilities — 1.4%            

Infraestructura Energetica Nova SAB de CV

    4,102,900       12,014,752  
   

 

 

 
Security   Shares     Value  
Hotels, Restaurants & Leisure — 0.6%            

Alsea SAB de CV(a)(c)

    4,529,066     $ 4,683,029  
   

 

 

 
Household Products — 2.2%            

Kimberly-Clark de Mexico SAB de CV, Class A

    11,553,554       18,560,859  
   

 

 

 
Industrial Conglomerates — 2.4%  

Alfa SAB de CV, Class A

    19,666,951       12,643,425  

Grupo Carso SAB de CV, Series A1

    3,635,133       7,176,921  
   

 

 

 
      19,820,346  
Insurance — 0.8%            

Qualitas Controladora SAB de CV

    1,800,500       7,078,270  
   

 

 

 
Media — 3.5%            

Grupo Televisa SAB, CPO(a)

    17,671,047       21,816,307  

Megacable Holdings SAB de CV, CPO

    2,476,900       7,128,755  
   

 

 

 
      28,945,062  
Metals & Mining — 6.8%            

Grupo Mexico SAB de CV, Series B

    14,199,386       37,889,251  

Industrias Penoles SAB de CV(c)

    1,113,273       18,568,962  
   

 

 

 
      56,458,213  
Pharmaceuticals — 0.9%            

Genomma Lab Internacional SAB de CV, Class B(a)

    7,328,393       7,688,015  
   

 

 

 
Real Estate Management & Development — 0.9%  

Corp Inmobiliaria Vesta SAB de CV

    5,009,449       7,484,647  
   

 

 

 
Transportation Infrastructure — 7.6%  

Grupo Aeroportuario del Centro Norte SAB de CV(a)

    2,555,792       11,673,077  

Grupo Aeroportuario del Pacifico SAB de CV, Class B

    2,778,149       21,602,184  

Grupo Aeroportuario del Sureste SAB de CV, Class B(a)(c)

    1,541,075       17,461,198  

Promotora y Operadora de Infraestructura SAB de CV(a)(c)

    1,754,020       13,037,740  
   

 

 

 
      63,774,199  
Wireless Telecommunication Services — 16.9%  

America Movil SAB de CV, Series L, NVS

    232,664,418       141,282,560  
   

 

 

 

Total Common Stocks — 99.8%
(Cost: $1,292,011,887)

 

    833,327,150  
   

 

 

 

Short-Term Investments

   

Money Market Funds — 1.7%

   

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(d)(e)(f)

    13,946,711       13,960,657  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(d)(e)

    574,000       574,000  
   

 

 

 
      14,534,657  
   

 

 

 

Total Short-Term Investments — 1.7%
(Cost: $14,534,142)

 

    14,534,657  
   

 

 

 

Total Investments in Securities — 101.5%
(Cost: $1,306,546,029)

 

    847,861,807  

Other Assets, Less Liabilities — (1.5)%

 

    (12,934,479
   

 

 

 

Net Assets — 100.0%

    $   834,927,328  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

All or a portion of this security is on loan.

 

 

 

C H E D U L E    O F    N V E S T  M E N T S

  28


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Mexico ETF

 

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

    

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 3,760,635     $ 10,199,252 (a)    $     $ 241     $ 529     $ 13,960,657       13,946,711     $ 52,917 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    371,000       203,000 (a)                         574,000       574,000       7,778        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 241     $ 529     $ 14,534,657       $ 60,695     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

         
Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

                 

MEX BOLSA Index

     96          09/18/20        $ 1,615        $ (86,699
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

   
      Equity
Contracts
 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 86,699  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

   
      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ (229,562
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (170,355
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 2,071,794  

 

 

29  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Mexico ETF

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

         
      Level 1        Level 2        Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 833,327,150        $        $        $ 833,327,150  

Money Market Funds

     14,534,657                            14,534,657  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 847,861,807        $                 —        $                 —        $ 847,861,807  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Liabilities

                 

Futures Contracts

   $ (86,699      $        $        $ (86,699
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E    O F    N V E S T  M E N T S

  30


Schedule of Investments  

August 31, 2020

  

iShares® MSCI South Korea ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Aerospace & Defense — 0.3%  

Korea Aerospace Industries Ltd.

    699,653     $ 13,222,670  
   

 

 

 
Air Freight & Logistics — 0.4%  

Hyundai Glovis Co. Ltd.

    170,088       20,833,239  
   

 

 

 
Airlines — 0.3%  

Korean Air Lines Co. Ltd.(a)

    978,254       14,535,048  
   

 

 

 
Auto Components — 2.6%  

Hankook Tire & Technology Co. Ltd.

    724,630       17,995,273  

Hanon Systems

    1,829,875       19,871,527  

Hyundai Mobis Co. Ltd.(a)

    478,798       90,286,011  
   

 

 

 
      128,152,811  
Automobiles — 4.7%  

Hyundai Motor Co.(a)

    1,066,448       158,454,476  

Kia Motors Corp.

    1,910,283       68,264,596  
   

 

 

 
      226,719,072  
Banks — 5.7%  

BNK Financial Group Inc.

    2,820,824       12,063,125  

Hana Financial Group Inc.

    2,135,163       50,687,429  

Industrial Bank of Korea

    2,350,491       16,007,637  

KB Financial Group Inc.

    2,757,851       85,551,654  

Shinhan Financial Group Co. Ltd.

    3,268,676       81,586,197  

Woori Financial Group Inc.

    4,164,597       29,659,475  
   

 

 

 
      275,555,517  
Biotechnology — 3.6%  

Alteogen Inc.(a)

    21,178       3,726,073  

Celltrion Inc.(a)(b)

    652,163       163,054,475  

Seegene Inc.

    28,588       6,329,358  
   

 

 

 
      173,109,906  
Capital Markets — 1.7%  

Korea Investment Holdings Co. Ltd.

    368,607       18,897,354  

Meritz Securities Co. Ltd.

    4,306,944       11,620,301  

Mirae Asset Daewoo Co. Ltd.

    3,542,318       27,732,601  

NH Investment & Securities Co. Ltd.

    1,536,444       11,588,971  

Samsung Securities Co. Ltd.

    598,208       15,183,072  
   

 

 

 
      85,022,299  
Chemicals — 5.7%  

Hanwha Solutions Corp.

    1,048,760       35,270,614  

Kumho Petrochemical Co. Ltd.

    221,691       18,755,742  

LG Chem Ltd.

    320,209       199,473,575  

Lotte Chemical Corp.

    143,394       22,874,958  
   

 

 

 
      276,374,889  
Commercial Services & Supplies — 0.3%  

S-1 Corp.

    189,917       13,941,209  
   

 

 

 
Communications Equipment — 0.4%  

KMW Co. Ltd.(a)(b)

    290,589       18,689,283  
   

 

 

 
Construction & Engineering — 1.3%  

Daelim Industrial Co. Ltd.

    265,765       19,441,854  

Daewoo Engineering & Construction Co.
Ltd.(a)

    32,148       79,700  

GS Engineering & Construction Corp.

    627,275       13,042,927  

Hyundai Engineering & Construction Co. Ltd.

    680,168       18,465,711  

Samsung Engineering Co. Ltd.(a)

    1,446,104       13,756,187  
   

 

 

 
      64,786,379  
Construction Materials — 0.4%  

POSCO Chemical Co. Ltd.

    286,533       21,467,663  
   

 

 

 
Security   Shares     Value  
Consumer Finance — 0.2%            

Samsung Card Co. Ltd.

    379,869     $ 9,193,732  
   

 

 

 
Diversified Telecommunication Services — 0.4%  

LG Uplus Corp.

    1,854,976       18,660,631  
   

 

 

 
Electric Utilities — 0.7%  

Korea Electric Power Corp.(a)

    1,916,340       33,070,940  
   

 

 

 
Electronic Equipment, Instruments & Components — 4.8%  

LG Display Co. Ltd.(a)

    1,938,484       23,825,125  

LG Innotek Co. Ltd.

    141,583       17,282,208  

Samsung Electro-Mechanics Co. Ltd.

    420,098       44,029,128  

Samsung SDI Co. Ltd.

    389,399       148,331,550  
   

 

 

 
      233,468,011  
Entertainment — 2.7%  

NCSoft Corp.

    126,429       87,805,308  

Netmarble Corp.(a)(b)(c)

    239,084       33,510,805  

Pearl Abyss Corp.(a)(b)

    80,808       12,380,719  
   

 

 

 
      133,696,832  
Food & Staples Retailing — 0.8%  

BGF retail Co. Ltd.

    91,565       9,827,879  

E-MART Inc.

    198,036       20,005,320  

GS Retail Co. Ltd.

    353,889       9,816,182  
   

 

 

 
      39,649,381  
Food Products — 1.3%  

CJ CheilJedang Corp.

    79,179       27,128,422  

Orion Corp./Republic of Korea

    217,080       25,675,343  

Ottogi Corp.

    21,355       10,822,216  
   

 

 

 
      63,625,981  
Gas Utilities — 0.2%  

Korea Gas Corp.

    389,090       7,730,048  
   

 

 

 
Health Care Providers & Services — 0.8%  

Celltrion Healthcare Co. Ltd.(a)

    463,157       39,028,551  
   

 

 

 
Hotels, Restaurants & Leisure — 0.4%  

Kangwon Land Inc.

    1,021,909       17,764,476  
   

 

 

 
Household Durables — 1.7%  

Coway Co. Ltd.(a)

    424,392       28,509,539  

LG Electronics Inc.

    783,294       55,520,966  
   

 

 

 
      84,030,505  
Industrial Conglomerates — 3.8%  

CJ Corp.

    167,838       11,444,463  

Hanwha Corp.

    574,468       13,298,990  

LG Corp.

    702,807       48,928,478  

Lotte Corp.

    378,556       9,560,300  

Samsung C&T Corp.

    617,166       56,110,723  

SK Holdings Co. Ltd.

    256,744       46,252,391  
   

 

 

 
      185,595,345  
Insurance — 2.0%  

DB Insurance Co. Ltd.

    481,124       17,679,150  

Hyundai Marine & Fire Insurance Co. Ltd.

    717,660       13,351,533  

Samsung Fire & Marine Insurance Co. Ltd.

    231,274       36,407,305  

Samsung Life Insurance Co. Ltd.

    552,407       28,459,726  
   

 

 

 
      95,897,714  
Interactive Media & Services — 7.4%  

Kakao Corp.

    377,364       129,292,994  

NAVER Corp.

    846,596       229,840,231  
   

 

 

 
      359,133,225  
 

 

 

31  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI South Korea ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Internet & Direct Marketing Retail — 0.2%            

CJ ENM Co. Ltd.

    115,404     $ 11,531,657  
   

 

 

 
IT Services — 0.7%            

Samsung SDS Co. Ltd.

    258,449       34,266,956  
   

 

 

 
Leisure Products — 0.7%            

HLB Inc.(a)(b)

    436,237       31,875,892  
   

 

 

 
Life Sciences Tools & Services — 1.7%            

Samsung Biologics Co. Ltd.(a)(b)(c)

    123,288       80,745,908  
   

 

 

 
Machinery — 1.6%            

Daewoo Shipbuilding & Marine Engineering Co. Ltd.(a)

    519,655       9,689,669  

Doosan Bobcat Inc.

    554,221       12,270,404  

Hyundai Heavy Industries Holdings Co. Ltd.

    86,448       16,446,879  

Korea Shipbuilding & Offshore Engineering Co. Ltd.(a)

    309,896       22,487,613  

Samsung Heavy Industries Co. Ltd.(a)

    3,879,752       16,852,867  
   

 

 

 
      77,747,432  
Marine — 0.2%            

Pan Ocean Co. Ltd.(a)

    3,483,664       9,956,258  
   

 

 

 
Media — 0.2%            

Cheil Worldwide Inc.

    763,286       11,726,551  
   

 

 

 
Metals & Mining — 2.5%            

Hyundai Steel Co.

    755,584       15,965,282  

Korea Zinc Co. Ltd.

    70,459       23,636,595  

POSCO

    541,733       84,139,859  
   

 

 

 
      123,741,736  
Multiline Retail — 0.4%            

Hyundai Department Store Co. Ltd.

    2,215       100,131  

Lotte Shopping Co. Ltd.(b)

    134,302       8,592,434  

Shinsegae Inc.

    71,581       12,232,463  
   

 

 

 
      20,925,028  
Oil, Gas & Consumable Fuels — 1.7%            

GS Holdings Corp.

    480,487       13,145,743  

SK Innovation Co. Ltd.

    423,266       51,665,603  

S-Oil Corp.

    378,670       18,010,653  
   

 

 

 
      82,821,999  
Personal Products — 2.6%            

Amorepacific Corp.

    244,005       34,508,662  

AMOREPACIFIC Group

    283,315       12,163,537  

LG Household & Health Care Ltd.(b)

    66,254       82,155,183  
   

 

 

 
      128,827,382  
Pharmaceuticals — 1.1%            

Celltrion Pharm Inc.(a)

    41,831       3,912,302  

Hanmi Pharm Co. Ltd.

    66,316       17,110,745  

Shin Poong Pharmaceutical Co. Ltd.(a)

    38,743       4,451,906  

Yuhan Corp.

    460,330       25,963,558  
   

 

 

 
      51,438,511  
Road & Rail — 0.3%            

CJ Logistics Corp.(a)

    108,559       13,845,179  
   

 

 

 
Semiconductors & Semiconductor Equipment — 4.9%  

SK Hynix Inc.

    3,739,271       236,399,741  
   

 

 

 
Software — 0.1%            

Douzone Bizon Co. Ltd.

    54,239       4,611,616  
   

 

 

 
Specialty Retail — 0.3%            

Hotel Shilla Co. Ltd.

    277,446       16,419,273  
   

 

 

 
Security   Shares     Value  
Technology Hardware, Storage & Peripherals — 21.2%  

Samsung Electronics Co. Ltd.

    22,653,854     $   1,029,807,320  
   

 

 

 
Textiles, Apparel & Luxury Goods — 0.3%  

Fila Holdings Corp.

    477,023       13,934,420  
   

 

 

 
Tobacco — 1.2%            

KT&G Corp.

    827,194       57,866,673  
   

 

 

 
Trading Companies & Distributors — 0.2%  

Posco International Corp.

    708,615       8,112,774  
   

 

 

 
Wireless Telecommunication Services — 0.7%  

SK Telecom Co. Ltd.

    160,428       33,492,839  
   

 

 

 

Total Common Stocks — 97.4%
(Cost: $2,614,932,000)

      4,733,050,502  
   

 

 

 

Preferred Stocks

   

Automobiles — 0.9%

   

Hyundai Motor Co.

   

Preference Shares, NVS

    241,774       17,707,162  

Series 2, Preference Shares, NVS

    316,986       23,589,160  
   

 

 

 
      41,296,322  
Chemicals — 0.5%            

LG Chem Ltd., Preference Shares, NVS

    83,632       26,401,212  
   

 

 

 
Personal Products — 0.4%            

Amorepacific Corp., Preference Shares, NVS

    136,246       6,847,282  

LG Household & Health Care Ltd., Preference Shares, NVS

    21,754       12,837,405  
   

 

 

 
      19,684,687  
Technology Hardware, Storage & Peripherals — 0.1%  

Samsung Electronics Co. Ltd., Preference Shares, NVS

    73,419       2,935,771  
   

 

 

 

Total Preferred Stocks — 1.9%
(Cost: $59,989,160)

      90,317,992  
   

 

 

 

Short-Term Investments

   

Money Market Funds — 4.5%

   

BlackRock Cash Funds: Institutional, SL Agency Shares, 0.37%(d)(e)(f)

    204,320,097       204,524,418  

BlackRock Cash Funds: Treasury, SL Agency Shares, 0.07%(d)(e)

    13,820,000       13,820,000  
   

 

 

 
      218,344,418  
   

 

 

 

Total Short-Term Investments — 4.5%
(Cost: $218,246,453)

 

    218,344,418  
   

 

 

 

Total Investments in Securities — 103.8%
(Cost: $2,893,167,613)

 

    5,041,712,912  

Other Assets, Less Liabilities — (3.8)%

 

    (184,231,377
   

 

 

 

Net Assets — 100.0%

    $ 4,857,481,535  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

 

 

 

C H E D U L E    O F    N V E S T  M E N T S

  32


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI South Korea ETF

 

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

    

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 202,704,508     $ 1,864,211 (a)    $     $ (90,419   $ 46,118     $ 204,524,418       204,320,097     $ 9,257,486 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    6,894,000       6,926,000 (a)                        13,820,000       13,820,000       81,274        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (90,419   $ 46,118     $ 218,344,418       $ 9,338,760     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

         
Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

                 

KOSPI 200 Index

     515          09/10/20        $ 33,242        $ 1,948,831  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

   
      Equity
Contracts
 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 1,948,831  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

   
      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ (2,861,150
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 2,737,033  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 29,736,326  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

 

33  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI South Korea ETF

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

         
      Level 1        Level 2        Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 4,733,050,502        $        $        $ 4,733,050,502  

Preferred Stocks

     90,317,992                            90,317,992  

Money Market Funds

     218,344,418                            218,344,418  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 5,041,712,912        $                 —        $                 —        $ 5,041,712,912  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 1,948,831        $        $        $ 1,948,831  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E    O F    N V E S T  M E N T S

  34


 

Statements of Assets and Liabilities

August 31, 2020

 

    

iShares

MSCI Australia

ETF

   

iShares

MSCI Canada ETF

   

iShares

MSCI Japan ETF

   

iShares

MSCI Mexico ETF

 

ASSETS

       

Investments in securities, at value (including securities on loan)(a):

       

Unaffiliated(b)

  $ 1,251,903,131     $ 2,256,202,775     $ 9,831,340,064     $ 833,327,150  

Affiliated(c)

    494,000       13,088,692       4,320,000       14,534,657  

Cash

    6,596       3,382       2,291       3,226  

Foreign currency, at value(d)

    1,618,831       6,062,896       39,331,964       1,625,751  

Foreign currency collateral pledged:

       

Futures contracts(e)

    749,904       869,565       2,070,102       175,455  

Receivables:

       

Investments sold

    1,802,842       2,575,637       29,888,205       16,130,699  

Securities lending income — Affiliated

          43,223       9       4,700  

Variation margin on futures contracts

                9,753        

Capital shares sold

                      62,546  

Dividends

    8,343,578       3,831,026       13,502,463       13,107  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    1,264,918,882       2,282,677,196       9,920,464,851       865,877,291  
 

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES

       

Collateral on securities loaned, at value

          12,117,775             13,959,958  

Payables:

       

Investments purchased

    1,048,365       3,444,817       7,194,263       16,219,369  

Variation margin on futures contracts

    85,603       117,839             46,707  

Capital shares redeemed

                      366,419  

Investment advisory fees

    526,109       962,352       4,244,240       357,510  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    1,660,077       16,642,783       11,438,503       30,949,963  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 1,263,258,805     $ 2,266,034,413     $ 9,909,026,348     $ 834,927,328  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS CONSIST OF:

       

Paid-in capital

  $ 1,788,489,276     $ 3,324,972,280     $ 12,193,347,490     $ 1,666,887,790  

Accumulated loss

    (525,230,471     (1,058,937,867     (2,284,321,142     (831,960,462
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 1,263,258,805     $ 2,266,034,413     $ 9,909,026,348     $ 834,927,328  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding

    59,800,000       78,800,000       170,400,000       25,300,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value

  $ 21.12     $ 28.76     $ 58.15     $ 33.00  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares authorized

    627.8 million       340.2 million       2.5246 billion       255 million  
 

 

 

   

 

 

   

 

 

   

 

 

 

Par value

  $ 0.001     $ 0.001     $ 0.001     $ 0.001  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) Securities loaned, at value

  $     $ 11,207,723     $     $ 12,959,120  

(b) Investments, at cost — Unaffiliated

  $ 1,492,530,903     $ 2,549,116,378     $ 10,859,180,714     $ 1,292,011,887  

(c)  Investments, at cost — Affiliated

  $ 494,000     $ 13,073,890     $ 4,320,000     $ 14,534,142  

(d) Foreign currency, at cost

  $ 1,566,077     $ 5,960,576     $ 39,224,170     $ 1,616,191  

(e) Foreign currency collateral pledged, at cost

  $ 747,876     $ 868,632     $ 2,072,643     $ 175,487  

See notes to financial statements.

 

 

35   2 0 2 0    H A R E S    N N U  A L    E P O R T    T O    H A R E H O L D E R  S


 

Statements of Assets and Liabilities  (continued)

August 31, 2020

 

    

iShares

MSCI South Korea
ETF

 

ASSETS

 

Investments in securities, at value (including securities on loan)(a):

 

Unaffiliated(b)

  $ 4,823,368,494  

Affiliated(c)

    218,344,418  

Cash

    2,368  

Foreign currency, at value(d)

    1,611  

Foreign currency collateral pledged:

 

Futures contracts(e)

    23,675,488  

Receivables:

 

Investments sold

    51,105,279  

Securities lending income — Affiliated

    345,628  

Variation margin on futures contracts

    1,950,654  

Dividends

    869  
 

 

 

 

Total assets

    5,118,794,809  
 

 

 

 

LIABILITIES

 

Collateral on securities loaned, at value

    204,509,836  

Payables:

 

Investments purchased

    54,333,156  

Investment advisory fees

    2,441,905  

Foreign taxes

    28,377  
 

 

 

 

Total liabilities

    261,313,274  
 

 

 

 

NET ASSETS

  $ 4,857,481,535  
 

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

  $ 3,964,364,022  

Accumulated earnings

    893,117,513  
 

 

 

 

NET ASSETS

  $ 4,857,481,535  
 

 

 

 

Shares outstanding

    77,050,000  
 

 

 

 

Net asset value

  $ 63.04  
 

 

 

 

Shares authorized

    300 million  
 

 

 

 

Par value

  $ 0.001  
 

 

 

 

(a) Securities loaned, at value

  $ 143,891,424  

(b) Investments, at cost — Unaffiliated

  $ 2,674,921,160  

(c)  Investments, at cost — Affiliated

  $ 218,246,453  

(d) Foreign currency, at cost

  $ 1,612  

(e) Foreign currency collateral pledged, at cost

  $ 23,075,142  

See notes to financial statements.

 

 

I N A N C I A L    T A T E M E N T S   36


 

Statements of Operations

Year Ended August 31, 2020

 

     

iShares

MSCI

Australia ETF

 

 

 

   

iShares

MSCI

Canada ETF

 

 

 

   

iShares

MSCI Japan

ETF

 

 

 

   

iShares

MSCI Mexico

ETF

 

 

 

INVESTMENT INCOME

       

Dividends — Unaffiliated

  $ 50,511,770     $ 78,484,203     $ 263,919,583     $ 16,401,972  

Dividends — Affiliated

    9,715       13,958       64,061       7,778  

Interest — Unaffiliated

          1,436             7,925  

Securities lending income — Affiliated — net

    2,211       2,045,033       223,509       52,917  

Foreign taxes withheld

    (768,564     (11,749,743     (26,382,004     (952,725
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    49,755,132       68,794,887       237,825,149       15,517,867  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory fees

    6,745,172       12,124,907       57,245,057       3,744,704  

Miscellaneous

    264       264       264       264  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    6,745,436       12,125,171       57,245,321       3,744,968  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    43,009,696       56,669,716       180,579,828       11,772,899  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — Unaffiliated

    (67,417,793     (199,251,783     (170,016,219     (91,892,114

Investments — Affiliated

    91       17,029       11,409       241  

In-kind redemptions — Unaffiliated

    58,790,198       129,334,035       293,626,665       23,622,062  

Futures contracts

    (3,101,199     546,718       15,247,664       (229,562

Foreign currency transactions

    (1,024,060     177,257       401,463       (49,616
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized gain (loss)

    (12,752,763     (69,176,744     139,270,982       (68,548,989
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — Unaffiliated

    (19,799,361     104,145,910       599,981,259       (55,711,501

Investments — Affiliated

          2,982       (12,243     529  

Futures contracts

    (57,156     451,059       713,047       (170,355

Foreign currency translations

    285,104       143,251       75,595       10,808  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    (19,571,413     104,743,202       600,757,658       (55,870,519
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    (32,324,176     35,566,458       740,028,640       (124,419,508
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ 10,685,520     $ 92,236,174     $ 920,608,468     $ (112,646,609
 

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

37   2 0 2 0    H A R E S    N N U  A L    E P O R T    T O    H A R E H O L D E R  S


 

Statements of Operations  (continued)

Year Ended August 31, 2020

 

    

iShares

MSCI South

Korea ETF

 

INVESTMENT INCOME

 

Dividends — Unaffiliated

  $ 94,715,158  

Dividends — Affiliated

    81,274  

Securities lending income — Affiliated — net

    9,257,486  

Foreign taxes withheld

    (16,648,434

Other foreign taxes

    (7,994
 

 

 

 

Total investment income

    87,397,490  
 

 

 

 

EXPENSES

 

Investment advisory fees

    25,182,549  

Miscellaneous

    264  
 

 

 

 

Total expenses

    25,182,813  
 

 

 

 

Net investment income

    62,214,677  
 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

 

Net realized gain (loss) from:

 

Investments — Unaffiliated(a)

    (210,270,596

Investments — Affiliated

    (90,419

Futures contracts

    (2,861,150

Foreign currency transactions

    (2,992,385
 

 

 

 

Net realized loss

    (216,214,550
 

 

 

 

Net change in unrealized appreciation (depreciation) on:

 

Investments — Unaffiliated

    921,492,102  

Investments — Affiliated

    46,118  

Futures contracts

    2,737,033  

Foreign currency translations

    1,306,841  
 

 

 

 

Net change in unrealized appreciation (depreciation)

    925,582,094  
 

 

 

 

Net realized and unrealized gain

    709,367,544  
 

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 771,582,221  
 

 

 

 

(a)  Net of foreign capital gain tax of

  $ 47,428  

See notes to financial statements.

 

 

I N A N C I A L    T A T E M E N T S   38


 

Statements of Changes in Net Assets

 

    iShares
MSCI Australia ETF
           iShares
MSCI Canada ETF
 
    

Year Ended

08/31/20

   

Year Ended

08/31/19

           

Year Ended

08/31/20

   

Year Ended

08/31/19

 

INCREASE (DECREASE) IN NET ASSETS

          

OPERATIONS

          

Net investment income

  $ 43,009,696     $ 59,623,655        $ 56,669,716     $ 60,051,016  

Net realized loss

    (12,752,763     (34,512,791        (69,176,744     (103,704,795

Net change in unrealized appreciation (depreciation)

    (19,571,413     (9,995,015        104,743,202       18,680,770  
 

 

 

   

 

 

      

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    10,685,520       15,115,849          92,236,174       (24,973,009
 

 

 

   

 

 

      

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

          

Decrease in net assets resulting from distributions to shareholders

    (51,870,949     (71,965,308        (58,024,818     (63,960,878
 

 

 

   

 

 

      

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

          

Net increase (decrease) in net assets derived from capital share transactions

    (95,145,968     93,669,497          (386,763,275     (287,106,743
 

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS(a)

          

Total increase (decrease) in net assets

    (136,331,397     36,820,038          (352,551,919     (376,040,630

Beginning of year

    1,399,590,202       1,362,770,164          2,618,586,332       2,994,626,962  
 

 

 

   

 

 

      

 

 

   

 

 

 

End of year

  $ 1,263,258,805     $ 1,399,590,202        $ 2,266,034,413     $ 2,618,586,332  
 

 

 

   

 

 

      

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

39  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


 

Statements of Changes in Net Assets  (continued)

 

    iShares
MSCI Japan ETF
           iShares
MSCI Mexico ETF
 
     Year Ended
08/31/20
    Year Ended
08/31/19
            Year Ended
08/31/20
    Year Ended
08/31/19
 

INCREASE (DECREASE) IN NET ASSETS

          

OPERATIONS

          

Net investment income

  $ 180,579,828     $ 247,265,802        $ 11,772,899     $ 23,960,370  

Net realized gain (loss)

    139,270,982       409,682,495          (68,548,989     (100,111,090

Net change in unrealized appreciation (depreciation)

    600,757,658       (1,725,742,453        (55,870,519     (62,853,146
 

 

 

   

 

 

      

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    920,608,468       (1,068,794,156        (112,646,609     (139,003,866
 

 

 

   

 

 

      

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

          

Decrease in net assets resulting from distributions to shareholders

    (245,795,518     (229,873,912        (11,539,781     (25,697,670
 

 

 

   

 

 

      

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

          

Net increase (decrease) in net assets derived from capital share transactions

    (2,935,960,843     (3,504,195,955        332,870,491       (377,985,490
 

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS

          

Total increase (decrease) in net assets

    (2,261,147,893     (4,802,864,023        208,684,101       (542,687,026

Beginning of year

    12,170,174,241       16,973,038,264          626,243,227       1,168,930,253  
 

 

 

   

 

 

      

 

 

   

 

 

 

End of year

  $ 9,909,026,348     $ 12,170,174,241        $ 834,927,328     $ 626,243,227  
 

 

 

   

 

 

      

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L    T A T E M E N T  S

  40


 

Statements of Changes in Net Assets  (continued)

 

    iShares
MSCI South Korea ETF
 
    

Year Ended

08/31/20

   

Year Ended

08/31/19

 

INCREASE (DECREASE) IN NET ASSETS

   

OPERATIONS

   

Net investment income

  $ 62,214,677     $ 69,657,107  

Net realized loss

    (216,214,550     (154,004,207

Net change in unrealized appreciation (depreciation)

    925,582,094       (823,249,004
 

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    771,582,221       (907,596,104
 

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

   

Decrease in net assets resulting from distributions to shareholders

    (94,999,174     (52,766,055
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Net increase in net assets derived from capital share transactions

    332,334,305       902,035,428  
 

 

 

   

 

 

 

NET ASSETS

   

Total increase (decrease) in net assets

    1,008,917,352       (58,326,731

Beginning of year

    3,848,564,183       3,906,890,914  
 

 

 

   

 

 

 

End of year

  $ 4,857,481,535     $ 3,848,564,183  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

41  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares MSCI Australia ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 21.67     $ 22.56     $ 22.58     $ 20.30     $ 18.66  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.67       1.00       0.90       0.84       0.84  

Net realized and unrealized gain (loss)(b)

    (0.48     (0.70     0.07       2.45       1.59  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase from investment operations

    0.19       0.30       0.97       3.29       2.43  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.74     (1.19     (0.99     (1.01     (0.79
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.74     (1.19     (0.99     (1.01     (0.79
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 21.12     $ 21.67     $ 22.56     $ 22.58     $ 20.30  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    0.99     1.75     4.43     16.70     13.36
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.50     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    3.23     4.68     3.95     3.90     4.41
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 1,263,259     $ 1,399,590     $ 1,362,770     $ 1,765,912     $ 1,668,702  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    8     9     3     4     7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d)

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L    I G H L I G H T  S

  42


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Canada ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 28.22     $ 28.79     $ 27.83     $ 25.33     $ 24.02  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.65       0.62       0.58       0.51       0.51  

Net realized and unrealized gain (loss)(b)

    0.54       (0.53     0.97       2.47       1.29  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase from investment operations

    1.19       0.09       1.55       2.98       1.80  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.65     (0.66     (0.59     (0.48     (0.49
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.65     (0.66     (0.59     (0.48     (0.49
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 28.76     $ 28.22     $ 28.79     $ 27.83     $ 25.33  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    4.32     0.56     5.61     11.88     7.73
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.37     2.26     2.01     1.93     2.18
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 2,266,034     $ 2,618,586     $ 2,994,627     $ 3,127,920     $ 3,097,794  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    9     6     3     6     4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Based on average shares outstanding.

(b)

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d)

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

43  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Japan ETF  
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
   
Year Ended
08/31/17
 
(a)  
   
Year Ended
08/31/16
 
(a)  

 

 

Net asset value, beginning of year

  $ 54.05     $ 58.45     $ 54.57     $ 49.05     $ 48.61  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(b)

    0.90       0.92       0.87       0.49       0.72  

Net realized and unrealized gain (loss)(c)

    4.36       (4.43     3.87       5.96       0.44  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    5.26       (3.51     4.74       6.45       1.16  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(d)

         

From net investment income

    (1.16     (0.89     (0.86     (0.93     (0.72
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.16     (0.89     (0.86     (0.93     (0.72
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 58.15     $ 54.05     $ 58.45     $ 54.57     $ 49.05  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    9.76     (5.96 )%      8.67     13.31     2.44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.60     1.68     1.46     1.45     1.53
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 9,909,026     $ 12,170,174     $ 16,973,038     $ 16,017,689     $ 14,015,180  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(e)

    4     7     4     4     4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Per share amounts reflect a one-for-four reverse stock split effective after the close of trading on November 4, 2016.

(b) 

Based on average shares outstanding.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L    I G H L I G H T  S

  44


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Mexico ETF  
     Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 41.47     $ 50.38     $ 56.68     $ 50.48     $ 52.70  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.61       1.09       0.95       0.88       0.93  

Net realized and unrealized gain (loss)(b)

    (8.52     (8.75     (6.17     6.10       (1.82
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (7.91     (7.66     (5.22     6.98       (0.89
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.56     (1.25     (1.08     (0.78     (1.33
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.56     (1.25     (1.08     (0.78     (1.33
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 33.00     $ 41.47     $ 50.38     $ 56.68     $ 50.48  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    (19.36 )%      (15.23 )%      (9.02 )%      14.03     (1.68 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.51     0.49     0.47     0.49     0.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.59     2.46     1.87     1.79     1.82
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 834,927     $ 626,243     $ 1,168,930     $ 1,320,642     $ 1,317,518  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    12     5     7     8     8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Based on average shares outstanding.

(b)

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d)

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

45  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI South Korea ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 53.34     $ 67.65     $ 68.19     $ 56.89     $ 48.15  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.83       0.97       0.94       0.64       0.56  

Net realized and unrealized gain (loss)(b)

    10.18       (14.49     0.70       11.31       9.38  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    11.01       (13.52     1.64       11.95       9.94  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (1.31     (0.79     (2.18     (0.65     (1.20
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.31     (0.79     (2.18     (0.65     (1.20
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 63.04     $ 53.34     $ 67.65     $ 68.19     $ 56.89  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    20.77     (20.08 )%      2.15     21.28     20.92
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.59     0.59     0.59     0.62     0.64
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.45     1.62     1.31     1.05     1.09
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 4,857,482     $ 3,848,564     $ 3,906,891     $ 3,784,638     $ 3,452,970  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(d)

    15 %(e)       16 %(e)       18 %(e)       16 %(e)       22 %(e)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(a) Based on average shares outstanding.

(b) The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) Portfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash in U.S. dollars (“cash creations”).

 

 

   

 

(e) Portfolio turnover rate excluding cash creations was as follows:

    9     5     11     6     10
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

I N A N C I A L    I G H L I G H T  S

  46


Notes to Financial Statements

 

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

   
iShares ETF   Diversification    
Classification    

MSCI Australia

  Non-diversified    

MSCI Canada

  Diversified    

MSCI Japan

  Diversified    

MSCI Mexico

  Non-diversified    

MSCI South Korea

  Non-diversified    

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

 

47  

2 0 2 0    H A R E S     N N U A L    E P O R T    T O    H A R E  H O L D E R S


Notes to Financial Statements  (continued)

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral

 

 

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Notes to Financial Statements  (continued)

 

received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

 

 
iShares ETF and Counterparty   Market Value of
Securities on Loan
     Cash Collateral
Received(a)
     Non-Cash Collateral
Received
     Net Amount  

 

 

MSCI Canada

          

Barclays Capital Inc.

  $ 4,652,964      $ 4,652,964      $      $  

BofA Securities, Inc.

    94,674        94,674                

Credit Suisse Securities (USA) LLC

    336,045        336,045                

JPMorgan Securities LLC

    2,373,479        2,373,479                

Morgan Stanley & Co. LLC

    994,286        994,286                

National Financial Services LLC

    1,650,869        1,650,869                

Wells Fargo Securities LLC

    1,105,406        1,105,406                
 

 

 

    

 

 

    

 

 

    

 

 

 
  $ 11,207,723      $ 11,207,723      $      $  
 

 

 

    

 

 

    

 

 

    

 

 

 

MSCI Mexico

          

Morgan Stanley & Co. LLC

  $ 12,959,120      $ 12,959,120      $      $  
 

 

 

    

 

 

    

 

 

    

 

 

 

MSCI South Korea

          

BofA Securities, Inc.

  $ 59,131,928      $ 59,131,928      $      $  

Morgan Stanley & Co. LLC

    84,759,496        84,759,496                
 

 

 

    

 

 

    

 

 

    

 

 

 
  $ 143,891,424      $ 143,891,424      $      $  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

 

 

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Notes to Financial Statements  (continued)

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each of the iShares MSCI Australia, iShares MSCI Canada, iShares MSCI Japan and iShares MSCI Mexico ETFs, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

   
Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $7 billion

    0.59

Over $7 billion, up to and including $11 billion

    0.54  

Over $11 billion, up to and including $24 billion

    0.49  

Over $24 billion, up to and including $48 billion

    0.44  

Over $48 billion, up to and including $72 billion

    0.40  

Over $72 billion, up to and including $96 billion

    0.36  

Over $96 billion

    0.32  

For its investment advisory services to the iShares MSCI South Korea ETF, BFAis entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

   
Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $2 billion

    0.74

Over $2 billion, up to and including $4 billion

    0.69  

Over $4 billion, up to and including $8 billion

    0.64  

Over $8 billion, up to and including $16 billion

    0.57  

Over $16 billion, up to and including $24 billion

    0.51  

Over $24 billion, up to and including $32 billion

    0.48  

Over $32 billion

    0.45  

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

 

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Notes to Financial Statements  (continued)

 

   
iShares ETF   Fees Paid  
to BTC  
 

MSCI Australia

  $ 605    

MSCI Canada

    455,789    

MSCI Japan

    60,739    

MSCI Mexico

    12,721    

MSCI South Korea

    2,102,420    

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

       
iShares ETF   Purchases      Sales      Net Realized
Gain (Loss)
 

MSCI Australia

  $ 16,771,211      $  20,526,974      $  (18,235,485

MSCI Japan

     116,114,657        44,155,083        (35,336,714

MSCI South Korea

    30,220,169        7,862,283        (8,876,486

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

     
iShares ETF   Purchases      Sales    

MSCI Australia

  $  108,651,354      $  108,442,962    

MSCI Canada

    242,451,210        226,675,967    

MSCI Japan

    453,722,554        415,822,309    

MSCI Mexico

    99,682,350        84,666,099    

MSCI South Korea

    920,181,356        648,158,739    

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

     
iShares ETF   In-kind
Purchases
    

In-kind  

Sales  

 

MSCI Australia

  $ 497,857,726      $ 601,584,688    

MSCI Canada

    547,161,653        946,938,119    

MSCI Japan

    3,491,612,620        6,545,656,711    

MSCI Mexico

    2,081,534,611        1,762,186,022    

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions, were reclassified to the following accounts:

 

 

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Notes to Financial Statements  (continued)

 

     
iShares ETF   Paid-in Capital      Accumulated
Earnings (Loss)
 

MSCI Australia

  $ 29,859,700      $ (29,859,700

MSCI Canada

     103,622,265        (103,622,265

MSCI Japan

    260,159,621        (260,159,621

MSCI Mexico

    17,773,764        (17,773,764

The tax character of distributions paid was as follows:

 

     
iShares ETF   Year Ended
08/31/20
     Year Ended
08/31/19
 

MSCI Australia

    

Ordinary income

  $ 51,870,949      $ 71,965,308  
 

 

 

    

 

 

 

MSCI Canada

    

Ordinary income

  $ 58,024,818      $ 63,960,878  
 

 

 

    

 

 

 

MSCI Japan

    

Ordinary income

  $ 245,795,518      $ 229,873,912  
 

 

 

    

 

 

 

MSCI Mexico

    

Ordinary income

  $ 11,539,781      $ 25,697,670  
 

 

 

    

 

 

 

MSCI South Korea

    

Ordinary income

  $ 94,999,174      $ 52,766,055  
 

 

 

    

 

 

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

           
iShares ETF    
Undistributed
Ordinary Income
 
 
    


Non-expiring

Capital Loss
Carryforwards

 

 
(a) 

   
Net Unrealized
Gains (Losses)
 
(b) 
   
Qualified
Late-Year Losses
 
(c) 
    Total  

MSCI Australia

  $ 5,986,818      $ (252,639,282   $ (278,578,007   $     $ (525,230,471

MSCI Canada

    4,682,498        (752,314,273     (311,306,092            (1,058,937,867

MSCI Japan

            (1,205,625,657      (1,060,857,941     (17,837,544     (2,284,321,142

MSCI Mexico

    3,856,336        (368,643,806     (467,172,992           (831,960,462

MSCI South Korea

           (613,182,217     1,516,507,111       (10,207,381     893,117,513  

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the timing and recognition of partnership income and the characterization of corporate actions.

 
  (c) 

The Funds have elected to defer certain qualified late-year losses and recognize such losses in the next taxable year.

 

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

         
iShares ETF   Tax Cost      Gross Unrealized
Appreciation
     Gross Unrealized
Depreciation
    Net Unrealized
Appreciation
(Depreciation)
 

MSCI Australia

  $ 1,531,252,534      $ 124,582,750      $ (403,388,413   $ (278,805,663

MSCI Canada

    2,581,264,377        286,533,632        (597,986,521     (311,452,889

MSCI Japan

     10,896,793,755         1,116,067,366         (2,177,262,224      (1,061,194,858

MSCI Mexico

    1,314,957,616        1,956,389        (469,138,897     (467,182,508

MSCI South Korea

    3,527,760,959        1,733,014,649        (217,113,865     1,515,900,784  

 

9.

LINE OF CREDIT

The iShares MSCI South Korea ETF, along with certain other iShares funds (“Participating Funds”), is a party to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on July 15, 2021. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1 and $200 million with respect to Tier 2, including the Fund. The Fund may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than

 

 

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Notes to Financial Statements  (continued)

 

zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Credit Agreement.

The Fund did not borrow under the credit agreement during the year ended August 31, 2020.

 

10.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

 

 

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Notes to Financial Statements  (continued)

 

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities.

Certain Funds invest a significant portion of their assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Funds’ investments.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Investment percentages in specific sectors are presented in the schedule of investments.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

11.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
    Year Ended
08/31/20
    Year Ended
08/31/19
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

 

MSCI Australia

       

Shares sold

    24,400,000     $ 512,582,367       17,200,000     $ 365,456,184  

Shares redeemed

    (29,200,000     (607,728,335     (13,000,000     (271,786,687
 

 

 

   

 

 

   

 

 

   

 

 

 

 

Net increase (decrease)

    (4,800,000   $ (95,145,968     4,200,000     $ 93,669,497  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Canada

       

Shares sold

    20,400,000     $ 565,536,537       16,000,000     $ 450,405,632  

Shares redeemed

    (34,400,000     (952,299,812     (27,200,000     (737,512,375
 

 

 

   

 

 

   

 

 

   

 

 

 

 

Net decrease

    (14,000,000   $ (386,763,275     (11,200,000   $ (287,106,743
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Japan

       

Shares sold

    65,100,000     $ 3,621,012,076       96,150,000     $ 5,263,571,116  

Shares redeemed

    (119,850,000     (6,556,972,919     (161,400,000     (8,767,767,071
 

 

 

   

 

 

   

 

 

   

 

 

 

 

Net decrease

    (54,750,000   $ (2,935,960,843     (65,250,000   $ (3,504,195,955
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Mexico

       

Shares sold

    56,300,000     $ 2,102,863,393       34,300,000     $ 1,475,864,783  

Shares redeemed

    (46,100,000     (1,769,992,902     (42,400,000     (1,853,850,273
 

 

 

   

 

 

   

 

 

   

 

 

 

 

Net increase (decrease)

    10,200,000     $ 332,870,491       (8,100,000   $ (377,985,490
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI South Korea

       

Shares sold

    9,900,000     $ 576,836,249       23,050,000     $ 1,390,211,716  

Shares redeemed

    (5,000,000     (244,501,944     (8,650,000     (488,176,288
 

 

 

   

 

 

   

 

 

   

 

 

 

 

Net increase

    4,900,000     $ 332,334,305       14,400,000     $ 902,035,428  
 

 

 

   

 

 

   

 

 

   

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

 

 

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  54


Notes to Financial Statements  (continued)

 

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

12.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

13.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

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Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares MSCI Australia ETF, iShares MSCI Canada ETF,

iShares MSCI Japan ETF, iShares MSCI Mexico ETF and iShares MSCI South Korea ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares MSCI Australia ETF, iShares MSCI Canada ETF, iShares MSCI Japan ETF, iShares MSCI Mexico ETF and iShares MSCI South Korea ETF (five of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

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  56


Important Tax Information  (unaudited)

 

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

   
iShares ETF   Qualified Dividend  
Income  
 

MSCI Australia

  $ 50,082,810    

MSCI Canada

    77,716,380    

MSCI Japan

    247,349,593    

MSCI Mexico

    14,130,409    

MSCI South Korea

    88,671,341    

For the fiscal year ended August 31, 2020, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders:

 

     
iShares ETF   Foreign Source
Income Earned
    

Foreign  

Taxes Paid  

 

MSCI Australia

  $ 50,512,312      $ 928,168    

MSCI Canada

    78,444,861        11,882,850    

MSCI Japan

    264,013,366        26,842,222    

MSCI Mexico

    16,401,969        938,707    

MSCI South Korea

    94,716,849        16,703,856    

 

 

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Board Review and Approval of Investment Advisory Contract

 

iShares MSCI Australia ETF, iShares MSCI Canada ETF, iShares MSCI Japan ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

 

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  58


Board Review and Approval of Investment Advisory Contract  (continued)

 

funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Mexico ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

 

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Board Review and Approval of Investment Advisory Contract (continued)

 

service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

 

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Board Review and Approval of Investment Advisory Contract (continued)

 

including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI South Korea ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”),

 

 

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Board Review and Approval of Investment Advisory Contract (continued)

 

with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

 

 

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Board Review and Approval of Investment Advisory Contract (continued)        

 

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

 

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Supplemental Information (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

     Total Cumulative Distributions
for the Fiscal Year
    % Breakdown of the Total Cumulative
Distributions for the Fiscal Year
 
iShares ETF   Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
    Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
 

MSCI Australia(a)

  $   0.720917     $     $   0.019647     $   0.740564       97         3     100

MSCI Canada(a)

    0.575335             0.076762       0.652097       88             12       100  

MSCI Japan(a)

    1.051810             0.105851       1.157661       91             9       100  

MSCI Mexico

    0.558070                   0.558070       100                   100  

MSCI South Korea(a)

    0.427177             0.880451       1.307628       33             67       100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (the “Directive”) imposes detailed and prescriptive obligations on fund managers established in the European Union (the “EU”). These do not currently apply to managers established outside of the EU, such as BFA (the “Company”). Rather, non-EU managers are only required to comply with certain disclosure, reporting and transparency obligations of the Directive if such managers market a fund to EU investors.

The Company has registered the iShares MSCI Canada ETF, iShares MSCI Japan ETF, iShares MSCI Mexico ETF and iShares MSCI South Korea ETF (each a “Fund”, collectively the “Funds”) to be marketed to EU investors in the United Kingdom, the Netherlands, Finland, Sweden and Luxembourg.

Report on Remuneration

The Company is required under the Directive to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to both (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Funds.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the each Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well defined pay-for-performance philosophy, and compensation programmes which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

 

 

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Supplemental Information (unaudited) (continued)

 

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the each Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Canada ETF in respect of the Company’s financial year ending December 31, 2019 was USD 233.97 thousand. This figure is comprised of fixed remuneration of USD 108.17 thousand and variable remuneration of USD 125.8 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Canada ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 29.83 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 3.51 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Japan ETF in respect of the Company’s financial year ending December 31, 2019 was USD 1.16 million. This figure is comprised of fixed remuneration of USD 538.3 thousand and variable remuneration of USD 626.05 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Japan ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 148.46 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 17.45 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI Mexico ETF in respect of the Company’s financial year ending December 31, 2019 was USD 77.98 thousand. This figure is comprised of fixed remuneration of USD 36.05 thousand and variable remuneration of USD 41.93 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI Mexico ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 9.94 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 1.17 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI South Korea ETF in respect of the Company’s financial year ending December 31, 2019 was USD 387.35 thousand. This figure is comprised of fixed remuneration of USD 179.08 thousand and variable remuneration of USD 208.27 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI South Korea ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 49.39 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 5.8 thousand.

 

 

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Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFAor its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., ParkAvenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Robert S. Kapito(a)

(63)

   Director (since 2009).    President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(50)

   Director (since 2019).    Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

(a) Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b) Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

 

     Independent Directors     
       
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Cecilia H. Herbert

(71)

   Director (since 2005); Independent Board Chair (since 2016).    Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).

Jane D. Carlin

(64)

   Director (since 2015); Risk Committee Chair (since 2016).    Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L. Fagnani

(65)

   Director (since 2017); Audit Committee Chair (since 2019).    Partner, KPMG LLP (2002-2016).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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  66


Director and Officer Information  (continued)

 

Independent Directors (continued)
       
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

John E. Kerrigan

(65)

   Director (since 2005); Nominating and Governance and Equity Plus Committee Chairs (since 2019).    Chief Investment Officer, Santa Clara University (since 2002).    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E. Lawton

(61)

   Director (since 2017); 15(c) Committee Chair (since 2017).    Senior Managing Director of New York Life Insurance Company (2010-2015).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

John E. Martinez

(59)

   Director (since 2003); Securities Lending Committee Chair (since 2019).    Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).    Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

Madhav V. Rajan

(56)

   Director (since 2011); Fixed Income Plus Committee Chair (since 2019).    Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).

 

Officers
     
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

Armando Senra

(49)

   President (since 2019).    Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

Trent Walker

(46)

   Treasurer and Chief Financial Officer (since 2020).    Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Charles Park

(53)

   Chief Compliance Officer (since 2006).    Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

Deepa Damre

(45)

   Secretary (since 2019).    Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

Scott Radell

(51)

   Executive Vice President (since 2012).    Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

Alan Mason

(59)

   Executive Vice President (since 2016).    Managing Director, BlackRock, Inc. (since 2009).

Marybeth Leithead

(57)

   Executive Vice President (since 2019).    Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

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General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

E N E R A L    N F O R M A T I O  N

  68


Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
CPO    Certificates of Participation (Ordinary)
NVS    Non-Voting Shares

 

 

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Want to know more?

iShares.com     |     1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-815-0820

 

 

LOGO

   LOGO


 

LOGO

  AUGUST 31, 2020

 

   2020 Annual Report

 

iShares, Inc.

 

·  

iShares Core MSCI Emerging Markets ETF  |  IEMG  |  NYSE Arca

·  

iShares MSCI BRIC ETF  |  BKF  |  NYSE Arca

·  

iShares MSCI Emerging Markets Asia ETF  |  EEMA  |  NASDAQ

·  

iShares MSCI Emerging Markets Small-Cap ETF  |  EEMS  |  NYSE Arca

 

 

 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020
     6-Month     12-Month

U.S. large cap equities
(S&P 500® Index)

  19.63%   21.94%

U.S. small cap equities
(Russell 2000® Index)

  6.57   6.02

International equities
(MSCI Europe, Australasia, Far East Index)

  7.10   6.13
   

Emerging market equities
(MSCI Emerging Markets Index)

  11.23   14.49

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

  0.34   1.26

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

  4.67   8.93

U.S. investment grade bonds
(Bloomberg Barclays U.S. Aggregate Bond Index)

  2.98   6.47

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

  0.29   3.15

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

  3.04   4.65

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

2  

T H I S   P A G E   I S   N O T   P A R T   O F   YO U R   F U N D   R E P O R T


Table of Contents

 

      Page  

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     13  

Shareholder Expenses

     13  

Consolidated Schedules of Investments

     14  

Consolidated Financial Statements

  

Consolidated Statements of Assets and Liabilities

     71  

Consolidated Statements of Operations

     72  

Consolidated Statements of Changes in Net Assets

     73  

Consolidated Financial Highlights

     75  

Notes to Consolidated Financial Statements

     79  

Report of Independent Registered Public Accounting Firm

     89  

Important Tax Information (Unaudited)

     90  

Board Review and Approval of Investment Advisory Contract

     91  

Supplemental Information

     99  

Director and Officer Information

     101  

General Information

     103  

Glossary of Terms Used in this Report

     104  


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

A R K E T   O V E R V I E W

  4


Fund Summary as of August 31, 2020     iShares® Core MSCI Emerging Markets ETF

 

Investment Objective

The iShares Core MSCI Emerging Markets ETF (the “Fund”) seeks to track the investment results of an index composed of large-, mid- and small-capitalization emerging market equities, as represented by the MSCI Emerging Markets Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      Since Inception              1 Year     5 Years      Since Inception  

Fund NAV

    13.97      8.31      3.44       13.97     49.03      30.50

Fund Market

    14.00        8.29        3.42         14.00       48.91        30.33  

Index

    14.09        8.21        3.41               14.09       48.36        30.19  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 10/18/12. The first day of secondary market trading was 10/22/12.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

Beginning
Account Value

(03/01/20)

       Ending
Account Value
(08/31/20)
      

Expenses
Paid During

the Period (a)

           Beginning
Account Value
(03/01/20)
       Ending
Account Value
(08/31/20)
       Expenses
Paid During
the Period (a)
       Annualized
Expense
Ratio
 
  $       1,000.00          $        1,111.60        $ 0.69               $        1,000.00          $        1,024.50          $        0.66          0.13

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 13 for more information.

 

 

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Fund Summary as of August 31, 2020   (continued)    iShares® Core MSCI Emerging Markets ETF

 

Portfolio Management Commentary

Emerging markets stocks advanced strongly during the reporting period, despite coronavirus-related restrictions that led to a worldwide recession. Chinese equities contributed the most to the Index’s return, driven primarily by the consumer discretionary sector. Internet and direct marketing retail companies advanced as consumers and businesses limiting physical interaction accelerated the migration to digital platforms. Temporary closures of brick-and-mortar stores led both merchants and customers to increase use of online platforms, driving sharply higher revenues for goods and services such as food delivery. Companies providing cloud computing services gained as closed offices and schools led to sharply increased demand for remote working and remote education capabilities, such as video conferencing and productivity tracking tools.

The Chinese communication services sector was also a notable contributor, bolstered by strong gains in the interactive media and services industry. Homebound consumers supported demand growth for online gaming, while increased use of social media drove stronger revenues for digital content and online advertising.

Information technology stocks in both Taiwan and South Korea contributed meaningfully to the Index’s return. Taiwan’s semiconductors industry benefited from growth in global demand. An increase in online activity and upgrades to mobile networks to support next-generation phones drove substantial revenue growth for companies producing high-performance computing semiconductors, including those used in data center hardware and 5G equipment. An increase in telecommuting drove considerable demand for high-speed Wi-Fi chips. The technology hardware and equipment industry drove contribution in South Korea, as companies responded to the pandemic by expanding online sales channels. Profits from sales of computer memory strengthened due to higher prices and substantial demand from data centers. The industry mitigated the impact of lower smartphone purchases by reducing expenses.

On the downside, Brazilian stocks detracted substantially from the Index’s return, weighed down by the financials sector. Bank profits dropped sharply as declining economic activity led to lower income from interest, fees, and insurance. Deteriorating demand for consumer credit, as well as sharply rising loan default provisions, also weighed on bank stocks.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   
Sector    

Percent of

Total Investments

 

(a) 

Consumer Discretionary

    19.0

Information Technology

    17.6  

Financials

    16.8  

Communication Services

    12.2  

Materials

    7.5  

Consumer Staples

    6.1  

Energy

    5.3  

Industrials

    5.3  

Health Care

    5.1  

Real Estate

    2.9  

Utilities

    2.2  

 

  (a) 

Excludes money market funds.

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

   
Country/Geographic Region    

Percent of

Total Investments

 

(a) 

China

    39.5

Taiwan

    13.4  

South Korea

    12.2  

India

    8.5  

Brazil

    5.1  

South Africa

    3.5  

Russia

    2.9  

Saudi Arabia

    2.7  

Thailand

    2.1  

Malaysia

    1.9  
 

 

F U N D   S U M M A R Y

  6


Fund Summary as of August 31, 2020 

 

   iShares® MSCI BRIC ETF

 

Investment Objective

The iShares MSCI BRIC ETF (the “Fund”) seeks to track the investment of an index composed of Chinese equities that are available to international investors, and Brazilian, Russian, and Indian equities, as represented by the MSCI BRIC Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years              1 Year     5 Years      10 Years  

Fund NAV

    19.78      11.19      3.18       19.78     69.92      36.78

Fund Market

    20.17        11.27        3.12         20.17       70.53        35.96  

Index

    20.21        11.73        3.84               20.21       74.10        45.75  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period

 

 

 (a) 

           

Beginning
Account Value

(03/01/20)

 
 

 

      

Ending
Account Value

(08/31/20)

 
 

 

      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense

Ratio

 

 

  $       1,000.00          $        1,136.10        $ 3.81               $        1,000.00          $        1,021.60          $        3.61          0.71

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 13 for more information.

 

 

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI BRIC ETF

 

Portfolio Management Commentary

The Index advanced sharply during the reporting period, despite coronavirus-related restrictions that led to a worldwide recession. Stocks in China, which constituted approximately 66% of the Index on average for the reporting period, contributed the majority of the Index’s return. The consumer discretionary sector drove performance, supported primarily by internet and direct marketing retailers. Although China’s lockdown briefly slowed sales and disrupted operations, consumers and businesses limiting physical interaction accelerated their migration toward digitization. A rebound in economic activity and innovation in digital operations drove higher investor demand for e-commerce stock. Temporary closures of brick-and-mortar stores led both merchants and customers to increase use of online platforms, driving sharply higher revenues for goods and services such as food delivery. Companies providing cloud computing services gained as closed offices and schools led to sharply increased demand for remote working and remote education capabilities, such as video conferencing and productivity tracking tools. As the coronavirus spread, Chinese e-commerce companies with a global footprint also benefited from social distancing measures enacted in other countries.

The Chinese communication services sector also contributed meaningfully to the Index’s return, driven primarily by the media and entertainment industry. Consumers staying at home increased demand for mobile and online games, driving sharply higher sales for interactive media and services companies. Homebound people also increased their use of social media, resulting in stronger revenues from digital content and online advertising. Financial services income also rose, driven by increased use of online tools for payments and wealth management. The interactive home industry advanced sharply, driven by accelerating revenue from mobile games and online education services, as well as advertising, e-commerce, and music streaming.

On the downside, Brazilian stocks detracted from the Index’s returns, weighed down by the financials sector. Bank profits dropped sharply as declining economic activity led to lower income from interest, fees, and insurance. Deteriorating demand for consumer credit, as well as sharply rising loan default provisions, also weighed on bank stocks.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

 

   

 

Percent of

Total Investments

 

 

(a) 

 

Consumer Discretionary

    27.4

Financials

    16.5  

Communication Services

    16.4  

Energy

    7.4  

Information Technology

    6.5  

Consumer Staples

    5.8  

Health Care

    5.1  

Materials

    5.1  

Industrials

    4.4  

Real Estate

    3.3  

Utilities

    2.1  

 

  (a)

Excludes money market funds.

 

GEOGRAPHIC ALLOCATION

 

   

Country/Geographic Region

 

   

 

Percent of

Total Investments

 

 

(a) 

 

China

    72.5

India

    13.8  

Brazil

    8.3  

Russia

    5.4  
 

 

F U N D   S U M M A R Y

  8


Fund Summary as of August 31, 2020    iShares® MSCI Emerging Markets Asia ETF

 

Investment Objective

The iShares MSCI Emerging Markets Asia ETF (the “Fund”) seeks to track the investment results of an index composed of Asian emerging market equities, as represented by the MSCI EM Asia Custom Capped Index (the “Index”) The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
             1 Year     5 Years     

Since

Inception

 

Fund NAV

    22.31      10.30      5.76       22.31     63.28      61.53

Fund Market

    23.45        10.66        5.81         23.45       65.95        62.27  

Index

    22.90        10.76        6.14               22.90       66.73        66.53  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 2/8/12. The first day of secondary market trading was 2/9/12.

Index performance through May 31, 2018 reflects the performance of the MSCI Emerging Markets Asia. Index performance beginning on June 1, 2018 reflects the performance of the MSCI EM Asia Custom Capped Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period

 

 

 (a) 

           

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending
Account Value

(08/31/20)

 
 

 

      


Expenses

Paid During
the Period

 

 
 (a) 

      

Annualized
Expense

Ratio

 

 

$        1,000.00        $         1,160.70        $ 2.66             $         1,000.00        $         1,022.70        $         2.49          0.49

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 13 for more information.

 

 

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Emerging Markets Asia ETF

 

Portfolio Management Commentary

Stocks in Asian emerging markets advanced strongly during the reporting period, despite coronavirus-related restrictions that led to a worldwide recession. Chinese equities contributed the majority of the Index’s return. The consumer discretionary sector drove performance as internet and direct marketing retailers advanced sharply. While China’s lockdown briefly slowed sales and disrupted operations, consumers and businesses limiting physical interaction accelerated their migration toward digitization. Temporary closures of brick-and-mortar stores led merchants and customers to increase their use of online platforms, driving sharply higher revenues for goods and services such as food delivery. Companies providing cloud computing services gained as closed offices and schools led to increased demand for remote working and education capabilities, such as video conferencing and productivity tracking tools.

The Chinese communication services sector also contributed meaningfully to the Index’s return. The media and entertainment industry benefited from growing demand for mobile and online games from homebound consumers, which drove sharply higher sales for interactive media and services companies. Increased social media use resulted in stronger revenues from digital content and online advertising. Adoption of online payment and wealth management tools further bolstered revenue gains. The media and entertainment industry also advanced, driven by accelerating sales of mobile games and online education services, as well as advertising, e-commerce, and music streaming.

Information technology stocks in Taiwan and South Korea contributed meaningfully to the Index’s return. Taiwan’s semiconductors industry benefited from growth in global demand. An increase in online activity and upgrades to mobile networks to support next-generation phones drove substantial revenue gains for companies producing high-performance computing chips, including those used in data center hardware and 5G equipment.

The technology hardware and equipment industry drove contribution in South Korea as companies responded to the pandemic by expanding online sales channels. Profits from sales of computer memory strengthened amid higher prices and substantial demand from data centers. South Korea’s communication services sector also bolstered the Index’s return. The interactive media and services industry benefited from robust demand for cloud computing services and increased video game use.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

 

   

 

Percent of

Total Investments

 

 

(a) 

 

Consumer Discretionary

    21.2

Information Technology

    20.4  

Financials

    15.9  

Communication Services

    14.0  

Consumer Staples

    5.7  

Industrials

    4.9  

Materials

    4.8  

Health Care

    4.5  

Energy

    4.0  

Real Estate

    2.7  

Utilities

    1.9  

 

  (a) 

Excludes money market funds.

 
  (b) 

Rounds to less than 0.1%.

 

 

GEOGRAPHIC ALLOCATION

 

   

Country/Geographic Region

 

   

 

Percent of
Total Investments

 

 
(a)  

 

China

    50.6

Taiwan

    16.0  

South Korea

    14.5  

India

    10.8  

Thailand

    2.6  

Malaysia

    2.4  

Indonesia

    2.0  

Philippines

    1.1  

Pakistan

    0.0 (b) 
 

 

F U N D   S U M M A R Y

  10


Fund Summary as of August 31, 2020     iShares® MSCI Emerging Markets Small-Cap ETF

 

Investment Objective

The iShares MSCI Emerging Markets Small-Cap ETF (the “Fund”) seeks to track the investment results of an index composed of small-capitalization emerging market equities, as represented by the MSCI Emerging Markets Small Cap Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
           1 Year      5 Years      Since
Inception
 

Fund NAV

    10.68      4.91      1.38       10.68      27.07      13.24

Fund Market

    10.37        4.75        1.26         10.37        26.12        12.02  

Index

    10.81        4.95        1.80               10.81        27.33        17.54  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 8/16/11. The first day of secondary market trading was 8/18/11.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 13 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
Beginning
Account Value
(03/01/20)
       Ending
Account Value
(08/31/20)
       Expenses
Paid During
the Period (a)
          

Beginning

Account Value

(03/01/20)

      

Ending

Account Value

(08/31/20)

      

Expenses

Paid During

the Period (a)

      

Annualized

Expense

Ratio

 
  $       1,000.00          $        1,111.90        $ 3.77               $        1,000.00          $        1,021.60          $        3.61          0.71

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 13 for more information.

 

 

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Emerging Markets Small-Cap ETF

 

Portfolio Management Commentary

Small-capitalization stocks in emerging markets advanced during the reporting period, despite coronavirus-related restrictions that led to a worldwide recession. South Korean equities contributed the most to the Index’s return, led by the healthcare sector. The pharmaceuticals, biotechnology, and life sciences industry advanced sharply, benefiting from rising demand for coronavirus test kits and the race to develop COVID-19 therapies and vaccines. Exports of South Korean testing kits, valued globally for their accuracy, rose dramatically. Meanwhile, approvals for using existing drugs to treat complications of COVID-19, along with clinical trials for a potential vaccine, bolstered gains of pharmaceuticals and biotechnology companies. In July 2020, several smaller healthcare stocks were listed on an influential stock index, raising expectations for more foreign investment from fund managers. Deals with global pharmaceuticals companies, such as a technology transfer that could lead to sizeable future payments, as well as the South Korean government’s support of vaccine developers with research funding also bolstered the healthcare sector.

The Taiwanese information technology sector advanced as an increase in remote working and remote learning led to growth in global demand for semiconductors. Higher investment in data centers, 5G product launches, and network upgrades drove strong profit gains. China’s industrial rebound and stockpiling of semiconductors ahead of U.S. restrictions on sales to a Chinese telecommunications giant also bolstered semiconductor demand. New or improved products and acquisition activity also bolstered chip stocks. Taiwan’s technology hardware and equipment industry advanced amid increased demand for products that support 5G-enabled artificial intelligence, data centers, and networking equipment.

Information technology stocks also drove China’s contribution to the Index’s return. Software companies serving e-commerce and social network providers advanced amid temporary store and business closures, as well as increasing social media use by homebound people.

On the downside, Brazilian consumer discretionary stocks detracted from the Index’s return. Travel restrictions weighed on the hotels, restaurants, and leisure industry, and education services stocks declined amid rising pandemic-associated costs. Airlines stocks in the industrials sector declined along with passenger traffic and revenue.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

 

   

 

Percent of
Total Investments

 

 
(a)  

 

Information Technology

    18.3

Industrials

    13.2  

Consumer Discretionary

    12.9  

Materials

    11.5  

Health Care

    11.1  

Financials

    9.8  

Real Estate

    7.5  

Consumer Staples

    5.5  

Utilities

    4.3  

Communication Services

    4.2  

Energy

    1.7  

 

  (a)

Excludes money market funds.

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

   

Country/Geographic Region

 

   

 

Percent of
Total Investments

 

 
(a)  

 

Taiwan

    23.1

South Korea

    18.3  

China

    12.9  

India

    12.2  

Brazil

    7.0  

Thailand

    3.5  

Malaysia

    3.1  

South Africa

    3.1  

Saudi Arabia

    2.7  

Mexico

    2.0  
 

 

F U N D   S U M M A R Y

  12


About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not trade in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

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Consolidated Schedule of Investments

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Argentina — 0.2%

   

Adecoagro SA(a)(b)

    909,825     $ 4,603,714  

Arcos Dorados Holdings Inc., Class A

    995,193       4,428,609  

Banco BBVA Argentina SA, ADR(a)(b)

    580,883       1,957,576  

Banco Macro SA, ADR(a)

    338,309       6,410,955  

Central Puerto SA, ADR

    793,100       1,990,681  

Despegar.com Corp.(a)

    432,624       3,698,935  

Globant SA(a)

    280,665       49,840,491  

Grupo Financiero Galicia SA, ADR(a)

    830,362       8,577,639  

Loma Negra Cia Industrial Argentina SA, ADR(a)(b)

    471,824       2,278,910  

Pampa Energia SA, ADR(a)(b)

    398,394       4,577,547  

Telecom Argentina SA, ADR

    693,092       4,685,302  

Transportadora de Gas del Sur SA,
Class B(a)(b)

    626,451       2,944,320  

YPF SA, ADR(a)

    1,350,993       7,538,541  
   

 

 

 
      103,533,220  
Brazil — 3.7%            

AES Tiete Energia SA

    1,321,444       3,613,201  

Aliansce Sonae Shopping Centers SA(a)

    1,062,301       5,116,023  

Alupar Investimento SA

    1,321,924       5,645,870  

Ambev SA

    34,891,199       78,293,563  

Anima Holding SA(a)

    675,900       3,688,811  

Arezzo Industria e Comercio SA

    396,212       4,053,194  

Atacadao SA

    2,802,300       9,986,505  

B2W Cia. Digital(a)

    1,692,003       34,571,650  

B3 SA - Brasil, Bolsa, Balcao

    15,524,828       166,401,117  

Banco Bradesco SA

    9,967,888       34,577,537  

Banco BTG Pactual SA

    1,750,500       25,632,561  

Banco do Brasil SA

    6,316,413       37,592,899  

Banco Inter SA

    548,500       6,472,938  

Banco Inter SA(a)

    1,167       13,381  

Banco Santander Brasil SA

    2,817,763       14,525,664  

BB Seguridade Participacoes SA

    5,140,343       24,718,323  

BK Brasil Operacao e Assessoria a Restaurantes SA

    1,524,700       3,057,238  

BR Malls Participacoes SA(a)

    5,867,724       9,925,897  

BR Properties SA

    2,032,491       3,393,722  

BRF SA(a)

    4,204,258       15,013,291  

Camil Alimentos SA

    1,103,082       2,565,728  

CCR SA

    9,229,387       22,426,171  

Centrais Eletricas Brasileiras SA

    2,386,200       15,445,772  

Cia Brasileira de Distribuicao

    1,159,400       13,422,318  

Cia. de Locacao das Americas

    2,569,436       9,554,767  

Cia. de Saneamento Basico do Estado de Sao Paulo

    2,585,928       22,508,260  

Cia. de Saneamento de Minas Gerais-COPASA

    527,800       4,579,610  

Cia. de Saneamento do Parana

    1,419,306       6,920,731  

Cia. Hering

    1,147,200       3,824,767  

Cia. Siderurgica Nacional SA

    5,110,756       14,169,890  

Cielo SA

    9,077,218       7,545,182  

Cogna Educacao

    13,466,815       13,992,389  

Construtora Tenda SA

    621,200       3,475,205  

Cosan Logistica SA(a)

    1,244,123       4,853,211  

Cosan SA

    1,184,572       17,976,197  

CPFL Energia SA

    1,314,700       6,887,562  

CVC Brasil Operadora e Agencia de Viagens SA

    1,122,340       3,743,929  

CVC Brasil Operadora e Agencia de Viagens SA(a)

    176,689       582,640  

Cyrela Brazil Realty SA Empreendimentos e Participacoes

    2,260,600       9,935,118  

Duratex SA

    2,473,208       7,172,704  
Security   Shares     Value  
Brazil (continued)            

EcoRodovias Infraestrutura e Logistica SA(a)

    1,767,100     $ 4,161,748  

EDP - Energias do Brasil SA

    2,003,300       6,825,075  

Embraer SA(a)

    5,620,783       7,520,470  

Enauta Participacoes SA

    708,300       1,452,519  

Energisa SA

    1,314,875       10,414,211  

Eneva SA(a)

    1,341,700       12,106,336  

Engie Brasil Energia SA

    1,421,175       11,043,710  

Equatorial Energia SA

    6,849,880       28,968,303  

Ez Tec Empreendimentos e Participacoes SA

    842,406       5,964,208  

Fleury SA

    1,537,914       7,316,859  

Grendene SA

    2,445,600       3,405,892  

Grupo SBF SA(a)

    814,600       4,511,119  

Guararapes Confeccoes SA

    861,238       2,747,346  

Hapvida Participacoes e Investimentos SA(c)

    1,691,254       19,955,681  

Hypera SA

    2,828,800       16,320,298  

Iguatemi Empresa de Shopping Centers SA

    714,200       4,291,006  

Instituto Hermes Pardini SA

    486,344       2,287,259  

Iochpe Maxion SA

    942,728       1,976,225  

IRB Brasil Resseguros S/A

    5,247,439       6,820,073  

IRB Brasil Resseguros S/A(a)

    1,923,496       2,426,328  

JBS SA

    8,168,761       33,414,207  

JHSF Participacoes SA

    2,131,200       2,762,141  

JSL SA

    593,700       3,423,090  

Klabin SA

    5,183,424       24,282,979  

Light SA(a)

    1,866,052       5,146,533  

Linx SA

    1,118,700       7,255,573  

Localiza Rent a Car SA

    4,649,903       40,880,224  

Locaweb Servicos de Internet SA(a)(c)

    631,900       7,077,040  

LOG Commercial Properties e Participacoes SA

    692,472       3,910,531  

Lojas Renner SA

    6,064,836       48,057,460  

M. Dias Branco SA

    674,997       4,369,227  

Magazine Luiza SA

    5,592,668       95,034,272  

Mahle-Metal Leve SA

    354,371       1,096,206  

Marfrig Global Foods SA(a)

    2,941,513       9,544,274  

Minerva SA(a)

    2,047,600       4,885,813  

Movida Participacoes SA

    1,219,600       3,621,518  

MRV Engenharia e Participacoes SA

    2,314,742       7,582,332  

Multiplan Empreendimentos Imobiliarios SA

    2,086,029       7,916,864  

Natura & Co. Holding SA

    5,675,400       51,044,357  

Notre Dame Intermedica Participacoes SA

    3,652,579       49,336,682  

Odontoprev SA

    1,869,200       4,364,726  

Omega Geracao SA(a)

    718,100       5,307,963  

Petro Rio SA(a)

    813,800       6,214,127  

Petrobras Distribuidora SA

    5,676,812       22,082,642  

Petroleo Brasileiro SA

    27,870,779       113,395,393  

Porto Seguro SA

    693,098       6,678,423  

Qualicorp Consultoria e Corretora de Seguros SA

    1,752,700       9,980,923  

Raia Drogasil SA

    1,615,357       31,742,373  

Rumo SA(a)

    9,048,081       37,274,947  

Santos Brasil Participacoes SA

    2,900,400       2,749,244  

Sao Martinho SA

    1,376,911       6,066,450  

Ser Educacional SA(c)

    621,200       1,624,933  

SLC Agricola SA

    760,978       3,484,527  

Smiles Fidelidade SA

    536,600       1,377,227  

Sul America SA

    2,221,032       17,481,938  

Suzano SA(a)

    4,097,354       37,493,788  

TIM Participacoes SA

    6,293,500       16,428,101  

TOTVS SA

    3,618,700       19,037,110  

Transmissora Alianca de Energia Eletrica SA

    1,418,200       7,292,773  

Tupy SA(a)

    622,200       1,916,765  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  14


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Brazil (continued)            

Ultrapar Participacoes SA

    5,454,860     $ 19,330,006  

Vale SA

    27,732,783       301,699,355  

Via Varejo SA(a)

    7,627,579       28,503,139  

Vivara Participacoes SA

    770,100       3,308,711  

WEG SA

    6,390,359       75,273,884  

Wiz Solucoes e Corretagem de Seguros SA

    892,900       1,739,933  

YDUQS Participacoes SA

    2,141,224       10,518,964  
   

 

 

 
      2,041,399,890  
Chile — 0.5%            

AES Gener SA

    23,847,370       3,889,338  

Aguas Andinas SA, Class A

    19,409,921       5,831,210  

Banco de Chile

    339,231,059       28,426,353  

Banco de Credito e Inversiones SA

    372,419       11,764,593  

Banco Santander Chile

    489,783,369       18,882,271  

CAP SA(a)

    584,997       5,204,532  

Cencosud SA

    10,709,741       15,880,194  

Cencosud Shopping SA

    3,051,895       4,568,969  

Cia. Cervecerias Unidas SA

    1,029,579       6,785,050  

Cia. Sud Americana de Vapores SA(a)

    102,160,231       2,779,350  

Colbun SA

    58,868,624       9,108,443  

Empresa Nacional de Telecomunicaciones SA

    1,149,475       6,975,372  

Empresas CMPC SA

    8,393,149       17,477,385  

Empresas COPEC SA

    2,904,530       21,350,395  

Enel Americas SA

    258,469,555       37,282,243  

Enel Chile SA

    205,195,040       15,821,478  

Engie Energia Chile SA

    4,641,638       6,284,049  

Falabella SA

    5,510,989       17,409,032  

Forus SA

    559,926       718,344  

Grupo Security SA

    9,032,962       1,781,971  

Inversiones Aguas Metropolitanas SA

    4,008,640       3,253,554  

Inversiones La Construccion SA

    288,792       1,880,423  

Itau CorpBanca Chile SA

    1,167,685,306       3,568,233  

Parque Arauco SA

    4,378,261       6,802,486  

Ripley Corp. SA

    6,551,889       2,407,634  

SMU SA

    16,918,422       2,835,843  

SONDA SA

    4,152,247       3,212,066  

Vina Concha y Toro SA

    3,387,884       5,892,770  
   

 

 

 
      268,073,581  
China — 39.0%            

21Vianet Group Inc., ADR(a)(b)

    584,865       13,574,717  

360 Finance Inc., ADR(a)(b)

    488,670       6,108,375  

360 Security Technology Inc., Class A

    2,595,188       7,077,975  

361 Degrees International Ltd.(a)(b)

    9,098,000       1,209,130  

3SBio Inc.(a)(b)(c)

    9,518,500       11,176,345  

51job Inc., ADR(a)(b)

    201,500       13,206,310  

58.com Inc., ADR(a)(b)

    711,181       39,370,980  

AAC Technologies Holdings Inc.(b)

    5,455,000       34,418,624  

AECC Aviation Power Co. Ltd., Class A

    1,118,116       7,287,430  

Agile Group Holdings Ltd.(b)

    8,470,500       11,694,528  

Agricultural Bank of China Ltd., Class A

    37,097,747       17,386,649  

Agricultural Bank of China Ltd., Class H

    203,630,000       68,050,515  

AGTech Holdings Ltd.(a)(b)

    33,768,000       1,328,908  

Aier Eye Hospital Group Co. Ltd., Class A

    2,059,762       15,629,068  

Air China Ltd., Class H

    14,598,000       10,058,298  

Aisino Corp., Class A

    2,310,372       6,075,177  

AK Medical Holdings Ltd.(c)

    3,156,000       8,071,059  

Alibaba Group Holding Ltd., ADR(a)

    14,086,081       4,043,127,829  

Alibaba Health Information Technology Ltd.(a)

    24,566,000       59,337,628  

Alibaba Pictures Group Ltd.(a)(b)

    92,530,000       13,133,036  
Security   Shares     Value  
China (continued)            

A-Living Services Co. Ltd., Class H(b)(c)

    3,446,500     $ 17,788,043  

Aluminum Corp. of China Ltd., Class H(a)

    31,114,000       7,627,801  

Anhui Conch Cement Co. Ltd., Class A

    2,100,307       18,678,186  

Anhui Conch Cement Co. Ltd., Class H

    9,089,000       65,908,634  

Anhui Gujing Distillery Co. Ltd., Class A

    212,480       8,015,058  

Anhui Gujing Distillery Co. Ltd., Class B

    669,980       8,506,420  

Anhui Kouzi Distillery Co. Ltd., Class A

    481,524       4,225,282  

ANTA Sports Products Ltd.(b)

    8,194,000       80,934,008  

Aoyuan Healthy Life Group Co. Ltd.(a)

    2,634,000       2,450,422  

Ascletis Pharma Inc.(a)(b)(c)

    3,631,000       1,358,670  

Asia Cement China Holdings Corp.

    4,087,500       4,145,436  

Asymchem Laboratories Tianjin Co. Ltd., Class A

    148,200       5,928,736  

Atlas Crop.

    780,003       6,731,426  

Autobio Diagnostics Co. Ltd., Class A

    168,590       3,967,649  

Autohome Inc., ADR(b)

    447,387       35,898,333  

AVIC Aircraft Co. Ltd., Class A

    1,677,487       5,927,040  

Avic Capital Co. Ltd., Class A

    7,388,091       5,425,797  

AVIC Jonhon Optronic Technology Co. Ltd., Class A

    1,196,861       8,440,228  

AVIC Shenyang Aircraft Co. Ltd., Class A

    583,667       5,032,090  

AviChina Industry & Technology Co. Ltd., Class H

    20,037,000       12,513,187  

BAIC Motor Corp. Ltd., Class H(c)

    12,582,500       6,023,248  

Baidu Inc., ADR(a)

    2,047,852       255,100,924  

Bank of Beijing Co. Ltd., Class A

    13,491,534       9,592,982  

Bank of Chengdu Co. Ltd., Class A

    2,657,175       3,941,642  

Bank of China Ltd., Class A

    20,194,000       9,670,736  

Bank of China Ltd., Class H

    588,211,000       192,777,680  

Bank of Communications Co. Ltd., Class A

    20,445,280       14,119,442  

Bank of Communications Co. Ltd., Class H

    62,756,000       32,794,436  

Bank of Hangzhou Co. Ltd., Class A

    3,763,240       7,115,329  

Bank of Jiangsu Co. Ltd., Class A

    8,229,514       7,713,874  

Bank of Nanjing Co. Ltd., Class A

    6,286,821       7,884,744  

Bank of Ningbo Co. Ltd., Class A

    3,067,076       15,897,038  

Bank of Shanghai Co. Ltd., Class A

    8,692,695       10,686,361  

Baoshan Iron & Steel Co. Ltd., Class A

    13,472,029       9,716,800  

Baozun Inc., ADR(a)(b)

    331,105       13,720,991  

BBMG Corp., Class A

    14,478,136       6,975,734  

Beijing Capital International Airport Co. Ltd., Class H(a)

    13,792,000       9,752,090  

Beijing Capital Land Ltd., Class H(b)

    11,014,000       2,089,067  

Beijing Chunlizhengda Medical Instruments Co. Ltd., Class H

    654,750       3,742,563  

Beijing Enlight Media Co. Ltd., Class A

    1,932,294       4,570,372  

Beijing Enterprises Holdings Ltd.

    3,552,500       11,299,023  

Beijing Enterprises Water Group Ltd.(a)

    35,912,000       14,132,836  

Beijing Gas Blue Sky Holdings Ltd.(a)(b)

    76,328,000       1,240,922  

Beijing New Building Materials PLC, Class A

    1,033,422       4,948,971  

Beijing Oriental Yuhong Waterproof Technology Co. Ltd., Class A

    948,097       8,297,224  

Beijing Shiji Information Technology Co. Ltd., Class A

    588,095       2,824,924  

Beijing Shunxin Agriculture Co. Ltd., Class A

    482,200       5,297,818  

Beijing Sinnet Technology Co. Ltd., Class A

    1,161,087       4,468,621  

Beijing Tiantan Biological Products Corp. Ltd., Class A

    683,037       4,221,393  

Beijing Tong Ren Tang Chinese Medicine Co. Ltd.(b)

    2,229,000       2,553,953  

Beijing Tongrentang Co. Ltd., Class A

    997,996       4,327,615  

BEST Inc., ADR(a)(b)

    1,526,791       6,107,164  

Betta Pharmaceuticals Co. Ltd., Class A

    230,994       4,412,702  

Bilibili Inc., ADR(a)(b)

    897,466       42,405,268  

Bitauto Holdings Ltd., ADR(a)

    268,377       4,232,305  
 

 

15  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

BOC Aviation Ltd.(c)

    1,590,700     $ 11,832,526  

BOE Technology Group Co. Ltd., Class A

    16,877,800       13,553,200  

Bosideng International Holdings Ltd.(b)

    24,662,000       7,064,333  

Brilliance China Automotive Holdings Ltd.

    23,154,000       20,733,632  

BYD Co. Ltd., Class A

    969,686       12,034,093  

BYD Co. Ltd., Class H(b)

    4,664,500       46,343,168  

BYD Electronic International Co. Ltd.(b)

    5,165,500       21,894,631  

C&D International Investment Group Ltd.

    3,282,000       5,911,720  

CA Cultural Technology Group Ltd.(a)(b)

    7,369,000       2,339,018  

Caitong Securities Co. Ltd., Class A

    2,320,986       4,933,978  

Camsing International Holding Ltd.(a)(b)(d)

    4,108,000       461,147  

CanSino Biologics Inc., Class H(a)(b)(c)

    453,800       9,620,374  

Canvest Environmental Protection Group Co. Ltd.

    7,824,000       3,412,208  

CAR Inc.(a)(b)

    6,071,000       1,934,849  

Central China Real Estate Ltd.

    3,620,000       1,583,427  

CGN New Energy Holdings Co. Ltd.(a)

    10,350,000       1,856,287  

CGN Power Co. Ltd., Class H(c)

    65,279,000       14,150,529  

Changchun High & New Technology Industry Group Inc., Class A

    202,486       13,823,971  

Changjiang Securities Co. Ltd., Class A

    4,147,596       5,165,458  

Chaowei Power Holdings Ltd.(b)

    4,816,000       2,044,430  

Chaozhou Three-Circle Group Co. Ltd., Class A

    1,130,246       4,617,257  

China Aircraft Leasing Group Holdings
Ltd.(b)

    3,766,000       3,454,934  

China Animal Healthcare Ltd.(a)(d)

    1,237,000       2  

China Aoyuan Group Ltd.

    9,172,000       10,580,141  

China BlueChemical Ltd., Class H

    15,988,000       2,351,738  

China Cinda Asset Management Co. Ltd., Class H

    60,777,000       11,606,222  

China CITIC Bank Corp. Ltd., Class H

    66,849,000       27,946,654  

China Communications Construction Co. Ltd., Class H

    34,823,000       19,545,435  

China Communications Services Corp. Ltd., Class H

    18,242,000       11,980,643  

China Conch Venture Holdings Ltd.

    12,378,500       53,665,748  

China Construction Bank Corp., Class A

    9,000,781       8,147,703  

China Construction Bank Corp., Class H

    714,512,000       506,141,285  

China Datang Corp. Renewable Power Co. Ltd., Class H

    20,684,000       2,802,294  

China Dongxiang Group Co. Ltd.

    28,948,000       3,772,505  

China East Education Holdings Ltd.(c)

    4,535,500       10,018,872  

China Eastern Airlines Corp. Ltd., Class H(b)

    15,020,000       6,201,686  

China Education Group Holdings Ltd.(b)

    4,919,000       9,672,788  

China Everbright Bank Co. Ltd., Class A

    21,455,882       12,029,316  

China Everbright Bank Co. Ltd., Class H

    20,193,000       7,243,284  

China Everbright Greentech Ltd.(b)(c)

    7,223,000       3,206,018  

China Everbright International Ltd.

    27,619,148       16,678,079  

China Everbright Ltd.

    7,172,000       11,049,293  

China Everbright Water Ltd.(b)

    8,211,000       1,358,837  

China Evergrande Group(b)

    13,981,000       32,651,768  

China Feihe Ltd.(c)

    9,066,000       18,365,606  

China Fiber Optic Network System Group Ltd.(a)(d)

    10,394,800       13  

China Foods Ltd.

    8,034,000       2,850,719  

China Fortune Land Development Co. Ltd., Class A

    2,409,524       5,910,223  

China Galaxy Securities Co. Ltd., Class H

    31,296,500       18,858,300  

China Gas Holdings Ltd.

    19,588,200       53,708,541  

China Gezhouba Group Co. Ltd., Class A

    4,303,193       3,995,869  

China Grand Pharmaceutical and Healthcare Holdings Ltd., Class A

    7,664,000       6,991,410  

China Greatwall Technology Group Co. Ltd., Class A

    1,622,400       4,195,076  

China Harmony Auto Holding Ltd.(b)

    7,277,500       3,342,890  
Security   Shares     Value  

 

 
China (continued)            

China High Speed Transmission Equipment Group Co. Ltd.

    4,069,000     $ 2,950,624  

China Hongqiao Group Ltd.

    13,318,000       8,592,092  

China Huarong Asset Management Co. Ltd., Class H(c)

    70,987,000       8,151,898  

China Huishan Dairy Holdings Co. Ltd.(a)(d)

    16,599,187       21  

China Huiyuan Juice Group Ltd.(a)(d)

    10,877,000       14,035  

China International Capital Corp. Ltd., Class H(a)(b)(c)

    10,039,200       23,860,450  

China Jinmao Holdings Group Ltd.(b)

    41,808,000       26,163,210  

China Jushi Co. Ltd., Class A

    2,200,893       4,771,871  

China Kepei Education Group Ltd.

    6,228,000       5,504,642  

China Lesso Group Holdings Ltd.

    8,450,000       15,765,759  

China Life Insurance Co. Ltd., Class A

    1,394,621       8,894,103  

China Life Insurance Co. Ltd., Class H

    55,527,000       135,268,319  

China Lilang Ltd.

    3,948,000       2,277,060  

China Literature Ltd.(a)(b)(c)

    2,297,600       14,274,490  

China Logistics Property Holdings Co.
Ltd.(a)(b)(c)

    9,294,000       4,257,169  

China Longyuan Power Group Corp. Ltd., Class H

    23,979,000       15,129,683  

China Lumena New Materials Corp.(a)(b)(d)

    64,600       0 (e)  

China Maple Leaf Educational Systems Ltd.(b)

    12,990,000       5,061,812  

China Medical System Holdings Ltd.

    10,462,000       11,811,707  

China Meidong Auto Holdings Ltd.

    3,362,000       11,365,509  

China Mengniu Dairy Co. Ltd.(a)

    20,786,000       102,184,680  

China Merchants Bank Co. Ltd., Class A

    9,643,063       53,064,547  

China Merchants Bank Co. Ltd., Class H

    29,057,964       138,725,659  

China Merchants Energy Shipping Co. Ltd., Class A

    3,615,388       3,409,972  

China Merchants Land Ltd.

    21,860,000       3,328,297  

China Merchants Port Holdings Co. Ltd.

    9,978,270       11,420,070  

China Merchants Securities Co. Ltd., Class A(a)

    3,599,731       11,326,107  

China Merchants Shekou Industrial Zone Holdings Co. Ltd., Class A

    4,123,834       10,054,974  

China Metal Recycling Holdings Ltd.(a)(d)

    62,400       0 (e)  

China Metal Resources Utilization
Ltd.(a)(b)(c)

    6,276,000       222,692  

China Minsheng Banking Corp. Ltd., Class A

    18,379,915       14,893,604  

China Minsheng Banking Corp. Ltd., Class H

    42,137,220       25,662,430  

China Mobile Ltd.

    46,026,000       321,581,892  

China Molybdenum Co. Ltd., Class A

    12,249,971       7,654,946  

China Molybdenum Co. Ltd., Class H

    21,696,000       8,818,204  

China National Building Material Co. Ltd., Class H

    29,256,850       41,147,547  

China National Chemical Engineering Co. Ltd., Class A

    6,539,822       5,595,345  

China National Nuclear Power Co. Ltd., Class A

    11,847,426       8,060,709  

China National Software & Service Co. Ltd., Class A

    259,999       3,752,042  

China New Higher Education Group
Ltd.(b)(c)

    7,096,000       5,493,571  

China Northern Rare Earth Group High-Tech Co. Ltd., Class A(a)

    2,623,800       4,731,088  

China Oilfield Services Ltd., Class H

    12,934,000       10,163,424  

China Oriental Group Co. Ltd.(b)

    10,202,000       2,869,668  

China Overseas Grand Oceans Group Ltd.

    12,802,500       8,342,113  

China Overseas Land & Investment Ltd.

    28,519,000       82,611,504  

China Overseas Property Holdings Ltd.

    10,365,000       9,348,380  

China Pacific Insurance Group Co. Ltd., Class A

    3,347,238       15,061,997  

China Pacific Insurance Group Co. Ltd., Class H

    20,519,400       57,056,066  

China Petroleum & Chemical Corp., Class A(a)

    16,813,010       9,892,677  

China Petroleum & Chemical Corp., Class H

    177,896,200       82,174,977  

China Power International Development Ltd.

    32,803,000       6,348,845  

China Railway Construction Corp. Ltd., Class A

    7,008,712       9,138,039  

China Railway Construction Corp. Ltd., Class H

    13,813,500       10,622,821  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  16


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 
China (continued)            

China Railway Group Ltd., Class A

    12,555,866     $ 10,265,923  

China Railway Group Ltd., Class H

    26,211,000       13,460,356  

China Railway Signal & Communication Corp. Ltd., Class H(c)

    11,755,000       4,762,579  

China Reinsurance Group Corp., Class H

    40,151,000       4,299,959  

China Renewable Energy Investment
Ltd.(a)(c)(d)

    8,046       0 (e)  

China Resources Beer Holdings Co. Ltd.

    11,084,000       72,080,360  

China Resources Cement Holdings Ltd.

    18,446,000       26,894,938  

China Resources Gas Group Ltd.

    6,860,000       32,219,247  

China Resources Land Ltd.

    23,931,777       110,701,626  

China Resources Medical Holdings Co. Ltd.(b)

    7,463,500       5,402,506  

China Resources Pharmaceutical Group Ltd.(c)

    11,465,500       6,494,525  

China Resources Power Holdings Co. Ltd.

    14,440,000       17,141,346  

China Resources Sanjiu Medical & Pharmaceutical Co. Ltd., Class A

    862,896       3,590,597  

China SCE Group Holdings Ltd.

    14,143,200       7,372,571  

China Shenhua Energy Co. Ltd., Class A

    3,810,229       8,989,919  

China Shenhua Energy Co. Ltd., Class H

    24,609,000       41,088,296  

China Shineway Pharmaceutical Group Ltd.

    2,774,000       1,943,552  

China Shipbuilding Industry Co. Ltd., Class A(a)

    13,380,118       9,474,690  

China South City Holdings Ltd.

    38,028,000       3,876,328  

China Southern Airlines Co. Ltd.,
Class A(a)

    11,784,984       10,083,004  

China Southern Airlines Co. Ltd.,
Class H(a)(b)

    10,452,000       5,515,852  

China State Construction Engineering Corp. Ltd., Class A

    23,267,119       17,460,998  

China State Construction International Holdings Ltd.

    14,802,000       11,478,490  

China Suntien Green Energy Corp. Ltd., Class H(a)

    15,127,000       4,059,813  

China Taiping Insurance Holdings Co. Ltd.

    12,063,108       19,176,079  

China Telecom Corp. Ltd., Class H

    97,738,000       32,032,221  

China Tian Lun Gas Holdings Ltd.

    2,970,000       2,253,324  

China Tourism Group Duty Free Corp. Ltd., Class A

    900,773       27,355,334  

China Tower Corp. Ltd., Class H(c)

    327,918,000       62,620,548  

China Traditional Chinese Medicine Holdings Co. Ltd.(a)

    20,000,000       8,541,770  

China Travel International Investment Hong Kong Ltd.(b)

    23,180,000       3,499,365  

China Unicom Hong Kong Ltd.

    45,702,000       32,374,080  

China United Network Communications Ltd., Class A

    15,864,482       12,021,442  

China Vanke Co. Ltd., Class A

    5,159,568       20,542,902  

China Vanke Co. Ltd., Class H

    12,270,387       38,156,207  

China Vast Industrial Urban Development Co. Ltd.(c)

    3,382,000       1,317,864  

China Water Affairs Group Ltd.(b)

    7,168,000       5,900,768  

China Yangtze Power Co. Ltd., Class A

    10,400,462       29,307,128  

China Youzan Ltd.(a)(b)

    106,140,000       23,144,920  

China Yuchai International Ltd.

    122,975       1,997,114  

China Yuhua Education Corp Ltd.(c)

    9,694,000       9,293,552  

China ZhengTong Auto Services Holdings Ltd.(b)

    9,134,500       1,143,264  

China Zhongwang Holdings Ltd.(a)

    12,716,800       2,690,987  

Chinasoft International Ltd.(a)(b)

    16,016,000       11,386,639  

Chongqing Changan Automobile Co. Ltd., Class A(a)

    2,416,783       4,131,977  

Chongqing Rural Commercial Bank Co. Ltd., Class H

    15,968,000       6,510,697  

Chongqing Zhifei Biological Products Co. Ltd., Class A

    743,063       14,662,398  

CIFI Holdings Group Co. Ltd.(b)

    23,762,000       20,235,634  

CIMC Enric Holdings Ltd.

    6,530,000       2,620,375  

CITIC Ltd.

    43,091,000       39,309,351  

CITIC Resources Holdings Ltd.(a)

    33,748,000       1,262,804  
Security   Shares     Value  
China (continued)            

CITIC Securities Co. Ltd., Class A

    5,207,245     $ 24,176,780  

CITIC Securities Co. Ltd., Class H(b)

    15,961,000       38,346,847  

CNOOC Ltd.

    132,969,000       151,324,372  

COFCO Meat Holdings Ltd.(b)

    17,734,000       8,283,334  

Colour Life Services Group Co. Ltd.(a)(b)

    3,615,000       1,870,435  

Concord New Energy Group Ltd.(b)

    78,810,000       3,508,248  

Consun Pharmaceutical Group Ltd.

    4,843,000       2,049,643  

Contemporary Amperex Technology Co. Ltd., Class A

    1,085,873       32,714,993  

COSCO SHIPPING Energy Transportation Co. Ltd., Class H

    10,554,000       4,861,555  

COSCO SHIPPING Holdings Co. Ltd., Class H(a)

    21,432,500       10,757,524  

COSCO SHIPPING International Hong Kong Co. Ltd.(b)

    9,102,000       2,525,022  

COSCO SHIPPING Ports Ltd.

    13,642,000       7,727,383  

Country Garden Holdings Co. Ltd.(b)

    57,022,733       70,706,820  

Country Garden Services Holdings Co. Ltd.

    10,443,000       72,830,094  

CPMC Holdings Ltd.

    6,560,000       2,835,558  

CRRC Corp. Ltd., Class A

    15,141,869       12,955,090  

CRRC Corp. Ltd., Class H

    29,819,750       13,466,723  

CSC Financial Co. Ltd., Class A

    1,379,292       10,526,210  

CSPC Pharmaceutical Group Ltd.

    42,249,600       93,874,068  

CT Environmental Group Ltd.(a)(b)(d)

    33,362,000       1,024,516  

Dali Foods Group Co. Ltd.(c)

    15,056,500       9,227,999  

Daqin Railway Co. Ltd., Class A

    10,388,262       10,040,705  

Daqo New Energy Corp., ADR(a)(b)

    75,377       8,503,279  

Dawning Information Industry Co. Ltd., Class A

    832,681       5,493,945  

DHC Software Co. Ltd., Class A

    1,886,498       3,211,576  

Digital China Holdings Ltd.

    6,734,000       5,482,673  

Dongfeng Motor Group Co. Ltd., Class H

    19,892,000       13,808,631  

Dongxing Securities Co. Ltd., Class A

    2,528,659       4,928,728  

Dongyue Group Ltd.(b)

    10,233,000       4,383,600  

East Money Information Co. Ltd., Class A

    3,864,171       14,759,016  

ENN Energy Holdings Ltd.

    5,968,400       66,228,705  

Eve Energy Co. Ltd., Class A

    957,332       6,850,316  

Ever Sunshine Lifestyle Services Group Ltd.

    5,152,000       10,609,591  

Everbright Securities Co. Ltd., Class A

    1,918,086       6,138,637  

Fangda Carbon New Material Co. Ltd., Class A(a)

    5,593,880       5,496,567  

Fanhua Inc., ADR

    342,057       6,940,337  

Fantasia Holdings Group Co. Ltd.(a)

    16,480,500       3,359,830  

Far East Horizon Ltd.

    15,130,000       13,392,231  

Fiberhome Telecommunication Technologies Co. Ltd., Class A

    779,798       2,994,341  

Focus Media Information Technology Co. Ltd., Class A

    8,097,799       8,914,596  

Foshan Haitian Flavouring & Food Co. Ltd., Class A

    1,258,640       33,665,907  

Fosun International Ltd.

    19,343,500       21,539,506  

Founder Securities Co. Ltd., Class A(a)

    5,310,787       6,800,202  

Foxconn Industrial Internet Co. Ltd., Class A

    3,079,161       6,626,637  

Fu Shou Yuan International Group Ltd.

    7,754,000       8,023,984  

Fufeng Group Ltd.(a)

    13,550,400       4,545,853  

Fuyao Glass Industry Group Co. Ltd.,
Class H(c)

    4,168,800       13,420,587  

Ganfeng Lithium Co. Ltd., Class A

    590,884       4,357,555  

GCL System Integration Technology Co. Ltd., Class A(a)

    2,911,100       1,831,883  

GCL-Poly Energy Holdings Ltd.(a)

    106,282,000       4,319,765  

GD Power Development Co. Ltd., Class A

    17,853,900       5,343,801  

GDS Holdings Ltd., ADR(a)(b)

    599,776       48,545,869  

Geely Automobile Holdings Ltd.

    44,122,000       93,252,177  

Gemdale Corp., Class A

    3,065,443       6,409,137  
 

 

17  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Gemdale Properties & Investment Corp. Ltd.

    43,072,000     $ 7,669,446  

Genertec Universal Medical Group
Co. Ltd.(c)

    8,278,500       5,768,134  

Genscript Biotech Corp.(a)(b)

    7,878,000       15,227,117  

GF Securities Co. Ltd., Class A

    4,485,085       10,588,734  

GF Securities Co. Ltd., Class H

    8,602,200       10,178,148  

Gigadevice Semiconductor Beijing Inc., Class A

    223,254       6,503,854  

Glodon Co. Ltd., Class A

    428,711       4,361,502  

Glory Sun Financial Group Ltd.(a)(b)

    111,856,000       4,618,481  

GoerTek Inc., Class A

    1,625,000       9,748,837  

GOME Retail Holdings Ltd.(a)(b)

    73,943,000       10,590,341  

Grand Baoxin Auto Group Ltd.(a)

    6,513,500       991,714  

Great Wall Motor Co. Ltd., Class H

    23,690,500         25,707,516  

Gree Electric Appliances Inc. of Zhuhai, Class A

    1,554,141       12,366,598  

Greenland Holdings Corp. Ltd., Class A

    4,433,032       4,951,373  

Greenland Hong Kong Holdings Ltd.

    7,916,000       2,635,211  

Greentown Service Group Co. Ltd.

    10,732,000       14,429,068  

GSX Techedu Inc., ADR(a)(b)

    429,516       36,680,666  

Guangdong Haid Group Co. Ltd., Class A

    845,499       8,736,261  

Guangdong HEC Technology Holding Co. Ltd., Class A(a)

    2,503,495       2,368,564  

Guangdong Investment Ltd.

    22,090,000       34,488,236  

Guangzhou Automobile Group Co. Ltd., Class H

    22,081,200       18,975,219  

Guangzhou Baiyun International Airport Co. Ltd., Class A

    1,419,323       3,153,982  

Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., Class A

    987,888       4,689,084  

Guangzhou R&F Properties Co. Ltd., Class H

    8,860,000       11,271,988  

Guorui Properties Ltd.

    10,612,000       1,574,653  

Guosen Securities Co. Ltd., Class A

    2,809,967       5,747,814  

Guotai Junan Securities Co. Ltd., Class A

    4,654,525       13,143,020  

Guotai Junan Securities Co. Ltd., Class H(c)

    3,668,200       5,727,014  

Guoyuan Securities Co. Ltd., Class A

    2,913,300       4,687,380  

Haidilao International Holding Ltd.(b)(c)

    6,096,000       39,328,271  

Haier Electronics Group Co. Ltd.

    9,767,000       33,459,204  

Haier Smart Home Co. Ltd., Class A

    3,144,605       10,238,452  

Haitian International Holdings Ltd.

    4,941,000       11,960,176  

Haitong Securities Co. Ltd., Class A(a)

    5,240,256       11,606,504  

Haitong Securities Co. Ltd., Class H(a)

    19,843,200       18,024,958  

Hangzhou Hikvision Digital Technology Co. Ltd., Class A

    4,471,465       24,429,633  

Hangzhou Robam Appliances Co. Ltd., Class A

    713,799       4,064,469  

Hangzhou Steam Turbine Co. Ltd., Class B

    3,020,577       3,281,647  

Hangzhou Tigermed Consulting Co. Ltd., Class A

    266,474       4,357,488  

Hansoh Pharmaceutical Group Co. Ltd.(a)(c)

    8,986,000       42,610,208  

Harbin Electric Co. Ltd., Class H(a)

    5,830,000       1,790,340  

Hefei Meiya Optoelectronic Technology Inc., Class A

    470,842       4,011,247  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    1,381,610       12,809,215  

Hengan International Group Co. Ltd.

    4,933,500       38,894,325  

Hengli Petrochemical Co. Ltd., Class A

    3,067,410       9,418,341  

HengTen Networks Group Ltd.(a)(b)

    179,148,000       5,755,740  

Hengtong Optic-Electric Co. Ltd., Class A

    1,707,500       4,076,071  

Hengyi Petrochemical Co. Ltd., Class A

    2,982,161       5,420,805  

Hi Sun Technology China Ltd.(a)

    27,003,000       3,309,981  

Hithink RoyalFlush Information Network Co. Ltd., Class A

    281,673       6,905,752  

Hope Education Group Co. Ltd.(c)

    19,832,000       6,115,815  

Hua Han Health Industry Holdings Ltd.(a)(b)(d)

    22,424,288       651,015  

Hua Hong Semiconductor Ltd.(a)(b)(c)

    3,427,000       12,381,180  
Security   Shares     Value  
China (continued)            

Huabao International Holdings Ltd.(b)

    6,332,000     $ 5,645,584  

Huadong Medicine Co. Ltd., Class A

    1,060,851       4,330,668  

Hualan Biological Engineering Inc., Class A

    930,820       7,828,013  

Huami Corp., ADR(a)(b)

    243,864       3,077,564  

Huaneng Power International Inc., Class H

    28,406,000       11,838,659  

Huatai Securities Co. Ltd., Class A

    4,243,351       13,264,441  

Huatai Securities Co. Ltd., Class H(c)

    10,485,200       18,399,479  

Huaxia Bank Co. Ltd., Class A

    9,965,512       9,355,649  

Huaxin Cement Co. Ltd., Class A

    851,969       3,477,958  

Huayu Automotive Systems Co. Ltd., Class A

    1,850,118       6,720,679  

Huazhu Group Ltd., ADR(b)

    1,014,889       45,395,985  

Hubei Biocause Pharmaceutical Co. Ltd., Class A

    4,608,171       3,787,916  

Hundsun Technologies Inc., Class A

    640,948       10,428,629  

Hutchison China MediTech Ltd., ADR(a)(b)

    523,171       17,379,741  

HUYA Inc., ADR(a)(b)

    477,258       13,706,850  

Iflytek Co. Ltd., Class A

    1,496,984       8,237,712  

IGG Inc.(b)

    7,043,000       8,133,372  

IMAX China Holding Inc.(a)(b)(c)

    1,234,700       1,985,041  

Industrial & Commercial Bank of China Ltd., Class A

    27,086,180       19,615,201  

Industrial & Commercial Bank of China Ltd., Class H

    451,842,000         253,026,623  

Industrial Bank Co. Ltd., Class A

    10,247,678       24,178,544  

Industrial Securities Co. Ltd., Class A

    4,466,400       5,360,345  

Inner Mongolia BaoTou Steel Union Co. Ltd., Class A(a)

    45,585,400       7,720,529  

Inner Mongolia Yili Industrial Group Co. Ltd., Class A

    3,176,488       19,450,867  

Inner Mongolia Yitai Coal Co. Ltd., Class B

    8,257,495       5,780,246  

Innovent Biologics Inc.(a)(c)

    7,160,500       47,720,344  

Inspur Electronic Information Industry Co. Ltd., Class A

    780,168       4,112,053  

Inspur International Ltd.(a)

    5,134,000       1,397,746  

iQIYI Inc., ADR(a)(b)

    1,695,751       36,713,009  

Jafron Biomedical Co. Ltd., Class A

    499,473       5,557,600  

JD.com Inc., ADR(a)

    6,384,851       502,104,683  

Jiangsu Expressway Co. Ltd., Class H

    9,198,000       9,209,690  

Jiangsu Hengli Hydraulic Co. Ltd., Class A

    754,988       7,221,227  

Jiangsu Hengrui Medicine Co. Ltd., Class A

    2,507,486       34,732,076  

Jiangsu King’s Luck Brewery JSC Ltd., Class A

    748,195       5,951,346  

Jiangsu Yanghe Brewery Joint-Stock Co. Ltd., Class A

    737,947       15,201,440  

Jiangsu Zhongnan Construction Group Co. Ltd., Class A

    2,613,000       3,715,880  

Jiangxi Copper Co. Ltd., Class H

    9,376,000       11,057,417  

Jiangxi Zhengbang Technology Co. Ltd., Class A

    1,278,400       4,638,275  

Jiayuan International Group Ltd.

    10,858,000       5,155,699  

Jinchuan Group International Resources Co. Ltd.

    28,229,000       3,278,143  

Jinke Properties Group Co. Ltd., Class A

    3,393,200       5,063,184  

JinkoSolar Holding Co. Ltd., ADR(a)(b)

    272,942       6,233,995  

Jiumaojiu International Holdings Ltd.(a)(c)

    3,354,000       7,625,334  

JNBY Design Ltd.

    1,859,500       1,943,440  

Jonjee Hi-Tech Industrial And Commercial Holding Co. Ltd., Class A

    488,142       5,815,669  

JOYY Inc.(a)

    447,770       38,257,469  

Juewei Food Co. Ltd., Class A

    358,100       4,925,140  

Kaisa Group Holdings Ltd.(a)

    19,124,000       9,623,504  

Kaisa Prosperity Holdings Ltd.

    569,500       2,130,991  

Kama Co. Ltd., Class B(a)

    3,577,824       1,516,997  

KE Holdings Inc.(a)

    495,721       25,425,530  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  18


Consolidated Schedule of Investments (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Kingboard Holdings Ltd.

    5,180,200     $ 16,676,579  

Kingboard Laminates Holdings Ltd.

    8,363,000       10,542,571  

Kingdee International Software Group Co. Ltd.(a)(b)

    17,825,000       45,447,120  

Kingsoft Corp. Ltd.

    6,288,000       33,670,574  

Konka Group Co. Ltd., Class B

    7,465,318       2,215,471  

Koolearn Technology Holding Ltd.(a)(b)(c)

    1,915,000       9,167,113  

Kunlun Energy Co. Ltd.

    29,446,000       21,960,592  

Kweichow Moutai Co. Ltd., Class A

    572,192       149,247,864  

KWG Group Holdings Ltd.

    9,943,500       18,911,529  

Lee & Man Paper Manufacturing Ltd.

    10,516,000       6,295,909  

Lee’s Pharmaceutical Holdings Ltd.

    2,655,500       2,021,567  

Legend Holdings Corp., Class H(c)

    4,009,400       5,907,931  

Lenovo Group Ltd.

    53,568,000       35,803,467  

Lens Technology Co. Ltd., Class A

    1,432,600       7,220,363  

Lepu Medical Technology Beijing Co. Ltd., Class A

    1,030,100       5,829,435  

Li Ning Co. Ltd.

    15,789,000       66,821,829  

Lifetech Scientific Corp.(a)

    23,344,000       7,018,125  

Lingyi iTech Guangdong Co., Class A(a)

    3,059,333       5,342,214  

Logan Group Co. Ltd.

    10,757,000       20,042,332  

Lomon Billions Group Co. Ltd., Class A

    1,357,475       4,651,663  

Longfor Group Holdings Ltd.(c)

    13,555,000       71,796,385  

LONGi Green Energy Technology Co. Ltd., Class A

    1,823,258       16,845,268  

Lonking Holdings Ltd.

    15,258,000       4,370,594  

Luthai Textile Co. Ltd., Class B

    2,538,921       1,431,596  

Luxshare Precision Industry Co. Ltd., Class A

    3,294,337       26,454,164  

Luye Pharma Group Ltd.(b)(c)

    12,842,500       6,959,672  

Luzhou Laojiao Co. Ltd., Class A

    748,554       16,339,082  

LVGEM China Real Estate Investment Co. Ltd.

    6,904,000       2,708,097  

Mango Excellent Media Co. Ltd., Class A

    909,687       9,430,043  

Meinian Onehealth Healthcare Holdings Co. Ltd., Class A(a)

    2,234,328       5,728,419  

Meitu Inc.(a)(c)

    17,426,500       3,822,513  

Meituan Dianping, Class B(a)(b)

    26,759,400       882,525,195  

MMG Ltd.(a)(b)

    20,327,999       5,429,438  

Mobvista Inc.(a)(c)

    4,126,000       2,512,818  

Momo Inc., ADR

    1,128,803       23,027,581  

Muyuan Foodstuff Co. Ltd., Class A

    1,756,932       22,522,303  

NARI Technology Co. Ltd., Class A

    2,616,002       8,555,579  

NAURA Technology Group Co. Ltd., Class A

    246,400       6,630,242  

NavInfo Co. Ltd., Class A

    1,279,100       3,070,221  

NetDragon Websoft Holdings Ltd.

    1,973,500       5,062,248  

NetEase Inc., ADR

    616,672         300,448,765  

New China Life Insurance Co. Ltd., Class A

    1,160,601       10,141,692  

New China Life Insurance Co. Ltd., Class H

    6,060,900       24,204,029  

New Hope Liuhe Co. Ltd., Class A

    2,048,650       11,366,184  

New Oriental Education & Technology Group Inc., ADR(a)

    1,086,665       159,337,689  

Nexteer Automotive Group Ltd.

    6,888,000       4,488,223  

Nine Dragons Paper Holdings Ltd.(b)

    12,362,000       13,717,567  

Ninestar Corp., Class A

    672,300       3,585,718  

Ningbo Zhoushan Port Co. Ltd., Class A

    2,636,215       1,427,967  

NIO Inc., ADR(a)(b)

    6,813,538       129,661,628  

Niu Technologies, ADR(a)(b)

    260,344       5,381,310  

Noah Holdings Ltd.(a)(b)

    243,469       6,817,132  

Offshore Oil Engineering Co. Ltd., Class A

    2,106,400       1,513,106  

OFILM Group Co. Ltd., Class A

    1,572,200       4,340,729  

OneSmart International Education Group Ltd., ADR(a)(b)

    616,518       2,614,036  

Oppein Home Group Inc., Class A

    322,880       4,761,303  

Orient Securities Co. Ltd., Class A

    3,642,968       6,281,575  
Security   Shares     Value  
China (continued)            

Oriental Pearl Group Co. Ltd., Class A

    4,087,200     $ 6,361,308  

Panda Green Energy Group Ltd.(a)(b)

    50,756,852       1,545,598  

PAX Global Technology Ltd.

    6,354,000       3,672,951  

People’s Insurance Co. Group of China Ltd. (The), Class H

    66,448,000       21,691,637  

Perfect World Co. Ltd., Class A

    1,015,900       5,430,177  

PetroChina Co. Ltd., Class A

    9,816,500       6,349,269  

PetroChina Co. Ltd., Class H

    154,452,000       53,409,464  

PICC Property & Casualty Co. Ltd., Class H

    51,631,040       39,905,025  

Pinduoduo Inc., ADR(a)(b)

    2,039,964       181,434,398  

Ping An Bank Co. Ltd., Class A

    9,536,436       20,996,686  

Ping An Healthcare and Technology Co.
Ltd.(a)(b)(c)

    2,851,700       41,578,821  

Ping An Insurance Group Co. of China Ltd., Class A

    5,174,336       57,884,208  

Ping An Insurance Group Co. of China Ltd., Class H

    44,490,000       473,881,086  

Poly Developments and Holdings Group Co. Ltd., Class A

    6,179,011       14,524,733  

Poly Property Group Co. Ltd.

    17,621,000       5,547,666  

Poly Property Services Co. Ltd.(b)

    932,000       8,159,352  

Postal Savings Bank of China Co. Ltd., Class H(c)

    77,280,000       36,595,111  

Pou Sheng International Holdings Ltd.(a)

    18,684,000       4,725,152  

Power Construction Corp. of China Ltd., Class A

    9,613,544       5,712,698  

Powerlong Commercial Management Holdings Ltd.

    1,723,500       5,448,378  

Q Technology Group Co. Ltd.(b)

    3,404,000       4,273,584  

Qudian Inc., ADR(a)(b)

    1,485,860       2,362,517  

Realord Group Holdings Ltd.(a)(b)

    6,410,000       3,779,759  

Redco Properties Group Ltd.(c)

    8,146,000       3,994,090  

Redsun Properties Group Ltd.

    9,958,000       3,494,869  

Renrui Human Resources Technology Holdings Ltd.(a)(b)

    380,600       1,267,005  

RiseSun Real Estate Development Co. Ltd., Class A

    4,723,562       5,682,771  

Road King Infrastructure Ltd.

    2,602,000       3,458,075  

Rongsheng Petro Chemical Co. Ltd., Class A

    2,743,300       7,930,523  

Ronshine China Holdings Ltd.(a)

    4,906,000       3,988,026  

SAIC Motor Corp. Ltd., Class A

    4,497,200       12,252,287  

Sanan Optoelectronics Co. Ltd., Class A

    2,263,600       8,969,595  

Sangfor Technologies Inc., Class A

    154,700       4,968,632  

Sany Heavy Equipment International Holdings Co. Ltd.

    9,851,000       5,478,321  

Sany Heavy Industry Co. Ltd., Class A

    4,406,616         14,244,465  

Scholar Education Group

    1,340,000       4,132,307  

SDIC Capital Co. Ltd., Class A

    2,348,900       5,205,946  

SDIC Power Holdings Co. Ltd., Class A

    4,134,454       5,469,022  

Seazen Group Ltd.(a)

    16,458,000       14,928,710  

Seazen Holdings Co. Ltd., Class A

    1,301,300       6,820,798  

Semiconductor Manufacturing International Corp.(a)

    26,615,200       85,510,407  

SF Holding Co. Ltd., Class A

    1,499,092       18,626,067  

Shaanxi Coal Industry Co. Ltd., Class A

    6,566,054       7,793,963  

Shandong Airlines Co. Ltd., Class B(a)

    1,796,418       1,386,112  

Shandong Gold Mining Co. Ltd., Class A

    1,843,349       7,802,236  

Shandong Hualu Hengsheng Chemical Co. Ltd., Class A

    1,235,800       4,849,989  

Shandong Weigao Group Medical Polymer Co. Ltd., Class H

    18,952,000       44,261,234  

Shang Gong Group Co. Ltd., Class B(a)

    3,762,960       1,486,369  

Shanghai Baosight Software Co. Ltd., Class A

    518,600       5,263,875  

Shanghai Chlor-Alkali Chemical Co. Ltd., Class B

    3,996,427       1,878,321  

Shanghai Construction Group Co. Ltd., Class A

    14,775,100       6,859,949  

Shanghai Electric Group Co. Ltd., Class H(a)

    22,736,000       6,688,655  
 

 

19  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class H

    4,785,500     $ 20,222,205  

Shanghai Fudan Microelectronics Group Co. Ltd., Class H(a)(b)

    2,228,000       4,823,886  

Shanghai Haixin Group Co., Class B

    5,180,410       1,942,654  

Shanghai Haohai Biological Technology Co. Ltd., Class H(b)(c)

    348,000       2,469,630  

Shanghai Industrial Holdings Ltd.

    3,909,000       5,870,952  

Shanghai Industrial Urban Development Group Ltd.

    20,130,000       2,363,606  

Shanghai International Airport Co. Ltd., Class A

    594,503       6,631,484  

Shanghai International Port Group Co. Ltd., Class A

    9,636,400       6,246,850  

Shanghai Jinjiang International Industrial Investment Co. Ltd., Class B

    2,821,841       2,119,203  

Shanghai Kindly Medical Instruments Co. Ltd., Class H

    246,000       1,936,221  

Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., Class B

    8,238,204       7,076,617  

Shanghai M&G Stationery Inc., Class A

    586,600       5,952,374  

Shanghai Pharmaceuticals Holding Co. Ltd., Class H

    6,367,900       11,355,184  

Shanghai Pudong Development Bank Co. Ltd., Class A

    14,776,933       22,351,536  

Shanxi Meijin Energy Co. Ltd., Class A(a)

    2,302,117       2,218,373  

Shanxi Xinghuacun Fen Wine Factory Co. Ltd., Class A

    460,114       13,248,897  

Shenergy Co. Ltd., Class A

    4,734,484       3,960,870  

Sheng Ye Capital Ltd.(b)

    4,033,000       4,136,997  

Shengyi Technology Co. Ltd., Class A

    1,210,000       4,383,040  

Shennan Circuits Co. Ltd., Class A

    258,380       5,230,487  

Shenwan Hongyuan Group Co. Ltd., Class A

    12,408,072       10,217,549  

Shenzhen Goodix Technology Co. Ltd., Class A

    224,700       5,870,811  

Shenzhen Inovance Technology Co. Ltd., Class A

    994,716       8,103,948  

Shenzhen International Holdings Ltd.

    8,059,250       12,936,146  

Shenzhen Investment Ltd.

    22,128,000       7,509,099  

Shenzhen Kangtai Biological Products Co. Ltd., Class A

    335,800       9,707,540  

Shenzhen Mindray Bio-Medical Electronics Co. Ltd., Class A

    486,100       24,304,468  

Shenzhen Overseas Chinese Town Co. Ltd., Class A

    5,017,702       5,238,105  

Shenzhen Sunway Communication Co. Ltd., Class A

    535,900       4,852,649  

Shenzhou International Group Holdings Ltd.(b)

    6,227,100         100,435,153  

Shimao Group Holdings Ltd.

    9,235,000       41,586,485  

Shoucheng Holdings Ltd.(b)

    25,204,800       6,862,077  

Shougang Fushan Resources Group Ltd.

    22,482,000       5,105,491  

Shui On Land Ltd.(a)

    32,055,666       4,384,303  

Sichuan Chuantou Energy Co. Ltd., Class A

    3,468,946       5,074,913  

Sichuan Kelun Pharmaceutical Co. Ltd., Class A

    1,055,800       3,813,684  

Sichuan Languang Justbon Services Group Co. Ltd., Class H

    287,500       1,817,707  

Sichuan Swellfun Co. Ltd., Class A

    324,300       3,602,781  

Sihuan Pharmaceutical Holdings Group Ltd.

    29,443,000       3,571,082  

Silergy Corp.

    559,000       35,531,074  

Silver Grant International Holdings Group
Ltd.(a)

    13,940,000       1,834,648  

SINA Corp.(a)

    422,854       17,203,815  

Sino Biopharmaceutical Ltd.(b)

    78,253,000       90,367,844  

Sinofert Holdings Ltd.(b)

    25,488,000       2,400,759  

Sino-Ocean Group Holding Ltd.

    21,998,500       5,080,846  

Sinopec Engineering Group Co. Ltd., Class H

    11,025,500       4,893,805  
Security   Shares     Value  
China (continued)            

Sinopec Kantons Holdings Ltd.(b)

    8,564,000     $ 3,381,333  

Sinopec Shanghai Petrochemical Co. Ltd., Class H

    26,609,000       5,493,365  

Sinopharm Group Co. Ltd., Class H

    9,862,400       24,280,123  

Sinotruk Hong Kong Ltd.

    5,326,500       13,848,632  

Skyfame Realty Holdings Ltd.

    26,534,000       3,457,912  

Skyworth Group Ltd.(a)(b)

    15,622,000       5,422,241  

SMI Holdings Group Ltd.(a)(b)(d)

    14,455,599       2,400,516  

SOHO China Ltd.(a)

    16,201,000       4,996,083  

Sohu.com Ltd., ADR(a)(b)

    238,287       4,799,100  

Songcheng Performance Development Co. Ltd., Class A

    1,623,243       4,237,546  

Spring Airlines Co. Ltd., Class A

    851,696       5,486,349  

SSY Group Ltd.

    11,808,411       7,526,764  

Sun Art Retail Group Ltd.

    18,175,500       23,686,322  

Sunac China Holdings Ltd.

    19,206,000       80,787,546  

Suning.com Co. Ltd., Class A

    5,698,850       8,195,714  

Sunny Optical Technology Group Co. Ltd.

    5,349,400       79,307,634  

Superb Summit International Group Ltd.(a)(d)

    1,998,771       1,883  

Suzhou Dongshan Precision Manufacturing Co. Ltd., Class A

    958,200       3,887,837  

TAL Education Group, ADR(a)

    2,851,363       210,459,103  

TCL Electronics Holdings Ltd.(a)

    6,281,000       4,295,310  

TCL Technology Group Corp., Class A

    7,618,700       7,875,488  

Tencent Holdings Ltd.

    42,988,900         2,942,602,588  

Tencent Music Entertainment Group, ADR(a)(b)

    2,758,162       43,110,072  

Texhong Textile Group Ltd.(a)

    2,358,500       1,838,073  

Tiangong International Co. Ltd.

    8,968,000       3,008,561  

Tianjin Port Development Holdings Ltd.

    38,912,000       2,861,859  

Tianjin Zhonghuan Semiconductor Co. Ltd., Class A.

    1,658,991       5,248,875  

Tianli Education International Holdings Ltd.(a)

    9,248,000       10,500,752  

Tianma Microelectronics Co. Ltd., Class A

    1,792,576       4,300,099  

Tianneng Power International Ltd.(b)

    5,228,000       11,224,805  

Tianqi Lithium Corp., Class A(a)

    794,193       2,632,178  

Times Neighborhood Holdings Ltd.

    4,333,000       6,205,854  

Tingyi Cayman Islands Holding Corp.

    14,952,000       28,089,923  

Toly Bread Co. Ltd., Class A

    405,579       3,737,711  

Tong Ren Tang Technologies Co. Ltd., Class H

    5,027,000       3,891,796  

Tongcheng-Elong Holdings Ltd.(a)

    6,456,400       12,662,630  

Tongda Group Holdings Ltd.(a)

    31,530,000       1,851,080  

Tongdao Liepin Group(a)(b)

    1,592,800       4,019,944  

Tonghua Dongbao Pharmaceutical Co. Ltd., Class A

    1,268,899       2,636,303  

Tongwei Co. Ltd., Class A

    2,101,359       7,486,062  

Topchoice Medical Corp., Class A(a)

    195,299       6,452,510  

Topsports International Holdings Ltd.(c)

    9,709,000       12,013,872  

Towngas China Co. Ltd.(a)

    8,639,000       3,923,702  

TravelSky Technology Ltd., Class H

    7,185,000       14,944,511  

Trip.com Group Ltd., ADR(a)(b)

    3,546,155       107,235,727  

Truly International Holdings Ltd.(a)(b)

    19,240,000       2,408,057  

Tsingtao Brewery Co. Ltd., Class H

    3,420,000       31,154,494  

Unigroup Guoxin Microelectronics Co. Ltd., Class A

    300,610       5,499,432  

Uni-President China Holdings Ltd.

    9,725,000       8,858,990  

Unisplendour Corp. Ltd., Class A

    1,481,355       7,094,084  

Uxin Ltd., ADR(a)

    1,233,458       962,097  

Venustech Group Inc., Class A

    620,203       3,453,646  

Vinda International Holdings Ltd.

    2,754,000       9,416,721  

Vipshop Holdings Ltd., ADR(a)

    3,332,751       55,023,719  

Walvax Biotechnology Co. Ltd., Class A

    749,188       6,945,889  

Wanda Film Holding Co. Ltd., Class A(a)

    1,348,638       3,648,666  

Wanhua Chemical Group Co. Ltd., Class A

    1,603,178       17,154,963  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  20


Consolidated Schedule of Investments (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)  

Want Want China Holdings Ltd.(b)

    37,625,000     $ 25,827,242  

Wasion Holdings Ltd.

    5,336,000       1,576,671  

Weibo Corp., ADR(a)(b)

    410,303       15,304,302  

Weichai Power Co. Ltd., Class A

    3,939,200       8,523,531  

Weichai Power Co. Ltd., Class H

    14,327,000       28,949,223  

Weimob Inc.(a)(b)(c)

    9,654,000       16,193,493  

Wens Foodstuffs Group Co. Ltd., Class A

    3,255,008       11,728,988  

West China Cement Ltd.

    18,580,000       3,260,427  

Western Securities Co. Ltd., Class A

    2,998,835       4,273,323  

Wharf Holdings Ltd. (The)

    11,866,000       23,149,735  

Will Semiconductor Ltd., Class A

    285,103       6,986,098  

Wingtech Technology Co. Ltd., Class A

    441,900       8,907,487  

Winning Health Technology Group Co. Ltd., Class A

    1,306,875       4,045,137  

Wisdom Education International Holdings Co. Ltd.

    5,712,000       2,977,553  

Wuhu Sanqi Interactive Entertainment Network Technology Group Co. Ltd., Class A

    1,062,883       7,074,869  

Wuliangye Yibin Co. Ltd., Class A

    1,802,166       63,149,419  

WUS Printed Circuit Kunshan Co. Ltd., Class A

    966,897       2,970,224  

WuXi AppTec Co. Ltd., Class A

    1,027,133       16,482,657  

WuXi AppTec Co. Ltd., Class H(b)(c)

    2,052,556       30,403,725  

Wuxi Biologics Cayman Inc.(a)(c)

    7,650,000       198,797,443  

Wuxi Lead Intelligent Equipment Co. Ltd., Class A

    538,676       3,534,468  

XCMG Construction Machinery Co. Ltd., Class A

    5,906,278       5,355,115  

Xiabuxiabu Catering Management China
Holdings Co. Ltd.(a)(c)

    3,522,500       4,358,725  

Xiaomi Corp., Class B(a)(c)

    78,953,800         239,403,663  

Xingda International Holdings Ltd.

    11,560,000       2,848,925  

Xinhu Zhongbao Co. Ltd., Class A

    5,406,300       2,778,473  

Xinjiang Goldwind Science & Technology Co. Ltd., Class H

    6,326,634       5,444,882  

Xinyi Solar Holdings Ltd.

    30,578,800       38,627,182  

Xtep International Holdings Ltd.

    9,470,000       3,152,533  

Yadea Group Holdings Ltd.(a)(c)

    8,474,000       8,583,176  

Yango Group Co. Ltd., Class A

    3,518,300       3,621,473  

Yantai Jereh Oilfield Services Group Co. Ltd., Class A

    605,898       3,029,866  

Yanzhou Coal Mining Co. Ltd., Class H

    12,018,000       9,257,558  

Yealink Network Technology Corp. Ltd., Class A

    444,427       3,656,433  

YiChang HEC ChangJiang Pharmaceutical Co. Ltd., Class H(c)

    2,247,000       3,195,027  

Yifeng Pharmacy Chain Co. Ltd., Class A

    336,957       4,959,048  

Yihai International Holding Ltd.(a)(b)

    3,637,000       57,158,455  

Yintech Investment Holdings Ltd., ADR

    235,302       1,715,352  

Yonghui Superstores Co. Ltd., Class A

    5,453,696       7,070,778  

Yonyou Network Technology Co. Ltd., Class A

    1,695,131       10,372,519  

Youyuan International Holdings Ltd.(a)(b)(d)

    5,307,000       133,528  

Yuexiu Property Co. Ltd.

    40,108,880       7,659,354  

Yuexiu REIT

    13,397,000       6,465,008  

Yuexiu Transport Infrastructure Ltd.(a)

    9,454,000       5,611,298  

Yum China Holdings Inc.(a)

    2,704,445       156,073,521  

Yunda Holding Co. Ltd., Class A

    1,363,640       4,137,220  

Yunnan Baiyao Group Co. Ltd., Class A

    663,264       11,205,227  

Yunnan Energy New Material Co. Ltd., Class A

    464,095       5,299,471  

Yuzhou Group Holdings Co. Ltd.

    14,176,400       6,621,623  

Zai Lab Ltd., ADR(a)(b)

    400,513       31,788,717  

Zhangzhou Pientzehuang Pharmaceutical Co. Ltd., Class A

    323,969       11,913,133  

Zhaojin Mining Industry Co. Ltd., Class H

    7,411,000       8,300,159  

Zhejiang Chint Electrics Co. Ltd., Class A(a)

    1,608,173       8,093,519  

Zhejiang Dahua Technology Co. Ltd., Class A

    1,928,229       6,435,735  
Security   Shares     Value  
China (continued)            

Zhejiang Expressway Co. Ltd., Class H

    10,988,000     $ 7,414,984  

Zhejiang Huayou Cobalt Co. Ltd.,
Class A(a)

    603,592       3,539,162  

Zhejiang Longsheng Group Co. Ltd., Class A

    1,862,974       3,903,211  

Zhejiang NHU Co. Ltd., Class A

    1,637,308       7,833,758  

Zhejiang Sanhua Intelligent Controls Co. Ltd., Class A

    2,056,190       6,784,768  

Zhejiang Supor Co. Ltd., Class A

    519,413       6,427,112  

Zhejiang Wolwo Bio-Pharmaceutical Co. Ltd., Class A

    328,298       2,864,456  

Zhengzhou Yutong Bus Co. Ltd., Class A

    2,256,290       4,681,147  

Zhenro Properties Group Ltd.(b)

    12,697,000       7,421,458  

ZhongAn Online P&C Insurance Co. Ltd., Class H(a)(b)(c)

    2,856,700       18,816,995  

Zhongji Innolight Co. Ltd., Class A

    458,274       3,961,718  

Zhongjin Gold Corp. Ltd., Class A

    2,862,279       4,555,141  

Zhongsheng Group Holdings Ltd.(b)

    4,402,500       27,493,790  

Zhou Hei Ya International Holdings Co.
Ltd.(a)(b)(c)

    4,705,000       5,336,277  

Zhuguang Holdings Group Co. Ltd.(a)

    18,012,000       2,533,252  

Zhuzhou CRRC Times Electric Co. Ltd., Class H

    4,076,900       13,098,432  

Zijin Mining Group Co. Ltd., Class A

    9,868,100       10,359,189  

Zijin Mining Group Co. Ltd., Class H

    42,256,000       28,842,569  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class H(a)

    10,811,000       10,824,740  

ZTE Corp., Class A

    1,814,000       10,329,165  

ZTE Corp., Class H

    5,625,440       16,367,899  

ZTO Express Cayman Inc., ADR

    2,830,300       94,899,959  
   

 

 

 
        21,292,457,199  
Colombia — 0.1%            

Bancolombia SA

    1,663,343       11,532,573  

Cementos Argos SA

    3,586,367       4,781,848  

Corp. Financiera Colombiana SA(a)

    780,649       5,641,520  

Ecopetrol SA

    36,752,497       21,463,573  

Grupo Argos SA

    2,346,110       7,457,541  

Grupo de Inversiones Suramericana SA

    1,743,064       9,761,211  

Interconexion Electrica SA ESP

    3,454,284       19,288,825  
   

 

 

 
      79,927,091  
Cyprus — 0.0%            

TCS Group Holding PLC(f)

    591,014       15,562,354  
   

 

 

 
Czech Republic — 0.1%            

Central European Media Enterprises Ltd., Class A(a)

    754,080       3,205,660  

CEZ AS

    1,169,682       24,143,389  

Komercni Banka AS(a)

    564,611       13,620,039  

Moneta Money Bank AS(c)

    3,947,601       9,971,934  
   

 

 

 
      50,941,022  
Egypt — 0.1%            

Commercial International Bank Egypt SAE

    10,742,754       45,797,343  

Eastern Co. SAE

    8,331,070       6,685,881  

Egyptian Financial Group-Hermes Holding Co.(a)

    5,166,996       4,580,208  

EISewedy Electric Co.

    6,417,547       3,040,743  

Heliopolis Housing

    4,963,517       2,048,038  

Juhayna Food Industries

    3,127,489       1,383,199  

Medinet Nasr Housing

    10,061,035       2,113,769  

Oriental Weavers

    3,805,605       1,284,542  

Palm Hills Developments SAE(a)

    16,799,042       1,630,090  

Six of October Development & Investment

    2,604,300       2,002,928  

Talaat Moustafa Group

    7,253,113       3,162,083  
 

 

21  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Egypt (continued)            

Telecom Egypt Co.

    3,528,280     $ 3,000,707  
   

 

 

 
      76,729,531  
Greece — 0.2%            

Alpha Bank AE(a)

    10,512,038       6,972,363  

Athens Water Supply & Sewage Co. SA

    369,625       3,094,372  

Eurobank Ergasias Services and Holdings SA, Series A(a)

    19,626,960       9,440,789  

FF Group(a)(d)

    343,633       4,110  

GEK Terna Holding Real Estate Construction SA(a)

    493,803       3,578,818  

Hellenic Exchanges-Athens Stock Exchange SA(a)

    756,681       2,579,116  

Hellenic Telecommunications Organization SA

    1,779,961       29,163,810  

Holding Co. ADMIE IPTO SA

    1,225,772       3,239,777  

JUMBO SA

    822,951       14,320,236  

Motor Oil Hellas Corinth Refineries SA

    470,193       6,607,349  

Mytilineos SA

    769,515       7,261,182  

National Bank of Greece SA(a)

    4,213,013       5,746,472  

OPAP SA

    1,526,510       14,020,842  

Piraeus Bank SA(a)(b)

    2,193,849       3,166,848  

Piraeus Port Authority SA

    75,576       1,438,932  

Public Power Corp. SA(a)(b)

    948,486       4,546,444  

Sarantis SA

    223,492       2,330,728  

Terna Energy SA

    403,555       5,724,013  

Titan Cement International SA(a)

    323,662       4,405,013  
   

 

 

 
      127,641,214  
Hungary — 0.2%            

Magyar Telekom Telecommunications PLC

    3,953,687       4,876,162  

MOL Hungarian Oil & Gas PLC(a)

    2,990,938       16,891,811  

Opus Global Nyrt(a)(b)

    1,934,986       1,597,492  

OTP Bank Nyrt(a)

    1,690,033       57,177,305  

Richter Gedeon Nyrt

    1,086,114       26,607,533  
   

 

 

 
      107,150,303  
India — 8.4%            

Aarti Industries Ltd.

    359,264       5,113,622  

Aavas Financiers Ltd.(a)

    224,924       4,286,871  

Adani Enterprises Ltd.

    1,180,751       4,484,311  

Adani Ports & Special Economic Zone Ltd.

    3,876,156       18,733,723  

Adani Power Ltd.(a)

    6,356,474       3,216,774  

Aditya Birla Fashion and Retail Ltd.(a)

    1,453,849       2,763,217  

Aegis Logistics Ltd.

    767,231       2,214,945  

AIA Engineering Ltd.

    315,123       7,713,091  

Ajanta Pharma Ltd.

    189,017       3,812,310  

Alembic Pharmaceuticals Ltd.

    382,283       4,892,828  

Amara Raja Batteries Ltd.

    208,706       2,064,022  

Ambuja Cements Ltd.

    4,847,638       13,866,388  

Apollo Hospitals Enterprise Ltd.

    672,560       14,935,067  

Apollo Tyres Ltd.

    2,162,385       3,629,558  

Ashok Leyland Ltd.

    8,920,665       8,198,662  

Asian Paints Ltd.

    2,159,551       55,717,193  

Astral Poly Technik Ltd.

    498,087       7,592,684  

AstraZeneca Pharma India Ltd.

    47,552       2,293,214  

Atul Ltd.

    120,097       9,431,304  

AU Small Finance Bank Ltd.(a)(c)

    908,911       8,248,515  

Aurobindo Pharma Ltd.

    2,166,544       23,808,952  

Avanti Feeds Ltd.

    331,483       2,335,006  

Avenue Supermarts Ltd.(a)(c)

    1,170,113       35,787,344  

Axis Bank Ltd.(a)

    16,923,900         114,213,189  

Bajaj Auto Ltd.

    520,847       20,994,505  

Bajaj Consumer Care Ltd.(a)

    686,027       1,603,052  

Bajaj Electricals Ltd.

    294,842       1,994,787  
Security   Shares     Value  
India (continued)            

Bajaj Finance Ltd.

    1,356,628     $ 64,282,133  

Bajaj Finserv Ltd.

    289,294       24,329,465  

Balkrishna Industries Ltd.

    650,894       11,689,254  

Bandhan Bank Ltd.(a)(c)

    5,421,616       22,523,930  

BASF India Ltd.

    93,235       1,870,907  

Bata India Ltd.

    268,297       4,734,996  

Bayer CropScience Ltd./India

    91,394       7,220,197  

Berger Paints India Ltd.

    1,734,141       12,667,834  

Bharat Forge Ltd.

    1,642,763       10,962,540  

Bharat Heavy Electricals Ltd.

    6,229,716       3,262,651  

Bharat Petroleum Corp. Ltd.

    4,875,989       27,013,936  

Bharti Airtel Ltd.

    9,472,804       66,032,615  

Bharti Infratel Ltd.

    2,594,675       6,998,916  

Biocon Ltd.(a)

    2,135,770       10,914,240  

Blue Dart Express Ltd.(a)

    53,237       1,582,988  

Blue Star Ltd.

    207,370       1,791,201  

Bosch Ltd.

    45,179       7,865,010  

Britannia Industries Ltd.

    438,822         22,213,398  

Ceat Ltd.

    174,396       2,080,692  

CESC Ltd.

    467,423       3,812,983  

Chambal Fertilizers and Chemicals Ltd.

    1,010,461       2,037,189  

Cholamandalam Financial Holdings Ltd.(a)

    590,796       3,504,685  

Cholamandalam Investment and Finance Co. Ltd.

    1,614,921       5,094,381  

Cipla Ltd.

    2,598,728       25,192,030  

City Union Bank Ltd.

    2,219,555       4,070,780  

Coal India Ltd.

    8,748,328       15,967,637  

Coforge Ltd.

    148,995       3,894,527  

Colgate-Palmolive India Ltd.

    459,863       8,516,907  

Container Corp. of India Ltd.

    1,585,172       8,463,439  

Coromandel International Ltd.

    632,288       6,528,825  

CRISIL Ltd.

    150,492       3,579,239  

Crompton Greaves Consumer Electricals
Ltd.(a)

    3,277,162       12,101,112  

Cummins India Ltd.

    432,163       2,713,954  

Dabur India Ltd.

    3,981,001       25,668,350  

Dalmia Bharat Ltd.(a)

    377,749       3,847,669  

DCB Bank Ltd.(a)

    1,292,767       1,563,983  

Deepak Nitrite Ltd.

    359,160       3,334,822  

Dilip Buildcon Ltd.(c)

    284,528       1,428,100  

Divi’s Laboratories Ltd.

    605,703       25,696,965  

Dixon Technologies India Ltd.

    29,443       3,237,980  

DLF Ltd.

    4,473,772       9,624,315  

Dr Lal PathLabs Ltd.(c)

    236,017       5,690,925  

Dr. Reddy’s Laboratories Ltd.

    862,252       49,957,492  

Edelweiss Financial Services Ltd.(a)

    3,584,700       3,898,451  

Eicher Motors Ltd.

    997,820       28,359,059  

EIH Ltd.(a)

    1,434,942       1,709,668  

Emami Ltd.

    754,715       3,659,892  

Endurance Technologies Ltd.(c)

    261,871       3,910,588  

Engineers India Ltd.

    1,261,360       1,145,561  

Escorts Ltd.

    494,632       7,308,518  

Exide Industries Ltd.

    1,721,117       3,835,876  

Federal Bank Ltd.(a)

    11,164,444       8,387,647  

Finolex Cables Ltd.

    646,976       2,436,460  

Fortis Healthcare Ltd.(a)

    3,613,744       6,519,787  

GAIL India Ltd.

    11,370,951       14,776,096  

Gillette India Ltd.

    53,232       3,926,183  

Glenmark Pharmaceuticals Ltd.

    1,095,113       6,986,585  

GMM Pfaudler Ltd.

    32,454       2,465,790  

GMR Infrastructure Ltd.(a)

    7,768,663       2,485,508  

Godrej Consumer Products Ltd.

    3,051,996       27,004,925  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  22


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
India (continued)  

Godrej Industries Ltd.(a)

    697,835     $ 4,166,200  

Godrej Properties Ltd.(a)

    499,383       6,195,857  

Granules India Ltd.

    1,140,228       4,860,191  

Graphite India Ltd.

    497,980       1,282,371  

Grasim Industries Ltd.

    2,230,277       20,447,678  

Great Eastern Shipping Co. Ltd. (The)

    500,876       1,730,772  

Gujarat Fluorochemicals Ltd.(a)

    206,466       1,433,895  

Gujarat Gas Ltd.

    1,264,092       5,589,087  

Gujarat Pipavav Port Ltd.

    2,217,699       2,408,790  

Gujarat State Petronet Ltd.

    1,260,339       3,485,270  

Havells India Ltd.

    1,887,136       15,781,362  

HCL Technologies Ltd.

    8,182,558       77,192,790  

HDFC Asset Management Co. Ltd.(c)

    371,088       12,154,414  

HDFC Life Insurance Co. Ltd.(a)(c)

    5,302,340       41,405,903  

Hemisphere Properties India Ltd.(a)

    713,675       1,492,844  

Hero MotoCorp Ltd.

    731,305       29,865,698  

Hexaware Technologies Ltd.

    993,334       5,349,422  

Hindalco Industries Ltd.

    8,924,888       22,461,509  

Hindustan Petroleum Corp. Ltd.

    4,464,236       12,223,846  

Hindustan Unilever Ltd.

    6,165,213       177,344,887  

Housing Development Finance Corp. Ltd.

    12,344,266       307,334,197  

ICICI Bank Ltd.(a)

    38,360,520       205,645,637  

ICICI Lombard General Insurance Co. Ltd.(c)

    1,542,647       26,337,594  

ICICI Prudential Life Insurance Co. Ltd.(c)

    2,586,606       14,852,142  

ICICI Securities Ltd.(c)

    622,018       4,034,255  

IDFC First Bank Ltd.(a)

    17,484,058       7,600,990  

IDFC Ltd.

    6,705,974       2,509,929  

IIFL Finance Ltd.

    1,060,757       1,176,657  

IIFL Wealth Management Ltd.

    182,498       2,537,604  

India Cements Ltd. (The)

    1,415,617       2,203,983  

Indiabulls Housing Finance Ltd.

    1,953,598       5,525,783  

Indiabulls Ventures Ltd.

    1,512,837       4,043,755  

Indian Hotels Co. Ltd. (The)

    3,941,606       5,553,028  

Indian Oil Corp. Ltd.

    13,434,168       15,659,432  

Indraprastha Gas Ltd.(a)

    1,588,367       8,511,787  

Info Edge India Ltd.

    492,230       21,824,766  

Infosys Ltd.

    25,569,428         322,572,711  

Inox Leisure Ltd.

    429,409       1,654,748  

InterGlobe Aviation Ltd.(a)(c)

    704,091       11,470,444  

IRB Infrastructure Developers Ltd.

    1,178,867       1,903,452  

ITC Ltd.

    22,122,662       57,434,918  

Jindal Steel & Power Ltd.(a)

    3,226,192       8,989,464  

JM Financial Ltd.

    2,895,070       3,211,391  

JSW Energy Ltd.

    2,623,892       1,951,677  

JSW Steel Ltd.

    6,464,619       23,695,333  

Jubilant Foodworks Ltd.

    582,649       16,599,055  

Jubilant Life Sciences Ltd.

    584,310       6,217,584  

Just Dial Ltd.(a)

    344,032       1,737,278  

Jyothy Labs Ltd.

    931,055       1,798,043  

Kajaria Ceramics Ltd.

    527,847       3,127,677  

Karur Vysya Bank Ltd. (The)(a)

    2,853,086       1,482,601  

Kaveri Seed Co. Ltd.(a)

    240,968       1,891,701  

KEC International Ltd.

    509,436       2,229,248  

KEI Industries Ltd.

    385,766       2,077,998  

KRBL Ltd.

    436,582       1,553,682  

L&T Technology Services Ltd.(c)

    193,968       4,124,430  

Lakshmi Machine Works Ltd.

    34,785       1,534,826  

Larsen & Toubro Ltd.

    3,489,044       44,791,253  

Laurus Labs Ltd.(c)

    427,565       6,583,017  

LIC Housing Finance Ltd.

    2,206,654       9,032,569  
Security   Shares     Value  
India (continued)            

Lupin Ltd.

    1,667,310     $ 21,010,269  

Mahanagar Gas Ltd.

    349,474       4,519,910  

Mahindra & Mahindra Financial Services
Ltd.(a)

    4,589,421       8,398,533  

Mahindra & Mahindra Ltd.

    5,650,022       46,584,904  

Mahindra CIE Automotive Ltd.(a)

    843,423       1,496,465  

Manappuram Finance Ltd.

    2,089,182       4,200,644  

Marico Ltd.

    3,305,447       16,565,967  

Maruti Suzuki India Ltd.

    902,643       83,877,770  

Max Financial Services Ltd.(a)

    1,219,135       9,759,539  

Metropolis Healthcare Ltd.(a)

    171,359       4,280,396  

Minda Industries Ltd.

    599,538       2,769,323  

Mindtree Ltd.

    349,342       5,485,202  

Motherson Sumi Systems Ltd.

    7,148,042       10,652,993  

Motilal Oswal Financial Services Ltd.

    321,411       2,986,503  

Mphasis Ltd.

    638,335       9,570,581  

Multi Commodity Exchange of India Ltd.

    199,446       4,331,006  

Natco Pharma Ltd.

    691,085       7,057,550  

National Aluminium Co. Ltd.

    4,038,209       1,966,780  

Navin Fluorine International Ltd.

    115,326       3,058,256  

Nestle India Ltd.

    174,113       37,727,460  

Nippon Life India Asset Management Ltd.(c)

    944,416       3,497,576  

NTPC Ltd.

    17,637,684       23,099,178  

Oberoi Realty Ltd.(a)

    442,406       2,343,431  

Oil & Natural Gas Corp. Ltd.

    18,454,558       20,546,154  

Oil India Ltd.

    1,451,955       1,869,004  

Page Industries Ltd.

    39,942       10,303,389  

Persistent Systems Ltd.

    319,143       4,154,723  

Petronet LNG Ltd.

    4,353,918       14,216,815  

Phoenix Mills Ltd. (The)

    483,460       4,235,427  

PI Industries Ltd.

    448,102       11,192,277  

Pidilite Industries Ltd.

    925,063       17,629,703  

Piramal Enterprises Ltd.

    677,965       12,593,575  

PNB Housing Finance Ltd.(a)(c)

    501,068       1,942,462  

Polycab India Ltd.

    265,327       3,218,384  

Power Grid Corp. of India Ltd.

    13,597,507       33,057,418  

Prestige Estates Projects Ltd.

    1,096,120       3,691,582  

Procter & Gamble Health Ltd.(a)

    37,544       2,446,717  

PVR Ltd.

    292,606       5,213,700  

Quess Corp. Ltd.(a)(c)

    554,518       2,746,317  

Radico Khaitan Ltd.

    561,734       3,066,328  

Rajesh Exports Ltd.

    491,496       2,981,060  

Rallis India Ltd.

    639,316       2,550,924  

Ramco Cements Ltd. (The)

    471,443       4,438,863  

RBL Bank Ltd.(c)

    2,741,274       7,297,526  

REC Ltd.

    5,077,546       7,322,372  

Redington India Ltd.

    2,110,776       3,091,284  

Relaxo Footwears Ltd.(a)

    380,813       3,390,753  

Reliance Industries Ltd.

    21,396,312         604,820,248  

Sanofi India Ltd.

    49,856       5,566,607  

SBI Life Insurance Co. Ltd.(a)(c)

    3,010,518       33,854,652  

Schaeffler India Ltd.

    41,500       2,236,374  

Shree Cement Ltd.

    64,446       17,758,492  

Shriram Transport Finance Co. Ltd.

    712,825       6,802,621  

Siemens Ltd.

    532,244       8,386,689  

SpiceJet Ltd.(a)

    1,288,833       900,866  

SRF Ltd.

    124,436       6,853,257  

State Bank of India(a)

    13,336,278       38,410,365  

Sterlite Technologies Ltd.

    864,187       1,759,897  

Strides Pharma Science Ltd.

    375,487       3,081,893  

Sun Pharma Advanced Research Co. Ltd.(a)

    722,913       1,771,251  
 

 

23  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
India (continued)            

Sun Pharmaceutical Industries Ltd.

    6,279,059     $ 44,379,723  

Sundaram Finance Ltd.

    232,195       5,082,218  

Sundram Fasteners Ltd.

    488,871       2,993,698  

Sunteck Realty Ltd.

    441,435       1,576,350  

Supreme Industries Ltd.

    310,026       5,630,653  

Symphony Ltd.

    137,379       1,590,336  

Syngene International Ltd.(a)(c)

    816,393       5,259,431  

Tata Chemicals Ltd.

    608,434       2,583,101  

Tata Communications Ltd.

    555,596       6,571,744  

Tata Consultancy Services Ltd.

    6,748,717       206,956,376  

Tata Consumer Products Ltd.

    3,297,072       23,845,346  

Tata Elxsi Ltd.

    160,226       2,339,584  

Tata Motors Ltd.(a)

    12,660,582       24,630,579  

Tata Power Co. Ltd. (The)

    8,480,359       6,768,619  

Tata Steel Ltd.

    2,586,203       14,510,775  

TeamLease Services Ltd.(a)

    94,835       3,053,221  

Tech Mahindra Ltd.

    3,475,453       34,987,069  

Thermax Ltd.

    224,679       2,334,012  

Titan Co. Ltd.

    2,344,590       35,053,783  

Torrent Pharmaceuticals Ltd.

    379,802       13,733,397  

Torrent Power Ltd.

    971,706       4,394,673  

TTK Prestige Ltd.

    46,374       3,586,090  

Tube Investments of India Ltd.

    666,853       5,869,702  

TV18 Broadcast Ltd.(a)

    4,310,653       1,859,365  

UltraTech Cement Ltd.

    850,175       45,089,912  

United Spirits Ltd.(a)

    2,223,939       16,516,201  

UPL Ltd.

    3,769,818       25,912,297  

Varun Beverages Ltd.

    566,738       5,666,803  

Vedanta Ltd.

    14,032,202       24,525,256  

V-Guard Industries Ltd.

    1,042,009       2,368,347  

Vinati Organics Ltd.

    219,291       3,001,389  

VIP Industries Ltd.

    311,257       1,198,598  

V-Mart Retail Ltd.(a)

    79,613       2,064,860  

Vodafone Idea Ltd.(a)

    66,042,564       9,151,705  

Voltas Ltd.

    796,511       6,868,666  

WABCO India Ltd.

    38,128       3,612,156  

Welspun India Ltd.

    2,990,879       2,212,456  

Westlife Development Ltd.(a)

    354,432       1,783,295  

Wipro Ltd.

    8,615,833       31,755,942  

Yes Bank Ltd., New

    12,578,231       1,828,037  

Zee Entertainment Enterprises Ltd.

    6,512,556       18,009,453  
   

 

 

 
        4,570,011,768  
Indonesia — 1.4%            

Ace Hardware Indonesia Tbk PT

    63,159,200       6,700,839  

Adaro Energy Tbk PT

    109,673,500       8,171,382  

AKR Corporindo Tbk PT

    15,390,200       3,064,829  

Aneka Tambang Tbk

    76,456,643       4,305,198  

Astra Agro Lestari Tbk PT

    3,957,300       2,765,015  

Astra International Tbk PT

    152,335,700       53,350,185  

Bank BTPN Syariah Tbk PT

    16,236,300       4,348,262  

Bank Central Asia Tbk PT

    74,475,200       160,457,298  

Bank Mandiri Persero Tbk PT

    140,935,300       57,583,865  

Bank Negara Indonesia Persero Tbk PT

    56,438,500       19,765,586  

Bank Pembangunan Daerah Jawa Barat
Dan Banten Tbk PT

    24,328,400       1,762,504  

Bank Rakyat Indonesia Persero Tbk PT

    418,491,500       100,869,024  

Bank Tabungan Negara Persero Tbk PT

    35,375,576       3,826,028  

Barito Pacific Tbk PT(a)

    205,762,400       11,868,870  

Bintang Oto Global Tbk PT(a)

    23,330,600       2,323,047  

Bukit Asam Tbk PT

    29,085,600       4,074,481  
Security   Shares     Value  
Indonesia (continued)            

Bumi Resources Tbk PT(a)

    458,473,900     $ 1,574,159  

Bumi Serpong Damai Tbk PT(a)

    68,301,800       3,634,946  

Charoen Pokphand Indonesia Tbk PT(a)

    56,199,800       24,313,046  

Ciputra Development Tbk PT

    87,617,727       4,632,834  

Gudang Garam Tbk PT(a)

    3,654,100       11,918,953  

Hanjaya Mandala Sampoerna Tbk PT

    68,899,100       7,806,593  

Hanson International Tbk PT(a)(d)

    783,666,700       1,906,769  

Indah Kiat Pulp & Paper Corp. Tbk PT

    21,092,500       13,470,232  

Indocement Tunggal Prakarsa Tbk PT

    11,137,800       9,082,326  

Indofood CBP Sukses Makmur Tbk PT

    17,265,700       12,123,041  

Indofood Sukses Makmur Tbk PT

    32,870,000       17,210,901  

Inti Agri Resources Tbk PT(a)(d)

    291,349,000       714,568  

Japfa Comfeed Indonesia Tbk PT

    37,266,200       3,122,044  

Jasa Marga Persero Tbk PT

    17,421,480       4,677,630  

Kalbe Farma Tbk PT

    158,331,900       17,178,671  

Link Net Tbk PT

    12,648,400       1,585,121  

Matahari Department Store Tbk PT(a)

    19,401,900       1,685,384  

Medco Energi Internasional Tbk PT(a)

    52,790,200       1,993,793  

Media Nusantara Citra Tbk PT(a)

    40,495,900       2,474,943  

Mitra Adiperkasa Tbk PT(a)

    74,283,000       3,468,665  

Pabrik Kertas Tjiwi Kimia Tbk PT

    9,025,800       4,230,117  

Pakuwon Jati Tbk PT(a)

    146,443,200       4,102,924  

Panin Financial Tbk PT(a)

    155,275,700       2,196,518  

Perusahaan Gas Negara Tbk PT

    84,262,300       7,261,747  

Perusahaan Perkebunan London Sumatra Indonesia Tbk PT

    31,676,500       2,131,706  

Pool Advista Indonesia Tbk PT(a)(d)

    12,679,400       41,358  

PP Persero Tbk PT

    27,934,950       1,860,731  

Ramayana Lestari Sentosa Tbk PT

    24,993,100       1,124,153  

Sawit Sumbermas Sarana Tbk PT(a)

    48,100,200       2,840,595  

Semen Indonesia Persero Tbk PT

    22,577,700       16,356,720  

Sugih Energy Tbk PT(a)(d)

    27,492,211       19  

Summarecon Agung Tbk PT(a)

    79,889,200       3,538,440  

Surya Citra Media Tbk PT

    53,037,700       4,516,172  

Telekomunikasi Indonesia Persero Tbk PT

    371,441,500       72,949,198  

Tower Bersama Infrastructure Tbk PT

    84,415,800       7,564,815  

Trada Alam Minera Tbk PT(a)(d)

    280,960,700       689,090  

Unilever Indonesia Tbk PT

    57,615,000       32,541,348  

United Tractors Tbk PT

    12,766,800       20,163,873  

Waskita Beton Precast Tbk PT

    105,238,000       1,214,076  

Waskita Karya Persero Tbk PT

    40,406,000       1,803,530  

Wijaya Karya Persero Tbk PT

    26,866,523       2,287,690  
   

 

 

 
        779,225,852  
Malaysia — 1.9%            

Aeon Co. M Bhd

    4,750,600       952,287  

AEON Credit Service M Bhd(b)

    2,047,400       4,443,283  

AirAsia Group Bhd(a)

    12,728,700       2,016,791  

Alliance Bank Malaysia Bhd

    8,297,700       4,362,493  

AMMB Holdings Bhd

    11,658,500       8,172,565  

Axiata Group Bhd

    20,227,800       14,616,655  

Berjaya Sports Toto Bhd(a)

    5,844,973       2,932,660  

Bermaz Auto Bhd

    7,876,100       2,571,479  

British American Tobacco Malaysia Bhd

    1,109,300       2,716,327  

Bursa Malaysia Bhd

    4,711,800       10,960,831  

Cahya Mata Sarawak Bhd(b)

    5,030,600       1,811,523  

Carlsberg Brewery Malaysia Bhd

    1,306,700       6,844,843  

CIMB Group Holdings Bhd

    46,166,100       36,573,792  

Dialog Group Bhd

    29,550,596       25,467,925  

DiGi.Com Bhd

    23,003,400       21,813,331  

DRB-Hicom Bhd

    7,583,800       3,714,068  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  24


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Malaysia (continued)            

Ekovest Bhd

    12,001,000     $ 1,426,118  

FGV Holdings Bhd

    13,546,100       3,999,929  

Fraser & Neave Holdings Bhd

    1,042,700       7,664,740  

Frontken Corp. Bhd

    5,598,900       5,107,627  

Gamuda Bhd

    12,859,600       10,496,373  

Genting Bhd

    16,363,500       13,788,473  

Genting Malaysia Bhd

    22,398,700       12,260,001  

Genting Plantations Bhd

    2,893,500       6,904,667  

Globetronics Technology Bhd

    5,817,600       3,840,691  

HAP Seng Consolidated Bhd

    4,883,300       8,440,706  

Hartalega Holdings Bhd

    12,773,300       50,657,764  

Hong Leong Bank Bhd

    4,831,900       16,239,731  

Hong Leong Financial Group Bhd

    1,721,700       5,100,415  

IGB REIT

    9,877,400       4,386,794  

IHH Healthcare Bhd

    16,388,100       21,087,556  

IJM Corp. Bhd

    20,665,700       5,953,389  

Inari Amertron Bhd(b)

    19,672,500       10,626,125  

IOI Corp. Bhd

    16,970,400       18,170,204  

Kossan Rubber Industries

    4,867,600       18,673,448  

KPJ Healthcare Bhd(b)

    23,650,300       4,684,071  

Kuala Lumpur Kepong Bhd

    3,147,300       17,121,070  

Lotte Chemical Titan Holding Bhd(c)

    3,349,400       1,463,428  

Magnum Bhd(b)

    7,588,600       4,062,556  

Mah Sing Group Bhd

    10,498,523       1,915,467  

Malayan Banking Bhd

    28,795,300       50,670,880  

Malaysia Airports Holdings Bhd

    8,037,700       9,840,900  

Malaysia Building Society Bhd

    13,672,300       1,903,717  

Malaysian Pacific Industries Bhd

    862,400       3,250,433  

Malaysian Resources Corp. Bhd

    18,138,100       2,198,953  

Maxis Bhd(b)

    17,715,700       21,264,794  

Mega First Corp Bhd

    1,648,300       3,070,654  

MISC Bhd

    9,963,400       18,202,250  

My EG Services Bhd

    18,491,000       6,614,234  

Nestle Malaysia Bhd

    503,100       16,812,272  

Padini Holdings Bhd

    3,402,300       1,927,603  

Pavilion REIT(b)

    10,520,100       3,914,573  

Pentamaster Corp. Bhd

    4,870,500       5,577,310  

Petronas Chemicals Group Bhd

    18,022,200       23,622,905  

Petronas Dagangan Bhd

    2,084,300       10,307,665  

Petronas Gas Bhd

    5,686,700       22,525,639  

PPB Group Bhd

    4,801,220       20,747,080  

Press Metal Aluminium Holdings Bhd

    11,075,800       13,853,059  

Public Bank Bhd

    21,850,460       86,132,410  

QL Resources Bhd

    5,868,895       13,525,721  

RHB Bank Bhd

    11,619,666       12,775,914  

Sapura Energy Bhd(a)(b)

    66,668,300       2,000,609  

Scientex Bhd

    2,172,600       4,902,758  

Serba Dinamik Holdings Bhd

    10,244,120       4,451,292  

Sime Darby Bhd

    20,360,200       10,704,318  

Sime Darby Plantation Bhd

    15,948,200       19,526,064  

Sime Darby Property Bhd

    21,856,300       3,436,773  

SKP Resources Bhd

    7,076,300       2,735,048  

SP Setia Bhd Group(b)

    13,352,700       2,548,409  

Sunway Construction Group Bhd

    5,495,070       2,611,989  

Sunway REIT

    16,450,000       6,318,569  

Supermax Corp. Bhd(a)

    5,730,512       30,458,177  

Telekom Malaysia Bhd(b)

    8,262,300       8,231,556  

Tenaga Nasional Bhd

    16,737,400       43,636,578  

TIME dotCom Bhd

    3,586,700       9,953,728  

Top Glove Corp. Bhd

    11,781,500       74,329,089  
Security   Shares     Value  
Malaysia (continued)            

UEM Sunrise Bhd(a)

    14,582,300     $ 1,417,797  

UMW Holdings Bhd(b)

    2,649,200       1,653,564  

ViTrox Corp. Bhd

    1,664,200       4,834,190  

VS Industry Bhd

    11,744,975       5,300,817  

Westports Holdings Bhd

    7,021,200       6,152,294  

Yinson Holdings Bhd(b)

    5,081,000       7,709,019  

YTL Corp. Bhd(a)

    24,554,866       3,949,528  
   

 

 

 
      1,009,643,328  
Mexico — 1.6%            

Alfa SAB de CV, Class A

    22,263,847       14,312,909  

Alpek SAB de CV(b)

    2,792,900       2,091,549  

Alsea SAB de CV(a)(b)

    4,069,495       4,207,835  

America Movil SAB de CV, Series L, NVS

    252,117,872       153,095,427  

Arca Continental SAB de CV(b)

    3,018,338       13,767,737  

Banco del Bajio SA(a)(b)(c)

    5,549,197       4,437,126  

Becle SAB de CV

    3,810,861       7,280,092  

Bolsa Mexicana de Valores SAB de CV(b)

    3,473,678       7,316,849  

Cemex SAB de CV, CPO, NVS

    114,318,083       36,667,867  

Coca-Cola Femsa SAB de CV

    3,803,141       15,952,131  

Controladora Vuela Cia. de Aviacion SAB de CV, Class A(a)(b)

    5,920,859       4,780,297  

Corp Inmobiliaria Vesta SAB de CV

    4,660,100       6,962,683  

Fibra Uno Administracion SA de CV

    24,544,000       19,154,323  

Fomento Economico Mexicano SAB de CV

    14,466,845       84,186,118  

Genomma Lab Internacional SAB de CV, Class B(a)(b)

    5,989,024       6,282,920  

Gentera SAB de CV(a)(b)

    7,982,292       2,618,699  

Gruma SAB de CV, Class B

    1,654,110       19,560,459  

Grupo Aeroportuario del Centro Norte SAB de CV(a)

    2,603,500       11,890,974  

Grupo Aeroportuario del Pacifico SAB de CV, Class B(b)

    2,872,800       22,338,166  

Grupo Aeroportuario del Sureste SAB de CV, Class B(a)

    1,572,780       17,820,432  

Grupo Bimbo SAB de CV, Series A(b)

    12,058,602       22,270,341  

Grupo Carso SAB de CV, Series A1

    3,475,136       6,861,036  

Grupo Cementos de Chihuahua SAB de CV

    1,346,857       6,124,427  

Grupo Comercial Chedraui SA de CV

    2,848,198       3,293,790  

Grupo Financiero Banorte SAB de CV, Class O(a)

    19,479,278       67,348,852  

Grupo Financiero Inbursa SAB de CV, Class O(a)(b)

    17,001,642       12,437,005  

Grupo Herdez SAB de CV(b)

    2,363,000       4,032,626  

Grupo Mexico SAB de CV, Series B

    23,311,020       62,202,484  

Grupo Televisa SAB, CPO(a)(b)

    17,986,856       22,206,198  

Industrias Penoles SAB de CV(b)

    1,063,595       17,740,353  

Infraestructura Energetica Nova SAB de CV

    3,927,222       11,500,304  

Kimberly-Clark de Mexico SAB de CV, Class A

    11,314,575       18,176,938  

La Comer SAB de CV(b)

    4,500,596       6,810,735  

Macquarie Mexico Real Estate Management SA de CV(a)(c)

    6,985,100       8,116,197  

Megacable Holdings SAB de CV, CPO

    2,128,977       6,127,399  

Orbia Advance Corp. SAB de CV(b)

    7,790,883       12,516,104  

PLA Administradora Industrial S. de RL de CV

    6,413,949       8,287,786  

Prologis Property Mexico SA de CV

    3,715,758       7,375,150  

Promotora y Operadora de Infraestructura SAB de CV(a)(b)

    1,729,530       12,855,704  

Qualitas Controladora SAB de CV

    1,402,478       5,513,534  

Regional SAB de CV(a)(b)

    1,674,947       4,176,271  

Telesites SAB de CV(a)(b)

    11,276,195       8,511,502  

Wal-Mart de Mexico SAB de CV

    38,700,696       92,888,036  
   

 

 

 
      882,097,365  
 

 

25  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Pakistan — 0.1%            

Engro Corp. Ltd./Pakistan

    2,554,973     $ 4,597,486  

Engro Fertilizers Ltd.

    5,305,847       2,023,670  

Fauji Fertilizer Co. Ltd.

    5,152,640       3,360,221  

Habib Bank Ltd.(a)

    4,511,816       3,662,845  

Hub Power Co. Ltd. (The)(a)

    6,499,479       3,354,810  

Lucky Cement Ltd.

    1,099,154       4,076,211  

MCB Bank Ltd.(a)

    3,389,500       3,500,931  

National Bank of Pakistan(a)

    5,096,314       1,122,805  

Oil & Gas Development Co. Ltd.

    4,960,300       3,436,646  

Pakistan Oilfields Ltd.

    1,132,670       2,926,580  

Pakistan Petroleum Ltd.

    3,057,142       1,873,324  

Pakistan State Oil Co. Ltd.

    2,166,085       2,509,585  

Searle Co. Ltd. (The)

    1,044,775       1,643,632  

United Bank Ltd./Pakistan(a)

    4,002,500       3,016,405  
   

 

 

 
      41,105,151  
Peru — 0.2%            

Cia. de Minas Buenaventura SAA, ADR

    1,614,076       22,726,190  

Credicorp Ltd.

    506,946       66,146,314  

Southern Copper Corp.

    657,516       31,626,520  
   

 

 

 
      120,499,024  
Philippines — 0.7%            

Aboitiz Equity Ventures Inc.

    15,049,130       14,898,592  

Aboitiz Power Corp.

    10,510,900       5,777,364  

Alliance Global Group Inc.(a)

    30,577,700       3,897,498  

Ayala Corp.

    2,109,035       31,906,305  

Ayala Land Inc.

    58,945,340       35,013,423  

Bank of the Philippine Islands

    6,627,183       9,157,910  

BDO Unibank Inc.

    14,884,926       26,402,055  

Bloomberry Resorts Corp.

    32,407,000       4,090,561  

Cebu Air Inc.(a)

    2,310,410       1,698,796  

Cosco Capital Inc.

    25,855,200       2,564,989  

D&L Industries Inc.(a)

    25,696,300       2,437,929  

DoubleDragon Properties Corp.(a)

    6,412,900       1,983,985  

Filinvest Land Inc.

    88,596,000       1,717,650  

Globe Telecom Inc.

    250,665       10,794,855  

GT Capital Holdings Inc.

    738,510       6,092,688  

International Container Terminal Services Inc.

    7,716,300       16,710,560  

JG Summit Holdings Inc.

    22,082,943       29,286,031  

Jollibee Foods Corp.

    3,374,280       9,402,191  

Manila Electric Co.

    1,585,170       8,794,694  

Manila Water Co. Inc.

    9,306,800       2,760,272  

Megaworld Corp.(a)

    84,434,200       5,067,619  

Metro Pacific Investments Corp.

    106,847,800       7,404,529  

Metropolitan Bank & Trust Co.

    12,846,803       8,876,310  

Petron Corp.

    16,635,500       1,043,043  

Pilipinas Shell Petroleum Corp.(a)

    2,001,100       730,524  

PLDT Inc.

    653,235       19,926,463  

Puregold Price Club Inc.

    6,165,560       6,866,871  

Robinsons Land Corp.

    17,452,913       5,262,691  

Security Bank Corp.

    1,800,740       3,602,594  

Semirara Mining & Power Corp.

    7,532,600       1,463,485  

SM Investments Corp.

    1,816,487       31,845,188  

SM Prime Holdings Inc.

    76,419,496       46,023,498  

Universal Robina Corp.

    6,718,260       19,094,075  

Vista Land & Lifescapes Inc.

    39,486,800       2,459,526  

Wilcon Depot Inc.

    12,298,300       4,109,157  
   

 

 

 
      389,163,921  
Poland — 0.8%            

Alior Bank SA(a)(b)

    731,770       2,732,755  
Security   Shares     Value  
Poland (continued)            

AmRest Holdings SE(a)

    541,705     $ 3,086,133  

Asseco Poland SA

    454,443       8,795,152  

Bank Millennium SA(a)

    4,729,318       3,898,395  

Bank Polska Kasa Opieki SA(a)

    1,373,379       19,579,322  

Budimex SA

    98,097       6,270,528  

CCC SA(a)(b)

    286,545       4,494,364  

CD Projekt SA(a)

    513,657       61,397,172  

Ciech SA(a)

    236,537       2,024,577  

Cyfrowy Polsat SA(a)

    2,011,045       15,765,808  

Dino Polska SA(a)(c)

    380,923       23,217,452  

Enea SA(a)

    1,796,754       3,254,537  

Eurocash SA(a)(b)

    645,382       2,744,397  

Famur SA(a)

    1,757,904       927,697  

Grupa Azoty SA(a)

    352,313       2,583,369  

Grupa Lotos SA

    688,435       7,592,667  

Jastrzebska Spolka Weglowa SA(a)(b)

    405,577       1,736,268  

KGHM Polska Miedz SA(a)

    1,070,604       39,937,348  

KRUK SA(a)(b)

    138,750       5,578,669  

LPP SA(a)

    9,979       19,544,265  

mBank SA(a)

    114,521       5,871,911  

Orange Polska SA(a)

    4,998,897       9,845,043  

PGE Polska Grupa Energetyczna SA(a)

    6,233,597       10,259,764  

PLAY Communications SA(c)

    934,063       7,786,086  

Polski Koncern Naftowy ORLEN SA

    2,229,816       30,779,976  

Polskie Gornictwo Naftowe i Gazownictwo SA

    13,058,031       18,259,994  

Powszechna Kasa Oszczednosci Bank Polski SA(a)

    6,533,881       38,417,307  

Powszechny Zaklad Ubezpieczen SA(a)

    4,513,629       33,428,821  

Santander Bank Polska SA(a)

    259,568       10,719,372  

Tauron Polska Energia SA(a)

    8,259,429       5,691,578  

TEN Square Games SA

    32,247       4,966,419  

Warsaw Stock Exchange

    282,125       3,368,381  
   

 

 

 
      414,555,527  
Qatar — 0.8%            

Al Meera Consumer Goods Co. QSC

    924,251       5,025,811  

Barwa Real Estate Co.

    13,161,278       12,224,131  

Commercial Bank PSQC (The)

    15,018,721       16,987,820  

Doha Bank QPSC(a)

    11,569,453       7,513,450  

Gulf International Services QSC(a)

    8,669,035       3,871,264  

Industries Qatar QSC

    13,559,333       36,404,363  

Masraf Al Rayan QSC

    28,265,358       32,094,362  

Medicare Group

    1,362,699       2,788,477  

Mesaieed Petrochemical Holding Co.

    33,536,929       19,359,643  

Ooredoo QPSC

    6,117,231       10,995,192  

Qatar Aluminum Manufacturing Co.

    23,302,539       6,249,966  

Qatar Electricity & Water Co. QSC

    3,771,415       17,663,264  

Qatar Fuel QSC

    3,718,750       18,631,722  

Qatar Insurance Co. SAQ

    11,760,422       6,820,885  

Qatar International Islamic Bank QSC

    5,918,200       13,794,361  

Qatar Islamic Bank SAQ

    8,959,843       39,035,395  

Qatar National Bank QPSC

    34,103,556       167,151,534  

Qatar National Cement Co. QSC

    1,733,754       1,885,059  

Qatar Navigation QSC

    3,823,389       6,215,285  

United Development Co. QSC

    15,114,819       5,107,554  

Vodafone Qatar QSC

    15,581,353       5,511,280  
   

 

 

 
      435,330,818  
Russia — 2.9%            

Aeroflot PJSC(a)

    5,045,657       5,504,057  

Alrosa PJSC

    19,711,170       17,470,325  

Credit Bank of Moscow PJSC(a)

    97,794,631       8,096,009  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  26


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Russia (continued)            

Detsky Mir PJSC(c)

    5,126,026     $ 8,051,257  

Gazprom PJSC

    83,176,620       202,937,044  

Gazprom PJSC, ADR

    2,690,871       13,093,778  

Inter RAO UES PJSC

    287,937,505       20,214,147  

LSR Group PJSC, GDR(f)

    2,188,219       4,551,496  

LUKOIL PJSC

    3,130,169       210,028,398  

Magnit PJSC, GDR(f)

    2,687,165       39,420,711  

Magnitogorsk Iron & Steel Works PJSC

    18,397,095       9,326,379  

Mechel PJSC, ADR(a)

    930,005       1,571,708  

MMC Norilsk Nickel PJSC

    478,645       124,393,620  

Mobile TeleSystems PJSC, ADR

    3,462,279       32,268,440  

Moscow Exchange MICEX-RTS PJSC

    10,517,311       19,402,969  

Novatek PJSC, GDR(f)

    685,163       101,472,640  

Novolipetsk Steel PJSC

    9,534,618       19,856,855  

OGK-2 PJSC

    245,755,000       2,468,477  

PhosAgro PJSC, GDR, Registered Shares(f)

    1,023,075       12,195,054  

Polymetal International PLC

    1,583,024       42,273,444  

Polyus PJSC

    253,327       61,533,946  

Rosneft Oil Co. PJSC

    2,771,320       13,912,600  

Rosneft Oil Co. PJSC, GDR(f)

    6,044,504       30,706,080  

Rostelecom PJSC

    6,634,371       8,670,197  

Sberbank of Russia PJSC(a)

    81,409,510       247,292,818  

Severstal PAO

    1,680,923       21,086,809  

Sistema PJSFC, GDR(f)

    1,348,055       7,737,836  

Surgutneftegas PJSC

    54,619,532       26,933,454  

Tatneft PJSC

    10,677,025       78,487,770  

Unipro PJSC

    119,997,082       4,359,516  

VTB Bank PJSC(a)

    8,431,310,000       3,990,239  

VTB Bank PJSC, GDR(a)(f)

    9,452,776       8,639,837  

X5 Retail Group NV, GDR(f)

    929,342       33,455,767  

Yandex NV, Class A(a)

    1,715,138       119,597,813  
   

 

 

 
      1,561,001,490  
Saudi Arabia — 2.7%            

Abdullah Al Othaim Markets Co.

    355,082       11,815,711  

Advanced Petrochemical Co.

    815,005       11,973,703  

Al Hammadi Co. for Development and Investment(a)

    534,601       3,784,521  

Al Rajhi Bank

    9,229,064       159,705,170  

Aldrees Petroleum and Transport Services Co.

    277,177       4,855,558  

Alinma Bank(a)

    7,418,723       30,660,376  

Almarai Co. JSC

    1,843,247       26,392,130  

Arab National Bank

    4,636,589       25,665,077  

Arabian Cement Co./Saudi Arabia

    481,823       3,905,510  

Arriyadh Development Co.

    1,045,998       4,601,839  

Bank AlBilad

    3,031,757       19,417,084  

Bank Al-Jazira

    3,217,415       11,203,839  

Banque Saudi Fransi

    4,488,335       38,236,026  

Bupa Arabia for Cooperative Insurance Co.(a)

    485,016       16,035,938  

City Cement Co.(a)

    1,178,439       5,674,681  

Co for Cooperative Insurance (The)(a)

    506,039       10,659,276  

Dallah Healthcare Co.

    266,538       4,036,678  

Dar Al Arkan Real Estate Development Co.(a)

    4,076,444       8,814,932  

Eastern Province Cement Co.

    464,667       4,342,566  

Emaar Economic City(a)

    3,646,028       7,845,311  

Etihad Etisalat Co.(a)

    2,960,517       21,155,290  

Fawaz Abdulaziz Al Hokair & Co.(a)

    681,888       4,054,474  

Herfy Food Services Co.

    315,158       4,327,651  

Jarir Marketing Co.

    437,663       19,068,148  

Leejam Sports Co. JSC

    256,335       4,839,024  

Mobile Telecommunications Co.(a)

    2,339,474       7,285,807  

Mouwasat Medical Services Co.

    384,495       12,281,860  
Security   Shares     Value  
Saudi Arabia (continued)            

National Agriculture Development Co. (The)(a)

    519,123     $ 4,443,160  

National Commercial Bank(a)

    10,960,427       108,714,390  

National Industrialization Co.(a)

    2,735,518       8,621,318  

National Medical Care Co.

    192,548       2,721,019  

Qassim Cement Co. (The)

    386,883       7,035,268  

Rabigh Refining & Petrochemical
Co.(a)

    1,866,441       7,106,555  

Riyad Bank

    10,141,160       51,862,430  

Sahara International Petrochemical Co.

    2,763,646       11,731,191  

Samba Financial Group

    7,426,009       54,549,867  

Saudi Airlines Catering Co.

    357,073       7,626,164  

Saudi Arabian Fertilizer Co.

    1,484,847       32,821,079  

Saudi Arabian Mining Co.(a)

    3,240,027       34,037,799  

Saudi Arabian Oil Co.(c)

    16,164,008       153,216,410  

Saudi Basic Industries Corp.

    6,738,717       158,116,252  

Saudi British Bank (The)

    5,450,357       39,019,874  

Saudi Cement Co.

    557,101       8,362,939  

Saudi Electricity Co.

    6,208,425       26,353,671  

Saudi Industrial Investment Group

    1,757,880       10,264,787  

Saudi Kayan Petrochemical Co.(a)

    5,702,915       13,807,001  

Saudi Pharmaceutical Industries & Medical Appliances Corp.

    686,932       6,547,966  

Saudi Research & Marketing Group(a)

    320,261       6,079,959  

Saudi Telecom Co.

    4,494,451       115,044,140  

Saudia Dairy & Foodstuff Co.

    145,245       7,164,560  

Savola Group (The)

    2,030,215       26,308,429  

Seera Group Holding(a)

    1,269,997       5,858,216  

Southern Province Cement Co.

    513,248       8,785,751  

United Electronics Co.

    284,097       5,363,108  

United International Transportation Co.

    467,089       4,240,659  

Yamama Cement Co.

    944,032       6,187,073  

Yanbu Cement Co.

    668,474       5,864,042  

Yanbu National Petrochemical Co.

    1,867,567       26,640,759  
   

 

 

 
      1,447,134,016  
South Africa — 3.4%            

Absa Group Ltd.

    5,303,925       24,185,241  

Adcock Ingram Holdings Ltd.(a)

    542,420       1,289,993  

AECI Ltd.

    948,389       4,706,887  

African Rainbow Minerals Ltd.

    900,281       11,311,138  

Alexander Forbes Group Holdings Ltd.

    6,046,249       1,177,754  

Anglo American Platinum Ltd.

    416,707       31,095,019  

AngloGold Ashanti Ltd.

    3,120,869       91,124,862  

Aspen Pharmacare Holdings Ltd.(a)

    2,934,166       23,532,215  

Astral Foods Ltd.

    315,113       2,479,053  

Attacq Ltd.

    5,667,922       1,321,525  

AVI Ltd.

    2,297,620       9,367,468  

Barloworld Ltd.

    1,488,500       5,254,175  

Bid Corp. Ltd.

    2,536,556       41,909,977  

Bidvest Group Ltd. (The)

    2,125,526       17,076,977  

Brait SE(a)(b)

    7,011,124       1,175,332  

Capitec Bank Holdings Ltd.(b)

    523,220       25,788,457  

Clicks Group Ltd.

    1,884,115       25,579,367  

Coronation Fund Managers Ltd.

    1,831,925       4,629,216  

DataTec Ltd.

    1,555,026       1,987,239  

Dis-Chem Pharmacies Ltd.(c)

    2,393,219       2,579,513  

Discovery Ltd.(b)

    3,021,714       21,587,430  

DRDGOLD Ltd.

    3,365,508       5,026,037  

Equites Property Fund Ltd.

    4,050,521       4,112,386  

Exxaro Resources Ltd.

    1,883,367       15,250,367  

FirstRand Ltd.

    35,603,436       79,544,901  

Fortress REIT Ltd., Series A

    9,741,540       7,245,239  
 

 

27  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Africa (continued)            

Foschini Group Ltd. (The)(b)

    2,445,942     $ 11,026,140  

Gold Fields Ltd.

    6,623,367       85,647,813  

Growthpoint Properties Ltd.

    23,385,735       16,854,708  

Harmony Gold Mining Co. Ltd.(a)

    4,097,741       26,754,291  

Impala Platinum Holdings Ltd.

    6,062,349       55,956,291  

Imperial Logistics Ltd.(a)

    1,304,693       2,670,034  

Investec Ltd.

    2,250,020       4,175,644  

JSE Ltd.

    699,886       4,899,667  

KAP Industrial Holdings Ltd.(a)

    21,623,234       3,510,006  

Kumba Iron Ore Ltd.

    487,239       15,271,831  

Liberty Holdings Ltd.

    967,558       3,455,880  

Life Healthcare Group Holdings Ltd.

    9,556,757       9,330,407  

Massmart Holdings Ltd.(a)(b)

    875,118       1,408,144  

Momentum Metropolitan Holdings

    7,044,000       6,303,374  

Motus Holdings Ltd.(a)

    1,226,799       2,000,100  

Mr. Price Group Ltd.

    1,888,237       12,915,747  

MTN Group Ltd.

    12,717,389       45,843,781  

MultiChoice Group Ltd.(a)

    3,288,900       18,809,800  

Naspers Ltd., Class N

    3,266,345       596,295,344  

Nedbank Group Ltd.

    2,745,252       15,554,740  

NEPI Rockcastle PLC

    2,983,833       13,965,210  

Netcare Ltd.

    8,683,474       6,407,049  

Ninety One Ltd.(a)

    1,144,241       3,121,102  

Northam Platinum Ltd.(a)

    2,799,812       26,450,817  

Oceana Group Ltd.

    762,020       2,830,151  

Old Mutual Ltd.

    35,243,397       23,278,897  

Pepkor Holdings Ltd.(c)

    5,932,680       3,396,857  

Pick n Pay Stores Ltd.

    2,540,567       6,257,972  

PSG Group Ltd.

    1,216,817       3,232,156  

Rand Merchant Investment Holdings Ltd.

    5,969,295       10,595,245  

Redefine Properties Ltd.

    41,826,938       6,098,283  

Reinet Investments SCA

    1,122,928       21,417,575  

Remgro Ltd.

    3,845,347       19,956,196  

Resilient REIT Ltd.

    2,613,709       6,041,635  

Reunert Ltd.

    1,394,928       2,568,981  

Royal Bafokeng Platinum Ltd.(a)(b)

    1,194,205       4,550,192  

Sanlam Ltd.

    13,546,743       43,963,694  

Sappi Ltd.(a)

    4,183,895       5,504,849  

Sasol Ltd.(a)(b)

    4,236,121       34,649,113  

Shoprite Holdings Ltd.

    3,722,696       24,281,438  

Sibanye Stillwater Ltd.(a)

    17,322,934       52,445,557  

SPAR Group Ltd. (The)

    1,391,977       13,282,786  

Standard Bank Group Ltd.

    9,602,487       59,849,574  

Steinhoff International Holdings NV(a)(b)

    34,367,227       1,886,609  

Super Group Ltd./South Africa(a)

    3,067,828       3,266,797  

Telkom SA SOC Ltd.

    2,358,054       3,159,615  

Tiger Brands Ltd.

    1,187,537       12,086,889  

Transaction Capital Ltd.

    1,851,689       1,963,039  

Truworths International Ltd.(b)

    3,275,827       5,878,264  

Vodacom Group Ltd.

    4,805,537       36,271,469  

Vukile Property Fund Ltd.

    6,047,693       1,777,762  

Wilson Bayly Holmes-Ovcon Ltd.

    468,681       3,065,567  

Woolworths Holdings Ltd.

    7,075,343       13,276,774  

Zeder Investments Ltd.(b)

    10,534,819       1,492,426  
   

 

 

 
      1,877,292,050  
South Korea — 11.5%            

ABLBio Inc.(a)

    220,815       6,598,983  

Advanced Process Systems Corp.

    86,308       1,627,493  

Aekyung Industrial Co. Ltd.

    75,586       1,390,314  

AfreecaTV Co. Ltd.

    64,474       3,147,986  
Security   Shares     Value  
South Korea (continued)            

Ahnlab Inc.(b)

    54,255     $ 2,932,209  

AK Holdings Inc.

    46,307       643,207  

Alteogen Inc.(a)

    140,546       24,727,767  

Amicogen Inc.(a)

    129,367       4,497,733  

Amorepacific Corp.(b)

    239,366       33,852,587  

AMOREPACIFIC Group

    209,712       9,003,546  

Ananti Inc.(a)

    417,511       3,198,375  

Anterogen Co. Ltd.(a)

    51,007       2,584,916  

Aprogen KIC Inc.(a)(b)

    783,255       2,020,942  

Asiana Airlines Inc.(a)

    1,018,376       3,699,211  

BGF retail Co. Ltd.

    58,055       6,231,175  

BH Co. Ltd.(a)(b)

    177,630       3,035,516  

Binex Co. Ltd.(a)(b)

    227,092       6,882,155  

Binggrae Co. Ltd.(b)

    42,536       2,084,010  

BNK Financial Group Inc.

    1,812,459       7,750,898  

Boditech Med Inc.(b)

    121,896       2,806,512  

Boryung Pharmaceutical Co. Ltd.

    168,046       2,291,729  

Bukwang Pharmaceutical Co. Ltd.

    250,271       7,963,839  

Cafe24 Corp.(a)

    54,732       3,358,837  

Cellivery Therapeutics Inc.(a)

    49,542       9,959,281  

Celltrion Healthcare Co. Ltd.(a)(b)

    513,684       43,286,277  

Celltrion Inc.(a)(b)

    708,557       177,154,162  

Celltrion Pharm Inc.(a)(b)

    125,472       11,734,943  

Chabiotech Co. Ltd.(a)

    317,110       5,806,164  

Cheil Worldwide Inc.

    473,373       7,272,546  

Chong Kun Dang Pharmaceutical Corp.

    50,500       8,247,327  

Chongkundang Holdings Corp.

    21,403       2,180,119  

Chunbo Co. Ltd.

    33,633       4,654,655  

CJ CGV Co. Ltd.(a)

    170,493       3,157,544  

CJ CheilJedang Corp.

    61,825       21,182,570  

CJ Corp.

    112,346       7,660,599  

CJ ENM Co. Ltd.

    74,641       7,458,445  

CJ Logistics Corp.(a)

    65,302       8,328,355  

CMG Pharmaceutical Co. Ltd.(a)

    896,526       3,388,671  

Com2uSCorp.

    74,073       6,927,780  

Cosmax Inc.

    57,264       4,917,020  

Coway Co. Ltd.(a)

    361,799       24,304,706  

CrystalGenomics Inc.(a)(b)

    287,408       4,911,510  

Cuckoo Holdings Co. Ltd.

    15,421       1,185,232  

Cuckoo Homesys Co. Ltd.

    61,825       2,227,553  

Daea TI Co. Ltd.

    485,008       2,482,405  

Daeduck Co. Ltd.

    125,661       650,573  

Daeduck Electronics Co. Ltd./New(a)

    282,326       2,602,466  

Daekyo Co. Ltd.(b)

    330,351       1,102,653  

Daelim Industrial Co. Ltd.

    198,049       14,488,137  

Daesang Corp.

    159,509       3,880,638  

Daewoo Engineering & Construction Co. Ltd.(a)

    1,351,019       3,349,399  

Daewoo Shipbuilding & Marine Engineering Co. Ltd.(a)

    286,705       5,346,002  

Daewoong Co. Ltd.

    192,568       5,795,358  

Daewoong Pharmaceutical Co. Ltd.

    37,735       3,684,872  

Daishin Securities Co. Ltd.

    322,190       2,780,072  

Daou Technology Inc.(b)

    197,007       3,225,681  

DB HiTek Co. Ltd.

    286,180       8,564,441  

DB Insurance Co. Ltd.

    370,552       13,616,125  

Dentium Co. Ltd.(a)

    57,850       1,823,792  

DGB Financial Group Inc.

    1,215,660       5,413,622  

DIO Corp.(a)

    82,962       1,794,868  

Dong-A Socio Holdings Co. Ltd.

    34,013       3,106,668  

Dong-A ST Co. Ltd.

    42,163       3,357,707  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  28


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Korea (continued)            

Dongjin Semichem Co. Ltd.

    266,853     $ 7,458,136  

DongKook Pharmaceutical Co. Ltd.(d)

    44,480       5,657,823  

Dongkuk Steel Mill Co. Ltd.(a)

    507,095       2,633,872  

Dongsuh Cos. Inc.(b)

    231,349       4,975,980  

Dongsung Pharmaceutical Co. Ltd.(a)

    162,255       1,693,713  

Dongwon F&B Co. Ltd.

    9,388       1,398,835  

Dongwon Industries Co. Ltd.

    11,799       2,210,016  

Doosan Bobcat Inc.

    373,387       8,266,755  

Doosan Heavy Industries & Construction Co. Ltd.(a)(b)

    997,664       13,521,669  

Doosan Infracore Co. Ltd.(a)(b)

    1,044,306       7,068,120  

Doosan Solus Co. Ltd.(a)

    91,453       3,079,485  

DoubleUGames Co. Ltd.(b)

    74,658       4,594,242  

Douzone Bizon Co. Ltd.

    149,750       12,732,343  

Duk San Neolux Co. Ltd.(a)

    92,347       2,596,506  

Echo Marketing Inc.

    113,936       2,824,661  

Ecopro BM Co. Ltd.

    72,911       9,513,600  

Ecopro Co. Ltd.

    158,175       6,271,607  

E-MART Inc.

    136,017       13,740,247  

Enzychem Lifesciences Corp.(a)(b)

    54,968       6,436,610  

Eo Technics Co Ltd.(b)

    68,499       6,475,661  

Eone Diagnomics Genome Center Co. Ltd.(a)

    150,758       1,967,126  

Eugene Corp.

    401,049       1,347,071  

Eutilex Co. Ltd.(a)

    54,286       1,672,588  

F&F Co. Ltd.(b)

    53,125       4,315,652  

Feelux Co. Ltd.(a)(b)

    507,435       1,524,996  

Fila Holdings Corp.

    366,107       10,694,430  

Foosung Co. Ltd.

    419,138       2,910,926  

GemVax & Kael Co. Ltd.(a)(b)

    260,710       4,872,264  

Geneone Life Science Inc.(a)

    304,352       7,353,230  

Genexine Co. Ltd.(a)

    121,809       18,436,954  

Grand Korea Leisure Co. Ltd.

    262,881       2,622,392  

Green Cross Cell Corp.

    53,485       2,039,625  

Green Cross Corp./South Korea

    44,151       9,867,910  

Green Cross Holdings Corp.

    176,507       4,086,154  

Green Cross LabCell Corp.

    46,613       2,264,138  

GS Engineering & Construction Corp.(b)

    404,160       8,403,697  

GS Holdings Corp.

    342,226       9,363,031  

GS Home Shopping Inc.

    22,914       2,256,872  

GS Retail Co. Ltd.

    198,949       5,518,452  

G-treeBNT Co. Ltd.(a)(b)

    186,826       4,710,362  

Halla Holdings Corp.

    64,643       1,477,445  

Hana Financial Group Inc.

    2,213,460       52,546,150  

Hana Tour Service Inc.

    84,414       2,728,763  

Hanall Biopharma Co. Ltd.(a)

    246,934       7,182,061  

Handok Inc.(b)

    87,673       2,863,635  

Handsome Co. Ltd.

    109,581       2,901,189  

Hanil Cement Co. Ltd./New

    15,120       1,005,539  

Hanjin Transportation Co. Ltd.(b)

    56,378       2,081,131  

Hankook Shell Oil Co. Ltd.(b)

    5,733       1,136,562  

Hankook Technology Group Co. Ltd.

    199,531       2,586,731  

Hankook Tire & Technology Co. Ltd.

    507,209       12,595,897  

Hanmi Pharm Co. Ltd.

    47,713       12,310,830  

Hanon Systems

    1,341,435       14,567,313  

Hansae Co. Ltd.

    148,487       2,174,993  

Hansol Chemical Co. Ltd.(b)

    71,069       9,662,129  

Hanssem Co. Ltd.(b)

    80,659       6,606,718  

Hanwha Aerospace Co. Ltd.(a)

    297,434       6,459,969  

Hanwha Corp.

    309,704       7,169,678  

Hanwha Investment & Securities Co. Ltd.(a)

    1,250,353       1,894,634  
Security   Shares     Value  
South Korea (continued)            

Hanwha Life Insurance Co. Ltd.

    2,306,471     $ 2,970,705  

Hanwha Solutions Corp.

    798,353       26,849,232  

Hanwha Systems Co. Ltd.

    249,845       2,292,542  

Harim Holdings Co. Ltd.

    304,069       1,666,377  

HDC Holdings Co. Ltd.

    281,444       2,665,414  

HDC Hyundai Development Co-Engineering & Construction, Class E

    290,462       5,623,896  

Helixmith Co. Ltd.(a)(b)

    180,786       7,495,337  

HFR Inc.(a)

    73,123       2,243,735  

Hite Jinro Co. Ltd.

    245,951       7,640,030  

HLB Inc.(a)(b)

    335,959       24,548,566  

HLB Life Science Co. Ltd.(a)(b)

    325,621       4,947,773  

HMM Co. Ltd.(a)

    1,907,288       9,248,235  

Hotel Shilla Co. Ltd.

    230,141       13,619,759  

HS Industries Co. Ltd.(b)

    316,590       1,836,270  

Huchems Fine Chemical Corp.

    138,711       2,107,697  

Hugel Inc.(a)

    49,155       6,778,002  

Huons Co. Ltd.

    52,763       3,215,794  

Huons Global Co. Ltd.

    60,385       1,733,419  

Hwaseung Enterprise Co. Ltd.

    139,702       1,370,089  

Hyosung Advanced Materials Corp.(a)

    22,511       2,577,234  

Hyosung Chemical Corp.

    15,768       1,319,420  

Hyosung Corp.

    76,274       4,302,010  

Hyosung TNC Co. Ltd.

    19,124       1,579,312  

Hyundai Bioscience Co. Ltd.(a)

    259,856       2,482,840  

Hyundai Construction Equipment Co. Ltd.(a)

    97,544       1,794,205  

Hyundai Department Store Co. Ltd.

    95,679       4,325,248  

Hyundai Electric & Energy System Co. Ltd.(a)

    179,424       1,774,755  

Hyundai Elevator Co. Ltd.(b)

    197,758       6,833,880  

Hyundai Engineering & Construction Co. Ltd.

    561,034       15,231,372  

Hyundai Glovis Co. Ltd.

    138,464       16,959,771  

Hyundai Greenfood Co. Ltd.

    341,571       2,081,803  

Hyundai Heavy Industries Holdings Co. Ltd.

    65,856       12,529,216  

Hyundai Home Shopping Network Corp.

    43,790       2,407,178  

Hyundai Marine & Fire Insurance Co. Ltd.

    460,119       8,560,173  

Hyundai Mipo Dockyard Co. Ltd.

    179,110       4,636,445  

Hyundai Mobis Co. Ltd.(a)

    495,557       93,446,223  

Hyundai Motor Co.(a)

    1,124,139       167,026,293  

Hyundai Rotem Co. Ltd.(a)(b)

    347,607       4,433,240  

Hyundai Steel Co.

    625,510       13,216,854  

Hyundai Wia Corp.(b)

    128,726       4,513,375  

Il Dong Pharmaceutical Co. Ltd.(a)

    142,603       2,214,854  

Iljin Materials Co. Ltd.(b)

    171,897       7,213,625  

Ilyang Pharmaceutical Co. Ltd.

    105,064       7,199,436  

Industrial Bank of Korea

    1,650,688       11,241,742  

Innocean Worldwide Inc.

    70,421       3,260,506  

Innox Advanced Materials Co. Ltd.(a)

    51,621       2,198,857  

iNtRON Biotechnology Inc.(a)

    215,066       3,077,803  

IS Dongseo Co. Ltd.

    123,957       4,648,779  

ITM Semiconductor Co. Ltd.(a)

    57,162       2,766,912  

JB Financial Group Co. Ltd.

    839,450       3,031,602  

Jcontentree Corp.(a)

    46,860       1,071,007  

Jeil Pharmaceutical Co. Ltd.

    41,941       1,952,468  

Jejuair Co. Ltd.(a)

    125,310       1,466,293  

JW Holdings Corp.

    370,489       1,606,211  

JW Pharmaceutical Corp.

    114,874       3,689,236  

JYP Entertainment Corp.

    198,873       5,834,434  

Kakao Corp.

    426,040       145,970,435  

Kangwon Land Inc.

    796,627       13,848,260  

KB Financial Group Inc.

    2,926,173       90,773,192  
 

 

29  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Korea (continued)            

KCC Corp.

    36,218     $ 4,253,229  

KEPCO Engineering & Construction Co. Inc.

    112,145       1,538,819  

KEPCO Plant Service & Engineering Co. Ltd.

    172,663       4,040,771  

Kginicis Co. Ltd.

    154,816       3,056,179  

Kia Motors Corp.

    1,970,030       70,399,675  

KISWIRE Ltd.

    94,753       1,132,665  

KIWOOM Securities Co. Ltd.(b)

    89,284       8,192,572  

KMW Co. Ltd.(a)(b)

    198,123       12,742,316  

Koentec Co. Ltd.

    160,446       1,318,253  

Koh Young Technology Inc.(b)

    83,700       6,341,443  

Kolmar BNH Co. Ltd.

    64,908       3,633,624  

Kolmar Korea Co. Ltd.

    105,981       4,086,143  

Kolmar Korea Holdings Co. Ltd.

    71,263       1,664,743  

Kolon Industries Inc.

    131,291       3,536,756  

Komipharm International Co. Ltd.(a)(b)

    295,327       3,841,066  

Korea Aerospace Industries Ltd.

    570,412       10,780,158  

Korea Electric Power Corp.(a)

    1,888,816       32,595,949  

Korea Gas Corp.

    209,154       4,155,261  

Korea Investment Holdings Co. Ltd.

    306,320       15,704,090  

Korea Line Corp.(a)

    114,469       1,551,436  

Korea Petrochemical Ind. Co Ltd.

    24,250       2,408,873  

Korea REIT & Trust Co. Ltd.

    1,597,608       2,279,607  

Korea Shipbuilding & Offshore Engineering Co. Ltd.(a)

    288,765       20,954,241  

Korea Zinc Co. Ltd.

    62,188       20,861,956  

Korean Air Lines Co. Ltd.(a)

    590,868       8,779,207  

Korean Reinsurance Co.

    685,045       4,232,873  

KT Skylife Co. Ltd.

    199,579       1,431,445  

KT&G Corp.

    859,552       60,130,290  

Kuk-Il Paper Manufacturing Co. Ltd.(a)(b)

    707,366       2,971,425  

Kumho Petrochemical Co. Ltd.

    132,939       11,247,049  

Kumho Tire Co. Inc.(a)(b)

    720,083       2,212,562  

Kwang Dong Pharmaceutical Co. Ltd.

    321,352       2,610,528  

Kyung Dong Navien Co. Ltd.

    61,800       2,694,873  

L&C Bio Co. Ltd.

    36,252       4,025,287  

L&F Co. Ltd.

    136,448       4,824,325  

LEENO Industrial Inc.

    77,130       8,246,073  

LegoChem Biosciences Inc.(a)(b)

    131,452       5,975,594  

LEMON Co. Ltd./Korea(a)

    98,849       1,518,642  

LF Corp.

    151,068       1,627,806  

LG Chem Ltd.

    344,684       214,720,229  

LG Corp.

    716,395       49,874,456  

LG Display Co. Ltd.(a)(b)

    1,698,539       20,876,058  

LG Electronics Inc.(b)

    788,029       55,856,589  

LG Hausys Ltd.

    50,721       2,476,486  

LG Household & Health Care Ltd.(b)

    69,776       86,522,475  

LG Innotek Co. Ltd.

    105,392       12,864,585  

LG International Corp.

    230,134       2,915,664  

LG Uplus Corp.

    1,512,590       15,216,307  

LIG Nex1 Co. Ltd.

    105,430       2,769,102  

Lock&Lock Co. Ltd.(a)

    178,489       1,630,277  

Lotte Chemical Corp.

    124,023       19,784,795  

Lotte Chilsung Beverage Co. Ltd.

    28,942       2,292,653  

Lotte Confectionery Co. Ltd.

    12,807       1,078,121  

Lotte Corp.

    199,462       5,037,343  

LOTTE Fine Chemical Co. Ltd.

    141,378       5,319,974  

Lotte Food Co. Ltd.

    3,446       881,879  

LOTTE Himart Co. Ltd.

    78,396       1,983,163  

LOTTE Reit Co. Ltd.

    727,979       3,113,169  

Lotte Shopping Co. Ltd.

    77,364       4,949,629  
Security   Shares     Value  
South Korea (continued)            

Lotte Tour Development Co. Ltd.(a)(b)

    258,623     $ 4,114,803  

LS Corp.

    131,916       5,025,001  

LS Electric Co. Ltd.

    121,899       5,551,592  

Maeil Dairies Co. Ltd.

    32,528       1,862,029  

Mando Corp.(b)

    243,669       6,440,952  

Mcnex Co. Ltd.

    103,105       2,916,346  

Medipost Co. Ltd.(a)(b)

    136,267       3,297,985  

MedPacto Inc.(a)

    84,338       7,525,741  

Medy-Tox Inc.

    34,105       7,168,969  

MegaStudyEdu Co. Ltd.

    66,966       1,849,049  

Meritz Financial Group Inc.

    314,320       2,442,271  

Meritz Fire & Marine Insurance Co. Ltd.

    392,944       4,217,557  

Meritz Securities Co. Ltd.

    1,884,113       5,083,410  

Mezzion Pharma Co. Ltd.(a)(b)

    51,221       7,338,845  

Mirae Asset Daewoo Co. Ltd.

    2,165,647       16,954,724  

Mirae Asset Life Insurance Co. Ltd.

    582,828       1,839,890  

Namhae Chemical Corp.(b)

    225,906       1,565,120  

Namsun Aluminum Co. Ltd.(a)(b)

    535,363       2,334,523  

Naturecell Co. Ltd.(a)(b)

    378,220       3,390,894  

NAVER Corp.

    927,927       251,920,580  

NCSoft Corp.

    124,121       86,202,395  

NEPES Corp.

    131,524       3,238,553  

Netmarble Corp.(a)(b)(c)

    160,874       22,548,633  

Nexen Tire Corp.

    241,755       1,031,819  

NH Investment & Securities Co. Ltd.

    745,941       5,626,426  

NHN Corp.(a)

    79,211       4,861,084  

NHN KCP Corp.

    107,694       6,518,393  

NICE Holdings Co. Ltd.

    188,111       2,977,091  

NICE Information Service Co. Ltd.

    279,145       4,229,826  

NKMax Co. Ltd.(a)

    260,357       3,473,911  

Nong Shim Holdings Co. Ltd.

    25,367       1,674,192  

NongShim Co. Ltd.

    21,963       6,646,770  

OCI Co. Ltd.(a)

    144,867       7,890,306  

OptoElectronics Solutions Co. Ltd.

    62,838       3,470,135  

Orion Corp./Republic of Korea

    177,351       20,976,358  

Orion Holdings Corp.

    170,686       1,882,302  

Oscotec Inc.(a)

    175,444       4,851,701  

Osstem Implant Co. Ltd.(a)(b)

    86,264       2,694,161  

Ottogi Corp.

    9,495       4,811,844  

Pan Ocean Co. Ltd.(a)

    2,105,923       6,018,696  

Paradise Co. Ltd.(b)

    393,598       4,406,813  

Partron Co. Ltd.(b)

    296,664       2,547,330  

Pearl Abyss Corp.(a)(b)

    44,891       6,877,820  

PHARMA RESEARCH PRODUCTS Co. Ltd.

    36,163       2,115,774  

Pharmicell Co. Ltd.(a)(b)

    439,511       8,287,774  

PI Advanced Materials Co. Ltd.

    120,983       2,907,707  

Poongsan Corp.

    168,481       3,283,387  

POSCO

    543,857       84,469,750  

POSCO Chemical Co. Ltd.

    162,544       12,178,143  

Posco ICT Co. Ltd.

    686,175       2,509,833  

Posco International Corp.

    374,653       4,289,318  

RFHIC Corp.(b)

    111,657       3,689,315  

S&T Motiv Co. Ltd.

    72,613       3,361,996  

S-1 Corp.

    121,045       8,885,532  

Sam Chun Dang Pharm Co. Ltd.

    105,842       5,221,265  

Samjin Pharmaceutical Co. Ltd.(b)

    106,580       2,619,864  

Samsung Biologics Co. Ltd.(a)(b)(c)

    124,900       81,801,667  

Samsung C&T Corp.

    632,732       57,525,933  

Samsung Card Co. Ltd.

    201,012       4,864,968  

Samsung Electro-Mechanics Co. Ltd.(b)

    415,475       43,544,606  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  30


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 
South Korea (continued)            

Samsung Electronics Co. Ltd.

    35,780,440     $   1,626,520,549  

Samsung Engineering Co. Ltd.(a)(b)

    1,136,292       10,809,074  

Samsung Fire & Marine Insurance Co. Ltd.

    230,112       36,224,383  

Samsung Heavy Industries Co. Ltd.(a)(b)

    3,497,844       15,193,935  

Samsung Life Insurance Co. Ltd.

    518,408       26,708,115  

Samsung SDI Co. Ltd.

    413,468       157,500,017  

Samsung SDS Co. Ltd.

    257,057       34,082,395  

Samsung Securities Co. Ltd.

    431,589       10,954,128  

Samwha Capacitor Co. Ltd.

    65,731       2,993,558  

Samyang Corp.

    29,424       1,652,143  

Samyang Foods Co. Ltd.(b)

    28,220       2,530,036  

Samyang Holdings Corp.

    38,326       2,077,780  

Sangsangin Co. Ltd.(b)

    253,936       1,280,475  

Seah Besteel Corp.

    129,599       1,066,991  

Sebang Global Battery Co. Ltd.

    69,250       1,591,485  

Seegene Inc.

    139,603       30,907,980  

Seobu T&D(a)

    289,875       1,598,351  

Seojin System Co. Ltd.

    97,125       4,145,330  

Seoul Semiconductor Co. Ltd.

    287,964       3,951,354  

SFA Engineering Corp.

    134,587       3,755,837  

SFA Semicon Co. Ltd.(a)

    672,773       2,826,111  

Shin Poong Pharmaceutical Co. Ltd.(a)

    220,823       25,374,476  

Shinhan Financial Group Co. Ltd.

    3,377,762       84,308,985  

Shinsegae Inc.

    52,823       9,026,912  

Shinsegae International Inc.(b)

    22,178       2,529,774  

Silicon Works Co. Ltd.

    85,589       3,249,486  

SillaJen Inc.(a)(b)(d)

    540,819       4,957,925  

SK Chemicals Co. Ltd.

    58,029       19,222,503  

SK D&D Co. Ltd.

    68,730       2,392,445  

SK Discovery Co. Ltd.

    85,193       5,550,920  

SK Gas Ltd.

    29,503       2,339,576  

SK Holdings Co. Ltd.

    264,487       47,647,292  

SK Hynix Inc.

    4,076,590       257,725,321  

SK Innovation Co. Ltd.

    413,938       50,526,989  

SK Materials Co. Ltd.(b)

    34,697       7,202,862  

SK Networks Co. Ltd.

    1,107,040       4,836,718  

SK Telecom Co. Ltd.

    288,410       60,211,870  

SKC Co. Ltd.

    160,360       12,486,994  

SL Corp.(b)

    111,998       1,136,102  

SM Entertainment Co. Ltd.(a)

    148,906       4,312,119  

S-Oil Corp.

    320,490       15,243,442  

Songwon Industrial Co. Ltd.

    120,354       1,241,128  

Soulbrain Co. Ltd./New(a)

    31,363       5,723,965  

Soulbrain Holdings Co. Ltd.

    39,705       1,554,241  

SPC Samlip Co. Ltd.

    20,078       1,042,859  

ST Pharm Co. Ltd.(a)

    75,018       4,092,235  

STCUBE(a)(b)

    224,805       1,706,996  

Taekwang Industrial Co. Ltd.

    3,327       1,848,489  

Taeyoung Engineering & Construction Co. Ltd.

    313,123       5,693,625  

Telcon RF Pharmaceutical Inc.(a)(b)

    586,538       2,715,682  

Tera Resource Co. Ltd.(a)(d)

    49,111       0 (e)  

TES Co. Ltd./Korea

    106,154       1,907,895  

Theragen Etex Co. Ltd.(a)(b)

    224,303       2,152,584  

Tokai Carbon Korea Co. Ltd.

    42,415       3,881,228  

Tongyang Inc.(b)

    1,133,985       1,107,351  

Tongyang Life Insurance Co. Ltd.

    487,076       1,221,893  

Toptec Co. Ltd.(b)

    176,180       2,447,150  

Ubiquoss Holdings Inc.(b)

    68,815       1,613,349  

Value Added Technology Co. Ltd.

    82,491       1,486,074  

Vieworks Co. Ltd.

    67,558       1,856,864  
Security   Shares     Value  
South Korea (continued)            

Webzen Inc.(a)

    146,192     $ 4,239,679  

Wemade Co. Ltd.(b)

    81,355       2,455,238  

Wonik Holdings Co. Ltd.(a)

    351,637       1,271,387  

WONIK IPS Co. Ltd.(a)

    224,463       6,046,650  

Woori Financial Group Inc.

    4,154,961       29,590,849  

Woori Investment Bank Co. Ltd.(a)(b)

    2,698,186       1,222,009  

YG Entertainment Inc.(a)

    87,742       3,445,715  

Youlchon Chemical Co. Ltd.(b)

    102,903       1,338,371  

Youngone Corp.

    168,120       4,443,950  

Youngone Holdings Co. Ltd.

    50,564       1,525,987  

Yuanta Securities Korea Co. Ltd.(a)

    937,178       2,382,589  

Yuhan Corp.

    355,726       20,063,677  

Yungjin Pharmaceutical Co. Ltd.(a)

    772,091       4,432,747  

Yuyang DNU Co. Ltd.(a)(b)(d)

    557,962       515,736  

Zinus Inc.

    65,554       4,657,595  
   

 

 

 
        6,281,812,322  
Taiwan — 13.2%            

AcBel Polytech Inc.(b)

    5,260,000       4,634,085  

Accton Technology Corp.(b)

    3,836,000       30,592,301  

Acer Inc.(a)

    21,224,872       16,890,778  

A-DATA Technology Co. Ltd.(b)

    1,741,820       3,086,912  

Advanced Ceramic X Corp.(b)

    371,000       4,691,001  

Advanced Wireless Semiconductor Co.(b)

    1,124,000       3,305,939  

Advantech Co. Ltd.(b)

    2,901,111       30,008,254  

Airtac International Group

    951,880       21,119,366  

Alchip Technologies Ltd.(b)

    460,000       8,262,018  

AmTRAN Technology Co. Ltd.(a)(b)

    7,362,000       2,647,073  

Arcadyan Technology Corp.(b)

    1,113,391       3,491,027  

Ardentec Corp.(b)

    3,599,546       4,017,693  

ASE Technology Holding Co. Ltd.(b)

    24,581,222       51,271,093  

Asia Cement Corp.(b)

    16,028,050       23,215,995  

Asia Optical Co. Inc.(b)

    1,842,000       4,143,346  

Asia Pacific Telecom Co. Ltd.(a)

    14,437,173       3,650,932  

Asia Vital Components Co. Ltd.(b)

    2,247,000       5,375,983  

ASMedia Technology Inc.

    210,000       12,632,278  

ASPEED Technology Inc.(b)

    182,000       7,443,382  

ASROCK Inc.(b)

    402,000       2,726,445  

Asustek Computer Inc.

    5,155,000       42,692,603  

AU Optronics Corp.(a)(b)

    63,509,000       22,618,784  

AURAS Technology Co. Ltd.(b)

    517,000       3,911,661  

Bank of Kaohsiung Co. Ltd.(b)

    21,082,837       7,257,184  

BES Engineering Corp.(b)

    13,987,000       3,894,613  

Bizlink Holding Inc.(b)

    964,926       8,122,854  

Brighton-Best International Taiwan Inc.(a)(b)

    3,920,000       3,440,179  

Capital Securities Corp.(b)

    17,472,050       6,550,195  

Career Technology MFG. Co. Ltd.(b)

    3,547,498       3,409,486  

Casetek Holdings Ltd.

    1,451,485       4,214,731  

Catcher Technology Co. Ltd.(b)

    5,123,000       35,007,123  

Cathay Financial Holding Co. Ltd.

    57,977,872       78,742,334  

Cathay Real Estate Development Co. Ltd.(b)

    5,626,900       3,739,569  

Center Laboratories Inc.(a)(b)

    2,451,070       6,707,937  

Century Iron & Steel Industrial Co. Ltd.(b)

    1,059,000       4,439,344  

Chailease Holding Co. Ltd.

    9,356,782       41,296,569  

Chang Hwa Commercial Bank Ltd.(b)

    40,366,121       25,107,159  

Charoen Pokphand Enterprise(b)

    1,438,000       3,342,419  

Chaun-Choung Technology Corp.(b)

    230,000       2,108,617  

Cheng Loong Corp.

    5,906,000       6,098,932  

Cheng Shin Rubber Industry Co. Ltd.(b)

    13,384,650       16,422,044  

Cheng Uei Precision Industry Co. Ltd.(b)

    2,894,000       4,137,597  

Chicony Electronics Co. Ltd.

    4,269,787       12,878,556  
 

 

31  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)            

Chicony Power Technology Co. Ltd.

    1,014,000     $ 2,557,333  

Chief Telecom Inc.(b)

    212,000       2,825,077  

Chilisin Electronics Corp.(b)

    1,697,000       5,708,430  

China Airlines Ltd.(a)

    19,914,000       5,796,076  

China Bills Finance Corp.(b)

    12,027,000       5,984,500  

China Development Financial Holding Corp.

    93,687,000       27,268,101  

China General Plastics Corp.(b)

    3,671,892       2,390,237  

China Life Insurance Co. Ltd.

    19,142,707       13,407,039  

China Man-Made Fiber Corp.(a)(b)

    12,225,514       3,170,805  

China Metal Products(b)

    3,056,146       2,791,429  

China Motor Corp.

    1,863,800       2,690,112  

China Petrochemical Development Corp.(b)

    23,472,245       6,895,719  

China Steel Chemical Corp.(b)

    1,170,000       3,684,474  

China Steel Corp.(b)

    85,385,529       57,910,196  

Chin-Poon Industrial Co. Ltd.(b)

    3,032,000       2,629,872  

Chipbond Technology Corp.(b)

    4,098,000       7,849,210  

ChipMOS Technologies Inc.(b)

    4,544,000       4,506,600  

Chlitina Holding Ltd.(b)

    391,000       2,791,763  

Chong Hong Construction Co. Ltd.(b)

    1,510,122       4,312,943  

Chroma ATE Inc.(b)

    2,662,000       14,606,683  

Chung Hung Steel Corp.(a)(b)

    11,132,000       3,535,956  

Chunghwa Precision Test Tech Co. Ltd.(b)

    148,000       3,551,011  

Chunghwa Telecom Co. Ltd.

    27,590,000         102,023,244  

Cleanaway Co. Ltd.

    730,000       3,955,830  

Clevo Co.(a)(b)

    3,506,175       3,537,065  

CMC Magnetics Corp.(b)

    8,991,640       2,491,421  

Compal Electronics Inc.(b)

    28,450,000       17,937,904  

Compeq Manufacturing Co. Ltd.(b)

    7,753,000       11,533,781  

Concraft Holding Co. Ltd.(b)

    725,357       2,269,406  

Continental Holdings Corp.(b)

    4,364,600       2,803,971  

Coretronic Corp.(b)

    3,336,200       3,985,270  

CSBC Corp. Taiwan(a)(b)

    2,321,712       1,958,399  

CTBC Financial Holding Co. Ltd.

    128,776,599       83,169,455  

CTCI Corp.(b)

    4,256,000       5,221,819  

Cub Elecparts Inc.(b)

    508,980       2,905,583  

Darfon Electronics Corp.(b)

    1,971,000       2,717,208  

Darwin Precisions Corp.(a)(b)

    3,822,000       1,413,312  

Delta Electronics Inc.(b)

    14,467,000       93,187,567  

Depo Auto Parts Ind. Co. Ltd.(b)

    864,000       1,456,122  

E Ink Holdings Inc.(b)

    6,446,000       9,051,180  

E.Sun Financial Holding Co. Ltd.

    85,006,938       78,802,676  

Eclat Textile Co. Ltd.(b)

    1,468,683       19,396,236  

Egis Technology Inc.

    493,000       2,805,957  

Elan Microelectronics Corp.(b)

    2,149,100       10,400,702  

Elite Material Co. Ltd.(b)

    2,069,000       11,987,458  

Elite Semiconductor Microelectronics Technology Inc.(b)

    2,003,000       2,484,849  

eMemory Technology Inc.(b)

    473,000       8,366,546  

Ennoconn Corp.(b)

    456,384       4,604,048  

Episil-Precision Inc.(b)

    812,000       1,915,049  

Epistar Corp.(a)

    8,039,000       10,931,824  

Eternal Materials Co. Ltd.(b)

    6,922,915       8,151,823  

Eva Airways Corp.

    16,137,326       6,324,804  

Evergreen Marine Corp. Taiwan Ltd.(a)

    17,461,449       10,354,931  

Everlight Chemical Industrial Corp.(b)

    5,301,781       2,891,076  

Everlight Electronics Co. Ltd.(b)

    2,930,000       3,450,113  

Far Eastern Department Stores Ltd.(b)

    7,581,167       6,704,882  

Far Eastern International Bank(b)

    19,349,042       7,385,760  

Far Eastern New Century Corp.(b)

    21,899,916       19,741,758  

Far EasTone Telecommunications Co. Ltd.

    10,716,000       22,387,772  
Security   Shares     Value  
Taiwan (continued)            

Faraday Technology Corp.(b)

    1,892,000     $ 2,798,521  

Farglory Land Development Co. Ltd.(b)

    1,953,782       3,196,208  

Feng Hsin Steel Co. Ltd.(b)

    4,110,000       7,984,254  

Feng TAY Enterprise Co. Ltd.

    3,006,387       17,469,761  

Firich Enterprises Co. Ltd.(b)

    2,716,718       2,555,473  

First Financial Holding Co. Ltd.(b)

    76,051,311       55,078,655  

FLEXium Interconnect Inc.(b)

    2,345,616       10,072,683  

Formosa Chemicals & Fibre Corp.

    25,469,210       58,852,221  

Formosa International Hotels Corp.(b)

    435,000       1,949,542  

Formosa Petrochemical Corp.(b)

    8,176,000       22,849,275  

Formosa Plastics Corp.

    27,967,800       74,538,860  

Formosa Sumco Technology Corp.(b)

    526,000       1,846,463  

Formosa Taffeta Co. Ltd.(b)

    4,961,000       5,351,316  

Foxconn Technology Co. Ltd.

    5,616,424       9,991,900  

Foxsemicon Integrated Technology Inc.

    514,000       3,345,909  

Fubon Financial Holding Co. Ltd.(b)

    47,464,000         69,235,015  

Fulgent Sun International Holding Co. Ltd.(b)

    821,000       3,525,587  

Fusheng Precision Co. Ltd.(b)

    729,000       4,298,246  

General Interface Solution Holding Ltd.(b)

    1,766,000       7,824,413  

Genius Electronic Optical Co. Ltd.(b)

    599,287       11,682,844  

Getac Technology Corp.(b)

    3,243,000       5,393,671  

Giant Manufacturing Co. Ltd.

    2,294,000       23,845,747  

Gigabyte Technology Co. Ltd.(b)

    3,874,000       11,209,468  

Ginko International Co. Ltd.(b)

    276,250       1,195,704  

Global Lighting Technologies Inc.

    625,000       2,694,562  

Global PMX Co. Ltd.(b)

    338,000       2,390,300  

Global Unichip Corp.

    644,000       5,805,361  

Globalwafers Co. Ltd.(b)

    1,609,000       21,605,780  

Gold Circuit Electronics Ltd.(a)(b)

    2,863,000       5,015,360  

Goldsun Building Materials Co. Ltd.(a)(b)

    8,843,000       6,524,920  

Gourmet Master Co. Ltd.(b)

    848,471       2,888,818  

Grand Pacific Petrochemical(a)(b)

    7,030,000       4,600,174  

Grape King Bio Ltd.(b)

    878,000       5,386,228  

Great Wall Enterprise Co. Ltd.

    4,641,789       7,158,494  

Greatek Electronics Inc.(b)

    2,705,000       4,627,950  

Hannstar Board Corp.(b)

    2,445,000       3,628,981  

HannStar Display Corp.(a)(b)

    21,247,640       5,822,164  

Highwealth Construction Corp.(b)

    4,819,230       7,621,024  

Hiwin Technologies Corp.

    1,906,717       20,924,727  

Holtek Semiconductor Inc.(b)

    1,319,000       2,868,027  

Holy Stone Enterprise Co. Ltd.(b)

    1,034,330       3,666,149  

Hon Hai Precision Industry Co. Ltd.

    93,060,928       243,899,779  

Hota Industrial Manufacturing Co. Ltd.(b)

    1,640,216       5,841,643  

Hotai Finance Co. Ltd.(b)

    1,382,000       3,805,722  

Hotai Motor Co. Ltd.(b)

    2,290,000       46,593,732  

Hsin Kuang Steel Co. Ltd.(b)

    2,843,000       2,892,270  

HTC Corp.(a)(b)

    5,662,000       5,808,367  

Hua Nan Financial Holdings Co. Ltd.(b)

    61,751,703       37,987,773  

Huaku Development Co. Ltd.(b)

    1,836,000       5,606,585  

Hung Sheng Construction Ltd.(a)

    5,045,200       2,966,096  

IBF Financial Holdings Co. Ltd.

    16,545,267       6,512,886  

IEI Integration Corp.(b)

    1,454,373       2,270,173  

Innodisk Corp.(b)

    515,740       2,794,767  

Innolux Corp.(a)(b)

    60,194,241       18,709,728  

International CSRC Investment Holdings Co.(b)

    5,635,685       3,956,686  

International Games System Co. Ltd.(b)

    468,000       14,036,092  

Inventec Corp.

    17,727,000       13,744,671  

ITEQ Corp.(b)

    1,650,604       6,722,464  

Jentech Precision Industrial Co. Ltd.(b)

    555,000       5,788,048  

Jih Sun Financial Holdings Co. Ltd.

    11,365,314       4,028,399  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  32


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)            

Johnson Health Tech Co. Ltd.(b)

    865,000     $ 2,267,045  

Kenda Rubber Industrial Co. Ltd.(b)

    4,185,889       4,565,153  

Kindom Development Co. Ltd.

    2,678,000       3,605,167  

King Slide Works Co. Ltd.(b)

    437,000       4,535,095  

King Yuan Electronics Co. Ltd.(b)

    7,735,000       8,224,937  

King’s Town Bank Co. Ltd.(b)

    6,492,000       8,086,928  

Kinpo Electronics(b)

    10,240,000       4,013,428  

Kinsus Interconnect Technology Corp.(b)

    2,139,000       4,651,030  

LandMark Optoelectronics Corp.(b)

    556,900       4,669,066  

Largan Precision Co. Ltd.(b)

    751,000       86,639,572  

Lealea Enterprise Co. Ltd.(a)(b)

    6,698,173       2,095,640  

Lien Hwa Industrial Holdings Corp.(b)

    5,602,934       8,029,698  

Lite-On Technology Corp.(b)

    15,380,238       24,321,969  

Longchen Paper & Packaging Co. Ltd.(b)

    5,354,646       3,184,519  

Lotes Co. Ltd.

    573,722       8,368,796  

Lotus Pharmaceutical Co. Ltd.(a)(b)

    753,000       2,060,764  

Machvision Inc.(b)

    275,094       2,615,791  

Macronix International(b)

    13,506,554       13,901,741  

Makalot Industrial Co. Ltd.

    1,509,568       10,161,024  

Marketech International Corp.(b)

    669,000       2,553,653  

MediaTek Inc.

    11,324,572       214,592,370  

Mega Financial Holding Co. Ltd.(b)

    79,622,958       79,374,658  

Mercuries Life Insurance Co. Ltd.(a)(b)

    10,924,000       3,507,117  

Merida Industry Co. Ltd.

    1,629,850       13,609,163  

Merry Electronics Co. Ltd.(b)

    1,376,051       7,222,257  

Micro-Star International Co. Ltd.

    5,134,000       23,708,979  

Mitac Holdings Corp.(b)

    6,961,053       6,856,310  

momo.com Inc.(b)

    296,000       7,354,225  

Nan Kang Rubber Tire Co. Ltd.(b)

    3,488,000       5,581,228  

Nan Liu Enterprise Co. Ltd.(b)

    325,000       2,990,645  

Nan Pao Resins Chemical Co. Ltd.

    350,000       1,514,919  

Nan Ya Plastics Corp.

    37,637,440       78,888,351  

Nan Ya Printed Circuit Board Corp.(a)(b)

    1,764,000       7,244,415  

Nantex Industry Co. Ltd.(b)

    2,177,000       3,483,467  

Nanya Technology Corp.(b)

    8,931,000       15,797,383  

Newmax Technology Co. Ltd.(a)(b)

    781,000       1,225,740  

Nien Made Enterprise Co. Ltd.

    1,250,000       14,399,400  

Novatek Microelectronics Corp.(b)

    4,358,000       35,646,439  

OBI Pharma Inc.(a)

    1,129,258       4,599,163  

Oneness Biotech Co. Ltd.(a)

    1,404,000         16,245,182  

Oriental Union Chemical Corp.(b)

    4,990,000       2,899,630  

Pan Jit International Inc.(b)

    2,297,200       2,873,310  

Pan-International Industrial Corp.(b)

    4,227,366       2,550,121  

Parade Technologies Ltd.(b)

    556,000       19,707,241  

PChome Online Inc.(b)

    777,070       2,966,169  

Pegatron Corp.(b)

    14,445,000       30,769,132  

PharmaEngine Inc.(b)

    930,793       2,277,693  

PharmaEssentia Corp.(a)

    1,388,587       5,395,052  

Pharmally International Holding Co. Ltd.(d)

    597,543       1,152,665  

Phison Electronics Corp.(b)

    1,126,000       10,630,063  

Pixart Imaging Inc.(b)

    1,000,000       5,879,045  

Pou Chen Corp.

    15,831,000       14,945,340  

Power Wind Health Industry Inc.

    312,958       1,829,228  

Powertech Technology Inc.

    5,333,000       15,703,737  

Poya International Co. Ltd.(b)

    418,447       8,200,229  

President Chain Store Corp.(b)

    4,064,000       37,396,861  

President Securities Corp.

    7,625,657       4,236,260  

Primax Electronics Ltd.(b)

    3,096,000       4,716,569  

Prince Housing & Development Corp.(b)

    9,421,995       3,291,428  

Qisda Corp.(b)

    11,227,000       7,116,957  
Security   Shares     Value  
Taiwan (continued)            

Quanta Computer Inc.(b)

    21,163,000     $ 55,537,413  

Quanta Storage Inc.(b)

    1,552,000       2,322,063  

Radiant Opto-Electronics Corp.

    3,220,000       11,852,155  

Radium Life Tech Co. Ltd.

    6,000,279       2,126,780  

Realtek Semiconductor Corp.

    3,657,110       47,363,011  

Rexon Industrial Corp. Ltd.(b)

    976,000       3,342,978  

RichWave Technology Corp.

    419,000       3,155,905  

Ritek Corp.(a)

    11,870,583       2,374,804  

Roo Hsing Co. Ltd.(a)(b)

    3,983,000       1,690,041  

Ruentex Development Co. Ltd.(b)

    6,326,086       9,314,006  

Ruentex Industries Ltd.(b)

    2,599,943       6,167,239  

Sanyang Motor Co. Ltd.(b)

    4,223,000       3,411,042  

ScinoPharm Taiwan Ltd.(b)

    2,242,027       2,513,937  

SDI Corp.(b)

    1,191,000       1,936,189  

Sercomm Corp.

    1,830,000       4,852,308  

Shanghai Commercial & Savings Bank Ltd. (The)(b)

    25,519,346         36,354,946  

Shin Kong Financial Holding Co. Ltd.(b)

    81,193,727       22,967,740  

Shin Zu Shing Co. Ltd.(b)

    1,410,905       7,260,933  

Shining Building Business Co. Ltd.(a)(b)

    6,430,184       2,202,456  

Shinkong Synthetic Fibers Corp.(b)

    11,201,000       4,657,301  

Sigurd Microelectronics Corp.(b)

    3,597,700       4,677,752  

Simplo Technology Co. Ltd.(b)

    1,364,400       15,577,731  

Sinbon Electronics Co. Ltd.

    1,733,809       10,665,867  

Sino-American Silicon Products Inc.

    3,712,000       12,195,586  

SinoPac Financial Holdings Co. Ltd.

    74,455,660       27,405,590  

Sinyi Realty Inc.(b)

    3,260,704       3,261,649  

Sitronix Technology Corp.(b)

    956,000       4,691,785  

Soft-World International Corp.(b)

    749,000       2,348,483  

Sporton International Inc.(b)

    624,000       5,742,038  

St. Shine Optical Co. Ltd.(b)

    346,000       3,490,483  

Standard Foods Corp.(b)

    3,207,096       6,962,562  

Sunny Friend Environmental Technology Co. Ltd.

    555,000       4,653,136  

Sunonwealth Electric Machine Industry Co. Ltd.(b)

    1,630,000       3,488,711  

Supreme Electronics Co. Ltd.(b)

    2,941,000       2,986,957  

Synnex Technology International Corp.

    9,626,250       14,336,933  

Systex Corp.(b)

    1,168,000       3,475,160  

TA Chen Stainless Pipe(b)

    6,879,567       4,982,390  

Taichung Commercial Bank Co. Ltd.

    18,321,595       6,962,350  

TaiDoc Technology Corp.(b)

    411,000       2,864,526  

Taigen Biopharmaceuticals Holdings Ltd.(a)(b)

    2,801,000       2,229,039  

TaiMed Biologics Inc.(a)

    1,418,000       5,557,657  

Tainan Spinning Co. Ltd.(b)

    10,255,894       4,089,565  

Taishin Financial Holding Co. Ltd.(b)

    67,687,803       30,566,378  

Taiwan Business Bank(b)

    37,618,725       12,820,996  

Taiwan Cement Corp.(b)

    36,012,575       52,653,732  

Taiwan Cogeneration Corp.

    3,896,000       4,979,296  

Taiwan Cooperative Financial Holding Co. Ltd.

    68,918,072       47,093,957  

Taiwan Fertilizer Co. Ltd.(b)

    5,516,000       10,208,026  

Taiwan Glass Industry Corp.(a)(b)

    11,179,053       4,381,477  

Taiwan High Speed Rail Corp.

    14,815,000       16,409,778  

Taiwan Hon Chuan Enterprise Co. Ltd.

    2,445,674       4,901,100  

Taiwan Mobile Co. Ltd.

    11,669,000       40,366,154  

Taiwan Paiho Ltd.(b)

    2,065,000       5,559,873  

Taiwan Secom Co. Ltd.(b)

    2,112,185       6,118,833  

Taiwan Semiconductor Co. Ltd.(b)

    2,064,000       2,637,902  

Taiwan Semiconductor Manufacturing Co. Ltd.

    184,668,000       2,684,283,421  

Taiwan Shin Kong Security Co. Ltd.

    4,805,577       5,953,435  

Taiwan Styrene Monomer(b)

    4,629,000       2,484,766  

Taiwan Surface Mounting Technology Corp.(b)

    1,946,000       7,892,371  

Taiwan TEA Corp.(a)

    7,630,000       4,290,680  
 

 

33  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)            

Taiwan Union Technology Corp.(b)

    1,776,000     $ 7,202,904  

Tanvex BioPharma Inc.(a)(b)

    1,043,738       1,428,219  

TCI Co. Ltd.(b)

    747,446       8,164,424  

Teco Electric and Machinery Co. Ltd.(b)

    13,145,000       13,126,408  

Test Research Inc.(b)

    1,500,400       3,006,783  

Test Rite International Co. Ltd.

    5,731,000       4,414,246  

Thinking Electronic Industrial Co. Ltd.(b)

    802,000       2,979,330  

Ton Yi Industrial Corp.(a)(b)

    8,264,000       2,737,627  

Tong Hsing Electronic Industries Ltd.(a)

    1,498,000       6,764,651  

Tong Yang Industry Co. Ltd.

    3,005,400       3,963,975  

Topco Scientific Co. Ltd.

    1,587,639       6,493,079  

TPK Holding Co. Ltd.(a)(b)

    2,503,000       4,197,045  

Transcend Information Inc.(a)(b)

    1,759,000       3,950,653  

Tripod Technology Corp.(b)

    3,020,000       11,939,403  

TSRC Corp.(b)

    5,231,900       3,129,351  

TTY Biopharm Co. Ltd.(b)

    1,714,124       4,054,333  

Tung Ho Steel Enterprise Corp.(b)

    7,931,000       7,230,518  

TXC Corp.

    2,375,000       6,256,923  

U-Ming Marine Transport Corp.

    4,277,000       4,372,987  

Unimicron Technology Corp.(b)

    9,134,000       22,911,658  

Union Bank of Taiwan

    6,390,928       2,232,572  

Uni-President Enterprises Corp.

    35,601,369       80,808,792  

Unitech Printed Circuit Board Corp.(b)

    4,697,000       3,313,665  

United Integrated Services Co. Ltd.(b)

    1,223,400       8,589,213  

United Microelectronics Corp.(b)

    86,728,000       62,663,245  

United Renewable Energy Co. Ltd.(a)

    18,037,388       7,100,245  

UPC Technology Corp.(b)

    7,262,365       3,168,150  

USI Corp.(b)

    9,515,300       4,215,834  

Vanguard International Semiconductor Corp.(b)

    6,602,000         21,038,018  

Via Technologies Inc.(a)

    1,673,000       2,360,554  

Visual Photonics Epitaxy Co. Ltd.(b)

    1,221,000       3,208,394  

Voltronic Power Technology Corp.(a)

    464,272       16,376,856  

Wafer Works Corp.(b)

    3,805,404       4,513,336  

Wah Lee Industrial Corp.

    2,113,000       4,075,995  

Walsin Lihwa Corp.(b)

    19,322,000       11,096,082  

Walsin Technology Corp.(b)

    2,388,597       13,025,085  

Win Semiconductors Corp.(b)

    2,511,427       24,479,598  

Winbond Electronics Corp.(b)

    21,413,480       8,867,092  

Wistron Corp.

    21,516,004       23,392,142  

Wistron NeWeb Corp.(b)

    2,391,654       6,724,655  

Wiwynn Corp.(b)

    609,000       16,230,868  

WPG Holdings Ltd.

    10,441,200       14,625,473  

WT Microelectronics Co. Ltd.(b)

    2,807,734       3,736,756  

XinTec Inc.(a)(b)

    1,316,000       5,539,117  

XPEC Entertainment Inc.(a)(d)

    31,000       0 (e)  

Xxentria Technology Materials Corp.

    1,412,000       2,502,394  

Yageo Corp.(b)

    2,784,454       31,601,083  

Yang Ming Marine Transport Corp.(a)

    11,186,677       3,850,704  

YFY Inc.(b)

    11,058,000       6,896,764  

Yieh Phui Enterprise Co. Ltd.(a)(b)

    12,791,026       4,141,395  

Yuanta Financial Holding Co. Ltd.

    73,150,388       45,872,472  

Yulon Finance Corp.

    1,327,920       4,512,163  

Yulon Motor Co. Ltd.(a)(b)

    6,979,000       6,017,712  

YungShin Global Holding Corp.(b)

    2,336,650       3,507,981  

Zhen Ding Technology Holding Ltd.(b)

    4,357,950       18,268,591  
   

 

 

 
      7,201,661,436  
Thailand — 2.0%            

Advanced Info Service PCL, NVDR

    8,984,800       52,830,537  

Airports of Thailand PCL, NVDR(b)

    32,416,100       58,327,628  

Amata Corp. PCL, NVDR(b)

    8,546,700       3,624,916  
Security   Shares     Value  
Thailand (continued)            

AP Thailand PCL, NVDR

    23,848,090     $ 4,827,471  

B Grimm Power PCL, NVDR

    6,037,300       8,971,809  

Bangchak Corp. PCL, NVDR

    9,069,600       5,158,066  

Bangkok Airways PCL, NVDR(b)

    9,891,300       1,827,455  

Bangkok Bank PCL, Foreign

    4,199,500       14,370,528  

Bangkok Chain Hospital PCL, NVDR

    13,067,050       6,549,795  

Bangkok Commercial Asset Management PCL, NVDR(b)

    13,551,300         10,145,242  

Bangkok Dusit Medical Services PCL, NVDR(b)

    71,715,100       47,929,121  

Bangkok Expressway & Metro PCL, NVDR

    60,487,885       17,589,055  

Bangkok Land PCL, NVDR

    134,782,600       4,287,405  

Banpu PCL, NVDR

    32,022,200       5,916,223  

BCPG PCL, NVDR(b)

    7,702,200       3,167,746  

Berli Jucker PCL, NVDR(b)

    9,050,800       10,760,048  

BTS Group Holdings PCL, NVDR

    63,416,700       21,191,539  

Bumrungrad Hospital PCL, NVDR

    3,059,500       10,862,712  

Central Pattana PCL, NVDR

    17,664,600       26,676,398  

Central Retail Corp. PCL, NVDR(a)(b)

    13,764,617       13,157,598  

CH Karnchang PCL, NVDR

    10,361,800       6,425,664  

Charoen Pokphand Foods PCL, NVDR

    30,466,200       31,569,924  

Chularat Hospital PCL, NVDR

    55,093,000       4,602,516  

CK Power PCL, NVDR(a)(b)

    25,214,800       4,901,584  

CP ALL PCL, NVDR(a)

    43,936,200       89,644,106  

Dynasty Ceramic PCL, NVDR(b)

    39,829,920       3,301,830  

Eastern Polymer Group PCL, NVDR(b)

    12,466,700       1,890,684  

Electricity Generating PCL, NVDR

    2,246,800       16,026,656  

Energy Absolute PCL, NVDR(b)

    11,533,000       15,563,853  

Esso Thailand PCL, NVDR(a)(b)

    11,738,900       2,489,412  

GFPT PCL, NVDR(b)

    6,756,100       2,800,343  

Global Power Synergy PCL, NVDR(b)

    5,453,200       11,213,906  

Gulf Energy Development PCL, NVDR

    16,777,500       16,981,003  

Gunkul Engineering PCL, NVDR

    52,717,241       4,302,411  

Hana Microelectronics PCL, NVDR

    4,890,500       6,246,201  

Home Product Center PCL, NVDR

    47,369,375       22,678,245  

Indorama Ventures PCL, NVDR(b)

    12,853,100       9,787,725  

Intouch Holdings PCL, NVDR(b)

    17,276,500       30,253,651  

IRPC PCL, NVDR(b)

    84,679,600       6,366,785  

Jasmine International PCL, NVDR(b)

    33,127,300       3,086,808  

Kasikornbank PCL, Foreign(b)

    8,802,000       23,827,408  

Kasikornbank PCL, NVDR

    4,560,100       12,344,395  

KCE Electronics PCL, NVDR(b)

    6,603,800       6,206,479  

Khon Kaen Sugar Industry PCL, NVDR

    24,887,286       1,631,298  

Kiatnakin Phatra Bank PCL, NVDR(a)(b)

    2,144,200       2,738,596  

Krung Thai Bank PCL, NVDR

    24,208,000       7,428,272  

Land & Houses PCL, NVDR

    62,103,600       14,766,379  

Major Cineplex Group PCL, NVDR(b)

    6,682,300       3,757,418  

MBK PCL, NVDR(b)

    10,534,400       4,231,023  

Mega Lifesciences PCL, NVDR(b)

    3,567,400       4,327,074  

Minor International PCL, NVDR(a)(b)

    23,596,460       16,983,234  

Muangthai Capital PCL, NVDR(a)

    5,860,700       9,368,458  

Origin Property PCL, NVDR(a)

    10,090,600       2,399,243  

Osotspa PCL, NVDR

    5,888,400       7,331,529  

Plan B Media PCL, NVDR(b)

    18,135,700       3,204,959  

Prima Marine PCL, NVDR(b)

    9,503,400       2,717,656  

PTG Energy PCL, NVDR

    7,148,000       4,432,690  

PTT Exploration & Production PCL, NVDR

    10,368,501       29,650,465  

PTT Global Chemical PCL, NVDR

    17,147,600       25,482,416  

PTT PCL, NVDR

    85,695,300       99,125,417  

Quality Houses PCL, NVDR(b)

    79,632,717       5,680,284  

Ratch Group PCL, NVDR

    6,136,100       11,040,938  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  34


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Thailand (continued)            

Ratchthani Leasing PCL, NVDR(b)

    18,000,650     $ 2,116,873  

RS PCL, NVDR(b)

    4,771,500       2,882,294  

Siam Cement PCL (The), NVDR

    5,856,200       66,610,806  

Siam Commercial Bank PCL (The), NVDR

    6,346,500       14,784,200  

Siamgas & Petrochemicals PCL, NVDR(b)

    7,731,900       2,223,488  

Singha Estate PCL, NVDR(b)

    38,265,200       1,770,484  

Sino-Thai Engineering & Construction PCL, NVDR(b)

    8,573,228       3,636,167  

Sri Trang Agro-Industry PCL, NVDR(a)(b)

    7,606,460       6,354,501  

Srisawad Corp PCL, NVDR

    6,128,949       9,009,540  

Supalai PCL, NVDR(b)

    12,732,900       6,873,250  

Super Energy Corp. PCL, NVDR

    144,657,400       3,811,361  

Taokaenoi Food & Marketing PCL, Class R, NVDR(b)

    5,900,500       2,028,608  

Thai Airways International PCL, NVDR(a)(b)

    9,454,500       1,008,561  

Thai Oil PCL, NVDR(b)

    8,662,800       11,551,328  

Thai Union Group PCL, NVDR

    23,435,200       10,617,281  

Thai Vegetable Oil PCL, NVDR

    5,058,300       4,388,275  

Thanachart Capital PCL, NVDR

    2,983,800       3,091,897  

Thonburi Healthcare Group PCL, NVDR(b)

    5,937,900       3,701,350  

TMB Bank PCL, NVDR

    184,465,927       5,571,467  

Total Access Communication PCL, NVDR(b)

    5,620,700       6,456,423  

TPI Polene PCL, NVDR(b)

    56,668,600       2,294,238  

True Corp. PCL, NVDR(b)

    87,709,911       9,356,475  

TTW PCL, NVDR

    16,347,300       7,038,439  

WHA Corp. PCL, NVDR(b)

    72,930,700       7,498,698  
   

 

 

 
        1,111,656,234  
Turkey — 0.4%            

Akbank T.A.S.(a)

    22,078,172       14,670,779  

Aksa Akrilik Kimya Sanayii AS

    2,006,691       1,826,991  

Anadolu Efes Biracilik Ve Malt Sanayii AS

    1,730,913       4,570,137  

Aselsan Elektronik Sanayi Ve Ticaret AS(b)

    5,492,016       12,119,899  

BIM Birlesik Magazalar AS

    3,427,155       31,598,378  

Coca-Cola Icecek AS

    634,331       3,725,477  

Dogan Sirketler Grubu Holding AS(b)

    10,218,794       2,916,085  

Emlak Konut Gayrimenkul Yatirim Ortakligi AS

    14,669,518       3,508,405  

Enerjisa Enerji AS(c)

    1,688,026       1,871,761  

Eregli Demir ve Celik Fabrikalari TAS

    10,431,341       12,360,551  

Ford Otomotiv Sanayi AS

    569,072       6,534,391  

Haci Omer Sabanci Holding AS

    6,512,752       6,841,089  

Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS, Class D(b)

    7,829,809       3,245,131  

KOC Holding AS

    5,080,445       10,286,538  

Koza Altin Isletmeleri AS(a)(b)

    282,288       2,980,538  

Koza Anadolu Metal Madencilik Isletmeleri AS(a)(b)

    1,736,971       3,033,031  

Mavi Giyim Sanayi Ve Ticaret AS, Class B(a)(b)(c)

    354,231       1,789,687  

Migros Ticaret AS(a)(b)

    689,300       3,673,644  

MLP Saglik Hizmetleri AS(a)(c)

    751,463       1,562,357  

Pegasus Hava Tasimaciligi AS(a)(b)

    300,790       1,872,018  

Petkim Petrokimya Holding AS(a)(b)

    7,940,581       4,219,007  

Sasa Polyester Sanayi AS(a)(b)

    1,487,473       3,048,117  

Soda Sanayii AS(b)

    3,361,082       3,110,337  

Sok Marketler Ticaret AS(a)

    1,616,889       2,823,349  

TAV Havalimanlari Holding AS

    1,479,960       3,016,633  

Tekfen Holding AS(b)

    1,433,702       2,889,224  

Trakya Cam Sanayii AS(b)

    4,672,513       2,495,309  

Tupras Turkiye Petrol Rafinerileri AS(a)(b)

    915,982       9,957,679  

Turk Hava Yollari AO(a)(b)

    4,356,585       6,251,602  

Turkcell Iletisim Hizmetleri AS

    8,182,579       15,922,616  

Turkiye Garanti Bankasi AS(a)

    16,535,244       15,189,326  
Security   Shares     Value  
Turkey (continued)            

Turkiye Halk Bankasi AS(a)

    1,165,961     $ 777,941  

Turkiye Is Bankasi AS, Class C(a)

    10,818,922       7,218,495  

Ulker Biskuvi Sanayi AS(a)

    1,325,465       4,124,630  

Yapi ve Kredi Bankasi AS(a)(b)

    20,423,604       5,633,906  
   

 

 

 
      217,665,058  
United Arab Emirates — 0.5%            

Abu Dhabi Commercial Bank PJSC

    21,253,428       32,055,318  

Air Arabia PJSC

    20,807,743       6,571,194  

Aldar Properties PJSC

    29,095,940       16,080,138  

Amanat Holdings PJSC

    11,626,916       2,700,069  

Dana Gas PJSC

    29,304,021       5,815,889  

Deyaar Development PJSC(a)

    24,949,248       2,044,491  

Dubai Financial Market PJSC

    11,828,303       2,791,919  

Dubai Investments PJSC

    16,855,843       5,598,500  

Dubai Islamic Bank PJSC

    13,267,496       14,809,287  

DXB Entertainments PJSC(a)

    40,366,869       1,318,766  

Emaar Malls PJSC(a)

    19,757,566       7,476,694  

Emaar Properties PJSC(a)

    27,120,009       21,263,936  

Emirates NBD Bank PJSC

    18,581,847       54,635,380  

Emirates Telecommunications Group Co. PJSC

    13,254,716       59,757,455  

First Abu Dhabi Bank PJSC

    20,675,766       64,507,107  

Union Properties PJSC(a)

    17,916,960       1,507,246  
   

 

 

 
      298,933,389  
   

 

 

 

Total Common Stocks — 96.6%
(Cost: $44,215,714,732)

      52,802,204,154  
   

 

 

 

Preferred Stocks

   
Brazil — 1.3%            

Azul SA, Preference Shares, NVS

    2,149,879       8,703,916  

Banco ABC Brasil SA, Preference Shares, NVS

    839,563       2,056,860  

Banco Bradesco SA, Preference Shares, NVS

    32,915,786       124,441,459  

Banco do Estado do Rio Grande do Sul SA, Class B, Preference Shares, NVS

    1,516,179       3,626,072  

Banco Pan SA, Preference Shares, NVS

    2,564,900       3,960,098  

Bradespar SA, Preference Shares, NVS

    1,671,200       13,400,916  

Braskem SA, Class A, Preference Shares, NVS

    1,438,700       5,583,391  

Centrais Eletricas Brasileiras SA, Class B, Preference Shares, NVS

    1,916,100       12,535,560  

Cia. de Saneamento do Parana, Preference Shares, NVS

    2,207,619       2,128,785  

Cia. Energetica de Minas Gerais, Preference Shares, NVS

    7,241,268       13,899,370  

Cia. Energetica de Sao Paulo, Class B, Preference Shares, NVS

    1,407,600       7,723,210  

Cia. Paranaense de Energia, Preference Shares, NVS

    787,000       8,862,878  

Gerdau SA, Preference Shares, NVS

    8,310,374       28,918,690  

Gol Linhas Aereas Inteligentes SA, Preference Shares, NVS(a)

    1,261,200       4,112,884  

Itau Unibanco Holding SA, Preference Shares, NVS

    36,001,382       154,547,576  

Itausa SA, Preference Shares, NVS

    32,687,277       56,187,867  

Lojas Americanas SA, Preference Shares, NVS

    6,871,027       40,417,806  

Marcopolo SA, Preference Shares, NVS

    4,278,179       2,199,177  

Metalurgica Gerdau SA, Preference Shares, NVS

    5,864,636       9,396,845  

Petroleo Brasileiro SA, Preference Shares, NVS

    35,736,508       142,596,868  

Randon SA Implemetos e Participacoes, Preference Shares, NVS

    1,530,300       2,993,150  

Telefonica Brasil SA, Preference Shares, NVS

    3,290,440       28,694,407  
 

 

35  

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Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Brazil (continued)            

Unipar Carbocloro SA, Preference Shares, NVS

    442,094     $ 2,403,920  

Usinas Siderurgicas de Minas Gerais SA Usiminas, Class A, Preference Shares, NVS

    3,158,000       5,842,925  
   

 

 

 
      685,234,630  
Chile — 0.1%            

Embotelladora Andina SA, Class B, Preference Shares

    2,776,328       5,928,026  

Sociedad Quimica y Minera de Chile SA, Class B, Preference Shares

    862,823       27,037,131  
   

 

 

 
      32,965,157  
Colombia — 0.0%            

Bancolombia SA, Preference Shares, NVS

    3,479,200       24,790,592  
   

 

 

 
Russia — 0.0%            

Surgutneftegas PJSC, Preference Shares, NVS

    51,845,277       25,971,407  
   

 

 

 
South Korea — 0.6%            

Amorepacific Corp., Preference Shares, NVS

    66,201       3,327,047  

Hyundai Motor Co.
Preference Shares, NVS

    169,513       12,414,876  

Series 2, Preference Shares, NVS

    271,514       20,205,268  

LG Chem Ltd., Preference Shares, NVS(b)

    57,633         18,193,766  

LG Household & Health Care Ltd., Preference Shares, NVS

    15,738       9,287,262  

Samsung Electronics Co. Ltd., Preference Shares, NVS

    6,168,327       246,649,998  
   

 

 

 
      310,078,217  
   

 

 

 

Total Preferred Stocks — 2.0%
(Cost: $1,214,066,736)

      1,079,040,003  
   

 

 

 

Rights

   
Chile — 0.0%            

Cia Sud Americana de Vapores SA,
(Expires 09/25/20)(a)

    36,885,236       142,772  
   

 

 

 
China — 0.0%            

Legend Holdings Corp. Class H,
(Expires 10/30/20)(a)(d)

    221,423       0 (e)  
   

 

 

 
India — 0.0%            

Minda Industries Ltd.,
(Expires 09/08/20)(a)

    22,425       21,402  
   

 

 

 
Thailand — 0.0%            

Gulf Energy Development PCL,
(Expires 09/16/20)(a)

    1,712,579       82,540  

Ratchthani Leasing PCL,
(Expires 10/07/20)(a)

    8,112,075       693,329  
   

 

 

 
      775,869  
   

 

 

 

Total Rights — 0.0%
(Cost: $678,100)

      940,043  
   

 

 

 
Security   Shares     Value  

 

 

Warrants

   
Brazil — 0.0%            

CVC Brasil Operadora e Agencia de Viagens SA (Expires 01/29/21)(a)

    176,689     $ 233,887  
   

 

 

 
Thailand — 0.0%            

Srisawad Corp. PCL
(Expires 08/17/21)(a)(d)

    245,157       0 (e)  
   

 

 

 

Total Warrants — 0.0%
(Cost: $0)

      233,887  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 5.5%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 0.37%(g)(h)(i)

    2,393,556,486       2,395,950,043  

BlackRock Cash Funds: Treasury, SL Agency Shares, 0.07%(g)(h)

    590,951,000       590,951,000  
   

 

 

 
      2,986,901,043  
   

 

 

 

Total Short-Term Investments — 5.5%
(Cost: $2,985,338,247)

 

    2,986,901,043  
   

 

 

 

Total Investments in Securities — 104.1%
(Cost: $48,415,797,815)

 

    56,869,319,130  

Other Assets, Less Liabilities — (4.1)%

 

    (2,240,938,111
   

 

 

 

Net Assets — 100.0%

    $   54,628,381,019  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

Rounds to less than $1.

(f) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(g) 

Affiliate of the Fund.

(h) 

Annualized 7-day yield as of period-end.

(i) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  36


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

      Affiliated Issuer   Value at
08/31/19
   

Purchases

at Cost

   

Proceeds

from Sales

    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
   

Shares

Held at

08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

   

   

 
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 2,015,545,961     $ 379,896,325 (a)    $     $ (90,134   $ 597,891     $ 2,395,950,043       2,393,556,486     $ 47,190,575 (b)    $    
 

BlackRock Cash Funds: Treasury,
SL Agency Shares

    139,883,000       451,068,000 (a)                        590,951,000       590,951,000       1,273,132          
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ (90,134   $ 597,891     $ 2,986,901,043       $ 48,463,707     $    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
    Expiration
Date
    Notional
Amount
(000)
    Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

        

MSCI Emerging Markets E-Mini Index

     12,829       09/18/20     $ 705,852     $ 74,892,386  
        

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Consolidated Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

 

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 74,892,386  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Consolidated Schedule of Investments. In the Consolidated Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Consolidated Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 115,966,709  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 82,830,088  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 336,954,990  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Consolidated Financial Statements.

 

37  

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Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® Core MSCI Emerging Markets ETF

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Consolidated Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Consolidated Schedule of Investments above.

 

                                                                                                           

 

 
     Level 1        Level 2        Level 3      Total  

 

 

Investments

               

Assets

               

Common Stocks

   $ 52,768,748,106        $ 13,129,309        $ 20,326,739      $ 52,802,204,154  

Preferred Stocks

     1,079,040,003                          1,079,040,003  

Rights

     21,402          918,641          0 (a)        940,043  

Warrants

              233,887          0 (a)        233,887  

Money Market Funds

     2,986,901,043                          2,986,901,043  
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 56,834,710,554        $ 14,281,837        $ 20,326,739      $ 56,869,319,130  
  

 

 

      

 

 

      

 

 

    

 

 

 

Derivative financial instruments(b)

               

Assets

               

Futures Contracts

   $ 74,892,386        $        $      $ 74,892,386  
  

 

 

      

 

 

      

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 
  (b) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to consolidated financial statements.

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  38


Consolidated Schedule of Investments

August 31, 2020

  

iShares® MSCI BRIC ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Brazil — 6.3%

   

Ambev SA

    161,215     $ 361,756  

Atacadao SA

    18,600       66,284  

B2W Cia. Digital(a)

    6,220       127,089  

B3 SA - Brasil, Bolsa, Balcao

    86,869       931,096  

Banco Bradesco SA

    55,948       194,078  

Banco BTG Pactual SA

    12,400       181,573  

Banco do Brasil SA

    31,089       185,030  

Banco Santander Brasil SA

    18,600       95,884  

BB Seguridade Participacoes SA

    24,800       119,255  

BRF SA(a)

    24,800       88,560  

CCR SA

    49,600       120,521  

Centrais Eletricas Brasileiras SA

    15,675       101,464  

Cia Brasileira de Distribuicao

    9,756       112,945  

Cia. de Saneamento Basico do Estado de Sao Paulo

    12,400       107,931  

Cia. Siderurgica Nacional SA

    24,800       68,760  

Cielo SA

    49,621       41,246  

Cogna Educacao

    62,064       64,486  

Cosan SA

    6,200       94,087  

Energisa SA

    6,200       49,106  

Engie Brasil Energia SA

    8,525       66,246  

Equatorial Energia SA

    31,000       131,100  

Hapvida Participacoes e Investimentos SA(b)

    6,200       73,156  

Hypera SA

    12,400       71,540  

IRB Brasil Resseguros S/A

    13,200       17,156  

IRB Brasil Resseguros S/A(a)

    11,680       14,733  

JBS SA

    43,452       177,740  

Klabin SA

    31,000       145,227  

Localiza Rent a Car SA

    26,482       232,820  

Lojas Renner SA

    31,016       245,769  

Magazine Luiza SA

    31,000       526,772  

Multiplan Empreendimentos Imobiliarios SA

    12,430       47,174  

Natura & Co. Holding SA

    31,093       279,649  

Notre Dame Intermedica Participacoes SA

    18,600       251,237  

Petrobras Distribuidora SA

    31,000       120,589  

Petroleo Brasileiro SA

    155,000       630,635  

Porto Seguro SA

    6,200       59,741  

Raia Drogasil SA

    9,740       191,395  

Rumo SA(a)

    43,400       178,793  

Sul America SA

    12,489       98,302  

Suzano SA(a)

    24,815       227,075  

TIM Participacoes SA

    37,269       97,284  

Ultrapar Participacoes SA

    24,800       87,882  

Vale SA

    142,629       1,551,632  

Via Varejo SA(a)

    49,600       185,348  

WEG SA

    37,272       439,038  
   

 

 

 
        9,259,184  
China — 72.2%            

360 Security Technology Inc., Class A

    31,099       84,818  

3SBio Inc.(a)(b)

    62,000       72,799  

51job Inc., ADR(a)(c)

    1,302       85,333  

58.com Inc., ADR(a)(c)

    5,270       291,747  

AAC Technologies Holdings Inc.

    31,000       195,596  

AECC Aviation Power Co. Ltd., Class A

    6,200       40,409  

Agricultural Bank of China Ltd., Class A

    148,800       69,738  

Agricultural Bank of China Ltd., Class H

    992,000       331,514  

Aier Eye Hospital Group Co. Ltd., Class A

    16,660       126,413  

Air China Ltd., Class H

    124,000       85,438  

Aisino Corp., Class A

    12,400       32,606  
Security   Shares     Value  
China (continued)            

Alibaba Group Holding Ltd., ADR(a)

    68,736     $   19,729,294  

Alibaba Health Information Technology Ltd.(a)

    124,000       299,514  

Alibaba Pictures Group Ltd.(a)

    620,000       87,998  

A-Living Services Co. Ltd., Class H(b)

    15,500       79,998  

Aluminum Corp. of China Ltd., Class A(a)

    55,800       25,745  

Aluminum Corp. of China Ltd., Class H(a)

    124,000       30,399  

Angang Steel Co. Ltd., Class A

    6,020       2,364  

Anhui Conch Cement Co. Ltd., Class H

    62,000       449,591  

Anhui Gujing Distillery Co. Ltd., Class B

    6,200       78,718  

ANTA Sports Products Ltd.

    43,040       425,116  

Autohome Inc., ADR

    3,410       273,618  

AVIC Aircraft Co. Ltd., Class A

    6,200       21,906  

Avic Capital Co. Ltd., Class A

    24,899       18,286  

AVIC Electromechanical Systems Co. Ltd., Class A

    12,400       18,702  

AviChina Industry & Technology Co. Ltd., Class H

    124,000       77,439  

BAIC BluePark New Energy Technology Co. Ltd., Class A(a)

    12,400       11,677  

BAIC Motor Corp. Ltd., Class H(b)

    62,000       29,679  

Baidu Inc., ADR(a)

    11,284       1,405,648  

Bank of Beijing Co. Ltd., Class A

    69,490       49,410  

Bank of Chengdu Co. Ltd., Class A

    12,400       18,394  

Bank of China Ltd., Class A

    74,400       35,630  

Bank of China Ltd., Class H

    3,100,000       1,015,980  

Bank of Communications Co. Ltd., Class A

    86,800       59,944  

Bank of Communications Co. Ltd., Class H

    248,200       129,702  

Bank of Hangzhou Co. Ltd., Class A

    12,499       23,632  

Bank of Jiangsu Co. Ltd., Class A

    43,400       40,681  

Bank of Nanjing Co. Ltd., Class A

    31,000       38,879  

Bank of Ningbo Co. Ltd., Class A

    18,600       96,406  

Bank of Shanghai Co. Ltd., Class A

    38,490       47,318  

Baoshan Iron & Steel Co. Ltd., Class A

    43,400       31,303  

Baozun Inc., ADR(a)

    3,720       154,157  

BBMG Corp., Class A

    24,800       11,949  

Beijing Capital International Airport Co. Ltd., Class H(a)

    124,000       87,678  

Beijing Dabeinong Technology Group Co. Ltd., Class A

    18,600       30,877  

Beijing Enlight Media Co. Ltd., Class A

    6,200       14,665  

Beijing Enterprises Water Group Ltd.(a)

    248,000       97,598  

Beijing New Building Materials PLC, Class A

    6,200       29,691  

Beijing Oriental Yuhong Waterproof Technology Co. Ltd., Class A

    6,200       54,259  

Beijing Originwater Technology Co. Ltd., Class A

    14,600       20,741  

Beijing Sinnet Technology Co. Ltd., Class A

    18,600       71,585  

Beijing Tongrentang Co. Ltd., Class A

    13,669       59,273  

Beijing Yanjing Brewery Co. Ltd., Class A

    12,400       14,484  

BEST Inc., ADR(a)

    12,772       51,088  

Bilibili Inc., ADR(a)

    6,448       304,668  

BOC Aviation Ltd.(b)

    6,200       46,119  

BOE Technology Group Co. Ltd., Class A

    80,600       64,723  

Bohai Leasing Co. Ltd., Class A(a)

    24,800       10,428  

Bosideng International Holdings Ltd.

    124,000       35,519  

Brilliance China Automotive Holdings Ltd.

    124,000       111,038  

BYD Co. Ltd., Class H

    31,000       307,994  

BYD Electronic International Co. Ltd.

    31,000       131,397  

Caitong Securities Co. Ltd., Class A

    6,200       13,180  

CGN Power Co. Ltd., Class H(b)

    310,000       67,199  

Changjiang Securities Co. Ltd., Class A

    18,600       23,165  

Chaozhou Three-Circle Group Co. Ltd., Class A

    6,200       25,328  

Chengdu Xingrong Environment Co. Ltd., Class A

    18,600       14,339  

China Aoyuan Group Ltd.

    62,000       71,519  

China Cinda Asset Management Co. Ltd., Class H

    248,000       47,359  
 

 

39  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI BRIC ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

China CITIC Bank Corp. Ltd., Class A

    12,400     $ 9,451  

China CITIC Bank Corp. Ltd., Class H

    372,000       155,517  

China Communications Construction Co. Ltd., Class A

    12,400       14,393  

China Communications Construction Co. Ltd., Class H

    124,000       69,599  

China Communications Services Corp. Ltd., Class H

    124,800       81,964  

China Conch Venture Holdings Ltd.

    62,000       268,795  

China Construction Bank Corp., Class A

    18,600       16,837  

China Construction Bank Corp., Class H

    3,782,370         2,679,330  

China East Education Holdings Ltd.(b)

    31,000       68,479  

China Eastern Airlines Corp. Ltd., Class A

    55,800       41,142  

China Enterprise Co. Ltd., Class A

    18,600       11,487  

China Everbright Bank Co. Ltd., Class A

    124,000       69,521  

China Everbright Bank Co. Ltd., Class H

    62,000       22,240  

China Everbright International Ltd.

    124,000       74,879  

China Evergrande Group

    62,000       144,797  

China Fortune Land Development Co. Ltd., Class A

    8,150       19,991  

China Galaxy Securities Co. Ltd., Class H

    155,000       93,398  

China Gas Holdings Ltd.

    99,200       271,995  

China Gezhouba Group Co. Ltd., Class A

    12,400       11,514  

China Greatwall Technology Group Co. Ltd., Class A

    6,200       16,031  

China Hongqiao Group Ltd.

    93,000       59,999  

China Huarong Asset Management Co. Ltd., Class H(b)

    434,000       49,839  

China Huishan Dairy Holdings Co. Ltd.(a)(d)

    51,450       0 (e)  

China International Capital Corp. Ltd., Class H(a)(b)

    49,600       117,886  

China Jinmao Holdings Group Ltd.

    124,000       77,599  

China Jushi Co. Ltd., Class A

    12,400       26,885  

China Lesso Group Holdings Ltd.

    62,000       115,678  

China Life Insurance Co. Ltd., Class A

    1,293       8,246  

China Life Insurance Co. Ltd., Class H

    310,000       755,185  

China Literature Ltd.(a)(b)

    12,400       77,039  

China Longyuan Power Group Corp. Ltd., Class H

    124,000       78,238  

China Medical System Holdings Ltd.

    66,000       74,515  

China Mengniu Dairy Co. Ltd.(a)

    124,000       609,588  

China Merchants Bank Co. Ltd., Class A

    49,600       272,942  

China Merchants Bank Co. Ltd., Class H

    155,456       742,163  

China Merchants Energy Shipping Co. Ltd., Class A

    12,400       11,695  

China Merchants Port Holdings Co. Ltd.

    86,000       98,426  

China Merchants Property Operation & Service Co. Ltd., Class A

    6,200       28,243  

China Merchants Securities Co. Ltd.,
Class A(a)

    24,450       76,929  

China Merchants Shekou Industrial Zone Holdings Co. Ltd., Class A

    19,881       48,475  

China Minsheng Banking Corp. Ltd., Class A

    86,800       70,336  

China Minsheng Banking Corp. Ltd., Class H

    217,000       132,157  

China Mobile Ltd.

    248,000       1,732,766  

China Molybdenum Co. Ltd., Class A

    49,600       30,995  

China Molybdenum Co. Ltd., Class H

    186,000       75,599  

China National Building Material Co. Ltd., Class H

    170,000       239,092  

China National Nuclear Power Co. Ltd., Class A

    55,800       37,965  

China Northern Rare Earth Group High-Tech Co. Ltd., Class A(a)

    6,200       11,179  

China Overseas Land & Investment Ltd.

    155,300       449,860  

China Pacific Insurance Group Co. Ltd., Class A

    18,600       83,697  

China Pacific Insurance Group Co. Ltd., Class H

    99,200       275,835  

China Petroleum & Chemical Corp.,
Class A(a)

    55,800       32,832  

China Petroleum & Chemical Corp., Class H

    992,600       458,508  

China Power International Development Ltd.

    310,000       59,999  

China Railway Construction Corp. Ltd., Class A

    31,000       40,418  

China Railway Construction Corp. Ltd., Class H

    62,000       47,679  

China Railway Group Ltd., Class A

    37,200       30,415  
Security   Shares     Value  

 

 
China (continued)  

China Railway Group Ltd., Class H

    124,000     $ 63,679  

China Railway Signal & Communication Corp. Ltd., Class H(b)

    66,000       26,740  

China Reinsurance Group Corp., Class H

    248,000       26,559  

China Renewable Energy Investment Ltd.(a)(b)(d)

    7,709       0 (e)  

China Resources Beer Holdings Co. Ltd.

    58,000         377,180  

China Resources Cement Holdings Ltd.

    124,000       180,796  

China Resources Gas Group Ltd.

    45,000       211,351  

China Resources Land Ltd.

    124,444       575,643  

China Resources Pharmaceutical Group Ltd.(b)

    62,000       35,119  

China Resources Power Holdings Co. Ltd.

    124,200       147,435  

China Shenhua Energy Co. Ltd., Class A

    12,400       29,257  

China Shenhua Energy Co. Ltd., Class H

    124,000       207,036  

China Shipbuilding Industry Co. Ltd., Class A(a)

    62,000       43,903  

China Southern Airlines Co. Ltd., Class A(a)

    31,000       26,523  

China State Construction Engineering Corp. Ltd., Class A

    111,600       83,751  

China State Construction International Holdings Ltd.

    124,000       96,158  

China Taiping Insurance Holdings Co. Ltd.

    62,040       98,622  

China Telecom Corp. Ltd., Class H

    496,000       162,557  

China Tourism Group Duty Free Corp. Ltd., Class A

    6,200       188,286  

China Tower Corp. Ltd., Class H(b)

    1,736,000       331,514  

China Traditional Chinese Medicine Holdings Co. Ltd.(a)

    124,000       52,959  

China Unicom Hong Kong Ltd.

    249,900       177,023  

China United Network Communications Ltd., Class A

    74,400       56,377  

China Vanke Co. Ltd., Class A

    24,801       98,746  

China Vanke Co. Ltd., Class H

    55,801       173,520  

China Yangtze Power Co. Ltd., Class A

    43,456       122,453  

Chongqing Changan Automobile Co. Ltd., Class A(a)

    12,400       21,200  

Chongqing Rural Commercial Bank Co. Ltd., Class H

    124,000       50,559  

Chongqing Zhifei Biological Products Co. Ltd., Class A

    6,200       122,341  

CIFI Holdings Group Co. Ltd.

    124,000       105,598  

CITIC Ltd.

    186,000       169,677  

CITIC Securities Co. Ltd., Class A

    18,600       86,358  

CITIC Securities Co. Ltd., Class H

    62,000       148,957  

CNOOC Ltd.

    744,000       846,704  

Contemporary Amperex Technology Co. Ltd., Class A

    6,200       186,793  

COSCO SHIPPING Development Co. Ltd., Class A

    12,400       3,838  

COSCO SHIPPING Energy Transportation Co. Ltd., Class H

    124,000       57,119  

COSCO SHIPPING Holdings Co. Ltd., Class A(a)

    49,600       39,395  

COSCO SHIPPING Holdings Co. Ltd., Class H(a)

    93,000       46,679  

COSCO SHIPPING Ports Ltd.

    124,000       70,239  

Country Garden Holdings Co. Ltd.(c)

    310,046       384,450  

Country Garden Services Holdings Co. Ltd.

    66,000       460,288  

CRRC Corp. Ltd., Class A

    62,000       53,046  

CRRC Corp. Ltd., Class H

    186,400       84,179  

CSC Financial Co. Ltd., Class A

    6,200       47,316  

CSPC Pharmaceutical Group Ltd.

    195,600       434,602  

Dali Foods Group Co. Ltd.(b)

    93,000       56,999  

Daqin Railway Co. Ltd., Class A

    37,200       35,955  

DHC Software Co. Ltd., Class A

    18,600       31,665  

Dongfang Electric Corp. Ltd., Class A

    12,400       18,123  

Dongfeng Motor Group Co. Ltd., Class H

    124,000       86,078  

Dongxing Securities Co. Ltd., Class A

    24,899       48,532  

East Money Information Co. Ltd., Class A

    31,060       118,632  

ENN Energy Holdings Ltd.

    31,000       343,993  

Everbright Securities Co. Ltd., Class A

    12,497       39,995  

Fangda Carbon New Material Co. Ltd., Class A(a)

    9,040       8,883  

Far East Horizon Ltd.

    62,000       54,879  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  40


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI BRIC ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Fiberhome Telecommunication Technologies Co. Ltd., Class A

    6,200     $ 23,807  

Financial Street Holdings Co. Ltd., Class A

    12,400       12,383  

First Capital Securities Co. Ltd., Class A

    12,400       19,462  

Focus Media Information Technology Co. Ltd., Class A

    43,439       47,821  

Foshan Haitian Flavouring & Food Co. Ltd., Class A

    9,111       243,700  

Fosun International Ltd.

    93,000       103,558  

Founder Securities Co. Ltd., Class A(a)

    24,899       31,882  

Foxconn Industrial Internet Co. Ltd., Class A

    12,400       26,686  

Fujian Sunner Development Co. Ltd., Class A(a)

    6,200       24,332  

Fuyao Glass Industry Group Co. Ltd., Class A

    6,200       26,233  

Fuyao Glass Industry Group Co. Ltd., Class H(b)

    24,800       79,838  

Ganfeng Lithium Co. Ltd., Class A

    6,200       45,723  

GD Power Development Co. Ltd., Class A

    68,200       20,413  

GDS Holdings Ltd., ADR(a)

    4,154         336,225  

Geely Automobile Holdings Ltd.

    248,000       524,150  

GEM Co. Ltd., Class A

    18,699       14,797  

Gemdale Corp., Class A

    12,400       25,926  

GF Securities Co. Ltd., Class A

    18,600       43,912  

GF Securities Co. Ltd., Class H

    37,200       44,015  

GoerTek Inc., Class A

    12,400       74,391  

GOME Retail Holdings Ltd.(a)(c)

    620,400       88,856  

Grandjoy Holdings Group Co. Ltd., Class A

    12,400       9,903  

Great Wall Motor Co. Ltd., Class H

    124,000       134,557  

Gree Electric Appliances Inc. of Zhuhai, Class A

    6,200       49,335  

Greenland Holdings Corp. Ltd., Class A

    31,099       34,735  

GSX Techedu Inc., ADR(a)(c)

    2,640       225,456  

Guangdong Haid Group Co. Ltd., Class A

    6,200       64,063  

Guangdong HEC Technology Holding Co. Ltd., Class A(a)

    12,400       11,732  

Guangdong Investment Ltd.

    124,000       193,596  

Guanghui Energy Co. Ltd., Class A(a)

    24,800       10,537  

Guangzhou Automobile Group Co. Ltd., Class H

    130,235       111,916  

Guangzhou Baiyun International Airport Co. Ltd., Class A

    6,200       13,777  

Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., Class A

    6,200       29,429  

Guangzhou R&F Properties Co. Ltd., Class H

    49,600       63,103  

Guosen Securities Co. Ltd., Class A

    12,400       25,364  

Guotai Junan Securities Co. Ltd., Class A

    24,800       70,028  

Guotai Junan Securities Co. Ltd., Class H(b)

    12,400       19,360  

Guoyuan Securities Co. Ltd., Class A

    12,400       19,951  

Haidilao International Holding Ltd.(b)

    23,000       148,384  

Haier Electronics Group Co. Ltd.

    33,000       113,049  

Haier Smart Home Co. Ltd., Class A

    18,679       60,817  

Haitong Securities Co. Ltd., Class A(a)

    31,000       68,661  

Haitong Securities Co. Ltd., Class H(a)

    99,200       90,110  

Hangzhou Hikvision Digital Technology Co. Ltd., Class A

    26,004       142,072  

Hangzhou Tigermed Consulting Co. Ltd., Class A

    6,200       101,385  

Hansoh Pharmaceutical Group Co. Ltd.(a)(b)

    46,000       218,125  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    6,200       57,482  

Hengan International Group Co. Ltd.

    31,000       244,395  

Hengli Petrochemical Co. Ltd., Class A

    18,600       57,110  

Hengtong Optic-Electric Co. Ltd., Class A

    6,200       14,800  

Hengyi Petrochemical Co. Ltd., Class A

    8,330       15,142  

Hesteel Co. Ltd., Class A(a)

    31,000       10,048  

Holitech Technology Co. Ltd., Class A

    18,600       14,257  

Huaan Securities Co. Ltd., Class A

    12,400       16,294  

Huadian Power International Corp. Ltd., Class A

    49,600       29,040  

Huadong Medicine Co. Ltd., Class A

    6,200       25,310  

Hualan Biological Engineering Inc., Class A

    8,450       71,063  
Security   Shares     Value  
China (continued)            

Huaneng Power International Inc., Class A

    12,400     $ 9,976  

Huaneng Power International Inc., Class H

    124,000       51,679  

Huatai Securities Co. Ltd., Class A

    24,800       77,523  

Huatai Securities Co. Ltd., Class H(b)

    49,600       87,038  

Huaxia Bank Co. Ltd., Class A

    49,600       46,565  

Huaxin Cement Co. Ltd., Class A

    6,200       25,310  

Huayu Automotive Systems Co. Ltd., Class A

    6,899       25,061  

Huazhu Group Ltd., ADR(c)

    5,580       249,593  

Hubei Biocause Pharmaceutical Co. Ltd., Class A

    31,000       25,482  

Hubei Energy Group Co. Ltd., Class A

    49,600       28,243  

Hunan Valin Steel Co. Ltd., Class A

    18,600       13,225  

Hutchison China MediTech Ltd., ADR(a)

    3,224       107,101  

HUYA Inc., ADR(a)(c)

    2,542       73,006  

Iflytek Co. Ltd., Class A

    18,600       102,353  

Industrial & Commercial Bank of China Ltd., Class A

    148,800       107,758  

Industrial & Commercial Bank of China Ltd., Class H

    2,294,050       1,284,643  

Industrial Bank Co. Ltd., Class A

    49,600       117,027  

Industrial Securities Co. Ltd., Class A

    18,600       22,323  

Inner Mongolia BaoTou Steel Union Co. Ltd., Class A(a)

    155,000       26,251  

Inner Mongolia Junzheng Energy & Chemical Industry Group Co. Ltd., Class A

    24,800       33,892  

Inner Mongolia MengDian HuaNeng Thermal Power Corp. Ltd., Class A

    32,207       12,320  

Inner Mongolia Yili Industrial Group Co. Ltd., Class A

    18,600       113,895  

Inner Mongolia Yitai Coal Co. Ltd., Class B

    55,800       39,060  

Innovent Biologics Inc.(a)(b)

    31,000       206,596  

Inspur Electronic Information Industry Co. Ltd., Class A

    8,883       46,820  

iQIYI Inc., ADR(a)(c)

    9,486       205,372  

JD.com Inc., ADR(a)

    34,100         2,681,624  

Jiangsu Hengrui Medicine Co. Ltd., Class A

    15,240       211,095  

Jiangsu Yanghe Brewery Joint-Stock Co. Ltd., Class A

    6,200       127,718  

Jiangsu Zhongnan Construction Group Co. Ltd., Class A

    12,400       17,634  

Jiangsu Zhongtian Technology Co. Ltd., Class A

    12,400       20,458  

Jiangxi Copper Co. Ltd., Class A

    6,200       14,140  

Jiangxi Copper Co. Ltd., Class H

    62,000       73,119  

Jiangxi Zhengbang Technology Co. Ltd., Class A

    6,200       22,495  

Jinke Properties Group Co. Ltd., Class A

    12,400       18,503  

JOYY Inc.(a)

    2,728       233,080  

Kaisa Group Holdings Ltd.(a)

    124,000       62,399  

KE Holdings Inc.(a)

    3,844       197,159  

Kingboard Holdings Ltd.

    31,000       99,798  

Kingboard Laminates Holdings Ltd.

    62,000       78,158  

Kingdee International Software Group Co.
Ltd.(a)(c)

    124,000       316,154  

Kingsoft Corp. Ltd.

    34,000       182,061  

Kunlun Energy Co. Ltd.(c)

    124,000       92,478  

Kweichow Moutai Co. Ltd., Class A

    2,600       678,172  

KWG Group Holdings Ltd.

    62,000       117,918  

Lee & Man Paper Manufacturing Ltd.

    62,000       37,119  

Legend Holdings Corp., Class H(b)

    18,600       27,407  

Lenovo Group Ltd.

    248,000       165,757  

Lens Technology Co. Ltd., Class A

    6,200       31,248  

Lepu Medical Technology Beijing Co. Ltd., Class A

    6,200       35,086  

Li Ning Co. Ltd.

    93,000       393,592  

Lingyi iTech Guangdong Co., Class A(a)

    12,400       21,653  

Logan Group Co. Ltd.

    62,000       115,518  

Longfor Group Holdings Ltd.(b)

    62,000       328,394  

LONGi Green Energy Technology Co. Ltd., Class A

    12,400       114,565  

Luxshare Precision Industry Co. Ltd., Class A

    16,402       131,711  

Luye Pharma Group Ltd.(b)

    93,000       50,399  

Luzhou Laojiao Co. Ltd., Class A

    6,200       135,331  
 

 

41  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI BRIC ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Maanshan Iron & Steel Co. Ltd., Class A(a)

    31,000     $ 12,718  

Mango Excellent Media Co. Ltd., Class A

    6,200       64,271  

Meinian Onehealth Healthcare Holdings Co. Ltd., Class A(a)

    10,953       28,082  

Meituan Dianping, Class B(a)

    137,900       4,547,943  

Metallurgical Corp. of China Ltd., Class A

    99,200       40,844  

Momo Inc., ADR

    7,192       146,717  

Muyuan Foodstuff Co. Ltd., Class A

    11,170       143,189  

NanJi E-Commerce Co. Ltd., Class A

    18,600       50,321  

Nanjing King-Friend Biochemical Pharmaceutical Co. Ltd., Class A

    8,150       58,556  

Nanjing Securities Co. Ltd., Class A

    12,400       26,758  

NARI Technology Co. Ltd., Class A

    12,400       40,554  

NavInfo Co. Ltd., Class A

    6,200       14,882  

NetEase Inc., ADR

    3,348       1,631,179  

New China Life Insurance Co. Ltd., Class A

    6,200       54,178  

New China Life Insurance Co. Ltd., Class H

    18,600       74,279  

New Hope Liuhe Co. Ltd., Class A

    12,400       68,797  

New Oriental Education & Technology Group Inc., ADR(a)

    5,890       863,651  

Nine Dragons Paper Holdings Ltd.

    62,000       68,799  

Ningbo Zhoushan Port Co. Ltd., Class A

    7,600       4,117  

NIO Inc., ADR(a)(c)

    33,666       640,664  

Noah Holdings Ltd.(a)(c)

    1,550       43,400  

Oceanwide Holdings Co. Ltd., Class A

    18,600       11,189  

Offcn Education Technology Co. Ltd., Class A

    6,200       32,325  

Offshore Oil Engineering Co. Ltd., Class A

    12,424       8,925  

OFILM Group Co. Ltd., Class A

    6,200       17,118  

Orient Securities Co. Ltd., Class A

    18,600       32,072  

Pacific Securities Co. Ltd. (The), Class A(a)

    24,800       15,389  

Pangang Group Vanadium Titanium & Resources Co. Ltd., Class A(a)

    31,000       9,867  

People’s Insurance Co. Group of China Ltd. (The), Class A

    24,000       25,299  

People’s Insurance Co. Group of China Ltd. (The), Class H

    310,000       101,198  

Perfect World Co. Ltd., Class A

    9,450       50,512  

PetroChina Co. Ltd., Class A

    31,000       20,051  

PetroChina Co. Ltd., Class H

    744,000       257,275  

PICC Property & Casualty Co. Ltd., Class H

    248,322       191,925  

Pinduoduo Inc., ADR(a)

    11,532         1,025,656  

Ping An Bank Co. Ltd., Class A

    43,400       95,555  

Ping An Healthcare and Technology Co.
Ltd.(a)(b)(c)

    12,400       180,796  

Ping An Insurance Group Co. of China Ltd., Class A

    24,900       278,551  

Ping An Insurance Group Co. of China Ltd., Class H

    232,500       2,476,452  

Poly Developments and Holdings Group Co. Ltd., Class A

    31,000       72,870  

Poly Property Services Co. Ltd.

    12,400       108,558  

Postal Savings Bank of China Co. Ltd., Class H(b)

    310,000       146,797  

Power Construction Corp. of China Ltd., Class A

    62,000       36,843  

RiseSun Real Estate Development Co. Ltd., Class A

    12,400       14,918  

Rongsheng Petro Chemical Co. Ltd., Class A

    18,600       53,770  

SAIC Motor Corp. Ltd., Class A

    18,600       50,674  

Sanan Optoelectronics Co. Ltd., Class A

    12,494       49,508  

Sany Heavy Industry Co. Ltd., Class A

    26,053       84,217  

SDIC Capital Co. Ltd., Class A

    12,400       27,483  

SDIC Power Holdings Co. Ltd., Class A

    24,899       32,936  

Sealand Securities Co. Ltd., Class A

    24,900       20,286  

Seazen Group Ltd.(a)

    136,000       123,363  

Seazen Holdings Co. Ltd., Class A

    6,200       32,497  

Semiconductor Manufacturing International
Corp.(a)

    124,200       399,035  
Security   Shares     Value  
China (continued)            

SF Holding Co. Ltd., Class A

    6,200     $ 77,034  

Shaanxi Coal Industry Co. Ltd., Class A

    26,005       30,868  

Shandong Gold Mining Co. Ltd., Class A

    8,680       36,739  

Shandong Hualu Hengsheng Chemical Co. Ltd., Class A

    6,200       24,332  

Shandong Nanshan Aluminum Co. Ltd., Class A

    37,200       14,447  

Shandong Weigao Group Medical Polymer Co. Ltd., Class H

    132,000         308,278  

Shanghai 2345 Network Holding Group Co. Ltd., Class A

    93,085       41,044  

Shanghai Baosight Software Co. Ltd., Class A

    6,200       62,931  

Shanghai Construction Group Co. Ltd., Class A

    24,800       11,514  

Shanghai Electric Group Co. Ltd., Class A(a)

    62,000       50,330  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class A

    6,200       49,624  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class H

    34,500       145,788  

Shanghai International Port Group Co. Ltd., Class A

    24,800       16,077  

Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., Class B

    49,676       42,672  

Shanghai Pharmaceuticals Holding Co. Ltd., Class A

    6,200       20,096  

Shanghai Pharmaceuticals Holding Co. Ltd., Class H

    49,600       88,446  

Shanghai Pudong Development Bank Co. Ltd., Class A

    74,400       112,537  

Shanghai RAAS Blood Products Co. Ltd., Class A

    24,000       31,502  

Shanghai Tunnel Engineering Co. Ltd., Class A

    12,400       10,826  

Shanghai Yuyuan Tourist Mart Group Co. Ltd., Class A

    12,400       17,942  

Shanxi Lu’an Environmental Energy Development Co. Ltd., Class A

    13,652       12,557  

Shanxi Meijin Energy Co. Ltd., Class A(a)

    12,400       11,949  

Shanxi Securities Co. Ltd., Class A

    17,860       21,435  

Shanxi Taigang Stainless Steel Co. Ltd., Class A

    18,600       9,939  

Shanxi Xishan Coal & Electricity Power Co. Ltd., Class A

    16,300       10,043  

Shenergy Co. Ltd., Class A

    24,800       20,748  

Shengyi Technology Co. Ltd., Class A

    6,200       22,459  

Shenwan Hongyuan Group Co. Ltd., Class A

    74,499       61,347  

Shenzhen Energy Group Co. Ltd., Class A

    44,820       37,496  

Shenzhen Inovance Technology Co. Ltd., Class A

    7,498       61,086  

Shenzhen International Holdings Ltd.

    31,000       49,759  

Shenzhen Investment Ltd.

    124,000       42,079  

Shenzhen Kaifa Technology Co. Ltd., Class A

    6,200       23,038  

Shenzhen Overseas Chinese Town Co. Ltd., Class A

    49,600       51,779  

Shenzhou International Group Holdings Ltd.

    31,000       499,990  

Shimao Group Holdings Ltd.

    62,000       279,195  

Sichuan Chuantou Energy Co. Ltd., Class A

    19,805       28,974  

Sichuan Kelun Pharmaceutical Co. Ltd., Class A

    6,200       22,395  

Sichuan Languang Development Co. Ltd., Class A

    12,400       9,957  

SINA Corp.(a)

    4,278       174,050  

Sino Biopharmaceutical Ltd.

    444,000       512,738  

Sinolink Securities Co. Ltd., Class A

    12,400       28,171  

Sino-Ocean Group Holding Ltd.

    62,000       14,320  

Sinopec Engineering Group Co. Ltd., Class H

    62,000       27,519  

Sinopec Shanghai Petrochemical Co. Ltd., Class A

    24,800       12,637  

Sinopec Shanghai Petrochemical Co. Ltd., Class H

    125,000       25,806  

Sinopharm Group Co. Ltd., Class H

    49,600       122,110  

Sinotrans Ltd., Class A

    18,600       9,939  

Sinotruk Hong Kong Ltd.

    31,000       80,598  

SOHO China Ltd.(a)

    97,500       30,067  

Songcheng Performance Development Co. Ltd., Class A

    11,880       31,013  

SooChow Securities Co. Ltd., Class A

    18,040       28,341  

Southwest Securities Co. Ltd., Class A

    18,600       15,235  

SSY Group Ltd.

    124,000       79,038  

Sun Art Retail Group Ltd.

    93,000       121,198  

Sunac China Holdings Ltd.

    105,000       441,669  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  42


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI BRIC ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Suning.com Co. Ltd., Class A

    24,800     $ 35,666  

Sunny Optical Technology Group Co. Ltd.

    31,000       459,591  

Suzhou Dongshan Precision Manufacturing Co. Ltd., Class A

    6,200       25,156  

TAL Education Group, ADR(a)

    15,810       1,166,936  

TBEA Co. Ltd., Class A

    12,400       14,791  

TCL Technology Group Corp., Class A

    49,600       51,272  

Tencent Holdings Ltd.

    206,600       14,141,830  

Tencent Music Entertainment Group, ADR(a)

    19,716       308,161  

Tianjin Zhonghuan Semiconductor Co. Ltd., Class A

    12,400       39,232  

Tianma Microelectronics Co. Ltd., Class A

    6,200       14,873  

Tianshui Huatian Technology Co. Ltd., Class A

    18,600       43,016  

Tingyi Cayman Islands Holding Corp.

    124,000       232,955  

Tongcheng-Elong Holdings Ltd.(a)

    49,600       97,278  

TongFu Microelectronics Co. Ltd., Class A(a)

    12,400       43,107  

Tonghua Dongbao Pharmaceutical Co. Ltd., Class A

    6,200       12,881  

Tongling Nonferrous Metals Group Co. Ltd., Class A

    37,200       12,438  

Tongwei Co. Ltd., Class A

    12,495       44,513  

Topsports International Holdings Ltd.(b)

    62,000       76,719  

Transfar Zhilian Co. Ltd., Class A

    12,400       10,935  

TravelSky Technology Ltd., Class H

    62,000       128,958  

Trip.com Group Ltd., ADR(a)

    18,786       568,089  

Tsingtao Brewery Co. Ltd., Class H

    24,000       218,628  

Uni-President China Holdings Ltd.

    62,000       56,479  

Unisplendour Corp. Ltd., Class A

    8,680       41,568  

Vipshop Holdings Ltd., ADR(a)

    17,670       291,732  

Walvax Biotechnology Co. Ltd., Class A

    6,200       57,482  

Wanda Film Holding Co. Ltd., Class A(a)

    6,200       16,774  

Wanhua Chemical Group Co. Ltd., Class A

    6,200       66,344  

Want Want China Holdings Ltd.

    186,000       127,678  

Weibo Corp., ADR(a)

    3,286       122,568  

Weichai Power Co. Ltd., Class A

    24,800       53,662  

Weichai Power Co. Ltd., Class H

    62,100       125,480  

Wens Foodstuffs Group Co. Ltd., Class A

    15,240       54,915  

Western Securities Co. Ltd., Class A

    24,800       35,340  

Wharf Holdings Ltd. (The)

    62,000       120,958  

Winning Health Technology Group Co. Ltd., Class A

    8,150       25,226  

Wuhu Sanqi Interactive Entertainment Network Technology Group Co. Ltd., Class A

    6,200       41,269  

Wuliangye Yibin Co. Ltd., Class A

    10,000       350,408  

WUS Printed Circuit Kunshan Co. Ltd., Class A

    6,200       19,046  

WuXi AppTec Co. Ltd., Class A

    9,040       145,067  

WuXi AppTec Co. Ltd., Class H(b)

    12,956       191,912  

Wuxi Biologics Cayman Inc.(a)(b)

    39,500       1,026,470  

XCMG Construction Machinery Co. Ltd., Class A

    24,800       22,486  

Xiamen C & D Inc., Class A

    12,400       17,416  

Xiaomi Corp., Class B(a)(b)

    396,800         1,203,177  

Xinhu Zhongbao Co. Ltd., Class A

    24,800       12,746  

Xinjiang Goldwind Science & Technology Co. Ltd., Class A

    18,653       29,740  

Xinjiang Goldwind Science & Technology Co. Ltd., Class H

    55,034       47,364  

Xinyi Solar Holdings Ltd.

    188,000       237,482  

Yango Group Co. Ltd., Class A

    12,400       12,764  

Yanzhou Coal Mining Co. Ltd., Class H

    124,000       95,518  

Yihai International Holding Ltd.(a)

    16,000       251,453  

Yonghui Superstores Co. Ltd., Class A

    24,893       32,274  

Yonyou Network Technology Co. Ltd., Class A

    12,430       76,059  

Yuexiu Property Co. Ltd.

    248,000       47,359  

Yum China Holdings Inc.(a)

    14,322       826,523  
Security   Shares     Value  
China (continued)            

Yunda Holding Co. Ltd., Class A

    8,330     $ 25,273  

Yunnan Baiyao Group Co. Ltd., Class A

    7,420       125,354  

Yuzhou Group Holdings Co. Ltd.

    62,000       28,959  

Zai Lab Ltd., ADR(a)

    2,852       226,363  

Zhaojin Mining Industry Co. Ltd., Class H

    62,000       69,439  

Zhejiang Chint Electrics Co. Ltd., Class A(a)

    6,200       31,203  

Zhejiang Dahua Technology Co. Ltd., Class A

    12,400       41,387  

Zhejiang Jingsheng Mechanical & Electrical Co. Ltd., Class A

    6,200       23,590  

Zhejiang Juhua Co. Ltd., Class A

    12,400       12,673  

Zhejiang Longsheng Group Co. Ltd., Class A

    6,200       12,990  

Zhejiang NHU Co. Ltd., Class A

    13,630       65,213  

Zhejiang Sanhua Intelligent Controls Co. Ltd., Class A

    8,330       27,486  

Zhengzhou Yutong Bus Co. Ltd., Class A

    6,200       12,863  

Zhenro Properties Group Ltd.

    62,000       36,239  

Zheshang Securities Co. Ltd., Class A

    12,400       26,939  

ZhongAn Online P&C Insurance Co. Ltd., Class H(a)(b)

    12,400       81,678  

Zhongjin Gold Corp. Ltd., Class A

    12,400       19,734  

Zhongsheng Group Holdings Ltd.

    31,000       193,596  

Zhuzhou CRRC Times Electric Co. Ltd., Class H

    24,800       79,678  

Zijin Mining Group Co. Ltd., Class A

    24,800       26,034  

Zijin Mining Group Co. Ltd., Class H

    279,000       190,436  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class A(a)

    19,800       24,630  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class H(a)

    78,400       78,500  

ZTE Corp., Class A

    6,200       35,304  

ZTE Corp., Class H

    37,248       108,378  

ZTO Express Cayman Inc., ADR

    13,330       446,955  
   

 

 

 
        106,202,642  
India — 13.7%            

Adani Ports & Special Economic Zone Ltd.

    20,461       98,889  

Ambuja Cements Ltd.

    23,498       67,215  

Asian Paints Ltd.

    12,090       311,926  

Aurobindo Pharma Ltd.

    10,602       116,509  

Avenue Supermarts Ltd.(a)(b)

    5,828       178,247  

Axis Bank Ltd.(a)

    81,902       552,727  

Bajaj Auto Ltd.

    3,348       134,952  

Bajaj Finance Ltd.

    7,130       337,846  

Bajaj Finserv Ltd.

    1,488       125,140  

Bandhan Bank Ltd.(a)(b)

    27,094       112,561  

Berger Paints India Ltd.

    9,238       67,483  

Bharat Forge Ltd.

    9,796       65,371  

Bharat Petroleum Corp. Ltd.

    27,156       150,450  

Bharti Airtel Ltd.

    53,568       373,409  

Bharti Infratel Ltd.

    16,368       44,151  

Biocon Ltd.(a)

    13,144       67,169  

Bosch Ltd.

    372       64,760  

Britannia Industries Ltd.

    2,108       106,708  

Cipla Ltd.

    14,260       138,236  

Coal India Ltd.

    28,272       51,603  

Colgate-Palmolive India Ltd.

    2,418       44,783  

Container Corp. of India Ltd.

    9,176       48,992  

Dabur India Ltd.

    23,498       151,508  

Divi’s Laboratories Ltd.

    3,286       139,409  

DLF Ltd.

    32,240       69,357  

Dr. Reddy’s Laboratories Ltd.

    4,154       240,676  

Eicher Motors Ltd.

    5,580       158,589  

GAIL India Ltd.

    59,582       77,424  

Godrej Consumer Products Ltd.

    14,446       127,822  
 

 

43  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI BRIC ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
India (continued)            

Grasim Industries Ltd.

    3,984     $ 36,526  

Havells India Ltd.

    11,656       97,474  

HCL Technologies Ltd.

    46,438       438,088  

HDFC Asset Management Co. Ltd.(b)

    1,798       58,891  

HDFC Life Insurance Co. Ltd.(a)(b)

    21,824       170,423  

Hero MotoCorp Ltd.

    3,906       159,517  

Hindalco Industries Ltd.

    38,502       96,899  

Hindustan Petroleum Corp. Ltd.

    25,048       68,586  

Hindustan Unilever Ltd.

    31,558       907,779  

Housing Development Finance Corp. Ltd.

    61,814       1,538,978  

ICICI Bank Ltd.(a)

    198,400       1,063,596  

ICICI Lombard General Insurance Co. Ltd.(b)

    7,254       123,847  

ICICI Prudential Life Insurance Co. Ltd.(b)

    12,958       74,404  

Indian Oil Corp. Ltd.

    76,570       89,253  

Indraprastha Gas Ltd.(a)

    11,526       61,766  

Info Edge India Ltd.

    2,976       131,952  

Infosys Ltd.

    139,872       1,764,564  

InterGlobe Aviation Ltd.(a)(b)

    4,340       70,704  

ITC Ltd.

    116,912       303,527  

JSW Steel Ltd.

    33,418       122,490  

Larsen & Toubro Ltd.

    19,592       251,516  

LIC Housing Finance Ltd.

    12,152       49,742  

Lupin Ltd.

    10,044       126,567  

Mahindra & Mahindra Ltd.

    27,094       223,392  

Marico Ltd.

    18,352       91,975  

Maruti Suzuki India Ltd.

    4,278       397,532  

Motherson Sumi Systems Ltd.

    39,060       58,213  

Nestle India Ltd.

    930       201,516  

NTPC Ltd.

    93,124       121,960  

Oil & Natural Gas Corp. Ltd.

    97,278       108,303  

Page Industries Ltd.

    248       63,974  

Petronet LNG Ltd.

    24,118       78,752  

Pidilite Industries Ltd.

    5,332       101,616  

Piramal Enterprises Ltd.

    3,534       65,646  

Power Grid Corp. of India Ltd.

    56,110       136,411  

REC Ltd.

    30,938       44,616  

Reliance Industries Ltd.

    111,166       3,142,385  

SBI Life Insurance Co. Ltd.(a)(b)

    14,074       158,269  

Shree Cement Ltd.

    372       102,507  

Shriram Transport Finance Co. Ltd.

    4,650       44,376  

Siemens Ltd.

    2,790       43,963  

State Bank of India(a)

    71,920       207,140  

Sun Pharmaceutical Industries Ltd.

    35,154       248,465  

Tata Consultancy Services Ltd.

    37,758       1,157,888  

Tata Consumer Products Ltd.

    12,586       91,025  

Tata Motors Ltd.(a)

    18,910       36,789  

Tata Steel Ltd.

    8,122       45,571  

Tech Mahindra Ltd.

    20,956       210,962  

Titan Co. Ltd.

    11,408       170,560  

Torrent Pharmaceuticals Ltd.

    1,798       65,015  

UltraTech Cement Ltd.

    4,526       240,041  

United Spirits Ltd.(a)

    11,594       86,103  

UPL Ltd.

    15,438       106,115  

Vedanta Ltd.

    55,986       97,851  

Wipro Ltd.

    48,484       178,701  

Zee Entertainment Enterprises Ltd.

    22,630       62,580  
   

 

 

 
      20,221,213  
Russia — 5.3%            

Alrosa PJSC

    76,880       68,140  

Gazprom PJSC

    434,624         1,060,410  
Security   Shares     Value  
Russia (continued)            

Inter RAO UES PJSC

    1,612,000     $ 113,168  

LUKOIL PJSC

    16,058         1,077,461  

Magnit PJSC, GDR(f)

    14,322       210,104  

Magnitogorsk Iron & Steel Works PJSC

    136,400       69,148  

MMC Norilsk Nickel PJSC

    2,480       644,520  

Mobile TeleSystems PJSC, ADR

    18,600       173,352  

Moscow Exchange MICEX-RTS PJSC

    55,380       102,168  

Novatek PJSC, GDR(f)

    3,661       542,194  

Novolipetsk Steel PJSC

    37,200       77,473  

PhosAgro PJSC, GDR, Registered
Shares(f)

    8,618       102,726  

Polymetal International PLC

    7,455       199,080  

Polyus PJSC

    1,343       326,219  

Rosneft Oil Co. PJSC

    47,452       238,219  

Sberbank of Russia PJSC(a)

    402,380       1,222,286  

Severstal PAO

    4,464       56,000  

Surgutneftegas PJSC

    291,410       143,697  

Tatneft PJSC

    49,414       363,247  

VTB Bank PJSC(a)

    131,306,001       62,142  

X5 Retail Group NV, GDR(f)

    3,968       142,846  

Yandex NV, Class A(a)

    10,440       727,989  
   

 

 

 
      7,722,589  
   

 

 

 

Total Common Stocks — 97.5%
(Cost: $127,629,156)

      143,405,628  
   

 

 

 

Preferred Stocks

   
Brazil — 2.0%            

Banco Bradesco SA, Preference Shares, NVS

    161,252       609,630  

Braskem SA, Class A, Preference Shares, NVS

    6,200       24,061  

Centrais Eletricas Brasileiras SA, Class B, Preference Shares, NVS

    6,282       41,098  

Cia. Energetica de Minas Gerais, Preference Shares, NVS

    38,895       74,657  

Gerdau SA, Preference Shares, NVS

    43,400       151,025  

Itau Unibanco Holding SA, Preference Shares, NVS

    179,856       772,090  

Itausa SA, Preference Shares, NVS

    130,244       223,883  

Lojas Americanas SA, Preference Shares, NVS

    31,390       184,647  

Petroleo Brasileiro SA, Preference Shares, NVS

    173,414       691,962  

Telefonica Brasil SA, Preference Shares, NVS

    18,664       162,760  
   

 

 

 
      2,935,813  
Russia — 0.1%            

Surgutneftegas PJSC, Preference Shares, NVS

    285,200       142,868  
   

 

 

 

Total Preferred Stocks — 2.1%
(Cost: $3,103,622)

      3,078,681  
   

 

 

 

Rights

   
China — 0.0%            

Legend Holdings Corp. Class H,
(Expires 10/30/20)(a)(d)

    2,030       0 (e)  
   

 

 

 

Total Rights — 0.0%
(Cost: $0)

      0 (e)  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 2.4%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(g)(h)(i)

    2,653,908       2,656,562  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  44


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI BRIC ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Money Market Funds (continued)            

BlackRock Cash Funds: Treasury, SL Agency Shares, 0.07%(g)(h)

    960,000     $ 960,000  
   

 

 

 
      3,616,562  
   

 

 

 

Total Short-Term Investments — 2.4%
(Cost: $3,614,478)

      3,616,562  
   

 

 

 

Total Investments in Securities — 102.0%
(Cost: $134,347,256)

      150,100,871  

Other Assets, Less Liabilities — (2.0)%

      (2,978,041
   

 

 

 

Net Assets — 100.0%

    $   147,122,830  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(c) 

All or a portion of this security is on loan.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

Rounds to less than $1.

(f) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(g) 

Affiliate of the Fund.

(h) 

Annualized 7-day yield as of period-end.

(i) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

                   
Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
   

Change in

Unrealized
Appreciation
(Depreciation)

    Value at
08/31/20
    Shares
Held at
08/31/20
    Income    

Capital Gain

Distributions from

Underlying Funds

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 4,938,054     $     $ (2,284,479 )(a)    $ 1,127     $ 1,860     $ 2,656,562       2,653,908     $ 51,228 (b)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

    181,000       779,000 (a)                        960,000       960,000       3,194        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 1,127     $ 1,860     $ 3,616,562       $ 54,422     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

         
Description    Number of
Contracts
    Expiration
Date
    Notional
Amount
(000)
    Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

        

Hang Seng China Enterprises Index

     2       09/29/20     $ 129     $ (3,815

MSCI Emerging Markets E-Mini Index

     5       09/18/20       275       (4,521
        

 

 

 
         $ (8,336
        

 

 

 

 

45  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI BRIC ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Consolidated Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 8,336  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Consolidated Schedule of Investments. In the Consolidated Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Consolidated Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 51,503  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (16,105
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 479,023  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Consolidated Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Consolidated Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Consolidated Schedule of Investments above.

 

                                                                                       
      Level 1        Level 2        Level 3      Total  

Investments

               

Assets

               

Common Stocks

   $ 143,405,628        $        $ 0 (a)     $ 143,405,628  

Preferred Stocks

     3,078,681                          3,078,681  

Rights

                       0 (a)        0 (a)  

Money Market Funds

     3,616,562                          3,616,562  
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 150,100,871        $        $ 0 (a)     $ 150,100,871  
  

 

 

      

 

 

      

 

 

    

 

 

 

Derivative financial instruments(b)

               

Liabilities

               

Futures Contracts

   $ (8,336      $        $      $ (8,336
  

 

 

      

 

 

      

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 
  (b) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to consolidated financial statements.

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  46


Consolidated Schedule of Investments

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
China — 50.4%            

360 Security Technology Inc., Class A

    8,199     $ 22,362  

3SBio Inc.(a)(b)(c)

    180,500       211,938  

51job Inc., ADR(b)(c)

    3,404       223,098  

58.com Inc., ADR(b)(c)

    12,136       671,849  

AAC Technologies Holdings Inc.(c)

    92,500       583,634  

AECC Aviation Power Co. Ltd., Class A

    15,000       97,764  

Agile Group Holdings Ltd.

    192,000       265,079  

Agricultural Bank of China Ltd., Class A

    454,500       213,011  

Agricultural Bank of China Ltd., Class H

    3,404,000       1,137,573  

Aier Eye Hospital Group Co. Ltd., Class A

    20,580       156,157  

Air China Ltd., Class A

    44,400       46,999  

Air China Ltd., Class H

    198,000       136,426  

Aisino Corp., Class A

    24,400       64,160  

Alibaba Group Holding Ltd., ADR(b)

    190,920         54,799,768  

Alibaba Health Information Technology Ltd.(b)

    22,000       53,140  

Alibaba Pictures Group Ltd.(b)(c)

    1,830,000       259,737  

A-Living Services Co. Ltd., Class H(a)

    37,000       190,964  

Aluminum Corp. of China Ltd., Class A(b)

    103,600       47,798  

Aluminum Corp. of China Ltd., Class H(b)

    528,000       129,443  

Angang Steel Co. Ltd., Class A

    85,760       33,682  

Anhui Conch Cement Co. Ltd., Class A

    19,500       173,415  

Anhui Conch Cement Co. Ltd., Class H

    153,000       1,109,475  

ANTA Sports Products Ltd.

    135,000       1,333,426  

Autohome Inc., ADR(c)

    7,252       581,900  

AVIC Aircraft Co. Ltd., Class A

    16,800       59,359  

Avic Capital Co. Ltd., Class A

    133,200       97,822  

AVIC Shenyang Aircraft Co. Ltd., Class A

    6,300       54,316  

AviChina Industry & Technology Co. Ltd., Class H

    339,000       211,707  

BAIC BluePark New Energy Technology Co. Ltd., Class A(b)

    31,200       29,382  

BAIC Motor Corp. Ltd., Class H(a)(c)

    296,000       141,695  

Baidu Inc., ADR(b)

    32,116       4,000,690  

Bank of Chengdu Co. Ltd., Class A

    19,700       29,223  

Bank of China Ltd., Class A

    172,900       82,800  

Bank of China Ltd., Class H

    9,028,000       2,958,797  

Bank of Communications Co. Ltd., Class A

    199,600       137,843  

Bank of Communications Co. Ltd., Class H

    1,048,000       547,654  

Bank of Hangzhou Co. Ltd., Class A

    44,600       84,327  

Bank of Jiangsu Co. Ltd., Class A

    70,399       65,988  

Bank of Nanjing Co. Ltd., Class A

    57,100       71,613  

Bank of Ningbo Co. Ltd., Class A

    28,600       148,237  

Bank of Shanghai Co. Ltd., Class A

    67,970       83,559  

Baoshan Iron & Steel Co. Ltd., Class A

    81,600       58,855  

Baozun Inc., ADR(b)(c)

    5,772       239,192  

BBMG Corp., Class A

    53,400       25,729  

Beijing Capital International Airport Co. Ltd., Class H(b)

    186,000       131,517  

Beijing Dabeinong Technology Group Co. Ltd., Class A

    38,800       64,410  

Beijing Enlight Media Co. Ltd., Class A

    29,600       70,012  

Beijing Enterprises Holdings Ltd.

    65,000       206,738  

Beijing Enterprises Water Group Ltd.(b)

    682,000       268,395  

Beijing Shiji Information Technology Co. Ltd., Class A

    5,400       25,939  

Beijing Sinnet Technology Co. Ltd., Class A

    14,800       56,960  

Beijing Tongrentang Co. Ltd., Class A

    18,400       79,788  

BEST Inc., ADR(b)

    7,104       28,416  

Betta Pharmaceuticals Co. Ltd., Class A

    2,600       49,668  

Bilibili Inc., ADR(b)

    592       27,972  

BOC Aviation Ltd.(a)

    26,300       195,634  

BOE Technology Group Co. Ltd., Class A

    162,800       130,732  
Security   Shares     Value  

 

 
China (continued)            

Bosideng International Holdings Ltd.(c)

    440,000     $ 126,036  

Brilliance China Automotive Holdings Ltd.

    376,000       336,695  

BYD Co. Ltd., Class A

    10,300       127,826  

BYD Co. Ltd., Class H

    80,000       794,823  

BYD Electronic International Co. Ltd.

    91,500       387,834  

Caitong Securities Co. Ltd., Class A

    24,500       52,082  

CGN Power Co. Ltd., Class H(a)

    1,255,000       272,046  

Changjiang Securities Co. Ltd., Class A

    56,100       69,868  

Chaozhou Three-Circle Group Co. Ltd., Class A

    29,699       121,326  

Chengdu Kanghong Pharmaceutical Group Co. Ltd., Class A

    4,900       34,569  

China Aoyuan Group Ltd.

    162,000       186,871  

China Avionics Systems Co. Ltd., Class A

    12,900       33,601  

China Cinda Asset Management Co. Ltd., Class H

    1,128,000       215,407  

China CITIC Bank Corp. Ltd., Class A

    87,000       66,306  

China CITIC Bank Corp. Ltd., Class H

    888,000       371,234  

China Communications Construction Co. Ltd., Class A

    20,100       23,331  

China Communications Construction Co. Ltd., Class H

    525,000       294,672  

China Communications Services Corp. Ltd., Class H

    332,000       218,045  

China Conch Venture Holdings Ltd.

    209,000       906,099  

China Construction Bank Corp., Class A

    88,800       80,384  

China Construction Bank Corp., Class H

    10,656,000         7,548,427  

China Eastern Airlines Corp. Ltd., Class A

    236,872       174,650  

China Education Group Holdings Ltd.(c)

    93,000       182,876  

China Everbright Bank Co. Ltd., Class A

    225,100       126,203  

China Everbright Bank Co. Ltd., Class H

    305,000       109,404  

China Everbright International Ltd.

    461,481       278,670  

China Everbright Ltd.

    122,000       187,955  

China Evergrande Group

    232,000       541,822  

China Film Co. Ltd., Class A

    29,600       64,912  

China Fortune Land Development Co. Ltd., Class A

    22,120       54,257  

China Galaxy Securities Co. Ltd., Class H

    518,000       312,131  

China Gas Holdings Ltd.

    325,600       892,757  

China Gezhouba Group Co. Ltd., Class A

    37,200       34,543  

China Great Wall Securities Co. Ltd., Class A

    14,800       30,101  

China Hongqiao Group Ltd.

    277,000       178,706  

China Huarong Asset Management Co. Ltd., Class H(a)

    1,268,000       145,613  

China Huishan Dairy Holdings Co. Ltd.(b)(d)

    20,200       0 (e)  

China International Capital Corp. Ltd., Class H(a)(b)

    171,200       406,896  

China Jinmao Holdings Group Ltd.

    676,000       423,037  

China Lesso Group Holdings Ltd.

    69,000       128,738  

China Life Insurance Co. Ltd., Class A

    10,900       69,514  

China Life Insurance Co. Ltd., Class H

    918,000       2,236,323  

China Literature Ltd.(a)(b)

    6,400       39,762  

China Longyuan Power Group Corp. Ltd., Class H

    400,000       252,382  

China Medical System Holdings Ltd.

    175,000       197,577  

China Mengniu Dairy Co. Ltd.(b)

    340,000       1,671,452  

China Merchants Bank Co. Ltd., Class A

    133,200       732,983  

China Merchants Bank Co. Ltd., Class H

    459,331       2,192,893  

China Merchants Energy Shipping Co. Ltd., Class A

    28,300       26,692  

China Merchants Port Holdings Co. Ltd.

    178,000       203,720  

China Merchants Securities Co. Ltd.,
Class A(b)

    42,680       134,287  

China Merchants Shekou Industrial Zone Holdings Co. Ltd., Class A

    32,400       79,000  

China Minsheng Banking Corp. Ltd., Class A

    223,900       181,431  

China Minsheng Banking Corp. Ltd., Class H

    809,160       492,795  

China Mobile Ltd.

    692,000       4,834,977  

China Molybdenum Co. Ltd., Class A

    88,800       55,491  

China Molybdenum Co. Ltd., Class H

    513,000       208,506  

China National Building Material Co. Ltd., Class H

    488,000       686,335  
 

 

47  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 
China (continued)            

China National Chemical Engineering Co. Ltd., Class A

    65,600     $ 56,126  

China National Nuclear Power Co. Ltd., Class A

    91,700       62,391  

China National Software & Service Co. Ltd., Class A

    2,500       36,077  

China Northern Rare Earth Group High-Tech Co. Ltd., Class A(b)

    22,100       39,849  

China Oilfield Services Ltd., Class H

    214,000       168,159  

China Overseas Land & Investment Ltd.

    471,000       1,364,354  

China Pacific Insurance Group Co. Ltd., Class A

    32,300       145,344  

China Pacific Insurance Group Co. Ltd., Class H

    325,800       905,917  

China Petroleum & Chemical Corp.,
Class A(b)

    103,600       60,958  

China Petroleum & Chemical Corp., Class H

    3,040,600       1,404,534  

China Power International Development Ltd.

    624,000       120,772  

China Railway Construction Corp. Ltd., Class A

    58,399       76,141  

China Railway Construction Corp. Ltd., Class H

    241,000       185,333  

China Railway Group Ltd., Class A

    99,800       81,598  

China Railway Group Ltd., Class H

    448,000       230,065  

China Railway Signal & Communication Corp. Ltd., Class H(a)

    134,000       54,291  

China Reinsurance Group Corp., Class H

    668,000       71,539  

China Renewable Energy Investment
Ltd.(a)(b)(d)

    2,513       0 (e)  

China Resources Beer Holdings Co. Ltd.

    180,000         1,170,558  

China Resources Cement Holdings Ltd.

    328,000       478,236  

China Resources Gas Group Ltd.

    118,000       554,209  

China Resources Land Ltd.

    339,777       1,571,712  

China Resources Pharmaceutical
Group Ltd.(a)

    222,000       125,750  

China Resources Power Holdings Co. Ltd.

    296,000       351,374  

China Resources Sanjiu Medical & Pharmaceutical Co. Ltd., Class A

    14,900       62,000  

China Shenhua Energy Co. Ltd., Class A

    25,200       59,457  

China Shenhua Energy Co. Ltd., Class H

    410,500       685,389  

China Shipbuilding Industry Co. Ltd.,
Class A(b)

    119,499       84,619  

China South Publishing & Media Group Co. Ltd., Class A

    50,899       83,232  

China Southern Airlines Co. Ltd., Class A(b)

    83,500       71,441  

China Southern Airlines Co. Ltd., Class H(b)(c)

    194,000       102,380  

China Spacesat Co. Ltd., Class A

    15,100       86,996  

China State Construction Engineering Corp. Ltd., Class A

    222,640       167,082  

China State Construction International Holdings Ltd.

    264,000       204,724  

China Taiping Insurance Holdings Co. Ltd.

    201,700       320,632  

China Telecom Corp. Ltd., Class H

    1,720,000       563,705  

China Tourism Group Duty Free Corp. Ltd., Class A

    10,500       318,872  

China Tower Corp. Ltd., Class H(a)

    5,180,000       989,194  

China Traditional Chinese Medicine Holdings Co. Ltd.(b)

    360,000       153,752  

China Unicom Hong Kong Ltd.

    744,000       527,030  

China United Network Communications Ltd., Class A

    158,700       120,256  

China Vanke Co. Ltd., Class A

    55,600       221,372  

China Vanke Co. Ltd., Class H

    207,200       644,313  

China Yangtze Power Co. Ltd., Class A

    133,200       375,340  

Chongqing Brewery Co. Ltd., Class A

    3,499       46,514  

Chongqing Changan Automobile Co. Ltd., Class A(b)

    20,900       35,733  

Chongqing Rural Commercial Bank Co. Ltd., Class H

    256,000       104,380  

Chongqing Zhifei Biological Products Co. Ltd., Class A

    9,100       179,565  

CIFI Holdings Group Co. Ltd.

    366,000       311,684  

CITIC Ltd.

    697,000       635,832  

CITIC Securities Co. Ltd., Class A

    59,400       275,789  

CITIC Securities Co. Ltd., Class H

    238,500       573,004  

CNOOC Ltd.

    2,122,000       2,414,926  

Contemporary Amperex Technology Co. Ltd., Class A

    11,700       352,496  

COSCO SHIPPING Development Co. Ltd., Class A

    193,900       60,017  

COSCO SHIPPING Energy Transportation Co. Ltd., Class H

    204,000       93,970  
Security   Shares     Value  
China (continued)            

COSCO SHIPPING Holdings Co. Ltd., Class A(b)

    94,200     $ 74,819  

COSCO SHIPPING Holdings Co. Ltd., Class H(b)

    284,000       142,547  

COSCO SHIPPING Ports Ltd.

    228,000       129,148  

Country Garden Holdings Co. Ltd.(c)

    926,828       1,149,244  

Country Garden Services Holdings Co. Ltd.

    152,000       1,060,057  

CRRC Corp. Ltd., Class A

    107,600       92,060  

CRRC Corp. Ltd., Class H

    548,750       247,818  

CSPC Pharmaceutical Group Ltd.

    680,000       1,510,887  

Dali Foods Group Co. Ltd.(a)

    265,500       162,723  

Daqin Railway Co. Ltd., Class A

    64,099       61,954  

DHC Software Co. Ltd., Class A

    22,300       37,964  

Dong-E-E-Jiao Co. Ltd., Class A

    5,300       35,774  

Dongfang Electric Corp. Ltd., Class A

    19,800       28,938  

Dongfeng Motor Group Co. Ltd., Class H

    352,000       244,351  

Dongxing Securities Co. Ltd., Class A

    34,800       67,830  

East Money Information Co. Ltd., Class A

    44,580       170,271  

ENN Energy Holdings Ltd.

    97,500       1,081,915  

Everbright Securities Co. Ltd., Class A

    14,900       47,686  

Fangda Carbon New Material Co. Ltd., Class A(b)

    133,240       130,922  

Far East Horizon Ltd.

    258,000       228,367  

Financial Street Holdings Co. Ltd., Class A

    14,800       14,780  

First Capital Securities Co. Ltd., Class A

    23,000       36,099  

Focus Media Information Technology Co. Ltd., Class A

    77,400       85,207  

Foshan Haitian Flavouring & Food Co. Ltd., Class A

    14,821       396,430  

Fosun International Ltd.

    326,000       363,010  

Founder Securities Co. Ltd., Class A(b)

    76,000       97,314  

Foxconn Industrial Internet Co. Ltd., Class A

    14,800       31,851  

Fuyao Glass Industry Group Co. Ltd., Class A

    15,800       66,853  

Fuyao Glass Industry Group Co. Ltd., Class H(a)

    71,200       229,214  

Ganfeng Lithium Co. Ltd., Class A

    8,900       65,634  

G-Bits Network Technology Xiamen Co. Ltd., Class A

    700       63,287  

GD Power Development Co. Ltd., Class A

    91,800       27,476  

GDS Holdings Ltd., ADR(b)

    7,844       634,893  

Geely Automobile Holdings Ltd.

    703,000       1,485,796  

Gemdale Corp., Class A

    28,600       59,796  

Genscript Biotech Corp.(b)

    120,000       231,944  

GF Securities Co. Ltd., Class A

    58,000       136,931  

GF Securities Co. Ltd., Class H

    146,000       172,748  

Giant Network Group Co. Ltd., Class A

    26,200       79,145  

GoerTek Inc., Class A

    22,600       135,584  

GOME Retail Holdings Ltd.(b)(c)

    1,395,000       199,796  

Great Wall Motor Co. Ltd., Class H

    388,000       421,034  

Gree Electric Appliances Inc. of Zhuhai, Class A

    15,400       122,541  

Greenland Holdings Corp. Ltd., Class A

    47,100       52,607  

Greentown Service Group Co. Ltd.

    184,000       247,386  

Guangdong HEC Technology Holding Co. Ltd., Class A(b)

    19,000       17,976  

Guangdong Investment Ltd.

    358,000       558,931  

Guanghui Energy Co. Ltd., Class A(b)

    52,300       22,221  

Guangzhou Automobile Group Co. Ltd., Class H

    372,800         320,361  

Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., Class A

    7,300       34,650  

Guangzhou Haige Communications Group Inc. Co., Class A

    36,500       70,451  

Guangzhou R&F Properties Co. Ltd., Class H

    163,200       207,629  

Guosen Securities Co. Ltd., Class A

    45,600       93,275  

Guotai Junan Securities Co. Ltd., Class A

    27,500       77,652  

Guotai Junan Securities Co. Ltd., Class H(a)

    104,200       162,683  

Guoyuan Securities Co. Ltd., Class A

    14,800       23,813  

Haidilao International Holding Ltd.(a)(c)

    51,000       329,026  

Haier Electronics Group Co. Ltd.

    158,000       541,267  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  48


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Haier Smart Home Co. Ltd., Class A

    29,700     $ 96,700  

Haitian International Holdings Ltd.

    83,000       200,910  

Haitong Securities Co. Ltd., Class A(b)

    66,000       146,182  

Haitong Securities Co. Ltd., Class H(b)

    324,400       294,675  

Hangzhou Hikvision Digital Technology Co. Ltd., Class A

    45,500       248,587  

Hangzhou Robam Appliances Co. Ltd., Class A

    5,600       31,887  

Hangzhou Tigermed Consulting Co. Ltd., Class A

    8,500       138,995  

Hansoh Pharmaceutical Group Co. Ltd.(a)(b)

    30,000       142,255  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    29,600       274,428  

Hengan International Group Co. Ltd.

    90,500       713,477  

Hengli Petrochemical Co. Ltd., Class A

    29,600       90,885  

Hengtong Optic-Electric Co. Ltd., Class A

    36,900       88,086  

Hengyi Petrochemical Co. Ltd., Class A

    29,690       53,969  

Hesteel Co. Ltd., Class A(b)

    94,800       30,727  

Hithink RoyalFlush Information Network Co. Ltd., Class A

    2,600       63,744  

Hongfa Technology Co. Ltd., Class A

    6,100       41,574  

Hua Hong Semiconductor Ltd.(a)(b)

    58,000       209,544  

Huaan Securities Co. Ltd., Class A

    28,200       37,056  

Huadian Power International Corp. Ltd., Class A

    48,300       28,278  

Huadong Medicine Co. Ltd., Class A

    8,800       35,924  

Huaneng Power International Inc., Class H

    592,000       246,726  

Huatai Securities Co. Ltd., Class A

    44,400       138,792  

Huatai Securities Co. Ltd., Class H(a)

    213,200       374,124  

Huaxi Securities Co. Ltd., Class A

    44,400       82,977  

Huaxia Bank Co. Ltd., Class A

    80,400       75,480  

Huayu Automotive Systems Co. Ltd., Class A

    18,900       68,656  

Huazhu Group Ltd., ADR

    16,428       734,824  

Hubei Biocause Pharmaceutical Co. Ltd., Class A

    40,600       33,373  

Hubei Energy Group Co. Ltd., Class A

    91,900       52,329  

Hunan Valin Steel Co. Ltd., Class A

    38,300       27,233  

Hundsun Technologies Inc., Class A

    8,580       139,602  

Hutchison China MediTech Ltd., ADR(b)(c)

    8,307       275,959  

HUYA Inc., ADR(b)

    2,960       85,011  

Iflytek Co. Ltd., Class A

    12,300       67,685  

Industrial & Commercial Bank of China Ltd., Class A

    316,500       229,202  

Industrial & Commercial Bank of China Ltd., Class H

    6,808,000       3,812,406  

Industrial Bank Co. Ltd., Class A

    115,200       271,805  

Industrial Securities Co. Ltd., Class A

    15,400       18,482  

Inner Mongolia BaoTou Steel Union Co. Ltd., Class A(b)

    331,700       56,178  

Inner Mongolia Junzheng Energy & Chemical Industry Group Co. Ltd., Class A

    59,200       80,902  

Inner Mongolia Yili Industrial Group Co. Ltd., Class A

    36,600       224,116  

Inner Mongolia Yitai Coal Co. Ltd., Class B

    142,800       99,960  

Innovent Biologics Inc.(a)(b)

    81,500       543,148  

iQIYI Inc., ADR(b)

    14,652       317,216  

JD.com Inc., ADR(b)

    95,756         7,530,252  

Jiangsu Expressway Co. Ltd., Class H

    124,000       124,158  

Jiangsu Hengli Hydraulic Co. Ltd., Class A

    5,920       56,623  

Jiangsu Hengrui Medicine Co. Ltd., Class A

    28,164       390,110  

Jiangsu Yanghe Brewery Joint-Stock Co. Ltd., Class A

    7,203       148,379  

Jiangsu Zhongtian Technology Co. Ltd., Class A

    29,600       48,835  

Jiangxi Copper Co. Ltd., Class A

    12,600       28,735  

Jiangxi Copper Co. Ltd., Class H

    167,000       196,948  

Jinduicheng Molybdenum Co. Ltd., Class A

    24,600       22,448  

Jinke Properties Group Co. Ltd., Class A

    59,200       88,336  

Joincare Pharmaceutical Group Industry Co. Ltd., Class A

    29,600       84,230  

Jointown Pharmaceutical Group Co. Ltd., Class A(b)

    29,600       76,581  

JOYY Inc.(b)

    6,956       594,321  

Kaisa Group Holdings Ltd.(b)

    375,000       188,706  
Security   Shares     Value  
China (continued)            

Kingboard Holdings Ltd.

    97,500     $ 313,881  

Kingboard Laminates Holdings Ltd.

    152,000       191,614  

Kingdee International Software Group Co.
Ltd.(b)(c)

    304,000       775,087  

Kingsoft Corp. Ltd.

    108,000       578,311  

Kunlun Energy Co. Ltd.

    408,000       304,283  

Kweichow Moutai Co. Ltd., Class A

    7,918       2,065,294  

KWG Group Holdings Ltd.

    164,000       311,911  

Lee & Man Paper Manufacturing Ltd.

    178,000       106,568  

Legend Holdings Corp., Class H(a)

    49,600       73,087  

Lenovo Group Ltd.

    912,000       609,557  

Lens Technology Co. Ltd., Class A

    26,600       134,065  

Lepu Medical Technology Beijing Co. Ltd., Class A

    13,100       74,134  

Li Ning Co. Ltd.

    248,500       1,051,696  

Liaoning Cheng Da Co. Ltd., Class A

    29,600       113,272  

Logan Group Co. Ltd.

    197,000       367,048  

Longfor Group Holdings Ltd.(a)

    216,500       1,146,729  

LONGi Green Energy Technology Co. Ltd., Class A

    20,700       191,249  

Luxshare Precision Industry Co. Ltd., Class A

    38,741       311,098  

Luye Pharma Group Ltd.(a)(c)

    222,000       120,307  

Luzhou Laojiao Co. Ltd., Class A

    7,700       168,072  

Mango Excellent Media Co. Ltd., Class A

    7,100       73,600  

Meinian Onehealth Healthcare Holdings Co. Ltd., Class A(b)

    29,684       76,105  

Meituan Dianping, Class B(b)

    266,400       8,785,874  

Momo Inc., ADR

    17,794       362,998  

Muyuan Foodstuff Co. Ltd., Class A

    13,600       174,340  

NARI Technology Co. Ltd., Class A

    26,900       87,976  

NavInfo Co. Ltd., Class A

    10,800       25,923  

NetEase Inc., ADR

    9,620       4,686,960  

New China Life Insurance Co. Ltd., Class A

    12,300       107,481  

New China Life Insurance Co. Ltd., Class H

    99,100       395,753  

New Hope Liuhe Co. Ltd., Class A

    21,300       118,175  

New Oriental Education & Technology Group Inc., ADR(b)

    17,211       2,523,649  

Nine Dragons Paper Holdings Ltd.(c)

    216,000       239,686  

Ninestar Corp., Class A

    14,800       78,936  

NIO Inc., ADR(b)(c)

    99,043       1,884,788  

Noah Holdings Ltd.(b)(c)

    4,884       136,752  

OFILM Group Co. Ltd., Class A

    24,600       67,919  

Oppein Home Group Inc., Class A

    2,800       41,290  

Orient Securities Co. Ltd., Class A

    33,700       58,109  

Oriental Pearl Group Co. Ltd., Class A

    27,100       42,178  

Pacific Securities Co. Ltd. (The), Class A(b)

    51,300       31,832  

People’s Insurance Co. Group of China Ltd. (The), Class H

    1,017,000       331,995  

Perfect World Co. Ltd., Class A

    9,396       50,223  

PetroChina Co. Ltd., Class A

    52,900       34,215  

PetroChina Co. Ltd., Class H

    2,580,000       892,163  

PICC Property & Casualty Co. Ltd., Class H

    770,740       595,696  

Pinduoduo Inc., ADR(b)(c)

    23,815         2,118,106  

Ping An Bank Co. Ltd., Class A

    92,300       203,220  

Ping An Healthcare and Technology Co.
Ltd.(a)(b)(c)

    29,800       434,495  

Ping An Insurance Group Co. of China Ltd., Class A

    65,600       733,853  

Ping An Insurance Group Co. of China Ltd., Class H

    666,000       7,093,837  

Poly Developments and Holdings Group Co. Ltd., Class A

    59,400       139,629  

Postal Savings Bank of China Co. Ltd., Class H(a)

    1,000,000       473,539  

Power Construction Corp. of China Ltd., Class A

    59,200       35,179  

RiseSun Real Estate Development Co. Ltd., Class A

    29,800       35,851  

Rongsheng Petro Chemical Co. Ltd., Class A

    29,619       85,625  

SAIC Motor Corp. Ltd., Class A

    45,922       125,111  

Sanan Optoelectronics Co. Ltd., Class A

    24,700       97,875  
 

 

49  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Sansteel Minguang Co. Ltd. Fujian, Class A

    20,900     $ 21,208  

Sany Heavy Industry Co. Ltd., Class A

    43,300       139,968  

SDIC Capital Co. Ltd., Class A

    27,600       61,171  

SDIC Power Holdings Co. Ltd., Class A

    25,800       34,128  

Seazen Group Ltd.(b)

    310,000       281,195  

Seazen Holdings Co. Ltd., Class A

    11,300       59,229  

Semiconductor Manufacturing International Corp.(b)

    373,300       1,199,354  

SF Holding Co. Ltd., Class A

    6,400       79,519  

Shaanxi Coal Industry Co. Ltd., Class A

    70,100       83,209  

Shandong Buchang Pharmaceuticals Co. Ltd., Class A

    18,500       74,982  

Shandong Gold Mining Co. Ltd., Class A

    22,260       94,219  

Shandong Linglong Tyre Co. Ltd., Class A

    18,800       65,630  

Shandong Weigao Group Medical Polymer Co. Ltd., Class H

    264,000       616,556  

Shanghai Electric Group Co. Ltd., Class A(b)

    81,900       66,485  

Shanghai Electric Group Co. Ltd., Class H(b)

    296,000       87,080  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class A

    17,100       136,867  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class H

    53,000       223,963  

Shanghai Industrial Holdings Ltd.

    63,000       94,620  

Shanghai International Airport Co. Ltd., Class A

    8,800       98,161  

Shanghai International Port Group Co. Ltd., Class A

    40,700       26,384  

Shanghai Jinjiang International Hotels Co. Ltd., Class A

    7,456       45,286  

Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., Class B

    167,736       144,085  

Shanghai Pharmaceuticals Holding Co. Ltd., Class A

    14,800       47,971  

Shanghai Pharmaceuticals Holding Co. Ltd., Class H

    118,400       211,130  

Shanghai Pudong Development Bank Co. Ltd., Class A

    156,400       236,570  

Shanghai Tunnel Engineering Co. Ltd., Class A

    80,300       70,110  

Shanxi Lu’an Environmental Energy Development Co. Ltd., Class A

    25,800       23,731  

Shanxi Securities Co. Ltd., Class A

    44,430       53,323  

Shanxi Xinghuacun Fen Wine Factory Co. Ltd., Class A

    5,500       158,371  

Shanxi Xishan Coal & Electricity Power Co. Ltd., Class A

    38,780       23,894  

Shenergy Co. Ltd., Class A

    30,300       25,349  

Shenwan Hongyuan Group Co. Ltd., Class A

    88,800       73,123  

Shenzhen Energy Group Co. Ltd., Class A

    91,920       76,900  

Shenzhen Goodix Technology Co. Ltd., Class A

    900       23,515  

Shenzhen Hepalink Pharmaceutical Group Co. Ltd., Class A

    29,656       105,866  

Shenzhen Inovance Technology Co. Ltd., Class A

    9,300       75,767  

Shenzhen International Holdings Ltd.

    132,500       212,680  

Shenzhen Investment Ltd.

    356,000       120,808  

Shenzhen Kangtai Biological Products Co. Ltd., Class A

    5,000       144,543  

Shenzhen Mindray Bio-Medical Electronics Co. Ltd., Class A

    2,600       129,997  

Shenzhen Overseas Chinese Town Co. Ltd., Class A

    74,000       77,250  

Shenzhou International Group Holdings Ltd.

    92,900       1,498,358  

Shijiazhuang Yiling Pharmaceutical Co. Ltd., Class A

    14,800       61,757  

Shimao Group Holdings Ltd.

    142,000       639,446  

Sichuan Chuantou Energy Co. Ltd., Class A

    59,200       86,607  

Sichuan Kelun Pharmaceutical Co. Ltd., Class A

    29,600       106,919  

SINA Corp.(b)

    8,288       337,197  

Sino Biopharmaceutical Ltd.

    1,290,250         1,490,002  

Sinolink Securities Co. Ltd., Class A

    29,600       67,246  

Sino-Ocean Group Holding Ltd.

    327,500       75,640  

Sinopec Engineering Group Co. Ltd., Class H

    172,500       76,566  

Sinopec Shanghai Petrochemical Co. Ltd., Class H

    433,000       89,392  

Sinopharm Group Co. Ltd., Class H

    168,000       413,597  

Sinotruk Hong Kong Ltd.

    94,500       245,695  

SOHO China Ltd.(b)(c)

    266,000       82,029  
Security   Shares     Value  
China (continued)            

Songcheng Performance Development Co. Ltd., Class A

    14,800     $ 38,636  

SooChow Securities Co. Ltd., Class A

    29,620       46,533  

Spring Airlines Co. Ltd., Class A

    9,000       57,975  

SSY Group Ltd.

    212,000       135,130  

Sun Art Retail Group Ltd.

    319,000       415,721  

Sunac China Holdings Ltd.

    298,000       1,253,498  

Suning.com Co. Ltd., Class A

    74,000       106,422  

Sunny Optical Technology Group Co. Ltd.

    88,800       1,316,506  

Suzhou Dongshan Precision Manufacturing Co. Ltd., Class A

    15,100       61,267  

Suzhou Gold Mantis Construction Decoration Co. Ltd., Class A

    22,699       34,832  

TAL Education Group, ADR(b)(c)

    44,992       3,320,860  

TBEA Co. Ltd., Class A

    15,300       18,251  

TCL Technology Group Corp., Class A

    103,600       107,092  

Tencent Holdings Ltd.

    578,800       39,619,027  

Tencent Music Entertainment Group, ADR(b)(c)

    592       9,253  

Tianma Microelectronics Co. Ltd., Class A

    12,500       29,985  

Tianqi Lithium Corp., Class A(b)

    9,620       31,883  

Tingyi Cayman Islands Holding Corp.

    246,000       462,154  

Toly Bread Co. Ltd., Class A

    3,800       35,020  

Tonghua Dongbao Pharmaceutical Co. Ltd., Class A

    29,600       61,498  

Tongling Nonferrous Metals Group Co. Ltd., Class A

    79,300       26,514  

Tongwei Co. Ltd., Class A

    29,600       105,450  

Transfar Zhilian Co. Ltd., Class A

    74,099       65,345  

TravelSky Technology Ltd., Class H

    111,000       230,876  

Trip.com Group Ltd., ADR(b)

    57,128       1,727,551  

Tsingtao Brewery Co. Ltd., Class A

    3,300       42,091  

Tsingtao Brewery Co. Ltd., Class H

    48,000       437,256  

Uni-President China Holdings Ltd.

    191,000       173,991  

Unisplendour Corp. Ltd., Class A

    9,380       44,920  

Vipshop Holdings Ltd., ADR(b)

    54,464       899,201  

Wangsu Science & Technology Co. Ltd., Class A

    19,200       25,678  

Wanhua Chemical Group Co. Ltd., Class A

    16,300       174,420  

Want Want China Holdings Ltd.(c)

    616,000       422,846  

Weibo Corp., ADR(b)(c)

    7,104       264,979  

Weichai Power Co. Ltd., Class A

    42,700       92,393  

Weichai Power Co. Ltd., Class H

    236,200       477,267  

Wens Foodstuffs Group Co. Ltd., Class A

    38,160       137,504  

Western Securities Co. Ltd., Class A

    42,600       60,705  

Wharf Holdings Ltd. (The)

    148,000       288,738  

Winning Health Technology Group Co. Ltd., Class A

    19,000       58,810  

Wuhan Guide Infrared Co. Ltd., Class A

    15,350       85,993  

Wuhu Sanqi Interactive Entertainment Network Technology Group Co. Ltd., Class A

    11,800       78,544  

Wuliangye Yibin Co. Ltd., Class A

    21,600       756,882  

WuXi AppTec Co. Ltd., Class A

    10,920       175,236  

WuXi AppTec Co. Ltd., Class H(a)

    44,480       658,865  

Wuxi Biologics Cayman Inc.(a)(b)

    66,000       1,715,115  

Wuxi Lead Intelligent Equipment Co. Ltd., Class A

    5,200       34,119  

Wuxi Taiji Industry Co. Ltd., Class A

    29,600       48,662  

XCMG Construction Machinery Co. Ltd., Class A

    74,200       67,276  

Xiamen C & D Inc., Class A

    22,000       30,900  

Xiaomi Corp., Class B(a)(b)

    921,200         2,793,262  

Xinhu Zhongbao Co. Ltd., Class A

    103,600       53,243  

Xinjiang Goldwind Science & Technology Co. Ltd., Class A

    34,302       54,690  

Xinjiang Goldwind Science & Technology Co. Ltd., Class H

    118,562       102,038  

Xinyi Solar Holdings Ltd.

    380,000       480,017  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  50


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Yango Group Co. Ltd., Class A

    25,700     $ 26,454  

Yantai Jereh Oilfield Services Group Co. Ltd., Class A

    5,600       28,003  

Yanzhou Coal Mining Co. Ltd., Class A

    44,400       60,158  

Yanzhou Coal Mining Co. Ltd., Class H

    186,000       143,277  

Yifan Pharmaceutical Co. Ltd., Class A

    29,600       129,565  

Yihai International Holding Ltd.(b)

    57,000       895,802  

Yonghui Superstores Co. Ltd., Class A

    76,200       98,794  

Yonyou Network Technology Co. Ltd., Class A

    18,240       111,611  

Youzu Interactive Co. Ltd., Class A

    11,500       34,672  

Yuexiu Property Co. Ltd.

    920,000       175,687  

Yum China Holdings Inc.(b)(c)

    43,808       2,528,160  

Yunda Holding Co. Ltd., Class A

    7,280       22,087  

Yunnan Baiyao Group Co. Ltd., Class A

    5,500       92,917  

Yuzhou Group Holdings Co. Ltd.

    225,000       105,095  

Zhaojin Mining Industry Co. Ltd., Class H

    127,500       142,797  

Zhejiang Chint Electrics Co. Ltd., Class A(b)

    22,000       110,720  

Zhejiang Dahua Technology Co. Ltd., Class A

    22,200       74,096  

Zhejiang Expressway Co. Ltd., Class H

    198,000       133,615  

Zhejiang Huayou Cobalt Co. Ltd., Class A(b)

    7,100       41,631  

Zhejiang Longsheng Group Co. Ltd., Class A

    30,600       64,112  

Zhejiang NHU Co. Ltd., Class A

    7,800       37,319  

Zhejiang Semir Garment Co. Ltd., Class A

    16,900       18,975  

Zhengzhou Yutong Bus Co. Ltd., Class A

    11,900       24,689  

ZhongAn Online P&C Insurance Co. Ltd., Class H(a)(b)

    46,600       306,953  

Zhongjin Gold Corp. Ltd., Class A

    22,000       35,012  

Zhongsheng Group Holdings Ltd.

    75,000       468,378  

Zhuzhou CRRC Times Electric Co. Ltd., Class H

    68,800       221,043  

Zijin Mining Group Co. Ltd., Class A

    103,600       108,756  

Zijin Mining Group Co. Ltd., Class H

    712,000       485,988  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class A(b)

    59,200       73,642  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class H(b)

    59,200       59,275  

ZTE Corp., Class A

    13,100       74,593  

ZTE Corp., Class H

    95,960       279,207  

ZTO Express Cayman Inc., ADR

    39,368       1,320,009  
   

 

 

 
      281,279,779  
India — 10.8%            

Adani Ports & Special Economic Zone Ltd.

    76,428       369,382  

Ambuja Cements Ltd.

    79,923       228,615  

Asian Paints Ltd.

    36,016       929,226  

Aurobindo Pharma Ltd.

    34,780       382,210  

Avenue Supermarts Ltd.(a)(b)

    16,034       490,392  

Axis Bank Ltd.(b)

    277,089       1,869,972  

Bajaj Auto Ltd.

    10,345       416,990  

Bajaj Finance Ltd.

    22,200       1,051,919  

Bajaj Finserv Ltd.

    4,739       398,547  

Bandhan Bank Ltd.(a)(b)

    79,258       329,275  

Berger Paints India Ltd.

    16,280       118,925  

Bharat Forge Ltd.

    28,164       187,945  

Bharat Petroleum Corp. Ltd.

    81,548       451,792  

Bharti Airtel Ltd.

    180,560       1,258,640  

Bharti Infratel Ltd.

    43,844       118,265  

Bosch Ltd.

    1,047       182,268  

Britannia Industries Ltd.

    7,434       376,313  

Cipla Ltd.

    45,880       444,760  

Coal India Ltd.

    142,376       259,868  

Colgate-Palmolive India Ltd.

    2,960       54,821  

Container Corp. of India Ltd.

    27,824       148,556  

Dabur India Ltd.

    64,727       417,341  
Security   Shares     Value  
India (continued)            

Divi’s Laboratories Ltd.

    10,309     $ 437,360  

DLF Ltd.

    36,112       77,687  

Dr. Reddy’s Laboratories Ltd.

    14,060       814,614  

Eicher Motors Ltd.

    15,520       441,094  

GAIL India Ltd.

    193,417       251,338  

Godrej Consumer Products Ltd.

    43,512       385,006  

Grasim Industries Ltd.

    37,077       339,930  

Havells India Ltd.

    31,885       266,641  

HCL Technologies Ltd.

    134,718       1,270,906  

HDFC Asset Management Co. Ltd.(a)

    3,996       130,883  

HDFC Life Insurance Co. Ltd.(a)(b)

    58,122       453,874  

Hero MotoCorp Ltd.

    11,465       468,218  

Hindalco Industries Ltd.

    139,553       351,217  

Hindustan Petroleum Corp. Ltd.

    77,140       211,223  

Hindustan Unilever Ltd.

    97,976       2,818,320  

Housing Development Finance Corp. Ltd.

    188,952       4,704,323  

ICICI Bank Ltd.(b)

    565,064       3,029,233  

ICICI Lombard General Insurance Co. Ltd.(a)

    17,268       294,816  

ICICI Prudential Life Insurance Co. Ltd.(a)

    26,828       154,045  

Indian Oil Corp. Ltd.

    225,996       263,430  

Info Edge India Ltd.

    5,456       241,911  

Infosys Ltd.

    389,980       4,919,817  

InterGlobe Aviation Ltd.(a)(b)

    11,988       195,298  

ITC Ltd.

    432,012       1,121,591  

JSW Steel Ltd.

    106,813       391,511  

Jubilant Foodworks Ltd.

    888       25,298  

Larsen & Toubro Ltd.

    56,536       725,791  

LIC Housing Finance Ltd.

    33,152       135,702  

Lupin Ltd.

    28,238       355,835  

Mahindra & Mahindra Ltd.

    90,178       743,525  

Marico Ltd.

    57,481       288,079  

Maruti Suzuki India Ltd.

    13,056       1,213,224  

Motherson Sumi Systems Ltd.

    118,252       176,235  

Nestle India Ltd.

    2,947       638,567  

NTPC Ltd.

    282,088       369,436  

Oil & Natural Gas Corp. Ltd.

    317,549       353,539  

Page Industries Ltd.

    672       173,348  

Petronet LNG Ltd.

    83,028       271,111  

Pidilite Industries Ltd.

    15,637       298,007  

Piramal Enterprises Ltd.

    12,105       224,857  

Power Grid Corp. of India Ltd.

    219,632       533,956  

REC Ltd.

    89,025       128,384  

Reliance Industries Ltd.

    318,052       8,990,535  

SBI Life Insurance Co. Ltd.(a)(b)

    32,856       369,481  

Shree Cement Ltd.

    1,068       294,294  

Shriram Transport Finance Co. Ltd.

    24,124       230,220  

Siemens Ltd.

    3,552       55,970  

State Bank of India(b)

    221,543       638,075  

Sun Pharmaceutical Industries Ltd.

    103,156       729,096  

Tata Consultancy Services Ltd.

    105,376       3,231,464  

Tata Consumer Products Ltd.

    5,624       40,674  

Tata Motors Ltd.(b)

    209,700       407,962  

Tata Steel Ltd.

    41,409       232,339  

Tech Mahindra Ltd.

    55,796       561,693  

Titan Co. Ltd.

    38,628       577,524  

UltraTech Cement Ltd.

    12,728       675,043  

United Spirits Ltd.(b)

    41,533       308,447  

UPL Ltd.

    67,299       462,588  

Vedanta Ltd.

    228,015       398,521  

Wipro Ltd.

    146,520       540,038  
 

 

51  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
India (continued)            

Zee Entertainment Enterprises Ltd.

    108,520     $ 300,095  
   

 

 

 
      60,219,261  
Indonesia — 2.0%            

Ace Hardware Indonesia Tbk PT

    296,000       31,404  

Adaro Energy Tbk PT

    1,816,200       135,318  

Astra International Tbk PT

    2,445,900       856,590  

Bank Central Asia Tbk PT

    1,213,800       2,615,140  

Bank Mandiri Persero Tbk PT

    2,291,400       936,229  

Bank Negara Indonesia Persero Tbk PT

    917,600       321,357  

Bank Rakyat Indonesia Persero Tbk PT

    6,808,400       1,641,029  

Barito Pacific Tbk PT(b)

    3,418,800       197,205  

Charoen Pokphand Indonesia Tbk PT(b)

    976,800       422,581  

Gudang Garam Tbk PT(b)

    63,400       206,798  

Hanjaya Mandala Sampoerna Tbk PT

    1,162,000       131,660  

Indah Kiat Pulp & Paper Corp. Tbk PT

    370,000       236,292  

Indocement Tunggal Prakarsa Tbk PT

    230,400       187,880  

Indofood CBP Sukses Makmur Tbk PT

    297,200       208,678  

Indofood Sukses Makmur Tbk PT

    562,800       294,685  

Kalbe Farma Tbk PT

    2,684,600       291,273  

Perusahaan Gas Negara Tbk PT

    1,482,800       127,788  

Semen Indonesia Persero Tbk PT

    371,100       268,848  

Telekomunikasi Indonesia Persero Tbk PT

    5,875,600       1,153,937  

Unilever Indonesia Tbk PT

    932,400       526,626  

United Tractors Tbk PT

    210,100       331,832  

XL Axiata Tbk PT

    162,800       27,278  
   

 

 

 
      11,150,428  
Malaysia — 2.3%            

AMMB Holdings Bhd

    198,700       139,288  

Axiata Group Bhd

    335,600       242,505  

CIMB Group Holdings Bhd

    580,200       459,647  

Dialog Group Bhd

    470,478       405,477  

DiGi.Com Bhd

    393,900       373,522  

Fraser & Neave Holdings Bhd

    20,700       152,163  

Gamuda Bhd

    281,200       229,523  

Genting Bhd

    251,600       212,007  

Genting Malaysia Bhd

    367,000       200,879  

Genting Plantations Bhd

    52,100       124,325  

HAP Seng Consolidated Bhd

    65,600       113,389  

Hartalega Holdings Bhd

    198,900       788,820  

Hong Leong Bank Bhd

    80,700       271,228  

Hong Leong Financial Group Bhd

    26,100       77,319  

IHH Healthcare Bhd

    271,800       349,741  

IJM Corp. Bhd

    8,600       2,477  

IOI Corp. Bhd

    242,900       260,073  

Kuala Lumpur Kepong Bhd

    51,700       281,244  

Malayan Banking Bhd

    463,000       814,738  

Malaysia Airports Holdings Bhd

    127,656       156,295  

Maxis Bhd

    301,300       361,661  

MISC Bhd

    171,200       312,767  

Nestle Malaysia Bhd

    8,500       284,048  

Petronas Chemicals Group Bhd

    300,000       393,230  

Petronas Dagangan Bhd

    43,100       213,146  

Petronas Gas Bhd

    97,100       384,624  

PPB Group Bhd

    76,080       328,758  

Press Metal Aluminium Holdings Bhd

    177,600       222,133  

Public Bank Bhd

    379,510       1,495,992  

QL Resources Bhd

    89,100       205,344  

RHB Bank Bhd

    201,262       221,289  

Sime Darby Bhd

    356,600       187,481  
Security   Shares     Value  
Malaysia (continued)            

Sime Darby Plantation Bhd

    267,000     $ 326,900  

Supermax Corp. Bhd(b)

    14,300       76,006  

Telekom Malaysia Bhd

    153,000       152,431  

Tenaga Nasional Bhd

    325,600       848,882  

Top Glove Corp. Bhd

    199,900       1,261,162  

Westports Holdings Bhd

    104,200       91,305  

YTL Corp. Bhd(b)

    407,308       65,513  
   

 

 

 
      13,087,332  
Pakistan — 0.0%            

Habib Bank Ltd.(b)

    51,476       41,790  

MCB Bank Ltd.(b)

    80,128       82,762  

Oil & Gas Development Co. Ltd.

    88,800       61,524  
   

 

 

 
      186,076  
Philippines — 1.0%            

Aboitiz Equity Ventures Inc.

    236,810       234,441  

Aboitiz Power Corp.

    177,600       97,619  

Ayala Corp.

    33,890       512,701  

Ayala Land Inc.

    871,460       517,646  

Bank of the Philippine Islands

    126,052       174,187  

BDO Unibank Inc.

    245,409       435,293  

Globe Telecom Inc.

    4,390       189,055  

GT Capital Holdings Inc.

    11,120       91,740  

International Container Terminal Services Inc.

    126,240       273,388  

JG Summit Holdings Inc.

    374,446       496,584  

Jollibee Foods Corp.

    55,090       153,504  

Manila Electric Co.

    29,930       166,055  

Megaworld Corp.(b)

    1,602,900       96,204  

Metro Pacific Investments Corp.

    1,951,400       135,232  

Metropolitan Bank & Trust Co.

    223,512       154,432  

PLDT Inc.

    11,840       361,171  

Puregold Price Club Inc.

    29,600       32,967  

Robinsons Land Corp.

    287,190       86,598  

SM Investments Corp.

    29,169       511,367  

SM Prime Holdings Inc.

    1,237,250       745,131  

Universal Robina Corp.

    115,120       327,184  
   

 

 

 
      5,792,499  
South Korea — 14.2%            

Alteogen Inc.(b)

    290       51,023  

Amorepacific Corp.

    4,144       586,069  

AMOREPACIFIC Group

    3,734       160,311  

BGF retail Co. Ltd.

    888       95,311  

BNK Financial Group Inc.

    33,596       143,672  

Celltrion Healthcare Co. Ltd.(b)

    6,956       586,157  

Celltrion Inc.(b)

    11,348       2,837,239  

Cheil Worldwide Inc.

    8,405       129,128  

CJ CheilJedang Corp.

    1,078       369,346  

CJ Corp.

    1,776       121,101  

CJ ENM Co. Ltd.

    1,418       141,693  

CJ Logistics Corp.(b)

    1,107       141,182  

Coway Co. Ltd.(b)

    6,371       427,987  

Daelim Industrial Co. Ltd.

    3,610       264,087  

Daewoo Engineering & Construction Co. Ltd.(b)

    382       947  

Daewoo Shipbuilding & Marine Engineering Co. Ltd.(b)

    6,216       115,906  

DB Insurance Co. Ltd.

    6,368       233,995  

Doosan Bobcat Inc.

    6,885       152,433  

E-MART Inc.

    2,665       269,215  

Fila Holdings Corp.

    5,624       164,284  

GS Engineering & Construction Corp.

    7,400       153,868  

GS Holdings Corp.

    5,328       145,770  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  52


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Korea (continued)            

GS Retail Co. Ltd.

    3,108     $ 86,210  

Hana Financial Group Inc.

    36,786       873,277  

Hankook Tire & Technology Co. Ltd.

    9,780       242,874  

Hanmi Pharm Co. Ltd.

    870       224,476  

Hanon Systems

    23,680       257,153  

Hanwha Corp.

    5,180       119,917  

Hanwha Solutions Corp.

    14,210       477,893  

HLB Inc.(b)

    5,005       365,716  

Hotel Shilla Co. Ltd.

    4,021       237,963  

Hyundai Department Store Co. Ltd.

    28       1,266  

Hyundai Engineering & Construction Co. Ltd.

    9,661       262,284  

Hyundai Glovis Co. Ltd.

    2,407       294,822  

Hyundai Heavy Industries Holdings Co. Ltd.

    1,218       231,727  

Hyundai Marine & Fire Insurance Co. Ltd.

    8,147       151,569  

Hyundai Mobis Co. Ltd.(b)

    8,373       1,578,880  

Hyundai Motor Co.(b)

    18,457       2,742,369  

Hyundai Steel Co.

    10,386       219,453  

Industrial Bank of Korea

    30,488       207,634  

Kakao Corp.

    6,271       2,148,579  

Kangwon Land Inc.

    15,070       261,971  

KB Financial Group Inc.

    47,804       1,482,934  

Kia Motors Corp.

    32,483       1,160,791  

KMW Co. Ltd.(b)

    1,332       85,668  

Korea Aerospace Industries Ltd.

    9,595       181,335  

Korea Electric Power Corp.(b)

    30,340       523,588  

Korea Gas Corp.

    3,363       66,813  

Korea Investment Holdings Co. Ltd.

    4,884       250,388  

Korea Shipbuilding & Offshore Engineering Co. Ltd.(b)

    4,805       348,675  

Korea Zinc Co. Ltd.

    1,048       351,568  

Korean Air Lines Co. Ltd.(b)

    9,768       145,134  

KT&G Corp.

    14,388       1,006,518  

Kumho Petrochemical Co. Ltd.

    2,383       201,609  

LG Chem Ltd.

    5,624       3,503,460  

LG Corp.

    11,842       824,424  

LG Display Co. Ltd.(b)

    29,109       357,767  

LG Electronics Inc.

    13,616       965,121  

LG Household & Health Care Ltd.

    1,116       1,383,844  

LG Innotek Co. Ltd.

    1,719       209,828  

LG Uplus Corp.

    16,280       163,773  

Lotte Chemical Corp.

    2,103       335,481  

Lotte Corp.

    4,144       104,655  

Lotte Shopping Co. Ltd.

    1,277       81,700  

Meritz Securities Co. Ltd.

    38,776       104,619  

Mirae Asset Daewoo Co. Ltd.

    50,468       395,111  

NAVER Corp.

    14,504       3,937,655  

NCSoft Corp.

    2,051       1,424,425  

Netmarble Corp.(a)(b)

    3,274       458,895  

NH Investment & Securities Co. Ltd.

    15,344       115,736  

Orion Corp./Republic of Korea

    3,007       355,656  

Ottogi Corp.

    296       150,006  

Pan Ocean Co. Ltd.(b)

    37,019       105,800  

Pearl Abyss Corp.(b)

    888       136,052  

POSCO

    9,324       1,448,167  

POSCO Chemical Co. Ltd.

    3,404       255,035  

Posco International Corp.

    6,956       79,638  

S-1 Corp.

    2,329       170,965  

Samsung Biologics Co. Ltd.(a)(b)

    2,072       1,357,030  

Samsung C&T Corp.

    10,804       982,264  

Samsung Card Co. Ltd.

    4,588       111,040  

Samsung Electro-Mechanics Co. Ltd.

    7,081       742,137  
Security   Shares     Value  
South Korea (continued)            

Samsung Electronics Co. Ltd.

    467,976     $   21,273,427  

Samsung Engineering Co. Ltd.(b)

    19,390       184,449  

Samsung Fire & Marine Insurance Co. Ltd.

    3,810       599,773  

Samsung Heavy Industries Co. Ltd.(b)

    55,920       242,905  

Samsung Life Insurance Co. Ltd.

    8,880       457,493  

Samsung SDI Co. Ltd.

    6,783       2,583,810  

Samsung SDS Co. Ltd.

    4,242       562,434  

Samsung Securities Co. Ltd.

    8,288       210,357  

Shinhan Financial Group Co. Ltd.

    55,796       1,392,669  

Shinsegae Inc.

    970       165,763  

SK Holdings Co. Ltd.

    4,358       785,093  

SK Hynix Inc.

    62,604       3,957,876  

SK Innovation Co. Ltd.

    7,104       867,144  

SK Telecom Co. Ltd.

    2,506       523,182  

S-Oil Corp.

    5,483       260,787  

Woori Financial Group Inc.

    57,720       411,071  

Yuhan Corp.

    6,068       342,248  
   

 

 

 
      79,162,543  
Taiwan — 15.9%            

Accton Technology Corp.

    42,000       334,952  

Acer Inc.(b)

    416,062       331,103  

Advantech Co. Ltd.

    47,604       492,402  

Airtac International Group

    15,000       332,805  

ASE Technology Holding Co. Ltd.

    433,484       904,154  

Asia Cement Corp.

    274,229       397,210  

Asustek Computer Inc.

    80,000       662,543  

AU Optronics Corp.(b)

    1,036,000       368,972  

Catcher Technology Co. Ltd.

    80,000       546,666  

Cathay Financial Holding Co. Ltd.

    918,624       1,247,624  

Chailease Holding Co. Ltd.

    133,565       589,495  

Chang Hwa Commercial Bank Ltd.

    736,210       457,912  

Cheng Shin Rubber Industry Co. Ltd.

    238,776       292,962  

Chicony Electronics Co. Ltd.

    73,518       221,745  

China Development Financial Holding Corp.

    1,605,200       467,202  

China Life Insurance Co. Ltd.

    344,040       240,956  

China Steel Corp.

    1,628,867       1,104,731  

Chunghwa Telecom Co. Ltd.

    444,000       1,641,838  

Compal Electronics Inc.

    592,000       373,260  

CTBC Financial Holding Co. Ltd.

    2,368,265       1,529,527  

Delta Electronics Inc.

    232,000       1,494,402  

E.Sun Financial Holding Co. Ltd.

    1,410,917       1,307,941  

Eclat Textile Co. Ltd.

    23,604       311,727  

Eva Airways Corp.

    276,610       108,414  

Evergreen Marine Corp. Taiwan Ltd.(b)

    296,867       176,047  

Far Eastern New Century Corp.

    383,460       345,671  

Far EasTone Telecommunications Co. Ltd.

    190,000       396,946  

Feng TAY Enterprise Co. Ltd.

    45,564       264,767  

First Financial Holding Co. Ltd.

    1,276,234       924,287  

Formosa Chemicals & Fibre Corp.

    401,950       928,794  

Formosa Petrochemical Corp.

    152,000       424,791  

Formosa Plastics Corp.

    479,400       1,277,681  

Formosa Taffeta Co. Ltd.

    137,000       147,779  

Foxconn Technology Co. Ltd.

    111,521       198,401  

Fubon Financial Holding Co. Ltd.

    786,396       1,147,104  

Giant Manufacturing Co. Ltd.

    39,000       405,399  

Globalwafers Co. Ltd.

    26,000       349,130  

Highwealth Construction Corp.

    119,840       189,512  

Hiwin Technologies Corp.

    32,049       351,713  

Hon Hai Precision Industry Co. Ltd.

    1,417,651       3,715,467  

Hotai Motor Co. Ltd.

    39,000       793,518  
 

 

53  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)            

Hua Nan Financial Holdings Co. Ltd.

    1,092,955     $ 672,353  

Innolux Corp.(b)

    1,050,620       326,556  

Inventec Corp.

    296,980       230,264  

Largan Precision Co. Ltd.

    12,000       1,384,387  

Lite-On Technology Corp.

    268,032       423,860  

MediaTek Inc.

    178,176       3,376,305  

Mega Financial Holding Co. Ltd.

    1,480,542       1,475,925  

Micro-Star International Co. Ltd.

    89,000       411,005  

Nan Ya Plastics Corp.

    628,090       1,316,481  

Nanya Technology Corp.

    162,000       286,550  

Nien Made Enterprise Co. Ltd.

    23,000       264,949  

Novatek Microelectronics Corp.

    68,000       556,209  

Pegatron Corp.

    240,000       511,221  

Phison Electronics Corp.

    18,000       169,930  

Pou Chen Corp.

    260,000       245,454  

Powertech Technology Inc.

    97,000       285,630  

President Chain Store Corp.

    66,000       607,331  

Quanta Computer Inc.

    324,000       850,263  

Realtek Semiconductor Corp.

    61,140       791,820  

Ruentex Development Co. Ltd.

    120,658       177,647  

Shanghai Commercial & Savings Bank Ltd. (The)

    422,980       602,579  

Shin Kong Financial Holding Co. Ltd.

    1,480,562       418,815  

SinoPac Financial Holdings Co. Ltd.

    1,480,699       545,015  

Standard Foods Corp.

    54,987       119,376  

Synnex Technology International Corp.

    172,050       256,244  

Taishin Financial Holding Co. Ltd.

    1,171,649       529,092  

Taiwan Business Bank

    888,323       302,753  

Taiwan Cement Corp.

    644,182       941,854  

Taiwan Cooperative Financial Holding Co. Ltd.

    1,163,500       795,057  

Taiwan High Speed Rail Corp.

    248,000       274,696  

Taiwan Mobile Co. Ltd.

    190,000       657,260  

Taiwan Semiconductor Manufacturing Co. Ltd.

    2,426,000       35,263,670  

Uni-President Enterprises Corp.

    593,650       1,347,480  

United Microelectronics Corp.

    1,484,000       1,072,229  

Vanguard International Semiconductor Corp.

    120,000       382,394  

Walsin Technology Corp.

    41,000       223,574  

Win Semiconductors Corp.

    41,000       399,639  

Winbond Electronics Corp.

    419,000       173,503  

Wistron Corp.

    369,080       401,263  

Wiwynn Corp.

    6,000       159,910  

WPG Holdings Ltd.

    258,320       361,841  

Yageo Corp.

    43,151       489,726  

Yuanta Financial Holding Co. Ltd.

    1,239,648       777,381  

Zhen Ding Technology Holding Ltd.

    61,455       257,620  
   

 

 

 
        88,914,661  
Thailand — 2.6%            

Advanced Info Service PCL, NVDR

    148,400       872,591  

Airports of Thailand PCL, NVDR(c)

    556,500       1,001,333  

Bangkok Bank PCL, Foreign

    61,400       210,108  

Bangkok Dusit Medical Services PCL, NVDR

    1,164,500       778,267  

Bangkok Expressway & Metro PCL, NVDR

    947,200       275,433  

Berli Jucker PCL, NVDR

    152,000       180,705  

BTS Group Holdings PCL, NVDR(c)

    799,200       267,063  

Bumrungrad Hospital PCL, NVDR

    59,900       212,674  

Central Pattana PCL, NVDR

    267,800       404,421  

Central Retail Corp. PCL, NVDR(b)

    29,674       28,365  

Charoen Pokphand Foods PCL, NVDR

    532,800       552,102  

CP ALL PCL, NVDR(b)

    710,400       1,449,447  

Electricity Generating PCL, NVDR

    37,500       267,491  

Energy Absolute PCL, NVDR

    210,600       284,206  
Security   Shares     Value  
Thailand (continued)            

Global Power Synergy PCL, NVDR

    46,600     $ 95,828  

Gulf Energy Development PCL, NVDR

    348,900       353,132  

Home Product Center PCL, NVDR

    782,449       374,600  

Indorama Ventures PCL, NVDR

    251,600       191,595  

Intouch Holdings PCL, NVDR

    281,200       492,422  

IRPC PCL, NVDR(c)

    1,687,200       126,855  

Kasikornbank PCL, Foreign

    162,800       440,707  

Kasikornbank PCL, NVDR

    44,400       120,193  

Krung Thai Bank PCL, NVDR

    384,850       118,092  

Land & Houses PCL, NVDR

    1,085,500       258,100  

Minor International PCL, NVDR(b)(c)

    414,480       298,316  

Muangthai Capital PCL, NVDR(b)

    76,500       122,287  

PTT Exploration & Production PCL, NVDR

    177,810       508,478  

PTT Global Chemical PCL, NVDR

    310,800       461,868  

PTT PCL, NVDR

    1,392,700       1,610,963  

Ratch Group PCL, NVDR

    99,500       179,035  

Siam Cement PCL (The), NVDR

    95,100       1,081,706  

Siam Commercial Bank PCL (The), NVDR

    88,800       206,860  

Thai Oil PCL, NVDR(c)

    151,300       201,750  

Thai Union Group PCL, NVDR

    444,000       201,154  

TMB Bank PCL, NVDR

    3,344,822       101,024  

Total Access Communication PCL, NVDR

    109,600       125,896  

True Corp. PCL, NVDR(c)

    1,465,205       156,301  
   

 

 

 
      14,611,368  
   

 

 

 

Total Common Stocks — 99.2%
(Cost: $448,465,122)

      554,403,947  
   

 

 

 

Preferred Stocks

   
South Korea — 0.3%            

Amorepacific Corp., Preference Shares, NVS

    1,184       59,504  

Hyundai Motor Co.

   

Preference Shares, NVS

    2,681       196,352  

Series 2, Preference Shares, NVS

    4,595       341,946  

LG Chem Ltd., Preference Shares, NVS

    894       282,221  

LG Household & Health Care Ltd., Preference Shares, NVS

    272       160,512  

Samsung Electronics Co. Ltd., Preference Shares, NVS

    9,888       395,387  
   

 

 

 
      1,435,922  
   

 

 

 

Total Preferred Stocks — 0.3%
(Cost: $1,080,975)

      1,435,922  
   

 

 

 

Rights

   
China — 0.0%            

Legend Holdings Corp. Class H,
(Expires 10/30/20)(b)(d)

    3,561       0 (e)  
   

 

 

 
Thailand — 0.0%            

Gulf Energy Development PCL,
(Expires 09/16/20)(b)

    34,200       1,648  
   

 

 

 

Total Rights — 0.0%
(Cost: $0)

      1,648  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 2.7%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 0.37%(f)(g)(h)

    12,951,676       12,964,628  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  54


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Money Market Funds (continued)            

BlackRock Cash Funds: Treasury, SL Agency Shares, 0.07%(f)(g)

    1,850,000     $ 1,850,000  
   

 

 

 
      14,814,628  
   

 

 

 

Total Short-Term Investments — 2.7%
(Cost: $14,808,467)

      14,814,628  
   

 

 

 

Total Investments in Securities — 102.2%
(Cost: $464,354,564)

      570,656,145  

Other Assets, Less Liabilities — (2.2)%

      (12,097,707
   

 

 

 

Net Assets — 100.0%

    $   558,558,438  
   

 

 

 

 

 

 

 

(a) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(b) 

Non-income producing security.

(c)

All or a portion of this security is on loan.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e)

Rounds to less than $1.

(f) 

Affiliate of the Fund.

(g)

Annualized 7-day yield as of period-end.

(h) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

    
Affiliated Issuer  

Value at

08/31/19

   

Purchases

at Cost

   

Proceeds

from Sales

   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at
08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

    

    

 

 

    

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 8,496,102     $ 4,465,081 (a)    $     $ (935   $ 4,380     $ 12,964,628       12,951,676     $ 157,069 (b)    $     

BlackRock Cash Funds: Treasury, SL Agency Shares

    788,000       1,062,000 (a)                        1,850,000       1,850,000       7,345           
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

    
        $ (935   $ 4,380     $ 14,814,628       $ 164,414     $     
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

    

 

  (a)

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description   

Number of

Contracts

    

Expiration

Date

    

Notional

Amount

(000)

    

Value/

Unrealized

Appreciation
(Depreciation)

 

 

 

Long Contracts

           

Hang Seng China Enterprises Index

     2        09/29/20      $ 129      $ (3,749

MSCI Emerging Markets E-Mini Index

     39        09/18/20        2,146        42,649  
           

 

 

 
            $ 38,900  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Consolidated Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 42,649  
  

 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 3,749  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Consolidated Schedule of Investments. In the Consolidated Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

 

55  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Asia ETF

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Consolidated Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 375,836  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 23,576  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 1,175,913      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Consolidated Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Consolidated Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Consolidated Schedule of Investments above.

 

                                                                                               

 

 
     Level 1        Level 2        Level 3      Total  

 

 

Investments

               

Assets

               

Common Stocks

   $ 554,403,947        $        $ 0 (a)     $ 554,403,947  

Preferred Stocks

     1,435,922                          1,435,922  

Rights

              1,648          0 (a)        1,648  

Money Market Funds

     14,814,628                          14,814,628  
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 570,654,497        $ 1,648        $ 0 (a)     $ 570,656,145  
  

 

 

      

 

 

      

 

 

    

 

 

 

Derivative financial instruments(b)

               

Assets

               

Futures Contracts

   $ 42,649        $        $      $ 42,649  

Liabilities

               

Futures Contracts

     (3,749                        (3,749
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 38,900        $        $      $ 38,900  
  

 

 

      

 

 

      

 

 

    

 

 

 

 

  (a)

Rounds to less than $1.

 
  (b)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to consolidated financial statements.

 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  56


Consolidated Schedule of Investments

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Argentina — 0.8%            

Adecoagro SA(a)

    31,540     $ 159,592  

Arcos Dorados Holdings Inc., Class A

    37,399       166,426  

Banco BBVA Argentina SA, ADR(a)(b)

    21,781       73,402  

Banco Macro SA, ADR(a)

    12,255       232,232  

Central Puerto SA, ADR

    30,855       77,446  

Despegar.com Corp.(a)

    14,577       124,633  

Empresa Distribuidora y Comercializadora Norte SA, ADR(a)

    9,767       31,840  

Grupo Financiero Galicia SA, ADR(a)

    30,400       314,032  

Grupo Supervielle SA, ADR(b)

    21,024       54,032  

Loma Negra Cia Industrial Argentina
SA, ADR(a)(b)

    19,683       95,069  

Pampa Energia SA, ADR(a)(b)

    16,363       188,011  

Transportadora de Gas del Sur SA, Class B(a)

    22,317       104,890  
   

 

 

 
          1,621,605  
Brazil — 5.7%            

AES Tiete Energia SA

    43,941       120,147  

Aliansce Sonae Shopping Centers SA(a)

    40,049       192,875  

Alupar Investimento SA

    43,308       184,966  

Anima Holding SA(a)

    22,900       124,980  

Arezzo Industria e Comercio SA

    14,500       148,333  

Banco Inter SA

    21,300       251,365  

Banco Inter SA(a)

    45       516  

BK Brasil Operacao e Assessoria a Restaurantes SA

    50,600       101,460  

BR Malls Participacoes SA(a)

    252,700       427,470  

BR Properties SA

    66,641       111,273  

C&A Modas Ltda

    40,700       89,473  

Camil Alimentos SA

    9,500       22,097  

Cia. de Locacao das Americas

    99,700       370,747  

Cia. de Saneamento de Minas Gerais-COPASA

    18,800       163,124  

Cia. de Saneamento do Parana

    70,800       345,230  

Cia. Hering

    41,500       138,361  

Construtora Tenda SA

    21,800       121,957  

Cosan Logistica SA(a)

    42,122       164,314  

CVC Brasil Operadora e Agencia de Viagens SA

    48,200       160,787  

CVC Brasil Operadora e Agencia de Viagens SA(a)

    6,092       20,089  

Cyrela Brazil Realty SA Empreendimentos e Participacoes

    85,500       375,764  

Duratex SA

    95,900       278,126  

EcoRodovias Infraestrutura e Logistica SA(a)

    58,899       138,715  

EDP - Energias do Brasil SA

    76,900       261,992  

Embraer SA(a)

    218,500       292,348  

Enauta Participacoes SA

    25,900       53,113  

Eneva SA(a)

    57,000       514,318  

Even Construtora e Incorporadora SA

    38,600       91,471  

Ez Tec Empreendimentos e Participacoes SA

    27,477       194,536  

Fleury SA

    62,800       298,780  

Grendene SA

    135,200       188,288  

Grupo SBF SA(a)

    28,500       157,828  

Guararapes Confeccoes SA

    31,000       98,890  

Iguatemi Empresa de Shopping Centers SA

    26,600       159,816  

Instituto Hermes Pardini SA

    17,500       82,302  

Iochpe Maxion SA

    32,805       68,769  

JHSF Participacoes SA

    89,200       115,608  

JSL SA

    21,200       122,233  

Light SA(a)

    67,600       186,439  

Linx SA

    47,600       308,720  

Locaweb Servicos de Internet SA(a)(c)

    28,500       319,189  

LOG Commercial Properties e Participacoes SA

    60       339  
Security   Shares     Value  

 

 
Brazil (continued)            

M. Dias Branco SA

    25,600     $ 165,708  

Mahle-Metal Leve SA

    12,200       37,739  

Marfrig Global Foods SA(a)

    114,000       369,894  

Marisa Lojas SA(a)

    40,700       62,616  

Minerva SA(a)

    79,100       188,742  

Movida Participacoes SA

    44,600       132,437  

MRV Engenharia e Participacoes SA

    89,900       294,483  

Odontoprev SA

    81,600       190,542  

Omega Geracao SA(a)

    28,500       210,663  

Petro Rio SA(a)

    27,200       207,697  

Qualicorp Consultoria e Corretora de Seguros SA

    68,100       387,802  

Santos Brasil Participacoes SA

    84,100       79,717  

Sao Martinho SA

    52,300       230,425  

Ser Educacional SA(c)

    19,535       51,100  

SLC Agricola SA

    29,600       135,539  

Smiles Fidelidade SA

    19,100       49,022  

TOTVS SA

    138,300       727,563  

Transmissora Alianca de Energia Eletrica SA

    73,300       376,929  

Trisul SA

    32,700       72,661  

Tupy SA(a)

    19,100       58,840  

Vivara Participacoes SA

    28,500       122,449  

Wiz Solucoes e Corretagem de Seguros SA

    25,300       49,300  

YDUQS Participacoes SA

    79,200       389,077  
   

 

 

 
        12,158,093  
Chile — 0.9%            

AES Gener SA

    824,167       134,416  

CAP SA(a)

    20,748       184,588  

Cia. Sud Americana de Vapores SA(a)

    3,267,206       88,887  

Engie Energia Chile SA

    149,258       202,072  

Forus SA

    32,587       41,807  

Grupo Security SA

    356,168       70,263  

Inversiones Aguas Metropolitanas SA

    120,610       97,891  

Inversiones La Construccion SA

    10,561       68,766  

Itau CorpBanca Chile SA

    61,640,550       188,362  

Parque Arauco SA

    176,213       273,782  

Ripley Corp. SA

    248,793       91,424  

SMU SA

    727,461       121,936  

SONDA SA

    153,140       118,465  

Vina Concha y Toro SA

    113,588       197,571  
   

 

 

 
      1,880,230  
China — 12.8%            

21Vianet Group Inc., ADR(a)(b)

    23,847       553,489  

360 Finance Inc., ADR(a)

    19,190       239,875  

361 Degrees International Ltd.(a)

    298,000       39,604  

AGTech Holdings Ltd.(a)

    1,256,000       49,429  

Anxin-China Holdings Ltd.(a)(d)

    1,084,000       1  

Aoyuan Healthy Life Group Co. Ltd.(a)

    83,000       77,215  

Ascletis Pharma Inc.(a)(b)(c)

    113,000       42,283  

Asia Cement China Holdings Corp.

    147,500       149,591  

Atlas Crop.

    26,710       230,507  

Beijing Capital Land Ltd., Class H

    430,000       81,560  

Beijing Chunlizhengda Medical Instruments Co. Ltd., Class H

    25,500       145,758  

Beijing Gas Blue Sky Holdings Ltd.(a)

    2,888,000       46,952  

Beijing Jingneng Clean Energy Co. Ltd., Class H

    380,000       101,005  

Beijing Tong Ren Tang Chinese Medicine Co. Ltd.(b)

    84,000       96,246  

Bitauto Holdings Ltd., ADR(a)

    8,753       138,035  

Boshiwa International Holding Ltd.(a)(b)(d)

    32,000       0 (e)  

C&D International Investment Group Ltd.

    95,000       171,119  
 

 

57  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Camsing International Holding Ltd.(a)(b)(d)

    164,000     $ 18,410  

Canvest Environmental Protection Group Co. Ltd.

    297,000              129,528  

CAR Inc.(a)(b)

    248,000       79,038  

Central China Real Estate Ltd.

    290,000       126,849  

CGN New Energy Holdings Co. Ltd.(a)

    434,000       77,838  

Chaowei Power Holdings Ltd.

    200,000       84,902  

China Aircraft Leasing Group
Holdings Ltd.(b)

    95,000       87,153  

China Animal Healthcare Ltd.(a)(d)

    126,000       0 (e)  

China BlueChemical Ltd., Class H

    622,000       91,492  

China Datang Corp. Renewable Power Co. Ltd., Class H

    870,000       117,869  

China Dongxiang Group Co. Ltd.

    1,551,000       202,126  

China Everbright Greentech Ltd.(c)

    153,000       67,911  

China Foods Ltd.

    284,000       100,772  

China Grand Pharmaceutical and Healthcare Holdings Ltd., Class A

    328,000       299,215  

China Harmony Auto Holding Ltd.

    269,000       123,564  

China High Speed Transmission Equipment Group Co. Ltd.

    124,000       89,918  

China Huiyuan Juice Group Ltd.(a)(d)

    379,000       489  

China Kepei Education Group Ltd.

    190,000       167,932  

China Lilang Ltd.

    141,000       81,324  

China Logistics Property Holdings
Co. Ltd.(a)(b)(c)

    380,000       174,061  

China Lumena New Materials Corp.(a)(b)(d)

    5,249       0 (e)  

China Maple Leaf Educational Systems Ltd.

    476,000       185,483  

China Meidong Auto Holdings Ltd.

    136,000       459,759  

China Merchants Land Ltd.

    380,000       57,857  

China Metal Recycling Holdings Ltd.(a)(d)

    12,000       0 (e)  

China Metal Resources Utilization Ltd.(a)(b)(c)

    312,000       11,071  

China Modern Dairy Holdings Ltd.(a)

    771,000       116,394  

China New Higher Education Group Ltd.(c)

    224,000       173,416  

China Oriental Group Co. Ltd.(b)

    376,000       105,763  

China Overseas Grand Oceans Group Ltd.

    462,000       301,039  

China Renaissance Holdings Ltd.(a)(c)

    66,300       159,117  

China Resources Medical Holdings
Co. Ltd.(b)

    291,000       210,642  

China SCE Group Holdings Ltd.

    570,000       297,130  

China Shineway Pharmaceutical Group Ltd.

    101,000       70,764  

China South City Holdings Ltd.

    2,090,000       213,041  

China Suntien Green Energy Corp. Ltd.,
Class H(a)

    665,000       178,474  

China Tian Lun Gas Holdings Ltd.

    86,000       65,248  

China Travel International Investment Hong Kong Ltd.

    762,000       115,035  

China Water Affairs Group Ltd.(b)

    262,000       215,681  

China Youzan Ltd.(a)

    4,284,000       934,170  

China ZhengTong Auto Services Holdings Ltd.

    341,000       42,679  

China Zhongwang Holdings Ltd.(a)

    532,000       112,576  

Chinasoft International Ltd.(a)(b)

    622,000       442,213  

CIMC Enric Holdings Ltd.

    192,000       77,046  

CITIC Resources Holdings Ltd.(a)

    1,140,000       42,657  

COFCO Meat Holdings Ltd.(b)

    761,000       355,454  

Colour Life Services Group Co. Ltd.(a)(b)

    122,000       63,124  

Concord New Energy Group Ltd.

    3,800,000       169,158  

Consun Pharmaceutical Group Ltd.

    95,000       40,206  

Cosmo Lady China Holdings Co. Ltd.(a)(c)

    285,000       16,180  

Cosmopolitan International Holdings Ltd.(a)

    380,000       69,134  

CPMC Holdings Ltd.

    285,000       123,191  

Daqo New Energy Corp., ADR(a)(b)

    2,850       321,508  

Dexin China Holdings Co. Ltd.(a)

    380,000       148,075  

Digital China Holdings Ltd.

    226,000       184,004  

Dongyue Group Ltd.

    475,000       203,480  

E-House China Enterprise Holdings Ltd.

    171,000       202,769  

Ever Sunshine Lifestyle Services Group Ltd.

    148,000       304,779  
Security   Shares     Value  
China (continued)            

Fanhua Inc., ADR

    13,775     $        279,495  

Fantasia Holdings Group Co. Ltd.(a)

    381,000       77,673  

FinVolution Group

    32,255       61,285  

Fu Shou Yuan International Group Ltd.

    304,000       314,585  

Fufeng Group Ltd.(a)

    492,400       165,189  

GCL-Poly Energy Holdings Ltd.(a)

    4,119,000       167,414  

Gemdale Properties & Investment Corp. Ltd.

    1,710,000       304,484  

Genertec Universal Medical Group Co. Ltd.(c)

    322,500       224,705  

Glory Sun Financial Group Ltd.(a)

    4,200,000       173,416  

Grand Baoxin Auto Group Ltd.(a)

    258,500       39,358  

Greenland Hong Kong Holdings Ltd.

    295,000       98,205  

Guorui Properties Ltd.

    362,000       53,715  

Haichang Ocean Park Holdings Ltd.(a)(c)

    489,000       38,488  

Hainan Meilan International Airport Co. Ltd., Class H(a)

    46,000       267,092  

Hangzhou Steam Turbine Co. Ltd., Class B

    87,280       94,824  

Harbin Electric Co. Ltd., Class H(a)

    210,000       64,489  

Hebei Construction Group Corp. Ltd., Class H

    142,500       314,781  

HengTen Networks Group Ltd.(a)(b)

    6,840,000       219,758  

Hi Sun Technology China Ltd.(a)

    1,140,000       139,739  

Hope Education Group Co. Ltd.(c)

    760,000       234,370  

Hua Han Health Industry Holdings Ltd.(a)(d)

    1,112,400       32,295  

Huabao International Holdings Ltd.(b)

    293,000       261,238  

Huami Corp., ADR(a)(b)

    7,220       91,116  

iDreamSky Technology Holdings Ltd.(a)(c)

    152,000       94,140  

IGG Inc.

    310,000       357,993  

IMAX China Holding Inc.(a)(c)

    38,100       61,254  

Jiayuan International Group Ltd.

    354,000       168,090  

Jinchuan Group International Resources Co. Ltd.(b)

    870,000       101,030  

JinkoSolar Holding Co. Ltd., ADR(a)(b)

    9,615       219,607  

Jiumaojiu International Holdings Ltd.(a)(c)

    95,000       215,983  

JNBY Design Ltd.

    68,500       71,592  

Konka Group Co. Ltd., Class B

    142,500       42,290  

Lifetech Scientific Corp.(a)

    888,000       266,968  

Lonking Holdings Ltd.

    606,000       173,586  

Luthai Textile Co. Ltd., Class B

    58,900       33,211  

LVGEM China Real Estate Investment Co. Ltd.

    382,000       149,840  

Maoyan Entertainment(a)(c)

    133,000       264,965  

Meitu Inc.(a)(b)(c)

    609,500       133,694  

MMG Ltd.(a)

    680,000       181,622  

Mobvista Inc.(a)(c)

    190,000       115,714  

National Agricultural Holdings Ltd.(b)(d)

    354,000       457  

NetDragon Websoft Holdings Ltd.

    63,500       162,885  

Nexteer Automotive Group Ltd.

    285,000       185,706  

Niu Technologies, ADR(a)

    9,975       206,183  

NOVA Group Holdings Ltd.(b)

    480,000       9,538  

OneSmart International Education Group Ltd., ADR(a)(b)

    21,850       92,644  

Panda Green Energy Group Ltd.(a)

    1,476,000       44,946  

PAX Global Technology Ltd.

    257,000       148,560  

Poly Property Group Co. Ltd.

    760,000       239,273  

Pou Sheng International Holdings Ltd.(a)

    646,000       163,372  

Powerlong Commercial Management Holdings Ltd.

    47,500       150,158  

Q Technology Group Co. Ltd.

    120,000       150,655  

Qudian Inc., ADR(a)(b)

    57,711       91,760  

Qutoutiao Inc., ADR(a)(b)

    19,396       53,533  

Realord Group Holdings Ltd.(a)

    250,000       147,417  

Redco Properties Group Ltd.(c)

    280,000       137,288  

Redsun Properties Group Ltd.

    380,000       133,365  

Road King Infrastructure Ltd.(b)

    69,000       91,701  

Ronshine China Holdings Ltd.(a)

    181,500       147,539  

Sany Heavy Equipment International Holdings Co. Ltd.

    311,000       172,953  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  58


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Scholar Education Group

    54,000     $ 166,526  

Shandong Airlines Co. Ltd., Class B(a)

    50,400       38,889  

Shanghai Fudan Microelectronics Group Co. Ltd., Class H(a)(b)

    92,000       199,191  

Shanghai Haohai Biological Technology Co. Ltd., Class H(c)

    13,000       92,256  

Shanghai Industrial Urban Development Group Ltd.(b)

    570,000       66,928  

Shanghai Jin Jiang Capital Co. Ltd., Class H

    570,000       97,817  

Shanghai Kindly Medical Instruments Co. Ltd., Class H

    19,000       149,545  

Sheng Ye Capital Ltd.

    124,000       127,198  

Shoucheng Holdings Ltd.(b)

    473,200       128,830  

Shougang Fushan Resources Group Ltd.

    788,000       178,949  

Shui On Land Ltd.(a)

    1,000,000       136,772  

Sihuan Pharmaceutical Holdings Group Ltd.

    1,425,000       172,835  

Silver Grant International Holdings
Group Ltd.(a)

    380,000       50,012  

Sinopec Kantons Holdings Ltd.(b)

    284,000       112,132  

Skyfame Realty Holdings Ltd.

    1,074,000       139,964  

Skyworth Group Ltd.(a)(b)

    574,000       199,230  

SMI Holdings Group Ltd.(a)(d)

    468,800       77,850  

Sohu.com Ltd., ADR(a)

    10,376       208,973  

Superb Summit International Group Ltd.(a)(d)

    11,913       11  

TCL Electronics Holdings Ltd.(a)

    327,000       223,621  

Texhong Textile Group Ltd.(a)

    100,000       77,934  

Tiangong International Co. Ltd.

    316,000       106,011  

Tianli Education International Holdings Ltd.(a)

    380,000       431,476  

Tianneng Power International Ltd.(b)

    226,000       485,234  

Times Neighborhood Holdings Ltd.

    190,000       272,124  

Tong Ren Tang Technologies Co. Ltd., Class H

    179,000       138,578  

Tongda Group Holdings Ltd.(a)

    1,190,000       69,863  

Tongdao Liepin Group(a)(b)

    57,000       143,858  

Towngas China Co. Ltd.(a)

    380,000       172,590  

Truly International Holdings Ltd.(a)

    190,000       23,780  

Wasion Holdings Ltd.

    170,000       50,231  

Weimob Inc.(a)(b)(c)

    380,000       637,407  

West China Cement Ltd.

    570,000       100,024  

Wisdom Education International Holdings Co. Ltd.

    236,000       123,022  

Xiabuxiabu Catering Management China Holdings Co. Ltd.(a)(c)

    142,500       176,329  

Xingda International Holdings Ltd.

    475,000       117,062  

Xtep International Holdings Ltd.

    343,000       114,184  

Yadea Group Holdings Ltd.(a)(c)

    342,000       346,406  

YiChang HEC ChangJiang Pharmaceutical Co. Ltd., Class H(c)

    75,600       107,496  

Yixin Group Ltd.(a)(c)

    600,000       154,062  

Yuexiu REIT

    483,000       233,082  

Yuexiu Transport Infrastructure Ltd.(a)

    318,000       188,745  

Zhou Hei Ya International Holdings
Co. Ltd.(a)(c)

    191,500       217,194  

Zhuguang Holdings Group Co. Ltd.(a)(b)

    898,000       126,297  
   

 

 

 
        27,151,121  
Colombia — 0.3%            

Cementos Argos SA

    128,924       171,900  

Corp. Financiera Colombiana SA(a)

    25,620       185,148  

Grupo Argos SA

    93,005       295,633  
   

 

 

 
      652,681  
Cyprus — 0.4%            

TCS Group Holding PLC(f)

    35,055       923,055  
   

 

 

 
Czech Republic — 0.1%            

Central European Media Enterprises Ltd. , Class A(a)

    38,165       162,243  
   

 

 

 
Security   Shares     Value  
Egypt — 0.4%            

Cleopatra Hospital(a)

    325,755     $ 103,173  

Egyptian Financial Group-Hermes Holding Co.(a)

    182,859       162,093  

Heliopolis Housing

    178,272       73,558  

Juhayna Food Industries

    183,976       81,367  

Medinet Nasr Housing

    284,527       59,778  

Oriental Weavers

    95       32  

Palm Hills Developments SAE(a)

    486,901       47,246  

Six of October Development & Investment

    76,514       58,846  

Talaat Moustafa Group

    296,414       129,225  

Telecom Egypt Co.

    99,508       84,629  
   

 

 

 
      799,947  
Greece — 1.1%            

Aegean Airlines SA(a)

    95       409  

Alpha Bank AE(a)

    420,375       278,824  

Athens Water Supply & Sewage Co. SA

    11,305       94,642  

Eurobank Ergasias Services and Holdings SA, Series A(a)

    795,720       382,750  

GEK Terna Holding Real Estate
Construction SA(a)

    19,570       141,833  

Hellenic Exchanges-Athens Stock Exchange SA(a)

    33,630       114,626  

Holding Co. ADMIE IPTO SA

    27,360       72,314  

LAMDA Development SA(a)

    21,090       142,508  

Mytilineos SA

    28,120       265,342  

National Bank of Greece SA(a)

    167,485       228,446  

Piraeus Bank SA(a)

    86,413       124,738  

Public Power Corp. SA(a)(b)

    34,109       163,497  

Sarantis SA

    7,410       77,277  

Terna Energy SA

    12,825       181,909  

Titan Cement International SA(a)

    13,205       179,719  
   

 

 

 
          2,448,834  
Hungary — 0.1%            

Magyar Telekom Telecommunications PLC

    145,255       179,146  
   

 

 

 
India — 12.1%            

Aarti Industries Ltd.

    14,100       200,694  

Aavas Financiers Ltd.(a)

    7,630       145,422  

Adani Enterprises Ltd.

    41,990       159,472  

Adani Power Ltd.(a)

    240,171       121,542  

Aditya Birla Fashion and Retail Ltd.(a)

    63,097       119,924  

Aegis Logistics Ltd.

    29,705       85,756  

AIA Engineering Ltd.

    12,952       317,019  

Ajanta Pharma Ltd.

    7,220       145,621  

Alembic Pharmaceuticals Ltd.

    13,680       175,090  

Apollo Hospitals Enterprise Ltd.

    25,557       567,526  

Apollo Tyres Ltd.

    144,685       242,853  

Ashok Leyland Ltd.

    417,050       383,296  

Astral Poly Technik Ltd.

    19,130       291,612  

Atul Ltd.

    5,274       414,171  

AU Small Finance Bank Ltd.(a)(c)

    36,451       330,799  

Avanti Feeds Ltd.

    5,510       38,813  

Bajaj Consumer Care Ltd.(a)

    21,362       49,917  

Balkrishna Industries Ltd.

    24,727       444,066  

Balrampur Chini Mills Ltd.

    40,885       81,901  

Bata India Ltd.

    10,675       188,396  

Bayer CropScience Ltd./India

    3,610       285,193  

Bharat Heavy Electricals Ltd.

    286,615       150,107  

Birla Corp. Ltd.

    7,078       59,253  

Blue Dart Express Ltd.(a)

    1,975       58,726  

Can Fin Homes Ltd.

    10,884       54,888  

Century Textiles & Industries Ltd.

    11,201       50,734  

CESC Ltd.

    19,570       159,641  

Cholamandalam Financial Holdings Ltd.(a)

    25,435       150,884  
 

 

59  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
India (continued)            

Cholamandalam Investment and Finance Co. Ltd.

    81,605     $        257,429  

City Union Bank Ltd.

    93,115       170,778  

Coforge Ltd.

    5,890       153,957  

Coromandel International Ltd.

    22,515       232,483  

CRISIL Ltd.

    6,246       148,552  

Crompton Greaves Consumer Electricals Ltd.(a)

    173,755       641,601  

Cummins India Ltd.

    28,405       178,381  

Dalmia Bharat Ltd.(a)

    14,745       150,189  

DCB Bank Ltd.(a)

    58,577       70,866  

Dilip Buildcon Ltd.(c)

    10,078       50,583  

Dr Lal PathLabs Ltd.(c)

    8,972       216,336  

Edelweiss Financial Services Ltd.(a)

    134,878       146,683  

Emami Ltd.

    37,905       183,815  

Endurance Technologies Ltd.(c)

    10,512       156,978  

Engineers India Ltd.

    95       86  

Eris Lifesciences Ltd.(c)

    13,631       89,185  

Escorts Ltd.

    17,769       262,549  

Exide Industries Ltd.

    87,875       195,848  

Federal Bank Ltd.(a)

    494,095       371,205  

Fortis Healthcare Ltd.(a)

    143,885       259,592  

Future Lifestyle Fashions Ltd.(a)

    18,119       37,613  

Gillette India Ltd.

    2,755       203,198  

Glenmark Pharmaceuticals Ltd.

    43,900       280,073  

GMR Infrastructure Ltd.(a)

    52,535       16,808  

Godrej Industries Ltd.(a)

    26,410       157,672  

Godrej Properties Ltd.(a)

    18,818       233,475  

Granules India Ltd.

    47,690       203,277  

Gujarat Fluorochemicals Ltd.(a)

    4,180       29,030  

Gujarat Gas Ltd.

    51,177       226,275  

Gujarat State Petronet Ltd.

    59,185       163,667  

HEG Ltd.

    4,370       50,826  

Hemisphere Properties India Ltd.(a)

    28,290       59,176  

Hexaware Technologies Ltd.

    39,652       213,539  

ICICI Securities Ltd.(c)

    19,344       125,460  

IDFC First Bank Ltd.(a)

    611,716       265,936  

IDFC Ltd.

    235,361       88,092  

IIFL Finance Ltd.

    39,997       44,367  

IIFL Wealth Management Ltd.

    8,273       115,035  

India Cements Ltd. (The)

    53,485       83,271  

Indiabulls Housing Finance Ltd.

    82,804       234,212  

Indiabulls Real Estate Ltd.(a)

    69,331       59,387  

Indiabulls Ventures Ltd.

    57,579       153,906  

IndiaMART Intermesh Ltd.(a)

    2,470       123,677  

Indian Hotels Co. Ltd. (The)

    163,305       230,068  

IRB Infrastructure Developers Ltd.

    48,382       78,120  

Jindal Steel & Power Ltd.(a)

    130,544       363,748  

JK Cement Ltd.

    9,293       188,063  

JM Financial Ltd.

    73,913       81,989  

JSW Energy Ltd.

    113,064       84,098  

Jubilant Life Sciences Ltd.

    24,216       257,680  

Just Dial Ltd.(a)

    12,359       62,410  

Kajaria Ceramics Ltd.

    20,273       120,125  

Karur Vysya Bank Ltd. (The)(a)

    109,857       57,087  

Kaveri Seed Co. Ltd.(a)

    10,004       78,536  

KEC International Ltd.

    19,960       87,343  

KEI Industries Ltd.

    13,433       72,359  

KRBL Ltd.

    18,207       64,794  

L&T Technology Services Ltd.(c)

    6,761       143,762  

Laurus Labs Ltd.(c)

    18,145       279,370  

Mahanagar Gas Ltd.

    13,585       175,701  
Security   Shares     Value  
India (continued)            

Mahindra & Mahindra Financial Services Ltd.(a)

    175,940     $        321,966  

Mahindra CIE Automotive Ltd.(a)

    38,351       68,045  

Manappuram Finance Ltd.

    77,501       155,829  

Max Financial Services Ltd.(a)

    45,963       367,948  

Metropolis Healthcare Ltd.(a)

    12,668       316,435  

Minda Industries Ltd.

    29,925       138,226  

Mindtree Ltd.

    12,635       198,389  

Motilal Oswal Financial Services Ltd.

    11,414       106,057  

Mphasis Ltd.

    25,270       378,874  

Multi Commodity Exchange of India Ltd.

    8,647       187,771  

Natco Pharma Ltd.

    26,803       273,720  

National Aluminium Co. Ltd.

    163,526       79,644  

Navin Fluorine International Ltd.

    4,180       110,847  

NBCC India Ltd.

    154,471       56,137  

Nippon Life India Asset Management Ltd.(c)

    39,615       146,711  

Oberoi Realty Ltd.(a)

    18,745       99,293  

Oil India Ltd.

    68,069       87,621  

Persistent Systems Ltd.

    12,563       163,550  

Phoenix Mills Ltd. (The)

    18,225       159,663  

PI Industries Ltd.

    17,765       443,718  

PNB Housing Finance Ltd.(a)(c)

    19,404       75,222  

Polycab India Ltd.

    12,920       156,718  

Prestige Estates Projects Ltd.

    37,413       126,002  

Procter & Gamble Health Ltd.(a)

    1,403       91,433  

PVR Ltd.

    10,220       182,102  

Quess Corp. Ltd.(a)(c)

    21,628       107,115  

Radico Khaitan Ltd.

    21,850       119,272  

Rajesh Exports Ltd.

    24,189       146,713  

Ramco Cements Ltd. (The)

    20,710       194,995  

RBL Bank Ltd.(c)

    106,615       283,819  

Redington India Ltd.

    85,885       125,781  

Relaxo Footwears Ltd.(a)

    17,765       158,179  

Sanofi India Ltd.

    1,888       210,802  

Schaeffler India Ltd.

    3,325       179,179  

Sobha Ltd.

    14,901       53,009  

Spandana Sphoorty Financial Ltd.(a)

    5,989       49,929  

SpiceJet Ltd.(a)

    51,967       36,324  

SRF Ltd.

    4,427       243,815  

Sterlite Technologies Ltd.

    33,573       68,371  

Strides Pharma Science Ltd.

    13,644       111,986  

Sundaram Finance Ltd.

    9,982       218,483  

Sunteck Realty Ltd.

    19,285       68,866  

Supreme Industries Ltd.

    12,275       222,937  

Suven Pharmaceuticals Ltd.(a)

    26,320       226,844  

Syngene International Ltd.(a)(c)

    34,304       220,996  

Tata Chemicals Ltd.

    23,422       99,438  

Tata Communications Ltd.

    20,900       247,211  

Tata Elxsi Ltd.

    5,804       84,749  

Tata Power Co. Ltd. (The)

    348,270       277,973  

TeamLease Services Ltd.(a)

    3,390       109,141  

Thermax Ltd.

    9,183       95,395  

Timken India Ltd.

    5,225       78,782  

Torrent Power Ltd.

    39,082       176,754  

TTK Prestige Ltd.

    2,755       213,044  

Tube Investments of India Ltd.

    24,060       211,778  

Vakrangee Ltd.

    140,874       53,588  

Varun Beverages Ltd.

    23,807       238,046  

V-Guard Industries Ltd.

    63,080       143,372  

Vinati Organics Ltd.

    9,648       132,050  

VIP Industries Ltd.

    13,017       50,126  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  60


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
India (continued)            

V-Mart Retail Ltd.(a)

    2,959     $ 76,745  

Vodafone Idea Ltd.(a)

    2,495,194       345,766  

Voltas Ltd.

    34,010       293,283  

WABCO India Ltd.

    1,805       171,001  

Yes Bank Ltd.(a)

    100       20  

Yes Bank Ltd., New

    433,083       62,941  
   

 

 

 
        25,704,176  
Indonesia — 1.8%            

AKR Corporindo Tbk PT

    536,400       106,820  

Aneka Tambang Tbk

    2,591,000       145,897  

Astra Agro Lestari Tbk PT

    171,000       119,480  

Bank BTPN Syariah Tbk PT

    666,400       178,469  

Bank Pembangunan Daerah Jawa Barat Dan Banten Tbk PT

    750,700       54,386  

Bank Tabungan Negara Persero Tbk PT

    1,425,000       154,120  

Bintang Oto Global Tbk PT(a)

    798,000       79,458  

Bukit Asam Tbk PT

    1,130,500       158,367  

Bumi Resources Tbk PT(a)

    17,747,400       60,935  

Bumi Serpong Damai Tbk PT(a)

    2,983,000       158,752  

Ciputra Development Tbk PT

    3,068,763       162,263  

Hanson International Tbk PT(a)(d)

    25,794,200       62,761  

Indo Tambangraya Megah Tbk PT

    123,600       70,235  

Indosat Tbk PT(a)

    414,400       65,450  

Industri Jamu Dan Farmasi Sido Muncul Tbk PT

    1,045,000       99,387  

Inti Agri Resources Tbk PT(a)(d)

    12,327,500       30,235  

Japfa Comfeed Indonesia Tbk PT

    1,114,300       93,353  

Jasa Marga Persero Tbk PT

    646,000       173,450  

Lippo Karawaci Tbk PT(a)

    9,105,400       98,166  

Matahari Department Store Tbk PT(a)

    726,300       63,091  

Medco Energi Internasional Tbk PT(a)

    1,620,366       61,198  

Media Nusantara Citra Tbk PT(a)

    1,612,700       98,562  

Mitra Adiperkasa Tbk PT(a)

    2,640,100       123,280  

Pabrik Kertas Tjiwi Kimia Tbk PT

    370,500       173,642  

Pacific Strategic Financial Tbk PT(a)

    1,586,500       95,871  

Pakuwon Jati Tbk PT(a)

    5,548,000       155,439  

Panin Financial Tbk PT(a)

    4,299,500       60,820  

Pelayaran Tamarin Samudra Tbk PT(a)

    2,499,900       9,957  

Perusahaan Perkebunan London Sumatra Indonesia Tbk PT

    974,800       65,600  

PP Persero Tbk PT

    976,925       65,072  

Ramayana Lestari Sentosa Tbk PT

    952,100       42,824  

Sawit Sumbermas Sarana Tbk PT(a)

    1,444,000       85,277  

Sitara Propertindo Tbk PT(a)

    2,120,600       7,281  

Sugih Energy Tbk PT(a)(d)

    1,824,800       1  

Summarecon Agung Tbk PT(a)

    2,617,800       115,947  

Surya Citra Media Tbk PT

    1,853,200       157,800  

Tower Bersama Infrastructure Tbk PT

    2,794,800       250,452  

Waskita Karya Persero Tbk PT

    1,536,200       68,569  

Wijaya Karya Persero Tbk PT

    1,004,348       85,520  
   

 

 

 
      3,858,187  
Malaysia — 3.1%            

Aeon Co. M Bhd

    243,000       48,711  

AEON Credit Service M Bhd(b)

    47,500       103,085  

AirAsia Group Bhd(a)

    617,500       97,839  

Alliance Bank Malaysia Bhd

    275,700       144,949  

Axis Real Estate Investment Trust

    323,000       168,266  

Berjaya Sports Toto Bhd(a)

    237,500       119,163  

Bermaz Auto Bhd

    260,200       84,953  

BIMB Holdings Bhd

    161,500       143,452  
Security   Shares     Value  
Malaysia (continued)            

British American Tobacco Malaysia Bhd

    42,444     $ 103,932  

Bursa Malaysia Bhd

    169,150       393,485  

Cahya Mata Sarawak Bhd

    171,000       61,577  

DRB-Hicom Bhd(b)

    262,200       128,409  

Ekovest Bhd(b)

    443,800       52,738  

FGV Holdings Bhd

    500,500       147,789  

Frontken Corp. Bhd

    225,000       205,257  

Globetronics Technology Bhd

    195,066       128,780  

IGB REIT

    503,500       223,617  

IJM Corp. Bhd

    983,000       283,183  

Inari Amertron Bhd

    756,950       408,867  

IOI Properties Group Bhd

    380,000       83,015  

KPJ Healthcare Bhd

    248,200       49,157  

Magnum Bhd

    285,000       152,575  

Mah Sing Group Bhd

    279,857       51,060  

Malakoff Corp. Bhd

    475,000       112,892  

Malaysia Building Society Bhd

    478,700       66,654  

Malaysian Pacific Industries Bhd

    29,500       111,187  

Malaysian Resources Corp. Bhd

    610,900       74,062  

Mega First Corp Bhd

    85,500       159,280  

My EG Services Bhd(b)

    581,400       207,967  

Padini Holdings Bhd

    110,800       62,775  

Pavilion REIT

    201,300       74,905  

Pentamaster Corp. Bhd

    176,250       201,828  

Sapura Energy Bhd(a)

    2,318,000       69,559  

Scientex Bhd(b)

    90,000       203,097  

Serba Dinamik Holdings Bhd

    427,620       185,810  

Sime Darby Property Bhd

    737,000       115,889  

SKP Resources Bhd

    253,400       97,941  

SP Setia Bhd Group

    477,200       91,075  

Sunway Construction Group Bhd

    190,020       90,323  

Sunway REIT

    482,100       185,178  

Syarikat Takaful Malaysia Keluarga Bhd

    73,800       89,471  

TIME dotCom Bhd

    114,000       316,370  

UMW Holdings Bhd

    98,600       61,544  

Velesto Energy Bhd(a)

    862,700       30,030  

ViTrox Corp. Bhd

    60,500       175,741  

VS Industry Bhd

    450,425       203,289  

Yinson Holdings Bhd(b)

    175,000       265,514  
   

 

 

 
          6,636,240  
Mexico — 1.9%            

Alpek SAB de CV

    85,500       64,029  

Alsea SAB de CV(a)(b)

    152,000       157,167  

Banco del Bajio SA(a)(b)(c)

    209,000       167,116  

Bolsa Mexicana de Valores SAB de CV

    131,600       277,198  

Concentradora Fibra Danhos SA de CV

    83,000       78,085  

Controladora Vuela Cia. de Aviacion SAB de CV, Class A(a)

    200,700       162,038  

Corp Inmobiliaria Vesta SAB de CV

    178,600       266,847  

Genomma Lab Internacional SAB de CV, Class B(a)

    209,100       219,361  

Gentera SAB de CV(a)(b)

    324,000       106,293  

Grupo Aeroportuario del Centro Norte SAB de CV(a)

    98,700       450,793  

Grupo Cementos de Chihuahua SAB de CV

    58,220       264,738  

Grupo Comercial Chedraui SA de CV

    103,000       119,114  

Grupo Herdez SAB de CV(b)

    72,000       122,873  

La Comer SAB de CV(b)

    153,900       232,896  

Macquarie Mexico Real Estate Management SA de CV(a)(c)

    237,600       276,075  

PLA Administradora Industrial S. de RL de CV(b)

    240,500       310,762  

Prologis Property Mexico SA de CV

    123,531       245,188  
 

 

61  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Mexico (continued)            

Qualitas Controladora SAB de CV

    47,500     $ 186,736  

Regional SAB de CV(a)(b)

    57,000       142,123  

Telesites SAB de CV(a)(b)

    402,400       303,740  
   

 

 

 
          4,153,172  
Pakistan — 0.6%            

Bank Alfalah Ltd.(a)

    207,850       43,973  

Engro Corp. Ltd./Pakistan

    101,930       183,416  

Engro Fertilizers Ltd.

    181,000       69,034  

Fauji Fertilizer Co. Ltd.

    161,000       104,994  

Hub Power Co. Ltd. (The)(a)

    240,904       124,347  

Indus Motor Co. Ltd.

    4,180       33,151  

Lucky Cement Ltd.

    45,350       168,180  

Millat Tractors Ltd.

    9,518       50,957  

Pakistan Oilfields Ltd.

    33,800       87,332  

Pakistan Petroleum Ltd.

    190,000       116,426  

Pakistan State Oil Co. Ltd.

    60,008       69,524  

Searle Co. Ltd. (The)

    31,847       50,101  

United Bank Ltd./Pakistan(a)

    143,800       108,372  
   

 

 

 
      1,209,807  
Philippines — 0.7%            

Alliance Global Group Inc.(a)

      1,197,900       152,687  

Bloomberry Resorts Corp.

    1,179,900       148,932  

Cebu Air Inc.(a)

    72,570       53,359  

Cosco Capital Inc.

    500       50  

D&L Industries Inc.(a)

    1,024,300       97,180  

DMCI Holdings Inc.

    1,330,000       109,725  

DoubleDragon Properties Corp.(a)

    247,110       76,449  

First Gen Corp.

    341,250       171,382  

Manila Water Co. Inc.

    372,800       110,568  

Petron Corp.

    1,017,200       63,778  

Pilipinas Shell Petroleum Corp.(a)

    126,700       46,253  

Security Bank Corp.

    61,750       123,538  

Semirara Mining & Power Corp.

    297,600       57,820  

Vista Land & Lifescapes Inc.

    1,330,100       82,848  

Wilcon Depot Inc.

    502,300       167,831  
   

 

 

 
      1,462,400  
Poland — 1.3%            

Alior Bank SA(a)(b)

    30,115       112,463  

AmRest Holdings SE(a)

    23,845       135,847  

Asseco Poland SA

    15,960       308,885  

Bank Handlowy w Warszawie SA(a)

    8,930       90,431  

Bank Millennium SA(a)

    194,940       160,690  

Budimex SA

    3,422       218,740  

CCC SA(a)

    10,450       163,905  

Ciech SA(a)

    9,500       81,313  

Enea SA(a)

    66,706       120,827  

Eurocash SA(a)(b)

    24,840       105,629  

Famur SA(a)

    84,530       44,609  

Grupa Azoty SA(a)

    13,395       98,220  

Jastrzebska Spolka Weglowa SA(a)

    14,485       62,010  

KRUK SA(a)

    5,370       215,910  

Neuca SA

    665       91,723  

PLAY Communications SA(c)

    36,195       301,711  

Tauron Polska Energia SA(a)

    330,981       228,079  

TEN Square Games SA

    1,045       160,942  

Warsaw Stock Exchange

    8,913       106,415  
   

 

 

 
      2,808,349  
Qatar — 1.0%            

Aamal Co.

    479,845       121,513  
Security   Shares     Value  
Qatar (continued)            

Al Meera Consumer Goods Co. QSC

    19,570     $ 106,416  

Baladna

    275,310       146,932  

Doha Bank QPSC(a)

    458,280       297,617  

Gulf International Services QSC(a)

    281,755       125,821  

Gulf Warehousing Co.

    95,950       133,925  

Medicare Group

    48,436       99,114  

Qatar Aluminum Manufacturing Co.

    873,810       234,364  

Qatar Insurance Co. SAQ

    434,340       251,911  

Qatar National Cement Co. QSC

    61,050       66,378  

Qatar Navigation QSC

    165,775       269,483  

United Development Co. QSC

    528,751       178,674  

Vodafone Qatar QSC

    529,910       187,435  
   

 

 

 
      2,219,583  
Russia — 0.9%            

Aeroflot PJSC(a)

    150,706       164,398  

Credit Bank of Moscow PJSC(a)

    3,363,000       278,409  

Detsky Mir PJSC(c)

    150,700       236,699  

LSR Group PJSC, GDR(f)

    74,691       155,357  

Mechel PJSC, ADR(a)

    33,104       55,946  

Mosenergo PJSC

    3,124,000       87,262  

Rostelecom PJSC

    257,450       336,451  

Sistema PJSFC, GDR(f)

    51,300       294,462  

Unipro PJSC

    7,455,000       270,841  
   

 

 

 
          1,879,825  
Saudi Arabia — 2.6%            

Al Hammadi Co. for Development and Investment(a)

    15,111       106,973  

Al Rajhi Co for Cooperative Insurance(a)

    5,483       107,892  

Aldrees Petroleum and Transport Services Co.

    8,988       157,451  

Arabian Cement Co./Saudi Arabia

    14,974       121,375  

Arriyadh Development Co.

    31,082       136,744  

City Cement Co.(a)

    33,099       159,386  

Dallah Healthcare Co.

    5,085       77,012  

Dur Hospitality Co.

    13,775       103,208  

Eastern Province Cement Co.

    14,125       132,006  

Fawaz Abdulaziz Al Hokair & Co.(a)

    22,451       133,493  

Herfy Food Services Co.

    6,890       94,611  

Leejam Sports Co. JSC

    8,481       160,102  

Maharah Human Resources Co.

    7,600       162,114  

Middle East Healthcare Co.(a)

    11,210       109,994  

Mobile Telecommunications Co.(a)

    81,605       254,142  

Mouwasat Medical Services Co.

    14,060       449,116  

National Agriculture Development Co. (The)(a)

    17,725       151,708  

National Gas & Industrialization Co.

    11,400       88,605  

National Medical Care Co.

    6,365       89,948  

Qassim Cement Co. (The)

    14,274       259,565  

Saudi Ceramic Co.(a)

    9,690       100,764  

Saudi Chemical Co. Holding(a)

    16,376       118,330  

Saudi Ground Services Co.(a)

    26,885       218,997  

Saudi Pharmaceutical Industries & Medical Appliances Corp.

    20,879       199,023  

Saudi Public Transport Co.(a)

    21,831       96,860  

Saudi Real Estate Co.(a)

    25,556       93,762  

Saudi Research & Marketing Group(a)

    11,476       217,865  

Saudia Dairy & Foodstuff Co.

    4,845       238,991  

Seera Group Holding(a)

    47,025       216,916  

Southern Province Cement Co.

    19,678       336,847  

United Electronics Co.

    10,204       192,628  

United International Transportation Co.

    10,611       96,336  

Yamama Cement Co.

    33,740       221,128  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  62


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Saudi Arabia (continued)            

Yanbu Cement Co.

    25,291     $ 221,860  
   

 

 

 
          5,625,752  
South Africa — 3.1%            

Adcock Ingram Holdings Ltd.(a)

    17,114       40,701  

AECI Ltd.

    34,781       172,619  

African Rainbow Minerals Ltd.

    31,624       397,324  

Alexander Forbes Group Holdings Ltd.

    289,752       56,441  

Allied Electronics Corp. Ltd.

    63,745       91,434  

Astral Foods Ltd.

    11,687       91,944  

Attacq Ltd.

    187,060       43,615  

AVI Ltd.

    102,477       417,802  

Barloworld Ltd.

    60,708       214,290  

Brait SE(a)(b)

    268,376       44,990  

Coronation Fund Managers Ltd.

    63,030       159,275  

Dis-Chem Pharmacies Ltd.(c)

    93,290       100,552  

DRDGOLD Ltd.

    127,965       191,102  

Equites Property Fund Ltd.

    149,451       151,734  

Fortress REIT Ltd., Series A

    346,465       257,682  

Foschini Group Ltd. (The)(b)

    98,420       443,671  

Imperial Logistics Ltd.(a)

    47,264       96,725  

Investec Ltd.

    77,425       143,687  

Investec Property Fund Ltd.

    193,500       97,542  

JSE Ltd.

    26,969       188,801  

KAP Industrial Holdings Ltd.(a)

    839,964       136,348  

Liberty Holdings Ltd.

    50,338       179,795  

Massmart Holdings Ltd.(a)(b)

    31,014       49,904  

Motus Holdings Ltd.(a)

    49,308       80,389  

Netcare Ltd.

    354,334       261,443  

Ninety One Ltd.(a)

    42,560       116,089  

Oceana Group Ltd.

    25,588       95,034  

Pick n Pay Stores Ltd.

    105,639       260,212  

PSG Group Ltd.

    35,970       95,545  

Redefine Properties Ltd.

      1,666,965       243,040  

Resilient REIT Ltd.

    103,148       238,428  

Reunert Ltd.

    50,938       93,810  

Royal Bafokeng Platinum Ltd.(a)

    36,599       139,450  

Sappi Ltd.(a)

    164,595       216,562  

Steinhoff International Holdings NV(a)(b)

    1,251,150       68,683  

Stor-Age Property REIT Ltd.

    128,155       92,516  

Super Group Ltd./South Africa(a)

    115,776       123,285  

Telkom SA SOC Ltd.

    91,295       122,328  

Transaction Capital Ltd.

    153,900       163,155  

Truworths International Ltd.(b)

    122,623       220,039  

Vukile Property Fund Ltd.

    235,347       69,182  

Wilson Bayly Holmes-Ovcon Ltd.

    15,984       104,549  

Zeder Investments Ltd.

    317,829       45,026  
   

 

 

 
      6,616,743  
South Korea — 18.2%            

ABLBio Inc.(a)

    7,893       235,880  

Advanced Process Systems Corp.

    4,027       75,936  

Aekyung Industrial Co. Ltd.

    2,203       40,522  

AfreecaTV Co. Ltd.

    2,671       130,413  

Ahnlab Inc.

    2,314       125,060  

AK Holdings Inc.

    1,824       25,335  

Amicogen Inc.(a)

    5,126       178,217  

Ananti Inc.(a)

    16,435       125,902  

Anterogen Co. Ltd.(a)

    1,805       91,473  

Aprogen KIC Inc.(a)

    32,965       85,056  

Asiana Airlines Inc.(a)

    36,018       130,834  
Security   Shares     Value  
South Korea (continued)            

BGF Co. Ltd.

    95     $ 328  

BH Co. Ltd.(a)

    7,167       122,477  

Binex Co. Ltd.(a)

    9,025       273,508  

Binggrae Co. Ltd.

    1,900       93,089  

Boditech Med Inc.

    4,560       104,989  

Boryung Pharmaceutical Co. Ltd.

    7,287       99,377  

Bukwang Pharmaceutical Co. Ltd.

    9,405       299,275  

Cafe24 Corp.(a)

    2,097       128,690  

Cellivery Therapeutics Inc.(a)

    1,900       381,951  

Chabiotech Co. Ltd.(a)

    13,033       238,629  

Chong Kun Dang Pharmaceutical Corp.

    1,710              279,266  

Chongkundang Holdings Corp.

    950       96,767  

Chunbo Co. Ltd.

    1,330       184,066  

CJ CGV Co. Ltd.(a)

    6,523       120,806  

CMG Pharmaceutical Co. Ltd.(a)(b)

    34,203       129,280  

Com2uSCorp.

    3,144       294,047  

Cosmax Inc.

    2,213       190,021  

CrystalGenomics Inc.(a)

    10,324       176,427  

CS Wind Corp.

    2,585       223,051  

Cuckoo Homesys Co. Ltd.

    2,432       87,625  

Daea TI Co. Ltd.

    19,901       101,859  

Daeduck Co. Ltd.

    6,461       33,450  

Daeduck Electronics Co. Ltd./New(a)

    11,167       102,937  

Daesang Corp.

    6,979       169,790  

Daewoo Engineering & Construction Co. Ltd.(a)

       110,064       272,867  

Daewoong Co. Ltd.

    7,410       223,005  

Daewoong Pharmaceutical Co. Ltd.

    1,492       145,696  

Daishin Securities Co. Ltd.

    12,343       106,504  

Daou Technology Inc.

    9,083       148,720  

DB HiTek Co. Ltd.

    11,323       338,861  

Dentium Co. Ltd.(a)

    2,534       79,887  

DGB Financial Group Inc.

    48,546       216,187  

DIO Corp.(a)

    3,675       79,508  

Dong-A Socio Holdings Co. Ltd.

    1,615       147,510  

Dong-A ST Co. Ltd.

    1,855       147,725  

Dongjin Semichem Co. Ltd.

    10,535       294,437  

DongKook Pharmaceutical Co. Ltd.(d)

    1,635       207,971  

Dongkuk Steel Mill Co. Ltd.(a)

    20,972       108,929  

Dongsuh Cos. Inc.

    10,523       226,334  

Dongsung Pharmaceutical Co. Ltd.(a)

    6,216       64,886  

Dongwon F&B Co. Ltd.

    355       52,896  

Dongwon Industries Co. Ltd.

    570       106,764  

Doosan Fuel Cell Co. Ltd.(a)

    7,513       263,104  

Doosan Heavy Industries & Construction Co. Ltd.(a)

    37,408       507,003  

Doosan Infracore Co. Ltd.(a)

    42,085       284,842  

Doosan Solus Co. Ltd.(a)

    3,800       127,957  

DoubleUGames Co. Ltd.

    2,967       182,581  

Duk San Neolux Co. Ltd.(a)

    3,515       98,831  

Ecopro BM Co. Ltd.

    2,755       359,479  

Ecopro Co. Ltd.

    6,367       252,450  

Enzychem Lifesciences Corp.(a)

    2,228       260,893  

Eo Technics Co Ltd.

    2,756       260,543  

Eone Diagnomics Genome Center Co. Ltd.(a)

    5,700       74,375  

Eugene Corp.

    95       319  

Eutilex Co. Ltd.(a)

    2,180       67,167  

F&F Co. Ltd.

    1,889       153,454  

Feelux Co. Ltd.(a)

    17,996       54,083  

Foosung Co. Ltd.

    16,880       117,232  

GemVax & Kael Co. Ltd.(a)

    10,151       189,706  

Geneone Life Science Inc.(a)

    11,590       280,018  
 

 

63  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Korea (continued)            

Genexine Co. Ltd.(a)

    4,286     $ 648,727  

Grand Korea Leisure Co. Ltd.

    9,921       98,968  

Green Cross Cell Corp.

    1,918       73,142  

Green Cross Corp./South Korea

    1,868              417,505  

Green Cross Holdings Corp.

    7,273       168,371  

Green Cross LabCell Corp.

    95       4,614  

GS Home Shopping Inc.

    1,330       130,996  

G-treeBNT Co. Ltd.(a)(b)

    7,749       195,372  

Hana Tour Service Inc.

    3,398       109,844  

Hanall Biopharma Co. Ltd.(a)

    8,692       252,806  

Handsome Co. Ltd.

    4,657       123,295  

Hanil Cement Co. Ltd./New

    772       51,341  

Hanjin Transportation Co. Ltd.

    1,995       73,643  

Hankook Technology Group Co. Ltd.

    13,708       177,711  

Hansol Chemical Co. Ltd.

    2,755       374,554  

Hanssem Co. Ltd.

    3,332       272,922  

Hanwha Aerospace Co. Ltd.(a)

    11,195       243,144  

Hanwha Life Insurance Co. Ltd.

    88,445       113,916  

HDC Holdings Co. Ltd.

    15,295       144,851  

HDC Hyundai Development Co-Engineering & Construction, Class E

    12,160       235,441  

Helixmith Co. Ltd.(a)

    7,932       328,859  

HFR Inc.(a)

    2,660       81,621  

Hite Jinro Co. Ltd.

    9,405       292,150  

HLB Life Science Co. Ltd.(a)

    11,748       178,509  

HMM Co. Ltd.(a)

           71,440       346,405  

HS Industries Co. Ltd.

    14,630       84,856  

Huchems Fine Chemical Corp.

    6,582       100,013  

Hugel Inc.(a)

    1,995       275,091  

Huons Co. Ltd.

    2,470       150,541  

Huons Global Co. Ltd.

    1,330       38,179  

Hwaseung Enterprise Co. Ltd.

    6,562       64,355  

Hyosung Advanced Materials Corp.(a)

    918       105,100  

Hyosung Chemical Corp.

    724       60,582  

Hyosung Corp.

    2,816       158,828  

Hyosung TNC Co. Ltd.

    862       71,186  

Hyundai Bioscience Co. Ltd.(a)

    10,592       101,203  

Hyundai Construction Equipment Co. Ltd.(a)(b)

    3,992       73,428  

Hyundai Department Store Co. Ltd.

    6,453       291,713  

Hyundai Electric & Energy System Co. Ltd.(a)

    5,936       58,715  

Hyundai Elevator Co. Ltd.

    7,426       256,619  

Hyundai Greenfood Co. Ltd.

    15,770       96,115  

Hyundai Home Shopping Network Corp.

    2,280       125,334  

Hyundai Mipo Dockyard Co. Ltd.

    7,074       183,118  

Hyundai Rotem Co. Ltd.(a)

    14,167       180,680  

Hyundai Wia Corp.

    5,074       177,904  

Iljin Diamond Co. Ltd.

    2,662       130,646  

Iljin Materials Co. Ltd.

    6,923       290,522  

Ilyang Pharmaceutical Co. Ltd.

    4,180       286,432  

Innocean Worldwide Inc.

    2,729       126,353  

iNtRON Biotechnology Inc.(a)

    9,219       131,933  

IS Dongseo Co. Ltd.

    6,175       231,582  

ITM Semiconductor Co. Ltd.(a)

    2,090       101,166  

JB Financial Group Co. Ltd.

    41,248       148,964  

Jejuair Co. Ltd.(a)

    3,644       42,640  

Jin Air Co. Ltd.(a)

    4,543       34,152  

JW Pharmaceutical Corp.

    4,902       157,430  

JYP Entertainment Corp.

    8,142       238,866  

KCC Corp.

    1,615       189,656  

KEPCO Engineering & Construction Co. Inc.

    4,581       62,859  
Security   Shares     Value  
South Korea (continued)            

KEPCO Plant Service & Engineering Co. Ltd.

    6,651     $ 155,651  

Kginicis Co. Ltd.

    5,225       103,145  

KIWOOM Securities Co. Ltd.(b)

    3,597       330,056  

Koh Young Technology Inc.

    3,348       253,658  

Kolmar BNH Co. Ltd.

    2,734       153,052  

Kolmar Korea Co. Ltd.

    5,035       194,127  

Kolmar Korea Holdings Co. Ltd.

    1,995       46,604  

Kolon Industries Inc.

    6,365       171,462  

Komipharm International Co. Ltd.(a)

    12,013       156,243  

Korea Electric Terminal Co. Ltd.

    1,754       66,150  

Korea Line Corp.(a)

    4,370       59,228  

Korea Petrochemical Ind. Co Ltd.

    1,111       110,361  

Korea REIT & Trust Co. Ltd.

    68,642       97,944  

Korean Reinsurance Co.

    29,156              180,154  

Kuk-Il Paper Manufacturing Co. Ltd.(a)(b)

    26,760       112,410  

Kyung Dong Navien Co. Ltd.

    2,188       95,411  

L&C Bio Co. Ltd.

    1,330       147,678  

L&F Co. Ltd.

    5,103       180,424  

LEENO Industrial Inc.

    2,945       314,854  

LegoChem Biosciences Inc.(a)

    4,456       202,563  

LG Hausys Ltd.

    1,995       97,407  

LG International Corp.

    9,975       126,377  

LIG Nex1 Co. Ltd.

    2,894       76,010  

Lotte Chilsung Beverage Co. Ltd.

    1,425       112,882  

LOTTE Fine Chemical Co. Ltd.

    6,159       231,760  

LOTTE Himart Co. Ltd.

    3,800       96,128  

LOTTE Reit Co. Ltd.

    28,310       121,066  

Lotte Tour Development Co. Ltd.(a)

    10,640       169,287  

LS Corp.

    5,595       213,127  

LS Electric Co. Ltd.

    4,439       202,163  

Maeil Dairies Co. Ltd.

    1,522       87,125  

Mando Corp.

    9,788       258,728  

Mcnex Co. Ltd.

    4,061       114,866  

Medipost Co. Ltd.(a)

    6,365       154,048  

MedPacto Inc.(a)

    3,230       288,223  

Medy-Tox Inc.

    1,330       279,570  

MegaStudyEdu Co. Ltd.

    2,717       75,021  

Meritz Financial Group Inc.

    14,603       113,466  

Meritz Fire & Marine Insurance Co. Ltd.

    15,030       161,320  

Mezzion Pharma Co. Ltd.(a)

    1,995       285,840  

Mirae Asset Life Insurance Co. Ltd.

    5,605       17,694  

Mirae Asset Maps Asia Pacific Real Estate 1 Investment

           27,764       90,334  

Namhae Chemical Corp.

    8,291       57,442  

Namsun Aluminum Co. Ltd.(a)

    17,860       77,881  

Naturecell Co. Ltd.(a)

    15,593       139,798  

NEPES Corp.

    5,417       133,384  

Nexen Tire Corp.

    95       405  

NHN Corp.(a)

    2,945       180,731  

NHN KCP Corp.

    3,800       230,003  

NICE Holdings Co. Ltd.

    9,500       150,349  

NICE Information Service Co. Ltd.

    10,866       164,650  

NKMax Co. Ltd.(a)

    11,357       151,535  

NongShim Co. Ltd.

    855       258,753  

OCI Co. Ltd.(a)

    6,745       367,372  

OptoElectronics Solutions Co. Ltd.

    2,660       146,895  

Orion Holdings Corp.

    13,775       151,909  

Oscotec Inc.(a)

    6,506       179,916  

Osstem Implant Co. Ltd.(a)

    3,802       118,743  

Paradise Co. Ltd.

    15,298       171,280  

Partron Co. Ltd.

    12,045       103,425  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  64


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Korea (continued)            

Pharmicell Co. Ltd.(a)

    17,005     $ 320,660  

PI Advanced Materials Co. Ltd.

    4,883       117,358  

Poongsan Corp.

    6,195       120,729  

Posco ICT Co. Ltd.

    22,820       83,469  

RFHIC Corp.(b)

    4,087       135,041  

S&T Motiv Co. Ltd.

    2,859       132,372  

Sam Chun Dang Pharm Co. Ltd.

    4,410       217,549  

Samwha Capacitor Co. Ltd.

    2,473       112,627  

Samyang Foods Co. Ltd.

    950       85,171  

Sangsangin Co. Ltd.

    9,785       49,341  

Seojin System Co. Ltd.

    4,467       190,653  

Seoul Semiconductor Co. Ltd.

    11,960       164,111  

SFA Engineering Corp.

    6,365       177,624  

SFA Semicon Co. Ltd.(a)

    25,935       108,945  

Shinsegae International Inc.

    766       87,375  

Silicon Works Co. Ltd.

    3,747       142,259  

SillaJen Inc.(a)(b)(d)

    19,774       181,277  

SK Chemicals Co. Ltd.

    2,414       799,654  

SK Discovery Co. Ltd.

    3,811       248,313  

SK Materials Co. Ltd.

    1,499       311,182  

SK Networks Co. Ltd.

    44,735       195,450  

SKC Co. Ltd.

    6,354       494,777  

SL Corp.

    4,412       44,755  

SM Entertainment Co. Ltd.(a)

    6,000       173,752  

Songwon Industrial Co. Ltd.

    5,225       53,882  

Soulbrain Co. Ltd./New(a)

    1,189       217,001  

Soulbrain Holdings Co. Ltd.

    1,470       57,543  

SPC Samlip Co. Ltd.

    760       39,475  

ST Pharm Co. Ltd.(a)

    3,135       171,014  

STCUBE(a)

    7,362       55,901  

Suheung Co. Ltd.

    1,615       77,358  

Taekwang Industrial Co. Ltd.

    95       52,782  

Taeyoung Engineering & Construction Co. Ltd.

    12,186       221,582  

Telcon RF Pharmaceutical Inc.(a)

    24,399       112,968  

TES Co. Ltd./Korea

    4,750       85,371  

Theragen Etex Co. Ltd.(a)

    9,448       90,670  

Tokai Carbon Korea Co. Ltd.

    1,733       158,580  

Tongyang Life Insurance Co. Ltd.

    15,987       40,105  

Toptec Co. Ltd.

    6,175       85,771  

Ubiquoss Holdings Inc.

    2,565       60,136  

Vieworks Co. Ltd.

    2,639       72,534  

Webzen Inc.(a)

    6,083       176,412  

Wemade Co. Ltd.

    3,104       93,677  

WONIK IPS Co. Ltd.(a)

    8,836       238,027  

YG Entertainment Inc.(a)

    3,147       123,586  

Young Poong Corp.

    190       78,294  

Youngone Corp.

    7,896       208,717  

Yungjin Pharmaceutical Co. Ltd.(a)

    30,951       177,697  

Yuyang DNU Co. Ltd.(a)(d)

    17,648       16,312  

Zinus Inc.

    2,755       195,742  
   

 

 

 
        38,588,194  
Taiwan — 23.0%            

AcBel Polytech Inc.

         160,000       140,961  

A-DATA Technology Co. Ltd.

    66,000       116,967  

Advanced Ceramic X Corp.

    13,000       164,375  

Advanced Wireless Semiconductor Co.

    44,596       131,167  

Alchip Technologies Ltd.

    16,000       287,375  

AmTRAN Technology Co. Ltd.(a)

    95,312       34,270  

Arcadyan Technology Corp.

    38,541       120,845  

Ardentec Corp.

    134,000       149,566  
Security   Shares     Value  
Taiwan (continued)            

Asia Optical Co. Inc.

    69,000     $ 155,207  

Asia Pacific Telecom Co. Ltd.(a)

    549,910       139,064  

Asia Vital Components Co. Ltd.

    101,000       241,644  

ASPEED Technology Inc.

    9,000       368,079  

AURAS Technology Co. Ltd.

    19,000       143,755  

BES Engineering Corp.

    532,000       148,133  

Bizlink Holding Inc.

    36,770       309,534  

Brighton-Best International Taiwan Inc.(a)

    174,000       152,702  

Capital Securities Corp.

    475,530       178,274  

Career Technology MFG. Co. Ltd.

    121,369       116,647  

Casetek Holdings Ltd.

    43,816       127,230  

Cathay Real Estate Development Co. Ltd.

    169,300       112,515  

Center Laboratories Inc.(a)

    96,871       265,111  

Century Iron & Steel Industrial Co. Ltd.

    42,000       176,065  

Charoen Pokphand Enterprise

    55,000       127,839  

Cheng Loong Corp.

    190,000       196,207  

Cheng Uei Precision Industry Co. Ltd.

    112,000       160,128  

Chicony Power Technology Co. Ltd.

    58,000       146,277  

Chief Telecom Inc.

    9,000       119,933  

Chilisin Electronics Corp.

    59,459       200,010  

China Airlines Ltd.(a)

    1,344,000       391,178  

China Bills Finance Corp.

    190,000       94,542  

China General Plastics Corp.

    149,064       97,034  

China Man-Made Fiber Corp.(a)

    570,223       147,893  

China Metal Products

    95,000       86,771  

China Motor Corp.

    92,200       133,077  

China Petrochemical Development Corp.

    1,047,600       307,766  

China Steel Chemical Corp.

    69,000       217,289  

Chin-Poon Industrial Co. Ltd.

    105,000       91,074  

Chipbond Technology Corp.

    185,000       354,345  

ChipMOS Technologies Inc.

    173,000       171,576  

Chlitina Holding Ltd.

    13,000       92,821  

Chong Hong Construction Co. Ltd.

    56,424       161,148  

Chroma ATE Inc.

    104,000       570,659  

Chung Hung Steel Corp.(a)

    475,000       150,878  

Chunghwa Precision Test Tech Co. Ltd.

    6,000       143,960  

Cleanaway Co. Ltd.

    31,000       167,987  

Clevo Co.(a)

    133,000       134,172  

CMC Magnetics Corp.

    322,238       89,286  

Compeq Manufacturing Co. Ltd.

    305,000              453,734  

Concraft Holding Co. Ltd.

    22,849       71,487  

Coretronic Corp.

    118,400       141,435  

CSBC Corp. Taiwan(a)

    81,455       68,709  

CTCI Corp.

    154,000       188,947  

Cub Elecparts Inc.

    18,361       104,816  

Darfon Electronics Corp.

    66,000       90,987  

Darwin Precisions Corp.(a)

    114,000       42,155  

E Ink Holdings Inc.

    258,000       362,272  

Egis Technology Inc.

    18,000       102,449  

Elan Microelectronics Corp.

    85,000       411,363  

Elite Material Co. Ltd.

    81,000       469,301  

Elite Semiconductor Microelectronics Technology Inc.

    102,000       126,537  

eMemory Technology Inc.

    17,000       300,700  

Ennoconn Corp.

    15,372       155,074  

Epistar Corp.(a)

    313,000       425,633  

Eternal Materials Co. Ltd.

    285,399       336,061  

Everlight Electronics Co. Ltd.

    118,000       138,947  

Far Eastern Department Stores Ltd.

    309,000       273,284  

Far Eastern International Bank

    676,518       258,235  

Faraday Technology Corp.

    67,000       99,102  
 

 

65  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)            

Farglory Land Development Co. Ltd.

    77,000     $ 125,965  

Feng Hsin Steel Co. Ltd.

    160,000       310,823  

Firich Enterprises Co. Ltd.

    190,376       179,077  

FLEXium Interconnect Inc.

    89,418       383,984  

Formosa Sumco Technology Corp.

    24,000       84,249  

Foxsemicon Integrated Technology Inc.

    19,200       124,983  

Fulgent Sun International Holding Co. Ltd.

    31,000       133,122  

Fusheng Precision Co. Ltd.

    37,000       218,155  

General Interface Solution Holding Ltd.

    71,000       314,571  

Genius Electronic Optical Co. Ltd.

    21,585       420,790  

Getac Technology Corp.

    118,000       196,254  

Gigabyte Technology Co. Ltd.

    156,000       451,388  

Ginko International Co. Ltd.

    10,500       45,448  

Global Lighting Technologies Inc.

    28,000       120,716  

Global Unichip Corp.

    24,000       216,349  

Gold Circuit Electronics Ltd.(a)

    95,000       166,420  

Goldsun Building Materials Co. Ltd.(a)

         332,000              244,970  

Gourmet Master Co. Ltd.

    23,821       81,104  

Grand Pacific Petrochemical(a)

    285,000       186,494  

Grape King Bio Ltd.

    37,000       226,982  

Great Wall Enterprise Co. Ltd.

    197,789       305,027  

Greatek Electronics Inc.

    108,000       184,776  

Hannstar Board Corp.

    96,481       143,202  

HannStar Display Corp.(a)

    771,320       211,353  

Holtek Semiconductor Inc.

    53,000       115,243  

Holy Stone Enterprise Co. Ltd.

    41,050       145,500  

Hota Industrial Manufacturing Co. Ltd.

    62,192       221,497  

Hotai Finance Co. Ltd.

    64,000       176,242  

HTC Corp.(a)

    212,000       217,480  

Huaku Development Co. Ltd.

    76,080       232,325  

Hung Sheng Construction Ltd.(a)

    163,520       96,134  

IBF Financial Holdings Co. Ltd.

    580,607       228,550  

International CSRC Investment Holdings Co.

    203,945       143,185  

International Games System Co. Ltd.

    19,000       569,841  

ITEQ Corp.

    59,559       242,568  

Jentech Precision Industrial Co. Ltd.

    19,000       198,149  

Jih Sun Financial Holdings Co. Ltd.

    491,341       174,154  

Johnson Health Tech Co. Ltd.

    30,000       78,626  

Kenda Rubber Industrial Co. Ltd.

    183,341       199,953  

Kindom Development Co. Ltd.

    97,000       130,583  

King Slide Works Co. Ltd.

    18,000       186,800  

King Yuan Electronics Co. Ltd.

    317,000       337,079  

King’s Town Bank Co. Ltd.

    256,000       318,893  

Kinpo Electronics

    285,000       111,702  

Kinsus Interconnect Technology Corp.

    79,000       171,777  

KMC Kuei Meng International Inc.

    27,000       179,439  

LandMark Optoelectronics Corp.

    21,400       179,418  

Lealea Enterprise Co. Ltd.(a)

    590       185  

Lien Hwa Industrial Holdings Corp.

    220,478       315,972  

Lite-On Semiconductor Corp.

    95,000       126,595  

Longchen Paper & Packaging Co. Ltd.

    206,456       122,784  

Lotes Co. Ltd.

    21,968       320,444  

Lotus Pharmaceutical Co. Ltd.(a)

    27,000       73,892  

Lung Yen Life Service Corp.

    79,000       148,084  

Machvision Inc.

    10,398       98,872  

Macronix International

    546,000       561,975  

Makalot Industrial Co. Ltd.

    58,036       390,645  

Mercuries & Associates Holding Ltd.

    133,579       113,131  

Mercuries Life Insurance Co. Ltd.(a)

    358,246       115,014  

Merida Industry Co. Ltd.

    66,000       551,097  
Security   Shares     Value  
Taiwan (continued)            

Merry Electronics Co. Ltd.

    54,224     $ 284,597  

Mitac Holdings Corp.

    274,383       270,254  

momo.com Inc.

    14,000       347,835  

Nan Kang Rubber Tire Co. Ltd.

    133,000       212,816  

Nan Liu Enterprise Co. Ltd.

    15,000       138,030  

Nan Ya Printed Circuit Board Corp.(a)

    68,000       279,263  

Nantex Industry Co. Ltd.

    95,000       152,012  

OBI Pharma Inc.(a)

    43,184       175,877  

Oneness Biotech Co. Ltd.(a)

    77,000       890,939  

Oriental Union Chemical Corp.

    190,000       110,407  

Pan Jit International Inc.

    93,900       117,449  

Pan-International Industrial Corp.

    151,722       91,525  

Parade Technologies Ltd.

    21,000       744,338  

PChome Online Inc.

    29,305       111,861  

PharmaEngine Inc.

    32,756       80,155  

PharmaEssentia Corp.(a)

    53,648              208,438  

Pharmally International Holding Co. Ltd.(d)

    21,603       41,672  

Pixart Imaging Inc.

    39,635       233,016  

Poya International Co. Ltd.

    17,453       342,023  

President Securities Corp.

    279,215       155,112  

Primax Electronics Ltd.

    109,000       166,055  

Prince Housing & Development Corp.

    380,917       133,067  

Qisda Corp.

    454,000       287,797  

Quanta Storage Inc.

    95,000       142,137  

Radiant Opto-Electronics Corp.

    131,000       482,184  

Radium Life Tech Co. Ltd.

    247,341       87,669  

Rexon Industrial Corp. Ltd.

    40,000       137,007  

RichWave Technology Corp.

    15,000       112,980  

Ritek Corp.(a)

    475,218       95,071  

Roo Hsing Co. Ltd.(a)

    174,000       73,831  

Ruentex Industries Ltd.

    95,000       225,346  

Run Long Construction Co. Ltd.

    65,000       156,621  

Sanyang Motor Co. Ltd.

    226,820       183,209  

ScinoPharm Taiwan Ltd.

    92,708       103,952  

SDI Corp.

    33,000       53,648  

Sercomm Corp.

    67,000       177,653  

Shin Zu Shing Co. Ltd.

    46,856       241,135  

Shinkong Synthetic Fibers Corp.

    419,135       174,274  

Sigurd Microelectronics Corp.

    125,124       162,687  

Simplo Technology Co. Ltd.

    49,600       566,297  

Sinbon Electronics Co. Ltd.

    66,000       406,012  

Sino-American Silicon Products Inc.

    149,000       489,532  

Sinyi Realty Inc.

    89,778       89,804  

Sitronix Technology Corp.

    33,000       161,955  

Soft-World International Corp.

    18,140       56,878  

Sporton International Inc.

    22,330       205,480  

St. Shine Optical Co. Ltd.

    14,000       141,233  

Sunny Friend Environmental Technology Co. Ltd.

    20,000       167,681  

Sunonwealth Electric Machine Industry Co. Ltd.

    54,000       115,577  

Supreme Electronics Co. Ltd.

    133,000       135,078  

Systex Corp.

    44,000       130,914  

TA Chen Stainless Pipe

    262,331       189,988  

Taichung Commercial Bank Co. Ltd.

         799,684       303,886  

TaiDoc Technology Corp.

    17,000       118,484  

TaiMed Biologics Inc.(a)

    55,000       215,565  

Tainan Spinning Co. Ltd.

    285,190       113,720  

Taiwan Cogeneration Corp.

    137,000       175,093  

Taiwan Fertilizer Co. Ltd.

    235,000       434,896  

Taiwan Glass Industry Corp.(a)

    475,000       186,170  

Taiwan Hon Chuan Enterprise Co. Ltd.

    90,004       180,367  
 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  66


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)            

Taiwan Paiho Ltd.

    75,050     $ 202,067  

Taiwan Secom Co. Ltd.

    88,450       256,233  

Taiwan Semiconductor Co. Ltd.

    66,000       84,352  

Taiwan Shin Kong Security Co. Ltd.

    73,366       90,890  

Taiwan Styrene Monomer

    196,000       105,209  

Taiwan Surface Mounting Technology Corp.

    76,000       308,232  

Taiwan TEA Corp.(a)

    291,000       163,642  

Taiwan Union Technology Corp.

    68,000       275,787  

TCI Co. Ltd.

    26,528       289,768  

Teco Electric and Machinery Co. Ltd.

    475,000       474,328  

Test Research Inc.

    52,000       104,207  

Ton Yi Industrial Corp.(a)

    380,000       125,883  

Tong Hsing Electronic Industries Ltd.(a)

    71,000       320,621  

Tong Yang Industry Co. Ltd.

    113,133       149,217  

Topco Scientific Co. Ltd.

    56,000       229,027  

TPK Holding Co. Ltd.(a)

    95,000       159,297  

Transcend Information Inc.(a)

    62,000       139,250  

Tripod Technology Corp.

    123,000       486,274  

TSRC Corp.

    222,000       132,785  

TTY Biopharm Co. Ltd.

    68,450       161,901  

Tung Ho Steel Enterprise Corp.

    190,000       173,219  

TXC Corp.

    89,000       234,470  

U-Ming Marine Transport Corp.

    146,000       149,277  

Unimicron Technology Corp.

    370,000       928,105  

Union Bank of Taiwan

    407,167       142,237  

Unitech Printed Circuit Board Corp.

    164,420       115,996  

United Integrated Services Co. Ltd.

    45,400       318,743  

United Renewable Energy Co. Ltd.(a)

    655,879       258,180  

UPC Technology Corp.

    349,741       152,572  

USI Corp.

    380,070       168,393  

Visual Photonics Epitaxy Co. Ltd.

    47,425       124,618  

Voltronic Power Technology Corp.(a)

    17,080       602,485  

Wafer Works Corp.

    145,681       172,783  

Wah Lee Industrial Corp.

    85,000       163,966  

Walsin Lihwa Corp.

    788,000       452,526  

Wan Hai Lines Ltd.

    190,000       137,280  

Wistron NeWeb Corp.

    85,481       240,348  

WT Microelectronics Co. Ltd.

    96,757       128,772  

XinTec Inc.(a)

    52,000       218,871  

Xxentria Technology Materials Corp.

    67,000       118,740  

Yang Ming Marine Transport Corp.(a)

    380,820       131,087  

YFY Inc.

    380,000       237,002  

Yieh Phui Enterprise Co. Ltd.(a)

    459,797       148,870  

Yulon Finance Corp.

    47,080       159,974  

Yulon Motor Co. Ltd.(a)

    264,000       227,637  

YungShin Global Holding Corp.

    85,200       127,910  

Yungtay Engineering Co. Ltd.

    62,000       115,584  
   

 

 

 
        48,801,761  
Thailand — 3.5%            

AEON Thana Sinsap Thailand PCL, NVDR

    37,800       129,957  

Amata Corp. PCL, NVDR(b)

    270,600       114,770  

AP Thailand PCL, NVDR

    822,800       166,556  

Bangchak Corp. PCL, NVDR

    340,800       193,820  

Bangkok Chain Hospital PCL, NVDR

    437,200       219,144  

Bangkok Land PCL, NVDR(b)

    5,158,500       164,091  

Bangkok Life Assurance PCL, NVDR(a)(b)

    229,800       118,878  

Banpu PCL, NVDR

      1,273,000       235,192  

Central Plaza Hotel PCL, NVDR(a)(b)

    171,000       149,723  

CH Karnchang PCL, NVDR

    369,500       229,138  

Chularat Hospital PCL, NVDR

    1,995,800       166,731  
Security   Shares     Value  
Thailand (continued)            

CK Power PCL, NVDR(a)

    798,100     $ 155,145  

Com7 PCL, NVDR

    190,000       250,301  

Eastern Polymer Group PCL, NVDR

    412,900       62,620  

Eastern Water Resources Development and Management PCL, NVDR

    663,500       212,124  

Esso Thailand PCL, NVDR(a)(b)

    352,000       74,647  

GFPT PCL, NVDR

    212,300       87,996  

Gunkul Engineering PCL, NVDR(b)

    1,568,899       128,042  

Hana Microelectronics PCL, NVDR

    190,100       242,798  

Jasmine International PCL, NVDR(b)

    1,147,200       106,896  

KCE Electronics PCL, NVDR(b)

    233,300       219,263  

Khon Kaen Sugar Industry PCL, NVDR

    933,930       61,217  

Kiatnakin Phatra Bank PCL, NVDR(a)

    85,532       109,242  

Major Cineplex Group PCL, NVDR(b)

    281,500       158,286  

MBK PCL, NVDR

    593,700       238,453  

Mega Lifesciences PCL, NVDR

    134,700       163,384  

Plan B Media PCL, NVDR

    741,500       131,039  

Pruksa Holding PCL, NVDR

    419,400       156,319  

PTG Energy PCL, NVDR

    261,000       161,854  

Quality Houses PCL, NVDR

    3,116,267       222,286  

Sansiri PCL, NVDR

    5,135,400       120,454  

Siamgas & Petrochemicals PCL, NVDR

    296,800       85,352  

Sino-Thai Engineering & Construction PCL, NVDR

    314,528       133,401  

Sri Trang Agro-Industry PCL, NVDR(a)(b)

    275,580       230,222  

Star Petroleum Refining PCL, NVS(b)

    560,500       123,365  

Supalai PCL, NVDR

    540,200       291,601  

Super Energy Corp. PCL, NVDR

    5,861,500       154,436  

Taokaenoi Food & Marketing PCL, Class R, NVDR(b)

    197,900       68,039  

Thai Airways International PCL, NVDR(a)(b)

    329,100       35,107  

Thai Vegetable Oil PCL, NVDR

    211,400       183,398  

Thanachart Capital PCL, NVDR

    110,300       114,296  

Thonburi Healthcare Group PCL, NVDR

    296,600       184,884  

Tipco Asphalt PCL, NVDR

    221,000       176,104  

TPI Polene Power PCL, NVDR

    731,500       101,537  

TTW PCL, NVDR(b)

    550,700       237,108  

WHA Corp. PCL, NVDR(b)

    2,839,500       291,956  
   

 

 

 
          7,361,172  
Turkey — 1.0%            

Coca-Cola Icecek AS

    24,878       146,111  

Dogan Sirketler Grubu Holding AS

    342,076       97,616  

Emlak Konut Gayrimenkul Yatirim Ortakligi AS

    552,615       132,165  

Enerjisa Enerji AS(c)

    62,225       68,998  

Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS, Class D(b)

    289,370       119,932  

Koza Altin Isletmeleri AS(a)(b)

    12,540       132,404  

Koza Anadolu Metal Madencilik
Isletmeleri AS(a)(b)

    65,036       113,563  

Mavi Giyim Sanayi Ve Ticaret AS, Class B(a)(c)

    13,692       69,176  

Migros Ticaret AS(a)(b)

    21,375       113,919  

MLP Saglik Hizmetleri AS(a)(c)

    28,407       59,061  

Pegasus Hava Tasimaciligi AS(a)(b)

    11,799       73,433  

Petkim Petrokimya Holding AS(a)(b)

    259,243       137,742  

Sasa Polyester Sanayi AS(a)

    54,297       111,265  

Soda Sanayii AS

    143,450       132,748  

Sok Marketler Ticaret AS(a)

    56,430       98,536  

TAV Havalimanlari Holding AS

    88,748       180,897  

Tekfen Holding AS(b)

    65,404       131,803  

Trakya Cam Sanayii AS

    190,670       101,825  

Turkiye Halk Bankasi AS(a)

    42,108       28,095  
 

 

67  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Turkey (continued)            

Ulker Biskuvi Sanayi AS(a)

    52,966     $ 164,821  
   

 

 

 
      2,214,110  
United Arab Emirates — 0.6%            

Air Arabia PJSC

    854,789       269,947  

Amanat Holdings PJSC

    529,062       122,862  

DAMAC Properties Dubai Co. PJSC(a)

    663,238       158,716  

Dana Gas PJSC

    1,199,770       238,115  

Drake & Scull International PJSC(a)(d)

    241,185       11,792  

Dubai Financial Market PJSC

    715,605       168,909  

Dubai Investments PJSC

    692,880       230,133  
   

 

 

 
      1,200,474  
   

 

 

 

Total Common Stocks — 98.0%
(Cost: $197,882,395)

        208,316,900  
   

 

 

 

Preferred Stocks

   

Brazil — 1.2%

   

Azul SA, Preference Shares, NVS

    83,500       338,055  

Banco ABC Brasil SA, Preference Shares, NVS

    25,269       61,907  

Banco do Estado do Rio Grande do Sul SA, Class B, Preference Shares, NVS

    59,800       143,017  

Banco Pan SA, Preference Shares, NVS

    104,500       161,343  

Bradespar SA, Preference Shares, NVS

    66,600       534,048  

Cia. de Saneamento do Parana, Preference
Shares, NVS .

    9,500       9,161  

Cia. Energetica de Sao Paulo, Class B, Preference Shares, NVS

    47,500       260,623  

Gol Linhas Aereas Inteligentes SA, Preference Shares, NVS(a)

    47,500       154,901  

Marcopolo SA, Preference Shares, NVS

    161,569       83,054  

Metalurgica Gerdau SA, Preference Shares, NVS

    237,500       380,544  

Randon SA Implemetos e Participacoes, Preference Shares, NVS

    53,725       105,082  

Unipar Carbocloro SA, Preference Shares, NVS

    15,483       84,190  

Usinas Siderurgicas de Minas Gerais SA Usiminas, Class A, Preference Shares, NVS

    123,500       228,499  
   

 

 

 
      2,544,424  
   

 

 

 

Total Preferred Stocks — 1.2%
(Cost: $2,600,491)

      2,544,424  
   

 

 

 

Rights

   
Chile — 0.0%            

Cia Sud Americana de Vapores SA,
(Expires 09/25/20)(a)

    1,289,502       4,991  
   

 

 

 
Security   Shares     Value  

 

 
India — 0.0%            

Minda Industries Ltd.,
(Expires 09/08/20)(a)

    1,108     $ 1,058  
   

 

 

 

Total Rights — 0.0%
(Cost: $0)

      6,049  
   

 

 

 

Warrants

   

Brazil — 0.0%

   

CVC Brasil Operadora e Agencia de Viagens SA (Expires 01/29/21)(a)

    6,092       8,064  
   

 

 

 

Total Warrants — 0.0%
(Cost: $0)

      8,064  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 4.5%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 0.37%(g)(h)(i)

          9,443,426       9,452,869  
   

 

 

 

Total Short-Term Investments — 4.5%
(Cost: $9,444,768)

 

    9,452,869  
   

 

 

 

Total Investments in Securities — 103.7%
(Cost: $209,927,654)

 

    220,328,306  

Other Assets, Less Liabilities — (3.7)%

 

    (7,817,125
   

 

 

 

Net Assets — 100.0%

    $   212,511,181  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

Rounds to less than $1.

(f) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(g) 

Affiliate of the Fund.

(h)

Annualized 7-day yield as of period-end.

(i) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  68


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

   
       Affiliated Issuer  

Value at

08/31/19

   

Purchases

at Cost

   

Proceeds

from Sales

    Net Realized
Gain (Loss)
   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at
08/31/20

    Income    

Capital Gain

Distributions from
Underlying Funds

        
 

 

   
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 17,931,324     $     $ (8,479,318 )(a)    $ 679     $ 184     $ 9,452,869       9,443,426     $ 571,837 (b)    $    
 

BlackRock Cash Funds: Treasury,
SL Agency Shares(c)

    110,000             (110,000 )(a)                              3,377          
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ 679     $ 184     $ 9,452,869       $ 575,214     $    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 
  (c) 

As of period end, the entity is no longer held.

 

Futures Contracts

 

 

 
Description  

Number of

Contracts

    

Expiration

Date

    

Notional

Amount

(000)

    

 

Value/

Unrealized

Appreciation

(Depreciation)

 

 

 

Long Contracts

          

MSCI Emerging Markets E-Mini Index

    19        09/18/20      $ 1,045      $ 56,469  
          

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Consolidated Statements of Assets and Liabilities were as follows:

 

 

 
   

 

Equity
Contracts

 

 

 

Assets — Derivative Financial Instruments

 

Futures contracts

 

Unrealized appreciation on futures contracts(a)

  $ 56,469  
 

 

 

 

 

  (a)

Net cumulative appreciation (depreciation) on futures contracts are reported in the Consolidated Schedule of Investments. In the Consolidated Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Consolidated Statements of Operations was as follows:

 

 

 
   

 

Equity

Contracts

 

 

 

Net Realized Gain (Loss) from:

 

Futures contracts

  $ 134,218  
 

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

 

Futures contracts

  $ 37,915  
 

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

 

Average notional value of contracts — long

  $ 829,794      

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Consolidated Financial Statements.

 

69  

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Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Small-Cap ETF

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Consolidated Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Consolidated Schedule of Investments above.

 

                                                                                               

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 207,122,380        $ 512,986        $ 681,534        $ 208,316,900  

Preferred Stocks

     2,544,424                            2,544,424  

Rights

     1,058          4,991                   6,049  

Warrants

              8,064                   8,064  

Money Market Funds

     9,452,869                            9,452,869  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 219,120,731        $ 526,041        $ 681,534        $ 220,328,306  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 56,469        $        $        $ 56,469  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to consolidated financial statements.

 

C O N S O L I D A T E D   S C H E D U L E   O F   I N V E S T M E N T S

  70


Consolidated Statements of Assets and Liabilities

August 31, 2020

 

   

iShares

Core MSCI

Emerging Markets

ETF

 

 

 

 

    

iShares

MSCI BRIC

ETF

 

 

 

   

iShares

MSCI

Emerging

Markets Asia

ETF

 

 

 

 

 

    

iShares

MSCI

Emerging

Markets

Small-Cap

ETF

 

 

 

 

 

 

 

 

ASSETS

         

Investments in securities, at value (including securities on loan)(a):

         

Unaffiliated(b)

  $ 53,882,418,087      $ 146,484,309     $ 555,841,517      $ 210,875,437  

Affiliated(c)

    2,986,901,043        3,616,562       14,814,628        9,452,869  

Cash

    380,362        282,710       487,001        484,615  

Foreign currency, at value(d)

    153,852,712        1,548,263       2,060,877        490,678  

Cash pledged:

         

Futures contracts

    76,492,200        172,000       327,000        102,000  

Foreign currency collateral pledged:

         

Futures contracts(e)

           86,063       30,838         

Receivables:

         

Investments sold

    404,305,471        1,327,833       3,872,913        8,469,657  

Securities lending income — Affiliated

    3,211,988        2,146       8,428        35,824  

Dividends

    69,851,311        155,117       666,709        379,085  

Tax reclaims

    811,243                     4,185  
 

 

 

    

 

 

   

 

 

    

 

 

 

Total assets

    57,578,224,417        153,675,003       578,109,911        230,294,350  
 

 

 

    

 

 

   

 

 

    

 

 

 

LIABILITIES

         

Collateral on securities loaned, at value

    2,394,530,916        2,652,776       12,959,077        9,445,619  

Deferred foreign capital gain tax

    4,042,980              9,639         

Payables:

         

Investments purchased

    527,407,868        3,502,361       5,796,756        7,536,635  

Variation margin on futures contracts

    17,854,063        59,785       83,123        23,560  

Bank borrowings

           250,008       475,012        647,014  

Investment advisory fees

    5,303,974        87,243       227,412        123,774  

Foreign taxes

    703,597              454        6,567  
 

 

 

    

 

 

   

 

 

    

 

 

 

Total liabilities

    2,949,843,398        6,552,173       19,551,473        17,783,169  
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETS

  $ 54,628,381,019      $ 147,122,830     $ 558,558,438      $ 212,511,181  
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETS CONSIST OF:

         

Paid-in capital

  $ 52,525,573,833      $ 361,226,026     $ 516,309,475      $ 250,227,220  

Accumulated earnings (loss)

    2,102,807,186        (214,103,196     42,248,963        (37,716,039
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETS

  $ 54,628,381,019      $ 147,122,830     $ 558,558,438      $ 212,511,181  
 

 

 

    

 

 

   

 

 

    

 

 

 

Shares outstanding

    1,024,200,000        3,100,000       7,400,000        4,750,000  
 

 

 

    

 

 

   

 

 

    

 

 

 

Net asset value

  $ 53.34      $ 47.46     $ 75.48      $ 44.74  
 

 

 

    

 

 

   

 

 

    

 

 

 

Shares authorized

    4.30 billion        500 million       500 million        500 million  
 

 

 

    

 

 

   

 

 

    

 

 

 

Par value

  $ 0.001      $ 0.001     $ 0.001      $ 0.001  
 

 

 

    

 

 

   

 

 

    

 

 

 

(a) Securities loaned, at value

  $ 2,165,527,271      $ 2,417,305     $ 10,482,664      $ 8,806,748  

(b) Investments, at cost — Unaffiliated

  $ 45,430,459,568      $ 130,732,778     $ 449,546,097      $ 200,482,886  

(c)  Investments, at cost — Affiliated

  $ 2,985,338,247      $ 3,614,478     $ 14,808,467      $ 9,444,768  

(d) Foreign currency, at cost

  $ 153,933,539      $ 1,547,990     $ 2,059,261      $ 490,273  

(e) Foreign currency collateral pledged, at cost

  $      $ 86,062     $ 30,838      $  

See notes to consolidated financial statements.

 

71  

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Consolidated Statements of Operations

Year Ended August 31, 2020

 

   

iShares

Core MSCI

Emerging Markets

ETF

 

 

 

 

   

iShares

MSCI BRIC

ETF

 

 

 

   

iShares

MSCI

Emerging

Markets Asia

ETF

 

 

 

 

 

   


iShares

MSCI

Emerging

Markets
Small-Cap

ETF

 

 

 

 
 

 

 

 

INVESTMENT INCOME

       

Dividends — Unaffiliated

  $ 1,370,526,067     $ 3,610,654     $ 11,522,436     $ 5,422,270  

Dividends — Affiliated

    1,273,132       3,194       7,345       3,377  

Non-cash dividends — Unaffiliated

    402,857,037                    

Interest — Unaffiliated

    81,566       148       423       284  

Securities lending income — Affiliated — net(a)

    47,190,575       51,228       157,069       571,837  

Other income — Unaffiliated

    5,270                    

Foreign taxes withheld

    (152,511,333     (288,594     (1,411,173     (589,455

Foreign withholding tax claims

    9,380                    

Other foreign taxes

    (86,843           (1,005     (614
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    1,669,344,851       3,376,630       10,275,095       5,407,699  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory fees

    73,193,956       1,178,749       2,314,189       1,358,678  

Commitment fees

    326,659       1,819       3,688       1,804  

Professional fees

    984                    

Miscellaneous

    264       264       264       264  

Mauritius income taxes

    2,346,030       10,151       23,378       12,760  

Interest expense

    43,881       1,058       1,509       1,822  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    75,911,774       1,192,041       2,343,028       1,375,328  

Less:

       

Investment advisory fees waived

    (2,717,834                  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived

    73,193,940       1,192,041       2,343,028       1,375,328  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1,596,150,911       2,184,589       7,932,067       4,032,371  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — Unaffiliated(b)

    (2,553,395,149     (8,586,300     (13,888,892     (14,313,992

Investments — Affiliated

    (90,134     1,127       (935     679  

In-kind redemptions — Unaffiliated

    752,701,613       3,741,500       8,736,667       69,053  

Futures contracts

    115,966,709       51,503       375,836       134,218  

Foreign currency transactions

    (12,502,029     (132,547     (62,818     (44,871
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized loss

    (1,697,318,990     (4,924,717     (4,840,142     (14,154,913
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — Unaffiliated(c)

    6,054,217,104       19,726,684       86,170,701       29,478,951  

Investments — Affiliated

    597,891       1,860       4,380       184  

Futures contracts

    82,830,088       (16,105     23,576       37,915  

Foreign currency translations

    601,189       881       3,395       101  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    6,138,246,272       19,713,320       86,202,052       29,517,151  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain

    4,440,927,282       14,788,603       81,361,910       15,362,238  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 6,037,078,193     $ 16,973,192     $ 89,293,977     $ 19,394,609  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) Net of securities lending income tax paid of

  $ 2,556,765     $     $     $  

(b) Net of foreign capital gain tax of

  $ 162,960     $     $ 1,302     $  

(c)  Net of deferred foreign capital gain tax of

  $ (15,382,643   $     $ (174,974   $  

See notes to consolidated financial statements.

 

C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

  72


Consolidated Statements of Changes in Net Assets

 

    iShares
Core MSCI Emerging Markets ETF
    iShares
MSCI BRIC ETF
 
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/20
    Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

    $  1,596,150,911       $  1,508,745,729       $  2,184,589       $  3,448,535  

Net realized gain (loss)

    (1,697,318,990     (2,080,355,186     (4,924,717     22,254,730  

Net change in unrealized appreciation (depreciation)

    6,138,246,272       (1,880,589,481     19,713,320       (19,645,277
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    6,037,078,193       (2,452,198,938     16,973,192       6,057,988  
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (1,796,276,569     (1,444,387,321     (2,573,879     (4,010,086
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    (2,632,718,567     7,837,158,637       (28,202,766     (46,185,765
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    1,608,083,057       3,940,572,378       (13,803,453     (44,137,863

Beginning of year

    53,020,297,962       49,079,725,584       160,926,283       205,064,146  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

    $54,628,381,019       $53,020,297,962       $147,122,830       $160,926,283  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to consolidated financial statements.

 

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Consolidated Statements of Changes in Net Assets  (continued)

 

    iShares
    MSCI Emerging Markets Asia ETF    
    iShares
MSCI Emerging Markets Small-Cap
ETF
 
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 7,932,067     $ 9,018,925     $ 4,032,371     $ 5,737,900  

Net realized loss

    (4,840,142     (7,607,049     (14,154,913     (12,756,567

Net change in unrealized appreciation (depreciation)

    86,202,052       (35,810,298     29,517,151       (19,596,766
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    89,293,977       (34,398,422     19,394,609       (26,615,433
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (8,516,244     (9,103,744     (5,314,637     (6,815,245
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    25,452,906       55,291,785       (40,270,524     10,108,698  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    106,230,639       11,789,619       (26,190,552     (23,321,980

Beginning of year

    452,327,799       440,538,180       238,701,733       262,023,713  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 558,558,438     $ 452,327,799     $ 212,511,181     $ 238,701,733  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to consolidated financial statements.

 

C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

  74


Consolidated Financial Highlights

(For a share outstanding throughout each period)

 

    iShares Core MSCI Emerging Markets ETF  
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
   
Year Ended
08/31/17
 
 
   
Year Ended
08/31/16
 
 

 

 

Net asset value, beginning of year

  $ 48.31     $ 52.27     $ 53.91     $ 44.60     $ 40.75  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    1.46       1.40       1.39       1.31       1.20  

Net realized and unrealized gain (loss)(b)

    5.21       (4.01     (1.61     8.95       3.58  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    6.67       (2.61     (0.22     10.26       4.78  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (1.64     (1.35     (1.42     (0.95     (0.93
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.64     (1.35     (1.42     (0.95     (0.93
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 53.34     $ 48.31     $ 52.27     $ 53.91     $ 44.60  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

         

Based on net asset value

    13.97     (4.93 )%(d)       (0.52 )%      23.45     11.99
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

         

Total expenses

    0.14     0.14     0.14     0.15     0.17
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived

    0.14     0.14     0.14     0.14     0.17
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    0.14     0.14     N/A       N/A       N/A  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.97     2.79     2.48     2.74     2.93
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 54,628,381     $ 53,020,298     $ 49,079,726     $ 36,775,298     $ 16,003,488  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(e)

    15     15     6     4     10
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Reflects the one-time, positive effect of foreign withholding tax claims, net of the associated professional fees, which resulted in the following increases for the year ended August 31, 2019:

   

Total return by 0.01%.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to consolidated financial statements.

 

75  

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Consolidated Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI BRIC ETF  
   

Year Ended

08/31/20

 

 

   

Year Ended

08/31/19

 

 

   

Year Ended

08/31/18

 

 

   

Year Ended

08/31/17

 

 

   

Year Ended

08/31/16

 

 

 

 

Net asset value, beginning of year

    $ 40.23        $ 41.01        $ 42.21            $ 33.48            $ 30.74  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income(a)

      0.55                 0.69                 0.68                 0.70                 0.64  

Net realized and unrealized gain (loss)(b)

      7.34          (0.59        (1.13        8.57          2.84  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) from investment operations

      7.89          0.10          (0.45        9.27          3.48  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Distributions(c)

                       

From net investment income

      (0.66        (0.88        (0.75        (0.54        (0.74
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total distributions

      (0.66        (0.88        (0.75        (0.54        (0.74
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net asset value, end of year

    $ 47.46        $ 40.23        $ 41.01        $ 42.21        $ 33.48  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total Return

                       

Based on net asset value

      19.78        0.35        (1.16 )%         28.15        11.61
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Ratios to Average Net Assets

                       

Total expenses

      0.70        0.69        0.67        0.70        0.73
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income

      1.29        1.69        1.51        1.96        2.13
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Supplemental Data

                       

Net assets, end of year (000)

    $ 147,123        $ 160,926        $ 205,064        $ 261,702        $ 182,488  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Portfolio turnover rate(d)

      42        53        22        24        20
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to consolidated financial statements.

 

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  76


Consolidated Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Emerging Markets Asia ETF  
   

Year Ended

08/31/20

 

 

   

Year Ended

08/31/19

 

 

   

Year Ended

08/31/18

 

 

   

Year Ended

08/31/17

 

 

   

Year Ended

08/31/16

 

 

 

 

Net asset value, beginning of year

    $ 62.82       $ 69.38       $ 69.15       $ 56.33        $ 50.87  
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Net investment income(a)

      1.12                1.26                1.16                1.31                 1.02  

Net realized and unrealized gain (loss)(b)

      12.79         (6.52       0.42         12.43          5.54  
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Net increase (decrease) from investment operations

      13.91         (5.26       1.58         13.74          6.56  
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Distributions(c)

                    

From net investment income

      (1.25       (1.30       (1.35       (0.92        (1.10
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Total distributions

      (1.25       (1.30       (1.35       (0.92        (1.10
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Net asset value, end of year

    $ 75.48           $ 62.82       $ 69.38       $ 69.15        $ 56.33  
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Total Return

                    

Based on net asset value

      22.31       (7.52 )%        2.22       24.80        13.14
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Ratios to Average Net Assets

                    

Total expenses

      0.50       0.50       0.50       0.49        0.66
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Total expenses after fees waived

      0.50       0.50       0.50       0.49        0.49
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Net investment income

      1.68       1.94       1.58       2.16        1.98
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Supplemental Data

                    

Net assets, end of year (000)

    $ 558,558       $ 452,328       $ 440,538       $ 501,330        $ 216,863  
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

Portfolio turnover rate(d)

      20       16       33       15        22
   

 

 

     

 

 

     

 

 

     

 

 

      

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to consolidated financial statements.

 

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Consolidated Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Emerging Markets Small-Cap ETF  
   

Year Ended

08/31/20

 

 

   

Year Ended

08/31/19

 

 

 

Year Ended

08/31/18

 

 

 

Year Ended

08/31/17

 

 

 

Year Ended

08/31/16

 

 

 

 

Net asset value, beginning of year

    $ 41.51              $ 47.64          $ 49.23          $ 43.27          $ 40.06  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.85         0.99         1.10         1.04         0.90  

Net realized and unrealized gain (loss)(b)

      3.52         (5.98       (1.22       5.81         3.36  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      4.37         (4.99       (0.12       6.85         4.26  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (1.14       (1.14       (1.47       (0.89       (1.05
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (1.14       (1.14       (1.47       (0.89       (1.05
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 44.74       $ 41.51       $ 47.64       $ 49.23       $ 43.27  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      10.68       (10.50 )%        (0.38 )%        16.17       10.83
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.71       0.69       0.67       0.69       0.71
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      2.07       2.25       2.14       2.32       2.20
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 212,511       $ 238,702       $ 262,024       $ 253,519       $ 121,151  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      46       29       39       19       24
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to consolidated financial statements.

 

C O N S O L I D A T E D   F I N A N C I A L   H I G H L I G H T S

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Notes to Consolidated Financial Statements   

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These consolidated financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

iShares ETF

 

 

 

Diversification    
Classification    

 

Core MSCI Emerging Markets

  Diversified    

MSCI BRIC

  Diversified    

MSCI Emerging Markets Asia

  Diversified    

MSCI Emerging Markets Small-Cap

  Diversified    

Basis of Consolidation: The accompanying consolidated financial statements for each Fund includes the accounts of its subsidiary in the Republic of Mauritius, which is a wholly-owned subsidiary (each, a “Subsidiary”) of the Fund that invests in Indian securities. Through this investment structure, each Fund expects to obtain certain benefits under a current tax treaty between Mauritius and India. Intercompany accounts and transactions, if any, have been eliminated.

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its consolidated statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the consolidated statement of assets and liabilities.

Each Fund conducts its investment activities in India through its Subsidiary and expects to obtain benefits under the Double Tax Avoidance Agreement (“DTAA”) between India and Mauritius. In order to be eligible to claim benefits under the DTAA, each Subsidiary must have commercial substance, on an annual basis, to satisfy certain tests and conditions, including the establishment and maintenance of valid tax residence in Mauritius, have the place of effective management outside of India, and related requirements. Each Fund has obtained a current tax residence certificate issued by the Mauritian Revenue Authorities.

Based upon current interpretation and practice of the current tax laws in India and Mauritius and the DTAA, each Subsidiary is subject to tax in Mauritius on its net income at the rate of 15%. However, each Subsidiary is entitled to a tax credit equivalent to the higher of the actual foreign tax incurred or 80% of the Mauritius tax on its foreign source income, thus reducing its maximum effective tax rate to 3% up to June 30, 2021. After June 30, 2021, under the new tax regime and subject to meeting the necessary substance requirements as required under the Financial Services Act 2007 (as amended by the Finance Act 2018) and such guidelines issued by the FSC, each Subsidiary is entitled to either (a) a foreign tax credit equivalent to the actual foreign tax suffered on its foreign income against each Subsidiary’s tax liability computed at 15% on such income, or (b) a partial exemption of 80% of some of the income derived, including interest income or foreign source dividends. Taxes on income, if any, are paid by each Subsidiary and are disclosed in its consolidated statement of operations. Any dividends paid by a Subsidiary to its Fund are not subject to tax in Mauritius. Each Subsidiary is currently exempt from tax in Mauritius on any gains from the sale of securities.

The DTAA provides that capital gains will be taxable in India with respect to the sale of shares acquired on or after April 1, 2017. Capital gains arising from shares acquired before April 1, 2017, regardless of when they are sold, will continue to be exempt from taxation under the amended DTAA, assuming requirements for eligibility under the DTAA are satisfied. There can be no assurance, however, that the DTAA will remain in effect during the Subsidiary’s existence or that it will continue to enjoy its benefits on the shares acquired prior to April 1, 2017.

 

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Notes to Consolidated Financial Statements  (continued)   

 

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned

 

N O T E S   T O   C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

  80


Notes to Consolidated Financial Statements  (continued)   

 

securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the consolidated schedules of investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its consolidated schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the consolidated statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

 

 

iShares ETF and Counterparty

 

 

 

 

 

 

Market Value of

Securities on Loan

 

 

 

 

 

 

 

 

 

 

Cash Collateral
Received

 

 

 
(a)  

 

 

 

 

 

 

Non-Cash Collateral
Received

 

 

 
 

 

   

 

Net Amount

 

 

 

 

 

Core MSCI Emerging Markets

       

Barclays Bank PLC

  $ 12,890,581     $ 12,890,581     $     $  

Barclays Capital Inc.

    34,879,238       34,879,238              

BNP Paribas Prime Brokerage International Ltd.

    31,350,468       31,350,468              

BNP Paribas Securities Corp.

    6,214,049       6,214,049              

BofA Securities, Inc.

    525,122,793       525,122,793              

Citadel Clearing LLC

    618,750       618,750              

Citigroup Global Markets Inc.

    147,897,176       147,897,176              

Citigroup Global Markets Ltd.

    42,755,253       42,755,253              

Credit Suisse Securities (Europe) Ltd.

    69,023,158       69,023,158              

Credit Suisse Securities (USA) LLC

    31,124,148       31,124,148              

Deutsche Bank Securities Inc.

    2,189,917       2,189,917              

Goldman Sachs & Co.

    164,674,106       164,674,106              

Goldman Sachs International

    45,170,755       45,170,755              

HSBC Bank PLC

    15,089,023       15,089,023              

Jefferies LLC

    6,470,762       6,470,762              

JPMorgan Securities LLC

    183,236,765       183,236,765              

JPMorgan Securities PLC

    297,362,720       297,362,720              

Macquarie Bank Limited

    59,265,467       59,265,467              

Morgan Stanley & Co. International PLC

    163,107,936       163,107,936              

Morgan Stanley & Co. LLC

    230,600,617       230,600,617              

National Financial Services LLC

    1,942,139       1,920,338             (21,801 )(b) 

Nomura Securities International Inc.

    2,176,159       2,176,159              

RBC Capital Markets LLC

    469,512       469,512              

SG Americas Securities LLC

    12,937,737       12,937,737              

State Street Bank & Trust Company

    1,511,247       1,511,247              

TD Prime Services LLC

    3,499,615       3,437,300             (62,315 )(b) 

UBS AG

    26,171,002       26,171,002              

UBS Europe SE

    2,454,936       2,454,936              

UBS Securities LLC

    38,214,409       37,984,681             (229,728 )(b) 

Wells Fargo Bank, National Association

    6,215,812       6,215,812              

Wells Fargo Securities LLC

    891,021       891,021              
 

 

 

   

 

 

   

 

 

   

 

 

 
  $ 2,165,527,271     $ 2,165,213,427     $     $ (313,844
 

 

 

   

 

 

   

 

 

   

 

 

 

 

81  

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Notes to Consolidated Financial Statements  (continued)   

 

 

 

iShares ETF and Counterparty

 

 

 

 

 

 

Market Value of

Securities on Loan

 

 

 

 

 

 

 

 

 

Cash Collateral

Received

 

 

 

(a)  

 

 

 

 

 

 

Non-Cash Collateral

Received

 

 

 

 

 

   

 

Net Amount

 

 

 

 

 

MSCI BRIC

       

BNP Paribas Prime Brokerage International Ltd.

  $ 163,091     $ 163,091     $     $  

BofA Securities, Inc.

    87,854       87,854              

HSBC Bank PLC

    171,757       171,757              

Jefferies LLC

    607,381       607,289             (92 )(b)  

JPMorgan Securities LLC

    290,041       290,041              

Macquarie Bank Limited

    70,406       70,406              

Morgan Stanley & Co. LLC

    748,035       748,035              

SG Americas Securities LLC

    203,315       203,315              

State Street Bank & Trust Company

    2,872       2,872              

UBS AG

    72,553       72,553              
 

 

 

   

 

 

   

 

 

   

 

 

 
  $ 2,417,305     $ 2,417,213     $     $ (92
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Emerging Markets Asia

       

BNP Paribas Prime Brokerage International Ltd.

  $ 622,634     $ 622,634     $     $  

BofA Securities, Inc.

    195,132       195,132              

Citigroup Global Markets Inc.

    797,561       797,561              

Deutsche Bank Securities Inc.

    213,209       213,209              

HSBC Bank PLC

    8,311       8,311              

Jefferies LLC

    1,865,930       1,863,785             (2,145 )(b) 

JPMorgan Securities LLC

    559,010       559,010              

Macquarie Bank Limited

    180,010       180,010              

Morgan Stanley & Co. LLC

    3,024,384       3,024,384              

RBC Capital Markets LLC

    405,955       405,955              

State Street Bank & Trust Company

    2,228,336       2,228,336              

UBS AG

    141,239       141,239              

Wells Fargo Bank, National Association

    240,953       240,953              
 

 

 

   

 

 

   

 

 

   

 

 

 
  $ 10,482,664     $ 10,480,519     $     $ (2,145
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Emerging Markets Small-Cap

       

Barclays Bank PLC

  $ 257,807     $ 257,807     $     $  

Barclays Capital Inc.

    218,805       218,805              

BMO Capital Markets

    211,211       211,211              

BNP Paribas Securities Corp.

    439,230       439,230              

BofA Securities, Inc.

    1,554,412       1,554,412              

Citigroup Global Markets Inc.

    548,737       548,737              

Credit Suisse Securities (USA) LLC

    592,911       592,911              

Deutsche Bank Securities Inc.

    10,474       10,474              

Goldman Sachs & Co.

    1,639,269       1,639,269              

HSBC Bank PLC

    503,001       503,001              

JPMorgan Securities LLC

    931,640       931,640              

JPMorgan Securities PLC

    23,438       23,438              

Macquarie Bank Limited

    182,977       182,977              

Morgan Stanley & Co. International PLC

    125,339       125,339              

Morgan Stanley & Co. LLC

    1,252,772       1,252,772              

SG Americas Securities LLC

    276,917       276,917              

UBS AG

    23,816       23,816              

UBS Securities LLC

    13,992       13,992              
 

 

 

   

 

 

   

 

 

   

 

 

 
  $ 8,806,748     $ 8,806,748     $     $  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 
  (b) 

Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

N O T E S   T O   C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

  82


Notes to Consolidated Financial Statements  (continued)   

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the consolidated schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the consolidated statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the consolidated statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the consolidated statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each of the following Funds, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on the average daily net assets of each Fund as follows:

 

 

iShares ETF

 

 

 

Investment Advisory Fee

 

 

Core MSCI Emerging Markets

    0.13

MSCI Emerging Markets Asia

    0.49  

Prior to March 27, 2020, for its investment advisory services to the iShares Core MSCI Emerging Markets ETF, BFA was entitled to an annual investment advisory fee of 0.14%, accrued daily and paid monthly by the Fund, based on the average daily net assets of the Fund.

For its investment advisory services to each of the iShares MSCI BRIC and iShares MSCI Emerging Markets Small-Cap ETFs, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

 

Aggregate Average Daily Net Assets

 

 

Investment Advisory Fee

 

 

 

First $14 billion

    0.75

Over $14 billion, up to and including $28 billion

    0.68  

Over $28 billion, up to and including $42 billion

    0.61  

Over $42 billion, up to and including $56 billion

    0.54  

Over $56 billion, up to and including $70 billion

    0.47  

Over $70 billion, up to and including $84 billion

    0.41  

Over $84 billion

    0.35  

Each Subsidiary has entered into a separate contract with BFA under which BFA provides investment advisory services to the Subsidiary but does not receive separate compensation from the Subsidiary for providing it with such services. Each Subsidiary has also entered into separate arrangements that provide for the provision of other services to the Subsidiary (including administrative, custody, transfer agency and other services), and BFA pays the costs and expenses related to the provision of those services.

Expense Waivers: The total of the investment advisory fee and any fund other expenses are a fund’s total annual operating expenses. For the iShares Core MSCI Emerging Markets ETF, BFA has contractually agreed to waive a portion of its investment advisory fee through December 31, 2022 in order to limit the Fund’s total annual operating expenses after fee waiver to 0.13% of average daily net assets. Prior to March 27, 2020, for the iShares Core MSCI Emerging Markets ETF, BFA contractually agreed to waive a portion of its investment advisory fee through December 31, 2022 in order to limit the Fund’s total annual operating expenses after fee waiver to 0.14% of average daily net assets.

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the

 

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Notes to Consolidated Financial Statements  (continued)   

 

“collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its consolidated statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF   

 

Fees Paid

to BTC

 

 

 

Core MSCI Emerging Markets

   $   11,669,995  

MSCI BRIC

     12,591  

MSCI Emerging Markets Asia

     37,773  

MSCI Emerging Markets Small-Cap

     129,991  

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

iShares ETF    Purchases      Sales     

 

Net Realized

Gain (Loss)

 

 

 

Core MSCI Emerging Markets

   $   63,913,424      $   370,943,086      $   (36,610,121

MSCI Emerging Markets Asia

     2,351,787        1,465,478        (355,755

MSCI Emerging Markets Small-Cap

     4,245,113        5,519,261        4,128,720  

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the consolidated statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

iShares ETF   

 

Purchases

 

    

 

Sales

 

 

 

Core MSCI Emerging Markets

   $   7,679,534,258      $   8,580,740,801  

MSCI BRIC

     96,897,275        71,272,497  

MSCI Emerging Markets Asia

     147,684,703        93,102,390  

MSCI Emerging Markets Small-Cap

     89,608,448        116,567,838  

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

iShares ETF   

 

In-kind

Purchases

 

    

 

In-kind

Sales

 

 

 

Core MSCI Emerging Markets

   $   606,885,923      $   2,874,483,489  

MSCI BRIC

     25,801,809        80,088,388  

MSCI Emerging Markets Asia

     6,255,728        37,047,446  

MSCI Emerging Markets Small-Cap

     9,038,447        23,562,980  
     

 

N O T E S   T O   C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

  84


Notes to Consolidated Financial Statements (continued)   

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ consolidated financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions, were reclassified to the following accounts:

 

iShares ETF   

Paid-in Capital

 

    

 

Accumulated
Earnings (Loss)

 

 

 

Core MSCI Emerging Markets

   $   616,057,354        $   (616,057,354

MSCI BRIC

     3,435,937        (3,435,937

MSCI Emerging Markets Asia

     7,952,900        (7,952,900

MSCI Emerging Markets Small-Cap

     (413,144      413,144  

The tax character of distributions paid was as follows:

 

iShares ETF

 

  

 

Year Ended

08/31/20

 

    

 

Year Ended

08/31/19

 

 

Core MSCI Emerging Markets
Ordinary income

   $ 1,796,276,569      $ 1,444,387,321  
  

 

 

    

 

 

 

MSCI BRIC
Ordinary income

   $ 2,573,879      $ 4,010,086  
  

 

 

    

 

 

 

MSCI Emerging Markets Asia
Ordinary income

   $ 8,516,244      $ 9,103,744  
  

 

 

    

 

 

 

MSCI Emerging Markets Small-Cap
Ordinary income

   $ 5,314,637      $ 6,815,245  
  

 

 

    

 

 

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

iShares ETF     

 

Undistributed
Ordinary Income

 

 
 

 

  

 

 

 

 

Non-expiring

Capital Loss

Carryforwards

 

 

 

 

(a) 

 

    

 

Net Unrealized

Gains (Losses)

 

 

(b) 

 

    

 

Total

 

 

 

 

Core MSCI Emerging Markets

   $ 483,598,754      $   (5,649,652,160    $ 7,268,860,592      $ 2,102,807,186  

MSCI BRIC

     708,533        (226,973,428      12,161,699        (214,103,196

MSCI Emerging Markets Asia

     4,141,538        (57,878,724      95,986,149        42,248,963  

MSCI Emerging Markets Small-Cap

     2,488,439        (40,215,642      11,164        (37,716,039

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the timing and recognition of partnership income and the characterization of corporate actions.

 

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

iShares ETF   

Tax Cost

 

    

Gross Unrealized

Appreciation

 

    

Gross Unrealized
Depreciation

 

    

 

Net Unrealized
Appreciation

(Depreciation)

 

 

 

Core MSCI Emerging Markets

   $  49,595,686,128      $  14,118,708,778      $  (6,845,075,776    $  7,273,633,002  

MSCI BRIC

     137,932,523        32,318,762        (20,154,229      12,164,533  

MSCI Emerging Markets Asia

     474,660,362        145,264,019        (49,271,985      95,992,034  

MSCI Emerging Markets Small-Cap

     220,311,681        33,976,271        (33,959,646      16,625  

 

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Notes to Consolidated Financial Statements  (continued)   

 

9.

LINE OF CREDIT

The Funds, along with certain other iShares funds (“Participating Funds”), are parties to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on July 15, 2021. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1, including the Funds, and $200 million with respect to Tier 2. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Credit Agreement.

For the year ended August 31, 2020, the maximum amount borrowed, the average daily borrowing and the weighted average interest rate, if any, under the credit agreement were as follows:

 

iShares ETF  

 

Maximum
Amount
Borrowed

     Average
Borrowing
    

Weighted

Average

Interest Rates

 

Core MSCI Emerging Markets

  $   75,550,000      $   1,604,863        2.70

MSCI BRIC

    1,600,000        41,913        2.48  

MSCI Emerging Markets Asia

    2,300,000        58,139        2.55  

MSCI Emerging Markets Small-Cap

    2,406,000        90,048        2.00  

 

10.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: Investments in the securities of issuers domiciled in countries with emerging capital markets involve certain additional risks that do not generally apply to investments in securities of issuers in more developed capital markets, such as (i) low or nonexistent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities; (ii) uncertain national policies and social, political and economic instability, increasing the potential for expropriation of assets, confiscatory taxation, high rates of inflation or unfavorable diplomatic developments; and (iii) possible fluctuations in exchange rates, differing legal systems and the existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to such investments.

An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial

 

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Notes to Consolidated Financial Statements  (continued)   

 

instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the consolidated statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its consolidated schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the schedule of investments.

Investments in Chinese securities, including certain Hong Kong-listed securities, involves risks specific to China. China may be subject to considerable degrees of economic, political and social instability and demonstrates significantly higher volatility from time to time in comparison to developed markets. Chinese markets generally continue to experience inefficiency, volatility and pricing anomalies resulting from governmental influence, a lack of publicly available information and/or political and social instability. Internal social unrest or confrontations with other neighboring countries may disrupt economic development in China and result in a greater risk of currency fluctuations, currency non-convertibility, interest rate fluctuations and higher rates of inflation. Incidents involving China’s or the region’s security may cause uncertainty in Chinese markets and may adversely affect the Chinese economy and a fund’s investments. Reduction in spending on Chinese products and services, institution of tariffs or other trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy.

Certain Funds invest a significant portion of their assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Funds’ investments.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

11.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
    

 

Year Ended

     Year Ended  
     08/31/20      08/31/19  
  

 

 

    

 

 

 
iShares ETF    Shares      Amount      Shares      Amount  

 

 

Core MSCI Emerging Markets

           

Shares sold

     69,600,000      $ 3,678,834,697        211,800,000      $ 10,461,822,914  

Shares redeemed

     (142,800,000      (6,311,553,264      (53,400,000      (2,624,664,277
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease)

     (73,200,000    $ (2,632,718,567      158,400,000      $   7,837,158,637  
  

 

 

    

 

 

    

 

 

    

 

 

 

MSCI BRIC

           

Shares sold

         2,200,000      $ 100,056,145        4,950,000      $ 208,411,154  

Shares redeemed

     (3,100,000      (128,258,911      (5,950,000      (254,596,919
  

 

 

    

 

 

    

 

 

    

 

 

 

Net decrease

     (900,000    $ (28,202,766      (1,000,000    $ (46,185,765
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to Consolidated Financial Statements  (continued)   

 

 

 
    

 

Year Ended

    

 

Year Ended

 
     08/31/20      08/31/19  
  

 

 

    

 

 

 
iShares ETF    Shares      Amount      Shares      Amount  

 

 

MSCI Emerging Markets Asia

           

Shares sold

     1,450,000      $ 106,385,007        1,850,000      $ 118,169,909  

Shares redeemed

     (1,250,000      (80,932,101      (1,000,000      (62,878,124
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase

     200,000      $ 25,452,906        850,000      $ 55,291,785  
  

 

 

    

 

 

    

 

 

    

 

 

 

MSCI Emerging Markets Small-Cap

           

Shares sold

         1,050,000      $ 46,923,657        1,100,000      $ 47,348,348  

Shares redeemed

     (2,050,000      (87,194,181      (850,000      (37,239,650
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease)

     (1,000,000    $     (40,270,524      250,000      $     10,108,698  
  

 

 

    

 

 

    

 

 

    

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the consolidated statement of assets and liabilities.

 

12.

FOREIGN WITHHOLDING TAX CLAIMS

The iShares Core MSCI Emerging Markets ETF has filed claims to recover taxes withheld by Poland on dividend income on the basis that Poland had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. The Fund has received payments on certain of the claims resulting from a favorable court ruling that the imposition of a withholding tax by a European Union member state on dividends paid to a nonresident company, including the Fund, while exempting domestic funds from such taxes results in discriminatory tax withholding contrary to the free movement of capital. The Fund continues to evaluate developments in Poland for potential impacts to the receivables and payables recorded. Polish withholding tax claims received are disclosed in the statement of operations. Professional fees associated with the filing of tax claims in Poland that result in the recovery of foreign withholding taxes have been approved by the Board as appropriate expenses of the Fund.

The Internal Revenue Service (“IRS”) has issued guidance to address U.S. income tax liabilities attributable to fund shareholders resulting from the recovery of foreign taxes withheld in prior years. These withheld foreign taxes were passed through to shareholders in the form of foreign tax credits in the year the taxes were withheld. Assuming there are sufficient foreign taxes paid which the Fund is able to pass through to its shareholders as a foreign tax credit in the current year, the Fund will be able to offset the prior years’ withholding taxes recovered against the foreign taxes paid in the current year. Accordingly, no federal income tax liability is recorded by the Fund.

 

13.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

14.

SUBSEQUENT EVENTS

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were available to be issued and the following items were noted:

The Board has approved the transfer of assets that are invested in India from MSCI BRIC’s wholly-owned Mauritius subsidiary to MSCI BRIC through on-exchange transactions in India. The transfer is expected to occur during the fourth quarter of 2020. MSCI BRIC will incur transaction costs from the transfer. After the transfer is completed, MSCI BRIC will make new investments in India directly.

 

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  88


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares Core MSCI Emerging Markets ETF, iShares MSCI BRIC ETF,

iShares MSCI Emerging Markets Asia ETF and iShares MSCI Emerging Markets Small-Cap ETF

Opinions on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of iShares Core MSCI Emerging Markets ETF, iShares MSCI BRIC ETF, iShares MSCI Emerging Markets Asia ETF and iShares MSCI Emerging Markets Small-Cap ETF and their subsidiaries (four of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related consolidated statements of operations for the year ended August 31, 2020, the consolidated statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the consolidated financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These consolidated financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

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Important Tax Information  (unaudited)

 

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

iShares ETF   

 

Qualified Dividend  

Income  

 

Core MSCI Emerging Markets

   $ 829,881,766    

MSCI BRIC

     2,320,384    

MSCI Emerging Markets Asia

     6,706,868    

MSCI Emerging Markets Small-Cap

     2,687,596    

For the fiscal year ended August 31, 2020, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders:

 

iShares ETF   

 

Foreign Source
Income Earned

    

Foreign  

Taxes Paid  

 

Core MSCI Emerging Markets

   $   1,771,729,233      $   162,089,967    

MSCI BRIC

     3,604,657        281,946    

MSCI Emerging Markets Asia

     11,512,160        1,416,513    

MSCI Emerging Markets Small-Cap

     5,986,137        656,150    

 

I M P O R T A N T   T A X   I N F O R M A T I O N

  90


Board Review and Approval of Investment Advisory Contract

 

iShares Core MSCI Emerging Markets ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI BRIC ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

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service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Emerging Markets Asia ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”),

 

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with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were within range of the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Emerging Markets Small-Cap ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

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Supplemental Information (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

    

 

Total Cumulative Distributions

for the Fiscal Year

           % Breakdown of the Total Cumulative
Distributions for the Fiscal Year
 
iShares ETF  

 

Net

Investment

Income

   

Net Realized

Capital Gains

   

Return of

Capital

   

Total Per

Share

          

Net

Investment

Income

   

Net Realized

Capital Gains

   

Return of

Capital

   

Total Per

Share

 

 

Core MSCI Emerging Markets

  $ 1.637540     $     $     $ 1.637540         100             100

MSCI BRIC(a)

    0.615433             0.044806       0.660239         93             7       100  

MSCI Emerging Markets Asia(a)

    1.241711             0.009337       1.251048         99             1       100  

MSCI Emerging Markets Small-Cap(a)

    1.109599             0.027198       1.136797               98             2       100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (the “Directive”) imposes detailed and prescriptive obligations on fund managers established in the European Union (the “EU”). These do not currently apply to managers established outside of the EU, such as BFA (the “Company”). Rather, non-EU managers are only required to comply with certain disclosure, reporting and transparency obligations of the Directive if such managers market a fund to EU investors.

The Company has registered the iShares Core MSCI Emerging Markets ETF and iShares MSCI BRIC ETF (each a “Fund”, collectively the “Funds”) to be marketed to EU investors in the United Kingdom, the Netherlands, Finland, Sweden and Luxembourg.

Report on Remuneration

The Company is required under the Directive to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Funds.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the each Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well defined pay-for-performance philosophy, and compensation programmes which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

 

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Supplemental Information (unaudited) (continued)

 

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the each Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares Core MSCI Emerging Markets ETF in respect of the Company’s financial year ending December 31, 2019 was USD 5.09 million. This figure is comprised of fixed remuneration of USD 2.35 million and variable remuneration of USD 2.74 million. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares Core MSCI Emerging Markets ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 649.23 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 76.31 thousand.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the iShares MSCI BRIC ETF in respect of the Company’s financial year ending December 31, 2019 was USD 14.94 thousand. This figure is comprised of fixed remuneration of USD 6.91 thousand and variable remuneration of USD 8.03 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the iShares MSCI BRIC ETF in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 1.9 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 0.22 thousand.

 

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Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFA or its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Robert S. Kapito(a)

(63)

  

Director

(since 2009).

   President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(50)

  

Director

(since 2019).

   Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

(a) Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b) Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

Independent Directors
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Cecilia H. Herbert

(71)

  

Director

(since 2005);

Independent Board Chair

(since 2016).

   Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).

Jane D. Carlin

(64)

  

Director

(since 2015);

Risk Committee Chair

(since 2016).

   Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L. Fagnani

(65)

  

Director

(since 2017);

Audit Committee Chair

(since 2019).

   Partner, KPMG LLP (2002-2016).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

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Director and Officer Information  (continued)

 

Independent Directors (continued)
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

John E. Kerrigan

(65)

  

Director

(since 2005);

Nominating and Governance and Equity Plus Committee Chairs

(since 2019).

   Chief Investment Officer, Santa Clara University (since 2002).    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E. Lawton

(61)

  

Director

(since 2017);

15(c) Committee Chair

(since 2017).

   Senior Managing Director of New York Life Insurance Company (2010-2015).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

John E. Martinez

(59)

  

Director

(since 2003);

Securities Lending

Committee Chair

(since 2019).

   Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).    Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

Madhav V. Rajan

(56)

  

Director

(since 2011);

Fixed Income Plus Committee Chair

(since 2019).

   Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).
Officers
     
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

     

Armando Senra

(49)

  

President

(since 2019).

   Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

Trent Walker

(46)

  

Treasurer and Chief

Financial Officer

(since 2020).

   Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Charles Park

(53)

  

Chief Compliance Officer

(since 2006).

   Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

Deepa Damre

(45)

  

Secretary

(since 2019).

   Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

Scott Radell

(51)

  

Executive Vice President

(since 2012).

   Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

Alan Mason

(59)

  

Executive Vice President

(since 2016).

   Managing Director, BlackRock, Inc. (since 2009).

Marybeth Leithead

(57)

  

Executive Vice President

(since 2019).

   Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

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General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

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Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
ADR    American Depositary Receipt
CPO    Certificates of Participation (Ordinary)
GDR    Global Depositary Receipt
JSC    Joint Stock Company
NVDR    Non-Voting Depositary Receipt
NVS    Non-Voting Shares
PJSC    Public Joint Stock Company

 

G L O S S A R Y   O F   T E R M S   U S E D   I N   T H I S   R E P O R T

  104


 

 

 

 

 

Want to know more?

iShares.com    |    1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-810-0820

 

 

LOGO

   LOGO


 

LOGO

  AUGUST 31, 2020

 

   2020 Annual Report

 

iShares, Inc.

 

🌑  

iShares MSCI Frontier 100 ETF  |  FM  |  NYSE Arca

 

🌑  

iShares MSCI World ETF  |  URTH  |  NYSE Arca

 

 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020

 

    

 

 6-Month 

 

 

 12-Month 

   

U.S. large cap equities
(S&P 500® Index)

  19.63%   21.94%
   

U.S. small cap equities
(Russell 2000® Index)

  6.57   6.02
   

International equities
(MSCI Europe, Australasia, Far East Index)

  7.10   6.13
   

Emerging market equities
(MSCI Emerging Markets Index)

  11.23   14.49
   

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

  0.34   1.26
   

U.S. Treasury securities (ICE BofA 10-Year U.S. Treasury Index)

  4.67   8.93
   

U.S. investment grade bonds
(Bloomberg Barclays U.S. Aggregate Bond Index)

  2.98   6.47
   

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

  0.29   3.15
   

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

  3.04   4.65

 

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

 

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H I S  A G E  I S  N O T  A R T  O F  O U R  U N D  E P O R T


Table of Contents

 

     Page  

 

 

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     9  

Shareholder Expenses

     9  

Schedules of Investments

     10  

Financial Statements

  

Statements of Assets and Liabilities

     27  

Statements of Operations

     28  

Statements of Changes in Net Assets

     29  

Financial Highlights

     30  

Notes to Financial Statements

     32  

Report of Independent Registered Public Accounting Firm

     41  

Important Tax Information (Unaudited)

     42  

Board Review and Approval of Investment Advisory Contract

     43  

Supplemental Information

     47  

Director and Officer Information

     49  

General Information

     51  

Glossary of Terms Used in this Report

     52  

 

 

 


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

A R K E T  V E R V I E W

  4


Fund Summary as of August 31, 2020    iShares® MSCI Frontier 100 ETF

 

Investment Objective

The iShares MSCI Frontier 100 ETF (the “Fund”) seeks to track the investment results of an index composed of frontier market equities, as represented by the MSCI Frontier Markets 100 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year       5 Years     

Since

Inception

           1 Year      5 Years     

Since

Inception

 

 

Fund NAV

    (8.44 )%       2.52      4.07       (8.44 )%       13.24      37.41

Fund Market

    (8.27      2.16        3.99         (8.27      11.29        36.59  

Index

    (5.21      4.50        5.65               (5.21      24.63        54.91  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 9/12/12. The first day of secondary market trading was 9/13/12.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 9 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(03/01/20)

 



 

      

Ending
Account Value
(08/31/20
 
 
)  
      

Expenses
Paid During
the Period
 
 
 (a)  
           

Beginning
Account Value
(03/01/20
 
 
)  
      

Ending
Account Value
(08/31/20
 
 
)  
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $ 1,000.00        $ 932.70        $ 3.89             $ 1,000.00        $ 1,021.10        $ 4.06          0.80

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 9 for more information.

 

 

 

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Frontier 100 ETF

 

Portfolio Management Commentary

Equities in the frontier market declined during the reporting period, despite the weakening of the U.S. dollar, as countries dealt with the challenges of the coronavirus pandemic. Frontier market economies contracted, as governments imposed travel restrictions and business closures to contain the spread of the novel coronavirus. The U.S. dollar declined relative to global currencies amid the U.S.’s expansive monetary policy, ultra-low interest rates, and the rapid spread of the coronavirus.

While declining interest rates in the U.S. normally bolster emerging market equities, as investors seek their higher yields, concerns about expanding government deficits and the possibility of sovereign debt defaults limited inflows. Halted economic activity drove down global demand for oil, leading to a sharp decline in the price of oil. A key export of frontier markets, oil price declines exacerbated their economic contractions.

The financials sector detracted the most from the Index’s performance, led by Kuwaiti banks. Reductions in income from oil production and the growing government deficit led to investor concerns about the government’s ability to support Kuwaiti banks should intervention be necessary. Additionally, the Kuwait Banking Association’s announcement that dividend payments would be suspended also weighed on the industry. Banks in Morocco also detracted from the Index’s return, amid lower interest rates and rising loan loss provisions. Concerns about banks’ exposure to industries heavily affected by the pandemic, such as tourism, automobiles, and agriculture, increased.

The real estate sector also detracted from the Index’s return. Property stocks in Vietnam declined amid reduced demand for commercial space and investor expectations that lower incomes would lead to slowing residential sales and lower housing prices. A sharp downturn in tourism forced the closure of hotels and entertainment services, weighing on revenues.

On the upside, the communication services sector, most notably in Kenya, contributed modestly to the Index’s return. Increases in working from home drove demand for mobile phone data for streaming and social media. Efforts to limit physical contact benefited telecommunication services companies that provide cashless mobile payment solutions.

Portfolio Information

 

ALLOCATION BY SECTOR

 

   

Sector

 

 

Percent of   

Total Investments(a)

 

Financials

  50.1%

Communication Services

  15.5   

Consumer Staples

  7.6   

Real Estate

  5.8   

Energy

  5.8   

Industrials

  5.4   

Materials

  4.3   

Health Care

  3.1   

Utilities

  1.3   

Consumer Discretionary

  1.1   

 

  (a) 

Excludes money market funds.

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

   

Country/Geographic Region

 

 

Percent of   

Total Investments(a)

 

Kuwait

  25.8%

Vietnam

  12.3   

Morocco

  11.7   

Romania

  8.9   

Kenya

  8.6   

Bahrain

  8.3   

Bangladesh

  6.6   

Nigeria

  6.3   

Oman

  4.0   

Kazakhstan

  3.4   

 

 

 

 

U N D  U M M A R Y

  6


 

Fund Summary  as of August 31, 2020     iShares® MSCI World ETF

 

Investment Objective

The iShares MSCI World ETF (the “Fund”) seeks to track the investment results of an index composed of developed market equities, as represented by the MSCI World Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns         Cumulative Total Returns
     1 Year      5 Years     

Since   

Inception   

         1 Year      5 Years      Since   
Inception   

 

Fund NAV

    17.04      10.71    10.95%       17.04      66.32    145.55%

Fund Market

    16.92        10.63      10.93          16.92        65.68      145.14   

Index

    16.79        10.42      10.74                16.79        64.15      141.40   

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 1/10/12. The first day of secondary market trading was 1/12/12.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 9 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20

 

 

)  

      

Expenses
Paid During
the Period
 
 
 (a)  
           

Beginning

Account Value

(03/01/20

 

 

)  

      

Ending
Account Value
(08/31/20
 
 
)  
      


Expenses

Paid During
the Period

 

 
 (a) 

      

Annualized
Expense
Ratio
 
 
 
  $ 1,000.00        $ 1,159.00        $ 1.30             $ 1,000.00        $ 1,023.90        $ 1.22          0.24

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 9 for more information.

 

 

 

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Fund Summary as of August 31, 2020  (continued)    iShares® MSCI World ETF

 

Portfolio Management Commentary

Global developed market stocks posted strong returns for the reporting period despite a significant pandemic-related economic contraction in many countries. The U.S., which represented approximately 64% of the Index on average, provided the large majority of contribution to the Index’s return.

The U.S. information technology sector advanced significantly as social distancing requirements drove sharply higher use of technology products and services by people staying at home. Software companies made notable gains, benefiting from increased demand for cloud-based subscriptions of business productivity, design, and marketing software. The technology hardware, storage, and peripherals industry was another source of strength, as high sales of wearable technology products and smartphone software boosted revenues. Semiconductor companies also advanced amid strong demand for chips to support expanding use of data centers and video gaming, both areas that grew after government-mandated coronavirus restrictions.

Stocks in the U.S. consumer discretionary sector also contributed meaningfully to the Index’s performance. While foot traffic at brick-and-mortar stores declined, internet and direct marketing retailers benefited from increased online shopping during the pandemic. Automobile manufacturers performed well due to cost-cutting measures and anticipated growth in the market for electric vehicles.

Healthcare stocks in the U.S., Japan, and Switzerland boosted the Index’s return. In the U.S. and Japan, the pharmaceuticals, biotechnology, and life sciences industry posted strong gains amid positive investor sentiment about treatments and potential vaccines for the coronavirus as well as new cancer drugs. Solid profit growth in the healthcare equipment and services industry also contributed to the Index’s performance. In the Swiss pharmaceuticals industry, emergency approval of coronavirus tests by the U.S. Food and Drug Administration and optimism about trials of drugs to treat COVID-19 drove solid performance.

German stocks were modest contributors to performance, driven by the industrials sector. Strong sales of software boosted profits in the industrial conglomerates industry, offsetting declines from renewable energy projects. On the downside, U.K. stocks detracted the most from the Index’s return, as the energy sector faced headwinds from a global decline in demand for oil and natural gas.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

 

 

 

Percent of   

Total Investments(a)

 

Information Technology

  22.3%

Health Care

  13.5   

Financials

  12.1   

Consumer Discretionary

  11.9   

Industrials

  10.0   

Communication Services

  9.0   

Consumer Staples

  8.0   

Materials

  4.4   

Utilities

  3.2   

Energy

  2.8   

Real Estate

  2.8   

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region

 

 

 

Percent of   

Total Investments(a)

 

United States

  66.1%

Japan

  7.5   

United Kingdom

  4.1   

France

  3.3   

Canada

  3.2   

Switzerland

  3.1   

Germany

  2.9   

Australia

  2.2   

Netherlands

  1.4   

Hong Kong

  1.0   
 
  (a) 

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  8


About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not trade in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

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Schedule of Investments  

August 31, 2020

  

iShares® MSCI Frontier 100 ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Bahrain — 8.1%  

Ahli United Bank BSC

    30,889,589     $ 23,586,021  

Aluminium Bahrain BSC

    874,831       888,636  

Bahrain Telecommunications Co. BSC

    2,399,920       2,686,026  

GFH Financial Group BSC

    15,367,573       2,573,012  

Ithmaar Holding BSC(a)(b)

    7,341,331       520,136  
   

 

 

 
        30,253,831  
Bangladesh — 6.4%            

Bangladesh Export Import Co. Ltd.

    4,310,470       1,357,188  

Beximco Pharmaceuticals Ltd.

    1,852,791       2,523,554  

BRAC Bank Ltd.

    4,878,855       2,284,087  

City Bank Ltd. (The)

    3,719,728       943,091  

GrameenPhone Ltd.

    603,225       2,264,939  

LafargeHolcim Bangladesh Ltd.

    2,836,041       1,474,875  

National Bank Ltd.

    12,555,761       1,140,087  

Olympic Industries Ltd.

    927,336       1,996,834  

Square Pharmaceuticals Ltd.

    3,362,106       8,678,833  

Summit Power Ltd.

    2,627,341       1,304,376  
   

 

 

 
      23,967,864  
Croatia — 0.4%            

Valamar Riviera DD(b)

    371,095       1,409,169  
   

 

 

 
Estonia — 0.7%            

LHV Group AS

    80,834       1,324,427  

Tallink Grupp AS(b)

    1,583,246       1,268,634  
   

 

 

 
      2,593,061  
Jordan — 1.5%            

Arab Bank PLC(b)

    471,798       2,695,038  

Jordan Islamic Bank(b)

    310,660       1,244,393  

Jordan Petroleum Refinery Co.

    425,368       1,559,882  
   

 

 

 
      5,499,313  
Kazakhstan — 3.3%            

Halyk Savings Bank of Kazakhstan JSC, GDR(c)

    589,839       6,901,116  

NAC Kazatomprom JSC, GDR

    361,942       5,537,713  
   

 

 

 
      12,438,829  
Kenya — 8.4%            

East African Breweries Ltd.

    2,297,634       3,418,846  

Equity Group Holdings PLC/Kenya(b)

    16,535,066       5,600,833  

KCB Group Ltd.

    14,985,016       5,124,266  

Safaricom PLC

    62,493,005       17,269,324  
   

 

 

 
      31,413,269  
Kuwait — 25.1%            

Agility Public Warehousing Co. KSC

    2,663,325       5,446,222  

ALAFCO Aviation Lease & Finance Co. KSCP

    768,700       395,497  

Alimtiaz Investment Group KSC(b)

    1,898,881       530,181  

Boubyan Bank KSCP

    1,940,056       3,674,758  

Boubyan Petrochemicals Co. KSCP

    940,741       1,652,424  

Burgan Bank SAK

    2,004,278       1,300,498  

Gulf Bank KSCP

    3,665,047       2,558,266  

Humansoft Holding Co. KSC(b)

    211,933       1,755,748  

Integrated Holding Co. KCSC

    385,072       441,669  

Jazeera Airways Co. KSC(b)

    228,660       420,378  

Kuwait Finance House KSCP

    8,017,368       16,447,230  

Kuwait International Bank KSCP

    1,428,582       805,231  

Kuwait Projects Co. Holding KSCP

    1,795,372       876,652  

Mabanee Co. SAK

    1,336,751       2,790,465  

Mezzan Holding Co. KSCC

    260,640       555,189  

Mobile Telecommunications Co. KSC

    5,189,854       10,034,455  
Security   Shares      Value  
Kuwait (continued)  

National Bank of Kuwait SAKP

    14,584,274      $ 41,102,657  

National Industries Group Holding SAK

    2,588,515        1,323,311  

National Real Estate Co. KPSC(b)

    2,080,560        502,498  

Warba Bank KSCP(b)

    1,998,811        1,303,501  
    

 

 

 
         93,916,830  
Mauritius — 0.4%             

Lighthouse Capital Ltd.(d)

    2,842,194        1,258,257  
    

 

 

 
Morocco — 11.4%             

Attijariwafa Bank(b)

    246,365        9,626,522  

Banque Centrale Populaire(b)

    158,088        3,908,251  

Ciments du Maroc

    20,787        3,347,783  

Cosumar

    167,812        3,640,293  

Label Vie

    6,349        2,052,687  

Maroc Telecom

    1,080,758        16,517,747  

Societe d’Exploitation des Ports

    129,048        2,636,806  

TOTAL Maroc SA

    8,267        808,812  
    

 

 

 
       42,538,901  
Nigeria — 6.1%             

Access Bank PLC

    101,166,493        1,312,201  

Afriland Properties PLC(b)

    8,020        33  

Dangote Cement PLC

    14,756,551        4,164,558  

FBN Holdings PLC

    95,143,544        975,321  

Guaranty Trust Bank PLC

    83,793,514        4,470,156  

MTN Nigeria Communications PLC

    14,286,260        3,520,756  

Nestle Nigeria PLC

    1,593,880        3,918,011  

United Bank for Africa PLC

    97,653,005        1,276,844  

Zenith Bank PLC

    90,720,921        3,179,028  
    

 

 

 
       22,816,908  
Oman — 3.9%             

Bank Dhofar SAOG

    39,196        11,301  

Bank Muscat SAOG

    7,789,434        8,092,919  

Bank Nizwa SAOG(b)

    5,534,567        1,451,925  

Oman Telecommunications Co. SAOG

    1,674,029        2,695,839  

Ooredoo

    1,401,753        1,449,085  

Sohar International Bank SAOG

    3,012,673        837,288  
    

 

 

 
       14,538,357  
Romania — 8.6%             

Banca Transilvania SA(b)

    23,509,691        13,279,685  

BRD-Groupe Societe Generale SA(b)

    1,221,580        3,623,746  

OMV Petrom SA

    67,719,056        6,009,800  

Societatea Energetica Electrica SA

    810,528        2,364,311  

Societatea Nationala de Gaze Naturale ROMGAZ SA

    684,743        4,993,491  

Transgaz SA Medias

    27,272        1,975,328  
    

 

 

 
       32,246,361  
Sri Lanka — 1.1%             

John Keells Holdings PLC

    4,465,287        3,256,214  

Sampath Bank PLC

    1,306,012        877,932  
    

 

 

 
       4,134,146  
Vietnam — 12.0%             

Bank for Foreign Trade of Vietnam JSC

    894,510        3,203,639  

Bank for Investment and Development of Vietnam JSC

    402,880        711,885  

Bao Viet Holdings

    140,380        302,264  

Ho Chi Minh City Development Joint Stock Commercial Bank(b)

    710,310        868,923  

Hoa Phat Group JSC

    3,870,846        4,100,508  

Hoang Huy Investment Financial Services JSC

    442,690        397,323  

Kinh Bac City Development Share Holding Corp.

    531,300        314,080  

Masan Group Corp.(b)

    1,072,650        2,545,663  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  10


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI Frontier 100 ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Vietnam (continued)            

No Va Land Investment Group Corp.(b)

    565,820     $ 1,557,684  

PetroVietnam Gas JSC

    168,050       537,325  

PetroVietnam Power Corp.(b)

    1,136,960       493,051  

PetroVietnam Technical Services Corp.

    609,998       331,649  

Saigon - Hanoi Commercial Joint Stock
Bank(b)

    1,075,200       644,888  

Saigon Beer Alcohol Beverage Corp.

    154,480       1,276,501  

Saigon Thuong Tin Commercial JSB(b)

    1,140,380       551,122  

SSI Securities Corp.

    935,830       601,677  

Thanh Thanh Cong - Bien Hoa JSC

    652,290       403,899  

Vietjet Aviation JSC(b)

    374,080       1,662,578  

Vietnam Dairy Products JSC

    1,441,670       7,527,166  

Vietnam Electrical Equipment JSC(b)

    643,570       616,494  

Vietnam National Petroleum Group

    267,320       605,579  

Viglacera Corp. JSC(b)

    524,040       486,164  

Vincom Retail JSC(b)

    1,626,720       1,895,208  

Vingroup JSC(b)

    1,820,580       7,070,214  

Vinh Hoan Corp.(b)

    211,010       346,903  

Vinhomes JSC(e)

    1,735,150       5,877,423  
   

 

 

 
      44,929,810  
   

 

 

 

Total Common Stocks — 97.4%
(Cost: $325,936,434)

 

    363,954,906  
   

 

 

 

Short-Term Investments

 

Money Market Funds — 0.2%  

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(f)(g)(h)

    20,329       20,350  
Security   Shares     Value  
Money Market Funds (continued)  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(f)(g)

    680,000     $ 680,000  
   

 

 

 
      700,350  
   

 

 

 

Total Short-Term Investments — 0.2%
(Cost: $700,349)

 

    700,350  
   

 

 

 

Total Investments in Securities — 97.6%
(Cost: $326,636,783)

 

    364,655,256  

Other Assets, Less Liabilities — 2.4%

 

    9,114,007  
   

 

 

 

Net Assets — 100.0%

 

  $   373,769,263  
   

 

 

 

 

(a) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(b) 

Non-income producing security.

(c) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(d) 

All or a portion of this security is on loan.

(e) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(f) 

Affiliate of the Fund.

(g) 

Annualized 7-day yield as of period-end.

(h) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
08/31/19
     Purchases
at Cost
     Proceeds
from Sales
     Net Realized
Gain (Loss)
    

 

Change in
Unrealized
Appreciation
(Depreciation)

     Value at
08/31/20
     Shares
Held at
08/31/20
     Income      Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 5,538      $ 14,820 (a)     $      $ (6    $ (2    $ 20,350        20,329      $ 330 (b)     $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

            680,000 (a)                            680,000        680,000        3,694         
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 
            $ (6    $ (2    $ 700,350         $ 4,024      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
  

 

Value/
Unrealized
Appreciation
(Depreciation)

 

 

 
Long Contracts                          

MSCI Emerging Markets E-Mini Index

     174        09/18/20      $ 9,573    $ 282,681  
           

 

 

 

 

 

11  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI Frontier 100 ETF

 

Forward Foreign Currency Exchange Contracts

 

Currency Purchased        Currency Sold      Counterparty    Settlement Date          

 

Unrealized

Appreciation

(Depreciation)

 
USD     1,376,162        NGN     593,400,700      BOA      11/10/20        $ (85,417
USD     6,376,711        NGN     2,704,489,545      CITI      11/10/20          (284,593
                   

 

 

 
                      (370,010
                   

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
    

 

Foreign
Currency
Exchange
Contracts

     Total  

Assets — Derivative Financial Instruments

        

Futures contracts

        

Unrealized appreciation on futures contracts(a)

   $ 282,681      $      $ 282,681  
  

 

 

    

 

 

    

 

 

 

Liabilities — Derivative Financial Instruments

        

Forward foreign currency exchange contracts

        

Unrealized depreciation on forward foreign currency exchange contracts

   $      $ 370,010      $ 370,010  
  

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
    

 

Foreign
Currency
Exchange
Contracts

     Total  

 

 

 

Net Realized Gain (Loss) from:

        

Futures contracts

   $ 326,432      $      $ 326,432  
  

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

        

Futures contracts

   $ 282,681      $      $ 282,681  

Forward foreign currency exchange contracts

            (370,010      (370,010
  

 

 

    

 

 

    

 

 

 
   $   282,681      $ (370,010    $ (87,329
  

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

Futures contracts:

        

Average notional value of contracts — long

   $ 1,924,025  

Forward foreign currency exchange contracts:

  

Average amounts sold — in USD

   $ 1,982,615  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Derivative Financial Instruments - Offsetting as of Year End

The Fund’s derivative assets and liabilities (by type) were as follows:

 

 

 
     Assets        Liabilities  

 

 

Derivative Financial Instruments:

       

Futures contracts

   $ 282,681        $  

Forward foreign currency exchange contracts

              370,010  
  

 

 

      

 

 

 

Total derivative assets and liabilities in the Statement of Assets and Liabilities

   $ 282,681        $ 370,010  

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

     (282,681         
  

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

   $        $  370,010  
  

 

 

      

 

 

 

 

 

C H E D U L E  O F  N V E T M E N T  S

  12


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI Frontier 100 ETF

 

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

 

 

 
    


Derivative
Liabilities
Subject to

an MNA by

 
 
 

 

   

Derivatives

Available

 

 

      
Cash
Collateral
 
 
   

Net Amount

of Derivative

 

 

Counterparty

     Counterparty       for Offset(a)          Pledged (b)        Liabilities (c)(d) 

 

 

Bank of America N.A.

              $ 85,417                $  —        $              $ 85,417  

Citibank N.A.

       284,593                  (260,000       24,593  
    

 

 

     

 

 

      

 

 

     

 

 

 
     $  370,010       $           —        $ (260,000     $   110,010  
    

 

 

     

 

 

      

 

 

     

 

 

 

 

  (a) 

The amount of derivatives available for offset is limited to the amount of derivatives assets and/or liabilities that are subject to an MNA.

 
  (b) 

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (c) 

Net amount represents the net amount payable due to the counterparty in the event of default.

 
  (d) 

Net amount may also include forward foreign currency exchange contracts that are not required to be collateralized.

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

 
     Level 1          Level 2          Level 3          Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 340,617,862        $ 22,816,908        $ 520,136        $ 363,954,906  

Money Market Funds

     700,350                            700,350  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 341,318,212        $ 22,816,908        $     520,136        $ 364,655,256  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 282,681        $        $        $ 282,681  

Liabilities

                 

Forward Foreign Currency Exchange Contracts

              (370,010                 (370,010
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 282,681        $ (370,010      $        $ (87,329
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

13  

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Schedule of Investments  

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Australia — 2.2%  

Afterpay Ltd.(a)

    5,493     $ 371,461  

AGL Energy Ltd.

    17,455       191,051  

APA Group

    33,267       256,605  

Aristocrat Leisure Ltd.

    14,040       294,574  

ASX Ltd.

    5,351       345,633  

Aurizon Holdings Ltd.

    47,525       152,890  

Australia & New Zealand Banking Group Ltd.

    52,873       714,788  

BHP Group Ltd.

    57,442       1,610,463  

BHP Group PLC

    43,719       1,002,631  

BlueScope Steel Ltd.

    13,744       128,986  

Brambles Ltd.

    33,261       272,794  

Cochlear Ltd.

    1,879       267,014  

Coles Group Ltd.

    24,130       316,398  

Commonwealth Bank of Australia

    35,026       1,768,689  

Computershare Ltd.

    15,194       149,336  

Crown Resorts Ltd.

    10,246       68,273  

CSL Ltd.

    9,247       1,955,913  

Dexus

    28,733       187,633  

Fortescue Metals Group Ltd.

    34,311       442,027  

Goodman Group

    41,355       559,994  

GPT Group (The)

    66,183       187,462  

Insurance Australia Group Ltd.

    50,433       177,910  

James Hardie Industries PLC

    13,195       300,850  

Lendlease Corp. Ltd.

    19,737       169,611  

Macquarie Group Ltd.

    6,348       599,508  

Medibank Pvt Ltd.

    66,724       134,714  

Mirvac Group

    134,242       209,478  

National Australia Bank Ltd.

    65,209       864,680  

Newcrest Mining Ltd.

    16,838       397,983  

Northern Star Resources Ltd.

    23,368       235,896  

Oil Search Ltd.

    39,818       96,293  

Orica Ltd.

    10,246       131,696  

Origin Energy Ltd.

    45,645       189,038  

QBE Insurance Group Ltd.

    28,444       223,189  

Ramsay Health Care Ltd.

    3,875       186,446  

Rio Tinto Ltd.

    4,597       333,172  

Santos Ltd.

    43,172       181,031  

Scentre Group

    142,479       238,137  

Sonic Healthcare Ltd.

    12,107       286,967  

South32 Ltd.

    112,258       174,343  

Stockland

    65,449       191,675  

Suncorp Group Ltd.

    28,653       197,070  

Sydney Airport

    31,102       131,568  

Tabcorp Holdings Ltd.

    53,760       143,925  

Telstra Corp. Ltd.

    95,010       203,065  

Transurban Group

    61,001       607,225  

Treasury Wine Estates Ltd.

    21,003       143,678  

Vicinity Centres

    91,449       97,727  

Wesfarmers Ltd.

    19,108       671,520  

Westpac Banking Corp.

    67,202       871,724  

Woodside Petroleum Ltd.

    17,048       246,862  

Woolworths Group Ltd.

    25,876       762,976  
   

 

 

 
        20,644,572  
Austria — 0.0%            

ANDRITZ AG

    2,581       86,552  

Erste Group Bank AG(a)

    7,299       177,902  

OMV AG(a)

    4,444       144,882  
Security   Shares     Value  
Austria (continued)            

Raiffeisen Bank International AG(a)

    3,528     $ 63,290  
   

 

 

 
      472,626  
Belgium — 0.3%            

Ageas SA/NV

    5,528       232,715  

Anheuser-Busch InBev SA/NV

    14,420       841,672  

Colruyt SA

    1,486       94,191  

Galapagos NV(a)(b)

    1,104       150,385  

Groupe Bruxelles Lambert SA

    2,605       241,697  

KBC Group NV

    3,320       190,984  

Proximus SADP

    4,538       90,037  

Solvay SA

    1,508       131,006  

UCB SA

    3,098       368,727  

Umicore SA

    5,075       233,613  
   

 

 

 
          2,575,027  
Canada — 3.2%            

Agnico Eagle Mines Ltd.

    5,207       429,764  

Algonquin Power & Utilities Corp.

    12,999       180,377  

Alimentation Couche-Tard Inc., Class B

    18,364       599,989  

Bank of Montreal

    12,744       809,661  

Bank of Nova Scotia (The)

    23,750       1,027,505  

Barrick Gold Corp.

    38,644       1,146,018  

Bausch Health Companies Inc.(a)

    6,862       114,020  

BCE Inc.

    3,102       133,465  

BlackBerry Ltd.(a)

    19,806       103,366  

Brookfield Asset Management Inc., Class A

    26,041       879,792  

Cameco Corp.

    11,657       135,183  

Canadian Imperial Bank of Commerce

    9,021       717,000  

Canadian National Railway Co.

    14,676       1,543,799  

Canadian Natural Resources Ltd.

    24,941       492,331  

Canadian Pacific Railway Ltd.

    3,008       890,868  

Canadian Tire Corp. Ltd., Class A, NVS

    1,951       204,316  

Canadian Utilities Ltd., Class A, NVS

    8,340       209,564  

Canopy Growth Corp.(a)(b)

    4,728       78,053  

CGI Inc.(a)

    5,348       376,057  

CI Financial Corp.

    10,765       153,013  

Constellation Software Inc.

    511       592,198  

Dollarama Inc.

    7,282       284,585  

Emera Inc.

    4,834       197,560  

Enbridge Inc.

    40,359       1,292,591  

Fairfax Financial Holdings Ltd.

    602       185,777  

First Quantum Minerals Ltd.

    15,769       156,244  

Fortis Inc.

    8,606       344,583  

Franco-Nevada Corp.

    4,088       615,483  

George Weston Ltd.

    3,256       235,476  

Gildan Activewear Inc.

    6,166       119,681  

Great-West Lifeco Inc.

    7,814       159,584  

IGM Financial Inc.

    4,287       104,728  

Imperial Oil Ltd.

    6,759       111,582  

Intact Financial Corp.

    2,828       303,235  

Inter Pipeline Ltd.

    15,110       159,687  

Kinross Gold Corp.(a)

    45,101       400,836  

Kirkland Lake Gold Ltd.

    5,774       307,988  

Loblaw Companies Ltd.

    4,289       221,898  

Magna International Inc.

    6,475       315,662  

Manulife Financial Corp.

    37,459       553,138  

Metro Inc.

    6,547       296,058  

National Bank of Canada

    8,298       456,630  

Nutrien Ltd.

    11,777       436,661  

Onex Corp.

    3,156       153,398  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  14


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Canada (continued)            

Open Text Corp.

    6,579     $ 298,717  

Pembina Pipeline Corp.

    11,968       296,685  

Power Corp. of Canada

    12,724       254,294  

Restaurant Brands International Inc.

    5,258       285,186  

RioCan REIT

    3,173       37,040  

Rogers Communications Inc., Class B, NVS

    8,199       341,439  

Royal Bank of Canada

    28,265       2,154,774  

Saputo Inc.

    7,479       186,781  

Shaw Communications Inc., Class B, NVS

    11,720       219,387  

Shopify Inc., Class A(a)

    2,212       2,365,267  

Sun Life Financial Inc.

    11,149       465,829  

Suncor Energy Inc.

    32,211       517,423  

TC Energy Corp.

    18,278       855,578  

Teck Resources Ltd., Class B

    10,347       119,436  

TELUS Corp.

    17,900       329,988  

Thomson Reuters Corp.

    4,335       331,742  

Toronto-Dominion Bank (The)

    36,820       1,838,810  

Waste Connections Inc.

    5,905       590,677  

Wheaton Precious Metals Corp.

    9,698       518,487  
   

 

 

 
        30,236,944  
Denmark — 0.7%            

AP Moller - Maersk A/S, Class A

    158       225,401  

Carlsberg AS, Class B

    2,717       382,627  

Chr Hansen Holding A/S

    2,266       260,723  

Coloplast A/S, Class B

    2,816       478,860  

Danske Bank A/S(a)

    13,944       216,262  

Demant A/S(a)

    4,608       137,841  

DSV Panalpina A/S

    4,667       731,317  

Genmab A/S(a)

    1,537       581,747  

Novo Nordisk A/S, Class B

    35,794       2,375,763  

Novozymes A/S, Class B

    5,485       325,241  

Orsted A/S(c)

    3,833       543,485  

Vestas Wind Systems A/S

    4,460       679,534  
   

 

 

 
      6,938,801  
Finland — 0.4%            

Elisa OYJ

    4,808       283,424  

Fortum OYJ

    10,547       223,451  

Kone OYJ, Class B

    7,119       611,644  

Neste OYJ

    9,477       507,877  

Nokia OYJ

    109,483       533,238  

Nordea Bank Abp(a)

    65,437       528,279  

Sampo OYJ, Class A

    7,816       315,293  

Stora Enso OYJ, Class R

    20,430       301,262  

UPM-Kymmene OYJ

    9,204       279,701  

Wartsila OYJ Abp

    11,544       98,907  
   

 

 

 
      3,683,076  
France — 3.3%            

Accor SA(a)

    4,628       142,467  

Air Liquide SA

    9,633       1,601,938  

Airbus SE(a)

    11,567       952,302  

Alstom SA(a)

    4,700       262,162  

Atos SE(a)

    3,009       260,900  

AXA SA

    39,549       807,672  

BioMerieux

    828       125,761  

BNP Paribas SA(a)

    22,941       1,003,208  

Bollore SA

    42,357       159,468  

Bouygues SA(a)

    7,099       282,294  

Bureau Veritas SA(a)

    7,300       165,835  

Capgemini SE

    3,368       467,244  
Security   Shares     Value  
France (continued)            

Carrefour SA

    13,367     $ 215,175  

Cie. de Saint-Gobain(a)

    12,623       512,979  

Cie. Generale des Etablissements Michelin SCA

    3,818       432,048  

Credit Agricole SA(a)

    23,932       245,801  

Danone SA

    12,422       818,571  

Dassault Systemes SE

    2,822       532,739  

Edenred

    6,129       317,168  

Electricite de France SA

    14,445       152,059  

Engie SA(a)

    34,085       475,104  

EssilorLuxottica SA(a)

    6,193       830,271  

Eurofins Scientific SE(a)

    320       257,024  

Getlink SE(a)

    16,857       258,856  

Hermes International

    706       607,419  

Iliad SA

    678       145,143  

Ingenico Group SA(a)

    1,686       286,728  

Ipsen SA

    2,122       220,282  

Kering SA

    1,536       945,310  

Klepierre SA(b)

    6,092       100,470  

Legrand SA

    6,129       512,366  

L’Oreal SA

    5,080       1,682,286  

LVMH Moet Hennessy Louis Vuitton SE

    5,376       2,525,480  

Orange SA

    37,279       415,967  

Pernod Ricard SA

    4,175       716,509  

Peugeot SA(a)(b)

    14,158       243,317  

Publicis Groupe SA(a)

    4,543       159,573  

Renault SA(a)

    3,832       109,256  

Safran SA(a)

    6,672       774,160  

Sanofi

    22,556       2,289,441  

Schneider Electric SE

    10,625       1,318,349  

SCOR SE(a)

    4,715       126,424  

SES SA

    8,379       59,624  

Societe Generale SA(a)

    15,144       245,990  

Sodexo SA

    2,221       159,266  

STMicroelectronics NV

    16,311       491,775  

Suez SA

    11,707       203,084  

Teleperformance

    1,495       462,005  

Thales SA

    2,828       221,531  

TOTAL SE

    48,245       1,909,825  

Ubisoft Entertainment SA(a)

    2,457       202,636  

Unibail-Rodamco-Westfield(b)

    3,497       163,777  

Valeo SA

    5,621       172,095  

Veolia Environnement SA

    11,613       280,549  

Vinci SA

    10,812       1,016,088  

Vivendi SA

    17,970       511,491  

Worldline SA(a)(c)

    3,874       356,842  
   

 

 

 
        30,914,104  
Germany — 2.7%            

adidas AG(a)

    3,728       1,135,135  

Allianz SE, Registered

    8,469       1,838,526  

BASF SE

    18,507       1,130,134  

Bayer AG, Registered

    19,932       1,323,945  

Bayerische Motoren Werke AG

    6,132       441,114  

Beiersdorf AG

    3,408       394,537  

Brenntag AG

    4,808       301,652  

Commerzbank AG(a)

    25,345       147,404  

Continental AG

    2,149       234,393  

Daimler AG, Registered

    17,412       888,035  

Delivery Hero SE(a)(c)

    2,208       237,712  

Deutsche Bank AG, Registered(a)

    42,626       409,103  

Deutsche Boerse AG

    4,425       838,266  
 

 

 

15  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Germany (continued)            

Deutsche Lufthansa AG, Registered(a)

    6,386     $ 66,674  

Deutsche Post AG, Registered

    20,425       931,168  

Deutsche Telekom AG, Registered

    64,219       1,132,841  

Deutsche Wohnen SE

    7,104       379,263  

E.ON SE

    47,396       561,731  

Fresenius Medical Care AG & Co. KGaA

    4,898       416,253  

Fresenius SE & Co. KGaA

    8,006       371,501  

GEA Group AG

    4,628       169,145  

Hannover Rueck SE

    1,407       239,953  

HeidelbergCement AG

    3,548       225,825  

Infineon Technologies AG

    25,733       712,758  

LANXESS AG

    3,278       192,135  

LEG Immobilien AG

    1,394       205,494  

Merck KGaA

    3,278       445,545  

MTU Aero Engines AG

    1,202       223,177  

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen, Registered

    2,918       843,481  

Puma SE(a)

    3,225       266,823  

RWE AG

    13,457       535,927  

SAP SE

    21,190       3,498,236  

Scout24 AG(c)

    2,590       241,451  

Siemens AG, Registered

    15,520       2,146,783  

Siemens Healthineers AG(c)

    3,032       138,155  

Symrise AG

    2,822       389,978  

TeamViewer AG(a)(c)

    3,696       200,546  

thyssenkrupp AG(a)(b)

    9,886       71,223  

United Internet AG, Registered

    3,136       154,296  

Vonovia SE

    11,843       849,819  

Zalando SE(a)(c)

    3,671       321,109  
   

 

 

 
        25,251,246  
Hong Kong — 1.0%            

AIA Group Ltd.

    239,800       2,469,119  

ASM Pacific Technology Ltd.

    18,400       197,885  

Bank of East Asia Ltd. (The)

    29,400       66,310  

BeiGene Ltd., ADR(a)(b)

    923       222,969  

BOC Hong Kong Holdings Ltd.

    93,500       265,414  

CK Asset Holdings Ltd.

    54,500       296,052  

CK Hutchison Holdings Ltd.

    56,000       366,703  

CLP Holdings Ltd.

    46,500       456,891  

Galaxy Entertainment Group Ltd.

    44,000       346,600  

Hang Seng Bank Ltd.

    19,200       301,992  

Hong Kong & China Gas Co. Ltd.(b)

    293,419       427,058  

Hong Kong Exchanges & Clearing Ltd.

    24,200       1,221,530  

Jardine Matheson Holdings Ltd.

    7,000       294,000  

Link REIT

    46,500       370,193  

Melco Resorts & Entertainment Ltd., ADR

    11,745       229,262  

MTR Corp. Ltd.

    47,000       244,698  

New World Development Co. Ltd.

    39,333       204,274  

Sands China Ltd.

    57,200       252,413  

Sun Hung Kai Properties Ltd.

    36,000       484,016  

Techtronic Industries Co. Ltd.

    46,500       590,389  

WH Group Ltd.(c)

    216,500       186,885  

Wynn Macau Ltd.(b)

    81,200       152,758  
   

 

 

 
      9,647,411  
Ireland — 0.6%            

CRH PLC

    17,952       665,561  

Flutter Entertainment PLC(a)

    3,147       531,805  

Kerry Group PLC, Class A

    3,777       496,882  

Linde PLC

    10,902       2,722,665  
Security   Shares     Value  
Ireland (continued)            

Smurfit Kappa Group PLC

    6,719     $ 238,496  

Steris PLC

    1,830       292,141  

Trane Technologies PLC

    5,521       653,631  
   

 

 

 
      5,601,181  
Israel — 0.2%            

Bank Hapoalim BM

    55,061       334,136  

Check Point Software Technologies Ltd.(a)(b)

    2,577       325,372  

CyberArk Software Ltd.(a)

    816       90,168  

Isracard Ltd.

    1       3  

Nice Ltd.(a)

    1,626       372,572  

Teva Pharmaceutical Industries Ltd., ADR(a)

    25,171       248,438  

Wix.com Ltd.(a)

    1,012       298,165  
   

 

 

 
      1,668,854  
Italy — 0.6%            

Assicurazioni Generali SpA

    23,977       372,922  

Atlantia SpA(a)

    18,475       294,529  

CNH Industrial NV(a)

    25,225       200,134  

Enel SpA

    167,384       1,519,189  

Eni SpA

    54,029       504,005  

Ferrari NV

    2,723       531,473  

FinecoBank Banca Fineco SpA(a)

    9,254       140,555  

Intesa Sanpaolo SpA(a)

    315,953       682,120  

Leonardo SpA

    3,996       27,087  

Mediobanca Banca di Credito Finanziario SpA

    18,166       158,206  

Moncler SpA(a)

    5,040       195,595  

Snam SpA

    71,770       368,225  

Telecom Italia SpA/Milano

    504,454       240,597  

Tenaris SA

    13,386       78,764  

Terna Rete Elettrica Nazionale SpA

    62,626       453,730  

UniCredit SpA(a)

    45,151       445,487  
   

 

 

 
          6,212,618  
Japan — 7.5%            

Advantest Corp.

    4,400       210,364  

Aeon Co. Ltd.

    18,500       458,640  

Aisin Seiki Co. Ltd.

    3,600       123,740  

Ajinomoto Co. Inc.

    15,900       296,274  

Alfresa Holdings Corp.

    5,200       104,446  

ANA Holdings Inc.(a)

    9,200       229,686  

Asahi Group Holdings Ltd.

    7,800       273,105  

Asahi Kasei Corp.

    27,700       232,477  

Astellas Pharma Inc.

    41,700       654,530  

Bridgestone Corp.

    9,200       291,586  

Canon Inc.

    18,400       317,873  

Casio Computer Co. Ltd.

    14,300       230,456  

Central Japan Railway Co.

    3,100       464,510  

Chubu Electric Power Co. Inc.

    15,900       196,342  

Chugai Pharmaceutical Co. Ltd.

    18,700       832,502  

Chugoku Electric Power Co. Inc. (The)

    15,900       193,718  

Coca-Cola Bottlers Japan Holdings Inc.

    3,200       53,351  

Concordia Financial Group Ltd.

    51,000       169,287  

Daifuku Co. Ltd.

    5,000       439,908  

Dai-ichi Life Holdings Inc.

    18,700       283,114  

Daiichi Sankyo Co. Ltd.

    11,600       1,033,384  

Daikin Industries Ltd.

    5,000       941,346  

Daito Trust Construction Co. Ltd.

    3,000       265,953  

Daiwa House Industry Co. Ltd.

    16,000       428,573  

Denso Corp.

    11,600       487,540  

Dentsu Group Inc.

    5,100       133,890  

East Japan Railway Co.

    6,500       422,750  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  16


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Japan (continued)            

Eisai Co. Ltd.

    5,100     $ 445,580  

ENEOS Holdings Inc.

    68,900       270,025  

FANUC Corp.

    4,500       789,500  

Fast Retailing Co. Ltd.

    1,600       954,765  

Fuji Electric Co. Ltd.

    3,600       112,537  

FUJIFILM Holdings Corp.

    9,300       442,527  

Fujitsu Ltd.

    4,000       521,288  

Hakuhodo DY Holdings Inc.

    16,000       199,161  

Hamamatsu Photonics KK

    6,100       277,835  

Hankyu Hanshin Holdings Inc.

    5,000       162,431  

Hikari Tsushin Inc.

    600       144,957  

Hitachi Ltd.

    18,400       612,495  

Honda Motor Co. Ltd.

    27,600       710,268  

Hoya Corp.

    9,300       913,381  

Hulic Co. Ltd.

    25,200       229,555  

Idemitsu Kosan Co. Ltd.

    4,800       105,736  

Inpex Corp.

    27,600       175,368  

ITOCHU Corp.

    30,500       783,316  

Japan Airlines Co. Ltd.

    2,500       49,837  

Japan Exchange Group Inc.

    16,000       414,616  

Japan Post Holdings Co. Ltd.

    30,300       223,925  

Japan Real Estate Investment Corp.

    29       162,440  

Japan Retail Fund Investment Corp.

    68       102,534  

Japan Tobacco Inc.

    25,000       467,372  

JFE Holdings Inc.

    14,400       109,041  

JGC Holdings Corp.

    5,800       64,046  

JTEKT Corp.

    4,500       34,754  

Kansai Electric Power Co. Inc. (The)

    19,200       189,022  

Kao Corp.

    9,200       700,031  

KDDI Corp.

    36,800       1,068,135  

Keyence Corp.

    4,000       1,647,602  

Kikkoman Corp.

    3,300       179,245  

Kintetsu Group Holdings Co. Ltd.

    3,800       166,986  

Kirin Holdings Co. Ltd.

    18,400       361,771  

Komatsu Ltd.

    9,200       199,885  

Konami Holdings Corp.

    2,800       107,860  

Kose Corp.

    900       105,493  

Kubota Corp.

    23,200       419,282  

Kuraray Co. Ltd.

    19,500       199,514  

Kyocera Corp.

    9,200       528,081  

Kyushu Electric Power Co. Inc.

    18,400       162,927  

LIXIL Group Corp.

    14,200       261,116  

M3 Inc.

    9,400       544,260  

Makita Corp.

    7,300       337,310  

Marubeni Corp.

    37,000       223,162  

Marui Group Co. Ltd.

    9,200       168,046  

Mazda Motor Corp.

    18,400       117,988  

MEIJI Holdings Co. Ltd.

    2,500       201,801  

MINEBEA MITSUMI Inc.

    15,900       275,733  

Mitsubishi Chemical Holdings Corp.

    39,400       230,281  

Mitsubishi Corp.

    27,600       653,921  

Mitsubishi Electric Corp.

    39,500       544,943  

Mitsubishi Estate Co. Ltd.

    21,900       343,127  

Mitsubishi Heavy Industries Ltd.

    9,300       230,954  

Mitsubishi Motors Corp.

    39,800       95,705  

Mitsubishi UFJ Financial Group Inc.

    240,400           1,003,131  

Mitsubishi UFJ Lease & Finance Co. Ltd.

    51,200       241,890  

Mitsui & Co. Ltd.

    36,800       664,201  

Mitsui Fudosan Co. Ltd.

    25,100       454,449  

Mizuho Financial Group Inc.

    585,900       794,497  
Security   Shares     Value  
Japan (continued)            

MS&AD Insurance Group Holdings Inc.

    10,900     $ 302,295  

Murata Manufacturing Co. Ltd.

    11,500       681,032  

Nagoya Railroad Co. Ltd.

    9,300       259,500  

NEC Corp.

    3,600       189,768  

Nexon Co. Ltd.

    11,800       276,292  

Nidec Corp.

    10,300       865,513  

Nintendo Co. Ltd.

    2,300       1,230,629  

Nippon Paint Holdings Co. Ltd.

    4,100       351,832  

Nippon Steel Corp.

    18,447       181,695  

Nippon Telegraph & Telephone Corp.

    25,800       586,701  

Nissan Motor Co. Ltd.

    48,400       196,941  

Nitori Holdings Co. Ltd.

    1,700       355,566  

Nitto Denko Corp.

    3,500       212,551  

Nomura Holdings Inc.

    63,500       326,048  

Nomura Real Estate Master Fund Inc.(a)

    160       205,045  

Nomura Research Institute Ltd.

    13,100       348,238  

NTT Data Corp.

    16,100       184,009  

NTT DOCOMO Inc.

    27,600       770,130  

Obic Co. Ltd.

    1,300       230,346  

Odakyu Electric Railway Co. Ltd.

    12,700       314,132  

Olympus Corp.

    28,100       556,197  

Omron Corp.

    3,800       278,429  

Ono Pharmaceutical Co. Ltd.

    9,200       277,531  

Oriental Land Co. Ltd.

    4,300       583,498  

ORIX Corp.

    33,600       418,871  

Orix JREIT Inc.

    57       84,765  

Otsuka Corp.

    6,000       294,215  

Otsuka Holdings Co. Ltd.

    9,300       408,412  

Pan Pacific International Holdings Corp.

    16,800       394,632  

Panasonic Corp.

    44,800       413,126  

Rakuten Inc.

    27,600       242,829  

Recruit Holdings Co. Ltd.

    27,600       1,047,834  

Resona Holdings Inc.

    69,200       254,496  

Ricoh Co. Ltd.

    16,900       126,377  

Santen Pharmaceutical Co. Ltd.

    18,400       350,666  

Secom Co. Ltd.

    4,000       378,141  

Sekisui House Ltd.

    18,400       363,680  

Seven & i Holdings Co. Ltd.

    18,600       602,139  

Seven Bank Ltd.

    40,400       101,338  

Shimano Inc.

    1,400       296,384  

Shin-Etsu Chemical Co. Ltd.

    9,200       1,117,846  

Shionogi & Co. Ltd.

    9,200       510,383  

Shiseido Co. Ltd.

    9,200       535,369  

SMC Corp.

    1,200       659,154  

Softbank Corp.

    46,000       604,036  

SoftBank Group Corp.

    34,100       2,121,663  

Sompo Holdings Inc.

    9,300       349,041  

Sony Corp.

    27,600           2,162,557  

Subaru Corp.

    18,400       382,159  

Sumitomo Chemical Co. Ltd.

    51,000       165,920  

Sumitomo Corp.

    27,600       357,737  

Sumitomo Electric Industries Ltd.

    25,000       294,450  

Sumitomo Metal Mining Co. Ltd.

    10,700       326,615  

Sumitomo Mitsui Financial Group Inc.

    27,600       811,512  

Sumitomo Mitsui Trust Holdings Inc.

    9,300       269,322  

Sumitomo Realty & Development Co. Ltd.

    9,600       283,442  

Suzuki Motor Corp.

    9,300       381,401  

Sysmex Corp.

    4,000       349,173  

T&D Holdings Inc.

    18,400       192,597  

Takeda Pharmaceutical Co. Ltd.

    31,426       1,173,233  
 

 

 

17  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Japan (continued)            

TDK Corp.

    2,700     $ 280,324  

Terumo Corp.

    18,400       747,833  

Toho Co. Ltd.

    3,200       121,609  

Tokio Marine Holdings Inc.

    14,900       687,076  

Tokyo Electric Power Co. Holdings Inc.(a)

    42,100       123,864  

Tokyo Electron Ltd.

    3,700       947,287  

Tokyo Gas Co. Ltd.

    9,200       204,440  

Tokyu Corp.

    9,200       123,019  

Tokyu Fudosan Holdings Corp.

    37,000       159,102  

Toray Industries Inc.

    34,100       161,971  

Toshiba Corp.

    9,200       265,038  

Tosoh Corp.

    22,100       328,233  

Toyota Motor Corp.

    46,000       3,039,049  

Unicharm Corp.

    9,300       404,641  

United Urban Investment Corp.

    118       131,303  

USS Co. Ltd.

    9,200       155,379  

West Japan Railway Co.

    5,900       309,952  

Yakult Honsha Co. Ltd.

    2,400       136,923  

Yamada Denki Co. Ltd.

    36,800       197,456  

Yamaha Corp.

    3,800       185,261  

Yamaha Motor Co. Ltd.

    6,800       107,151  

Yaskawa Electric Corp.

    9,200       330,973  

Yokogawa Electric Corp.

    9,300       151,982  

Z Holdings Corp.

    60,600       402,876  
   

 

 

 
        70,963,159  
Netherlands — 1.4%            

Adyen NV(a)(c)

    348       588,077  

Aegon NV

    37,099       103,512  

AerCap Holdings NV(a)

    3,818       112,898  

Akzo Nobel NV

    3,562       353,322  

Altice Europe NV(a)

    15,088       66,909  

ArcelorMittal SA(a)

    17,380       220,369  

Argenx SE(a)

    904       209,417  

ASML Holding NV

    8,486       3,189,779  

Heineken Holding NV(a)

    3,554       291,790  

Heineken NV(a)

    4,718       437,632  

ING Groep NV(a)

    77,610       631,532  

Just Eat Takeaway.com NV(a)(c)

    2,392       266,733  

Koninklijke Ahold Delhaize NV

    25,722       775,824  

Koninklijke DSM NV

    3,899       626,942  

Koninklijke KPN NV

    82,066       215,629  

Koninklijke Philips NV(a)

    18,146       860,148  

NN Group NV

    5,801       218,885  

NXP Semiconductors NV

    5,748       722,868  

Prosus NV(a)

    9,883       990,953  

QIAGEN NV(a)

    5,038       256,493  

Randstad NV(a)

    3,046       159,084  

Unilever NV

    29,904       1,734,897  

Wolters Kluwer NV

    5,571       458,390  
   

 

 

 
      13,492,083  
New Zealand — 0.1%            

a2 Milk Co. Ltd. (The)(a)

    22,846       287,060  

Fisher & Paykel Healthcare Corp. Ltd.

    12,052       300,178  

Spark New Zealand Ltd.

    73,107       238,665  
   

 

 

 
      825,903  
Norway — 0.2%            

Adevinta ASA(a)

    4,851       91,117  

DNB ASA(a)

    22,112       357,237  

Equinor ASA

    19,293       314,806  
Security   Shares     Value  
Norway (continued)            

Norsk Hydro ASA(a)

    34,422     $ 110,628  

Orkla ASA

    24,874       254,874  

Telenor ASA

    15,792       258,590  

Yara International ASA

    5,348       225,555  
   

 

 

 
      1,612,807  
Portugal — 0.0%            

EDP - Energias de Portugal SA(b)

    72,019       365,368  

Galp Energia SGPS SA

    13,541       145,296  
   

 

 

 
      510,664  
Singapore — 0.3%            

Ascendas REIT

    171,023       417,620  

CapitaLand Ltd.

    104,500       212,905  

CapitaLand Mall Trust(b)

    102,600       147,908  

DBS Group Holdings Ltd.

    36,500       560,279  

Genting Singapore Ltd.

    179,700       92,520  

Keppel Corp. Ltd.

    50,800       171,127  

Oversea-Chinese Banking Corp. Ltd.

    57,600       367,308  

Singapore Exchange Ltd.

    7,500       47,496  

Singapore Telecommunications Ltd.

    177,100       299,595  

United Overseas Bank Ltd.(b)

    31,100       447,423  

Venture Corp. Ltd.

    12,800       186,878  

Wilmar International Ltd.

    47,500       152,324  
   

 

 

 
          3,103,383  
Spain — 0.7%            

ACS Actividades de Construccion y Servicios SA

    7,849       192,622  

Aena SME SA(a)(c)

    1,861       278,431  

Amadeus IT Group SA

    9,682       543,180  

Banco Bilbao Vizcaya Argentaria SA

    132,388       388,382  

Banco Santander SA(a)

    333,458       742,883  

Bankinter SA

    23,988       129,299  

CaixaBank SA

    75,370       166,036  

Cellnex Telecom SA(c)

    6,706       430,516  

Enagas SA

    2,268       55,577  

Endesa SA

    6,423       178,443  

Ferrovial SA

    9,141       244,662  

Iberdrola SA

    124,246       1,567,646  

Industria de Diseno Textil SA

    22,213       625,621  

Naturgy Energy Group SA

    8,840       170,847  

Red Electrica Corp. SA

    5,764       110,468  

Repsol SA

    30,949       245,103  

Telefonica SA

    91,927       364,012  
   

 

 

 
      6,433,728  
Sweden — 0.9%            

Alfa Laval AB(a)(b)

    8,289       203,166  

Assa Abloy AB, Class B

    21,572       500,223  

Atlas Copco AB, Class A

    13,555       628,484  

Atlas Copco AB, Class B

    9,976       401,703  

Boliden AB

    7,113       212,690  

Electrolux AB, Series B

    6,039       131,213  

Epiroc AB, Class A

    11,657       174,011  

Epiroc AB, Class B

    9,976       143,829  

Essity AB, Class B(a)

    12,467       430,168  

Evolution Gaming Group AB(c)

    3,766       282,856  

Hennes & Mauritz AB, Class B(b)

    16,767       268,079  

Hexagon AB, Class B(a)

    5,653       410,558  

Investor AB, Class B

    8,896       568,729  

Kinnevik AB, Class B(a)

    9,805       379,754  

Lundin Energy AB

    6,402       156,915  

Sandvik AB(a)

    27,735       546,021  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  18


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Sweden (continued)            

Skandinaviska Enskilda Banken AB, Class A(a)

    35,221     $ 350,129  

Skanska AB, Class B(a)

    12,850       262,514  

SKF AB, Class B

    13,956       279,283  

Svenska Handelsbanken AB, Class A(a)

    33,666       339,668  

Swedbank AB, Class A(a)

    19,804       336,659  

Swedish Match AB

    4,163       316,921  

Telefonaktiebolaget LM Ericsson, Class B

    57,096       663,641  

Telia Co. AB

    58,809       227,123  

Volvo AB, Class B(a)

    29,220       560,011  
   

 

 

 
      8,774,348  
Switzerland — 3.1%            

ABB Ltd., Registered

    38,426       980,227  

Adecco Group AG, Registered

    3,728       195,664  

Alcon Inc.(a)

    8,525       486,250  

Baloise Holding AG, Registered

    2,041       318,463  

Chocoladefabriken Lindt & Spruengli AG, Participation Certificates, NVS

    19       162,369  

Cie. Financiere Richemont SA, Registered

    10,606       703,886  

Coca-Cola HBC AG(a)

    4,852       129,542  

Credit Suisse Group AG, Registered

    52,165       575,498  

Geberit AG, Registered

    1,051       607,641  

Givaudan SA, Registered

    184       774,457  

Julius Baer Group Ltd.

    6,586       316,701  

Kuehne & Nagel International AG, Registered(a)

    2,269       441,100  

LafargeHolcim Ltd., Registered(a)

    9,970       474,999  

Logitech International SA, Registered

    3,932       291,783  

Lonza Group AG, Registered

    1,684       1,048,047  

Nestle SA, Registered

    60,198       7,257,588  

Novartis AG, Registered

    43,630       3,781,315  

Partners Group Holding AG

    508       517,788  

Roche Holding AG, NVS

    14,088       4,939,288  

Schindler Holding AG, Participation Certificates, NVS

    775       207,510  

Schindler Holding AG, Registered

    1,018       268,844  

SGS SA, Registered

    92       238,876  

Sika AG, Registered

    2,176       523,429  

Sonova Holding AG, Registered(a)

    1,414       331,496  

Swatch Group AG (The), Bearer

    871       184,753  

Swiss Life Holding AG, Registered(a)

    869       352,059  

Swiss Prime Site AG, Registered

    3,202       289,281  

Swiss Re AG

    5,348       431,427  

Swisscom AG, Registered

    582       323,172  

Temenos AG, Registered

    1,775       287,406  

UBS Group AG, Registered

    76,944       938,675  

Zurich Insurance Group AG

    2,852       1,057,880  
   

 

 

 
        29,437,414  
United Kingdom — 4.1%            

3i Group PLC

    23,313       292,796  

Admiral Group PLC

    5,621       198,467  

Amcor PLC(a)

    28,174       311,604  

Anglo American PLC

    24,766       607,698  

Antofagasta PLC

    13,907       199,987  

Aptiv PLC

    5,276       454,369  

Ashtead Group PLC

    10,808       376,979  

Associated British Foods PLC

    8,109       222,145  

AstraZeneca PLC

    26,987       3,013,595  

Auto Trader Group PLC(c)

    40,428       304,866  

Aviva PLC

    78,399       296,757  

BAE Systems PLC

    66,452       462,319  

Barclays PLC(a)

    299,037       448,283  
Security   Shares     Value  
United Kingdom (continued)            

BP PLC

    407,037     $ 1,439,896  

British American Tobacco PLC

    46,031       1,560,861  

British Land Co. PLC (The)

    30,093       147,352  

BT Group PLC

    163,952       229,731  

Bunzl PLC

    9,815       318,294  

Burberry Group PLC

    9,526       184,244  

Coca-Cola European Partners PLC

    5,257       216,378  

Compass Group PLC

    35,996       588,242  

Croda International PLC

    5,373       424,456  

Diageo PLC

    47,705       1,602,933  

Experian PLC

    21,032       785,686  

Ferguson PLC

    4,719       466,053  

Fiat Chrysler Automobiles NV(a)

    22,844       252,194  

GlaxoSmithKline PLC

    101,752       2,005,465  

Glencore PLC(a)

    201,738       456,984  

GVC Holdings PLC(a)

    12,144       130,765  

HSBC Holdings PLC

    403,651       1,784,357  

Imperial Brands PLC

    18,363       308,077  

Informa PLC(a)

    38,141       211,119  

InterContinental Hotels Group PLC(a)

    4,711       277,921  

Intertek Group PLC

    5,348       420,763  

J Sainsbury PLC

    47,956       118,019  

Johnson Matthey PLC

    7,974       253,574  

Kingfisher PLC

    46,018       166,547  

Land Securities Group PLC

    20,763       160,715  

Legal & General Group PLC

    111,747       325,132  

Lloyds Banking Group PLC(a)

    1,417,692       538,145  

London Stock Exchange Group PLC

    7,471       880,290  

M&G PLC

    65,186       150,996  

Melrose Industries PLC

    117,431       160,064  

National Grid PLC

    70,509       796,048  

Natwest Group PLC(a)

    107,388       162,192  

Next PLC

    3,278       265,012  

Ocado Group PLC(a)

    9,568       319,892  

Pearson PLC(b)

    17,118       128,215  

Persimmon PLC

    6,448       226,199  

Prudential PLC

    50,466       825,385  

Reckitt Benckiser Group PLC

    14,651       1,473,233  

RELX PLC

    42,420       966,990  

Rentokil Initial PLC(a)

    38,801       276,907  

Rio Tinto PLC

    26,152       1,623,002  

Rolls-Royce Holdings PLC

    49,304       159,164  

Royal Dutch Shell PLC, Class A

    82,456       1,221,956  

Royal Dutch Shell PLC, Class B

    79,345       1,129,320  

RSA Insurance Group PLC

    26,865       161,617  

Sage Group PLC (The)

    29,681       294,325  

Segro PLC

    24,032       306,589  

Severn Trent PLC

    7,659       239,147  

Smith & Nephew PLC

    18,625       379,431  

Smiths Group PLC

    12,197       228,963  

SSE PLC

    20,090       338,665  

Standard Chartered PLC(a)

    60,852       319,719  

Taylor Wimpey PLC

    102,247       167,707  

Tesco PLC

    198,837       582,251  

Unilever PLC

    22,565       1,347,518  

United Utilities Group PLC

    18,445       205,281  

Vodafone Group PLC

    546,915       816,066  

Whitbread PLC(a)

    6,132       207,642  

WPP PLC

    27,484       237,579  
   

 

 

 
        39,161,133  
 

 

 

19  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States — 65.7%            

3M Co.

    11,511     $ 1,876,523  

Abbott Laboratories

    35,802       3,919,245  

AbbVie Inc.

    36,046       3,452,125  

ABIOMED Inc.(a)

    1,123       345,457  

Accenture PLC, Class A

    12,632       3,030,796  

Activision Blizzard Inc.

    16,166       1,350,184  

Adobe Inc.(a)

    9,828       5,045,597  

Advance Auto Parts Inc.

    1,589       248,377  

Advanced Micro Devices Inc.(a)

    23,359       2,121,464  

AES Corp. (The)

    15,554       276,084  

Aflac Inc.

    15,144       550,030  

Agilent Technologies Inc.

    6,833       686,170  

AGNC Investment Corp.

    16,653       234,974  

Air Products & Chemicals Inc.

    4,543       1,327,737  

Akamai Technologies Inc.(a)

    3,266       380,260  

Albemarle Corp.

    2,497       227,252  

Alexandria Real Estate Equities Inc.

    2,353       396,198  

Alexion Pharmaceuticals Inc.(a)

    4,628       528,610  

Align Technology Inc.(a)

    1,616       479,920  

Alleghany Corp.

    353       195,760  

Allegion PLC

    1,870       193,339  

Alliant Energy Corp.

    4,792       259,487  

Allstate Corp. (The)

    6,387       593,991  

Alnylam Pharmaceuticals Inc.(a)

    2,814       373,249  

Alphabet Inc., Class A(a)

    6,075       9,899,395  

Alphabet Inc., Class C, NVS(a)

    6,164       10,073,086  

Altria Group Inc.

    37,926       1,658,883  

Amazon.com Inc.(a)

    8,556       29,526,414  

Ameren Corp.

    5,280       417,701  

American Electric Power Co. Inc.

    10,908       859,878  

American Express Co.

    13,525       1,374,005  

American Financial Group Inc./OH

    2,188       146,268  

American International Group Inc.

    17,769       517,789  

American Tower Corp.

    9,293       2,315,351  

American Water Works Co. Inc.

    4,347       614,405  

Ameriprise Financial Inc.

    2,458       385,414  

AmerisourceBergen Corp.

    3,368       326,797  

AMETEK Inc.

    5,305       534,213  

Amgen Inc.

    12,073       3,058,332  

Amphenol Corp., Class A

    6,295       691,191  

Analog Devices Inc.

    7,647       893,781  

Annaly Capital Management Inc.

    29,599       217,553  

ANSYS Inc.(a)

    2,036       690,224  

Anthem Inc.

    5,168       1,454,895  

Aon PLC, Class A(b)

    4,919       983,751  

Apple Inc.

    351,724         45,386,465  

Applied Materials Inc.

    19,978       1,230,645  

Arch Capital Group Ltd.(a)

    8,322       262,476  

Archer-Daniels-Midland Co.

    12,113       542,178  

Arista Networks Inc.(a)

    1,107       247,359  

Arrow Electronics Inc.(a)

    2,177       171,025  

Arthur J Gallagher & Co.

    3,691       388,662  

Assurant Inc.

    2,044       248,469  

AT&T Inc.

    142,565       4,249,863  

Atmos Energy Corp.

    3,073       306,747  

Autodesk Inc.(a)

    4,630       1,137,591  

Autoliv Inc.

    2,687       210,500  

Automatic Data Processing Inc.

    9,358       1,301,604  

AutoZone Inc.(a)

    510       610,118  

Avalara Inc.(a)

    3,487       461,714  
Security   Shares     Value  
United States (continued)            

AvalonBay Communities Inc.

    2,671     $ 422,178  

Avantor Inc.(a)

    15,084       340,446  

Avery Dennison Corp.

    2,460       283,859  

Baker Hughes Co.

    15,528       221,740  

Ball Corp.

    7,192       578,021  

Bank of America Corp.

    157,148       4,044,990  

Bank of New York Mellon Corp. (The)

    16,864       623,631  

Baxter International Inc.

    9,971       868,175  

Becton Dickinson and Co.

    5,544       1,345,917  

Berkshire Hathaway Inc., Class B(a)

    28,034       6,112,533  

Best Buy Co. Inc.

    4,800       532,368  

Biogen Inc.(a)

    3,536       1,017,095  

BioMarin Pharmaceutical Inc.(a)

    4,351       339,509  

BlackRock Inc.(d)

    3,115       1,850,902  

Blackstone Group Inc. (The), Class A

    13,646       722,556  

Boeing Co. (The)

    10,875       1,868,542  

Booking Holdings Inc.(a)

    778       1,486,330  

BorgWarner Inc.

    6,174       250,603  

Boston Properties Inc.

    3,368       292,578  

Boston Scientific Corp.(a)

    28,721       1,178,135  

Bristol-Myers Squibb Co.

    45,673       2,840,861  

Broadcom Inc.

    8,111       2,815,734  

Broadridge Financial Solutions Inc.

    1,748       240,175  

Brown & Brown Inc.

    4,841       224,622  

Brown-Forman Corp., Class B, NVS

    6,537       478,312  

Bunge Ltd.

    3,462       157,936  

Burlington Stores Inc.(a)

    1,046       205,989  

Cable One Inc.

    172       316,537  

Cabot Oil & Gas Corp.

    8,392       159,196  

Cadence Design Systems Inc.(a)

    6,537       725,019  

Campbell Soup Co.

    4,546       239,165  

Capital One Financial Corp.

    9,886       682,431  

Cardinal Health Inc.

    6,399       324,813  

CarMax Inc.(a)

    3,891       416,065  

Carnival Corp.

    12,236       201,649  

Carrier Global Corp.

    16,733       499,480  

Catalent Inc.(a)

    3,313       306,453  

Caterpillar Inc.

    10,963       1,560,145  

Cboe Global Markets Inc.

    2,429       222,958  

CBRE Group Inc., Class A(a)

    7,029       330,574  

CDK Global Inc.

    4,361       203,310  

CDW Corp./DE

    2,844       323,221  

Celanese Corp.

    2,622       265,215  

Centene Corp.(a)

    12,086       741,114  

CenterPoint Energy Inc.

    14,260       286,198  

CenturyLink Inc.

    21,034       226,116  

Cerner Corp.

    6,775       497,082  

CF Industries Holdings Inc.

    6,358       207,462  

CH Robinson Worldwide Inc.

    2,994       294,310  

Charles Schwab Corp. (The)

    24,243       861,354  

Charter Communications Inc., Class A(a)(b)

    2,945       1,812,971  

Cheniere Energy Inc.(a)

    4,988       259,625  

Chevron Corp.

    37,745       3,167,938  

Chipotle Mexican Grill Inc.(a)

    552       723,275  

Chubb Ltd.

    8,390       1,048,750  

Church & Dwight Co. Inc.

    7,166       686,718  

Cigna Corp.

    7,822       1,387,388  

Cincinnati Financial Corp.

    3,368       267,453  

Cintas Corp.

    1,847       615,494  

Cisco Systems Inc.

    83,418           3,521,908  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  20


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States (continued)            

Citigroup Inc.

    42,541     $     2,174,696  

Citizens Financial Group Inc.

    12,164       314,683  

Citrix Systems Inc.

    2,354       341,801  

Clorox Co. (The)

    2,641       590,263  

CME Group Inc.

    7,212       1,268,374  

CMS Energy Corp.

    6,300       381,087  

Coca-Cola Co. (The)

    81,094       4,016,586  

Cognex Corp.

    3,712       256,833  

Cognizant Technology Solutions Corp., Class A

    11,508       769,425  

Colgate-Palmolive Co.

    17,135       1,358,120  

Comcast Corp., Class A

    89,801       4,023,983  

Comerica Inc.

    4,078       161,203  

Conagra Brands Inc.

    11,161       428,136  

Concho Resources Inc.

    4,416       229,544  

ConocoPhillips

    22,020       834,338  

Consolidated Edison Inc.

    7,135       509,011  

Constellation Brands Inc., Class A

    3,461       638,485  

Cooper Companies Inc. (The)

    644       202,461  

Copart Inc.(a)

    4,628       478,165  

Corning Inc.

    12,544       407,178  

Corteva Inc.

    15,051       429,706  

CoStar Group Inc.(a)

    870       738,282  

Costco Wholesale Corp.

    8,991       3,125,811  

Coupa Software Inc.(a)

    1,220       399,843  

Crowdstrike Holdings Inc., Class A(a)

    2,615       328,784  

Crown Castle International Corp.

    8,665       1,414,561  

Crown Holdings Inc.(a)

    4,268       327,996  

CSX Corp.

    15,732       1,202,869  

Cummins Inc.

    3,368       698,018  

CVS Health Corp.

    26,098       1,621,208  

Danaher Corp.

    13,118       2,708,473  

Darden Restaurants Inc.

    2,825       244,843  

Datadog Inc., Class A(a)

    2,703       225,836  

DaVita Inc.(a)

    2,576       223,494  

Deere & Co.

    5,801       1,218,558  

Dell Technologies Inc., Class C(a)

    4,707       311,039  

Delta Air Lines Inc.

    3,866       119,266  

Dentsply Sirona Inc.

    4,988       223,812  

DexCom Inc.(a)

    2,031       864,008  

Diamondback Energy Inc.

    3,710       144,542  

Digital Realty Trust Inc.

    5,355       833,506  

Discover Financial Services

    6,808       361,369  

Discovery Inc., Class A(a)(b)

    3,008       66,372  

Discovery Inc., Class C, NVS(a)

    7,856       156,884  

DISH Network Corp., Class A(a)

    5,929       210,598  

DocuSign Inc.(a)

    3,215       716,945  

Dollar General Corp.

    4,942       997,691  

Dollar Tree Inc.(a)

    4,718       454,202  

Dominion Energy Inc.

    15,939       1,250,255  

Domino’s Pizza Inc.

    778       318,171  

Dover Corp.

    2,917       320,403  

Dow Inc.

    15,051       679,101  

DR Horton Inc.

    7,839       559,469  

DTE Energy Co.

    3,818       453,082  

Duke Energy Corp.

    14,106       1,133,276  

Duke Realty Corp.

    9,584       369,463  

DuPont de Nemours Inc.

    15,051       839,244  

E*TRADE Financial Corp.

    4,802       259,788  

Eastman Chemical Co.

    3,368       246,234  

Eaton Corp. PLC

    8,716       889,904  
Security   Shares     Value  
United States (continued)            

eBay Inc.

    16,125     $ 883,327  

Ecolab Inc.

    5,345       1,053,393  

Edison International

    7,034       369,144  

Edwards Lifesciences Corp.(a)

    13,354       1,146,307  

Elanco Animal Health Inc.(a)

    10,032       291,530  

Electronic Arts Inc.(a)

    6,170       860,530  

Eli Lilly & Co.

    17,877       2,652,768  

Emerson Electric Co.

    12,107       841,073  

Entergy Corp.

    3,998       396,362  

EOG Resources Inc.

    11,423       517,919  

EPAM Systems Inc.(a)

    959       313,689  

Equifax Inc.

    2,491       419,161  

Equinix Inc.

    1,775       1,401,859  

Equity Residential

    7,299       412,029  

Essential Utilities Inc.

    4,499       191,208  

Essex Property Trust Inc.

    1,501       324,982  

Estee Lauder Companies Inc. (The), Class A

    4,448       986,211  

Everest Re Group Ltd.

    1,026       225,802  

Evergy Inc.

    4,608       245,238  

Eversource Energy

    6,387       547,430  

Exact Sciences Corp.(a)(b)

    2,980       224,364  

Exelon Corp.

    17,635       650,908  

Expedia Group Inc.

    2,949       289,444  

Expeditors International of Washington Inc.

    3,880       342,953  

Extra Space Storage Inc.

    1,196       127,434  

Exxon Mobil Corp.

    83,747       3,344,855  

F5 Networks Inc.(a)

    1,861       246,266  

Facebook Inc., Class A(a)

    48,332         14,170,942  

FactSet Research Systems Inc.

    731       256,142  

Fair Isaac Corp.(a)

    563       236,905  

Fastenal Co.

    11,085       541,613  

Federal Realty Investment Trust

    2,871       227,498  

FedEx Corp.

    4,988       1,096,562  

Fidelity National Financial Inc.

    6,039       198,260  

Fidelity National Information Services Inc.

    12,815       1,933,143  

Fifth Third Bancorp

    15,983       330,209  

First Republic Bank/CA

    3,908       441,252  

FirstEnergy Corp.

    9,238       264,114  

Fiserv Inc.(a)

    11,886       1,183,608  

FleetCor Technologies Inc.(a)

    1,862       468,200  

FLIR Systems Inc.

    4,246       156,677  

FMC Corp.

    2,620       279,973  

Ford Motor Co.

    73,728       502,825  

Fortinet Inc.(a)

    2,875       379,514  

Fortive Corp.

    6,538       471,455  

Fortune Brands Home & Security Inc.

    3,061       257,369  

Fox Corp., Class A, NVS

    7,776       216,639  

Franklin Resources Inc.

    7,749       163,194  

Freeport-McMoRan Inc.(a)

    29,479       460,167  

Garmin Ltd.

    3,367       348,855  

Gartner Inc.(a)

    2,135       277,166  

General Dynamics Corp.

    4,982       744,062  

General Electric Co.

    178,814       1,133,681  

General Mills Inc.

    12,569       803,788  

General Motors Co.

    25,233       747,654  

Genuine Parts Co.

    3,362       317,507  

Gilead Sciences Inc.

    25,605       1,709,134  

Global Payments Inc.

    5,675       1,002,318  

Globe Life Inc.

    2,822       232,759  

GoDaddy Inc., Class A(a)

    3,052       255,391  
 

 

 

21  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States (continued)            

Goldman Sachs Group Inc. (The)

    6,587     $     1,349,479  

Guidewire Software Inc.(a)

    1,669       187,445  

Halliburton Co.

    16,540       267,617  

Hartford Financial Services Group Inc. (The)

    8,289       335,290  

Hasbro Inc.

    3,129       247,003  

HCA Healthcare Inc.

    5,433       737,367  

Healthpeak Properties Inc.

    10,705       295,886  

HEICO Corp., Class A

    3,171       283,424  

Henry Schein Inc.(a)

    3,471       230,613  

Hershey Co. (The)

    3,458       513,997  

Hess Corp.

    6,257       288,072  

Hewlett Packard Enterprise Co.

    22,304       215,680  

Hilton Worldwide Holdings Inc.

    5,714       516,317  

Hologic Inc.(a)

    6,277       374,862  

Home Depot Inc. (The)

    21,822       6,220,143  

Honeywell International Inc.

    13,353       2,210,589  

Hormel Foods Corp.

    7,029       358,338  

Host Hotels & Resorts Inc.

    17,756       199,400  

Howmet Aerospace Inc.

    9,614       168,437  

HP Inc.

    29,752       581,652  

Humana Inc.

    2,725       1,131,338  

Huntington Bancshares Inc./OH

    26,285       247,342  

IAC/InterActiveCorp.(a)

    1,711       227,546  

IDEXX Laboratories Inc.(a)

    1,951       762,958  

IHS Markit Ltd.

    8,384       670,049  

Illinois Tool Works Inc.

    6,489       1,281,902  

Illumina Inc.(a)

    3,005       1,073,446  

Incyte Corp.(a)

    4,182       402,936  

Ingersoll Rand Inc.(a)

    7,198       252,362  

Insulet Corp.(a)

    1,288       281,106  

Intel Corp.

    85,837       4,373,395  

Intercontinental Exchange Inc.

    11,927       1,267,005  

International Business Machines Corp.

    18,239       2,249,051  

International Flavors & Fragrances Inc.

    1,857       229,878  

International Paper Co.

    8,476       307,425  

Interpublic Group of Companies Inc. (The)

    11,342       201,434  

Intuit Inc.

    5,441       1,879,267  

Intuitive Surgical Inc.(a)

    2,410       1,761,324  

Invitation Homes Inc.

    10,452       299,241  

IPG Photonics Corp.(a)

    1,095       177,094  

IQVIA Holdings Inc.(a)

    3,519       576,236  

Iron Mountain Inc.

    8,286       249,326  

Jack Henry & Associates Inc.

    1,515       250,611  

Jacobs Engineering Group Inc.

    2,891       260,971  

Jazz Pharmaceuticals PLC(a)

    1,575       211,664  

JB Hunt Transport Services Inc.

    2,044       287,264  

JM Smucker Co. (The)

    2,761       331,817  

Johnson & Johnson

    52,815       8,102,349  

Johnson Controls International PLC

    16,064       654,287  

JPMorgan Chase & Co.

    60,863       6,097,864  

Juniper Networks Inc.

    10,720       268,000  

Kansas City Southern

    2,025       368,631  

Kellogg Co.

    5,621       398,585  

Keurig Dr Pepper Inc.

    7,111       212,121  

KeyCorp.

    21,855       269,254  

Keysight Technologies Inc.(a)

    4,199       413,685  

Kimberly-Clark Corp.

    7,299       1,151,490  

Kinder Morgan Inc./DE

    44,497       614,949  

KKR & Co. Inc.

    9,242       331,048  

KLA Corp.

    3,542       726,606  
Security   Shares     Value  
United States (continued)            

Kraft Heinz Co. (The)

    12,735     $ 446,234  

Kroger Co. (The)

    16,807       599,674  

L3Harris Technologies Inc.

    4,631       837,007  

Laboratory Corp. of America Holdings(a)

    2,033       357,300  

Lam Research Corp.

    2,951       992,539  

Lamb Weston Holdings Inc.

    3,152       198,103  

Las Vegas Sands Corp.

    6,283       318,611  

Lennar Corp., Class A

    6,600       493,812  

Lennox International Inc.

    850       238,281  

Liberty Media Corp.-Liberty Formula One, Class C, NVS(a)

    4,921       191,821  

Lincoln National Corp.

    4,988       179,817  

Live Nation Entertainment Inc.(a)

    3,933       223,394  

LKQ Corp.(a)

    7,550       239,637  

Lockheed Martin Corp.

    5,106       1,992,668  

Loews Corp.

    7,119       255,287  

Lowe’s Companies Inc.

    15,488       2,550,719  

Lululemon Athletica Inc.(a)

    2,309       867,422  

LyondellBasell Industries NV, Class A

    5,295       346,717  

M&T Bank Corp.

    2,548       263,106  

Marathon Petroleum Corp.

    13,250       469,845  

Markel Corp.(a)

    331       359,741  

MarketAxess Holdings Inc.

    753       365,913  

Marriott International Inc./MD, Class A

    6,217       639,791  

Marsh & McLennan Companies Inc.

    9,797       1,125,773  

Martin Marietta Materials Inc.

    1,317       267,180  

Marvell Technology Group Ltd.

    13,896       538,887  

Masco Corp.

    5,728       333,942  

Masimo Corp.(a)

    1,133       253,792  

Mastercard Inc., Class A

    18,111       6,487,179  

Match Group Inc(a)

    4,615       515,403  

Maxim Integrated Products Inc.

    5,730       392,161  

McCormick & Co. Inc./MD, NVS

    2,637       543,749  

McDonald’s Corp.

    15,140       3,232,693  

McKesson Corp.

    3,627       556,527  

Medical Properties Trust Inc.

    10,524       195,536  

Medtronic PLC

    26,500       2,847,955  

MercadoLibre Inc.(a)(b)

    872       1,019,010  

Merck & Co. Inc.

    50,895       4,339,817  

MetLife Inc.

    17,207       661,781  

Mettler-Toledo International Inc.(a)

    460       446,559  

MGM Resorts International

    12,337       277,583  

Microchip Technology Inc.

    5,164       566,491  

Micron Technology Inc.(a)

    22,573       1,027,297  

Microsoft Corp.

    145,734         32,867,389  

Mid-America Apartment Communities Inc.

    2,327       272,538  

Moderna Inc.(a)

    5,231       339,440  

Mohawk Industries Inc.(a)

    1,424       131,478  

Molina Healthcare Inc.(a)

    1,135       209,941  

Molson Coors Beverage Co., Class B

    4,273       160,836  

Mondelez International Inc., Class A

    28,021       1,636,987  

MongoDB Inc.(a)(b)

    1,428       333,866  

Monster Beverage Corp.(a)

    8,986       753,566  

Moody’s Corp.

    3,626       1,068,365  

Morgan Stanley

    24,232       1,266,364  

Mosaic Co. (The)

    7,937       144,692  

Motorola Solutions Inc.

    3,636       562,671  

MSCI Inc.

    1,712       639,038  

Mylan NV(a)

    11,895       194,840  

Nasdaq Inc.

    2,501       336,184  

National Oilwell Varco Inc.

    8,749       104,988  
 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  22


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States (continued)            

NetApp Inc.

    5,348     $ 253,442  

Netflix Inc.(a)

    8,899           4,712,554  

Neurocrine Biosciences Inc.(a)

    2,116       246,345  

Newell Brands Inc.

    11,319       180,878  

Newmont Corp.

    15,394       1,035,708  

News Corp., Class A, NVS

    12,450       188,244  

NextEra Energy Inc.

    9,477       2,645,694  

Nielsen Holdings PLC

    8,302       126,855  

Nike Inc., Class B

    23,949       2,679,654  

Norfolk Southern Corp.

    5,249       1,115,570  

Northern Trust Corp.

    4,628       378,987  

Northrop Grumman Corp.

    3,276       1,122,390  

NortonLifeLock Inc.

    12,624       296,916  

NRG Energy Inc.

    7,007       241,111  

Nucor Corp.

    6,489       294,990  

NVIDIA Corp.

    12,307       6,583,999  

Occidental Petroleum Corp.

    16,772       213,675  

Okta Inc.(a)

    2,267       488,244  

Old Dominion Freight Line Inc.

    1,188       240,190  

Omega Healthcare Investors Inc.

    5,333       165,163  

Omnicom Group Inc.

    5,078       274,669  

ON Semiconductor Corp.(a)

    11,890       254,089  

ONEOK Inc.

    8,388       230,502  

Oracle Corp.

    45,269       2,590,292  

O’Reilly Automotive Inc.(a)

    1,499       697,979  

Otis Worldwide Corp.(b)

    8,369       526,410  

PACCAR Inc.

    7,299       626,546  

Packaging Corp. of America

    1,969       199,342  

Palo Alto Networks Inc.(a)

    1,763       453,814  

Parker-Hannifin Corp.

    2,642       544,278  

Paychex Inc.

    7,311       559,072  

Paycom Software Inc.(a)

    1,247       373,427  

PayPal Holdings Inc.(a)

    22,920       4,678,889  

Peloton Interactive Inc., Class A(a)

    3,961       303,690  

Pentair PLC

    4,373       197,397  

People’s United Financial Inc.

    14,779       156,362  

PepsiCo Inc.

    28,097       3,935,266  

Perrigo Co. PLC

    3,095       161,869  

Pfizer Inc.

    113,765       4,299,179  

PG&E Corp.(a)

    21,603       200,044  

Philip Morris International Inc.

    31,503       2,513,624  

Phillips 66

    8,986       525,411  

Pinnacle West Capital Corp.

    3,557       260,906  

Pinterest Inc., Class A(a)

    10,288       378,496  

Pioneer Natural Resources Co.

    2,998       311,582  

PNC Financial Services Group Inc. (The)

    8,839       982,897  

PPG Industries Inc.

    4,516       543,726  

PPL Corp.

    13,449       371,596  

Principal Financial Group Inc.

    6,404       269,672  

Procter & Gamble Co. (The)

    48,865       6,759,495  

Progressive Corp. (The)(b)

    11,920       1,132,877  

Prologis Inc.

    15,499       1,578,728  

Prudential Financial Inc.

    8,469       573,944  

PTC Inc.(a)(b)

    2,846       260,153  

Public Service Enterprise Group Inc.

    10,511       549,095  

Public Storage

    3,188       677,131  

PulteGroup Inc.

    5,909       263,482  

Qorvo Inc.(a)

    2,622       336,324  

QUALCOMM Inc.

    23,144       2,756,450  

Quest Diagnostics Inc.

    3,008       334,610  
Security   Shares     Value  
United States (continued)            

Ralph Lauren Corp.

    1,411     $ 97,119  

Raymond James Financial Inc.

    2,798       211,865  

Raytheon Technologies Corp.

    30,898       1,884,778  

Realty Income Corp.

    6,593       408,964  

Regency Centers Corp.

    4,538       180,204  

Regeneron Pharmaceuticals Inc.(a)

    1,715       1,063,180  

Regions Financial Corp.

    24,982       288,792  

Reinsurance Group of America Inc.

    1,749       160,348  

RenaissanceRe Holdings Ltd.

    1,154       212,036  

Republic Services Inc.

    5,493       509,311  

ResMed Inc.

    3,104       561,141  

RingCentral Inc., Class A(a)

    1,472       428,013  

Robert Half International Inc.

    3,728       198,330  

Rockwell Automation Inc.

    2,300       530,219  

Roku Inc.(a)

    1,940       336,551  

Roper Technologies Inc.

    2,401       1,025,683  

Ross Stores Inc.

    7,294       664,338  

Royal Caribbean Cruises Ltd.

    4,327       297,871  

RPM International Inc.

    2,696       228,540  

S&P Global Inc.

    5,069       1,857,383  

salesforce.com Inc.(a)

    17,296       4,715,754  

Sarepta Therapeutics Inc.(a)(b)

    1,474       215,823  

SBA Communications Corp.

    2,485       760,584  

Schlumberger Ltd.

    23,572       448,104  

Seagate Technology PLC

    5,168       248,012  

Seattle Genetics Inc.(a)

    2,601       411,842  

SEI Investments Co.

    5,354       280,335  

Sempra Energy

    6,085       752,410  

ServiceNow Inc.(a)

    4,001       1,928,562  

Sherwin-Williams Co. (The)

    1,681       1,128,035  

Simon Property Group Inc.

    6,074       412,121  

Sirius XM Holdings Inc.(b)

    40,622       238,451  

Skyworks Solutions Inc.

    3,724       539,421  

Slack Technologies Inc., Class A(a)(b)

    7,423       243,771  

Snap Inc., Class A, NVS(a)

    14,444       326,290  

Southern Co. (The)

    22,006       1,148,273  

Southwest Airlines Co.

    3,554       133,559  

Splunk Inc.(a)

    2,910       638,250  

Square Inc., Class A(a)

    7,054       1,125,536  

SS&C Technologies Holdings Inc.

    5,365       341,858  

Stanley Black & Decker Inc.

    3,368       543,258  

Starbucks Corp.

    22,359       1,888,665  

State Street Corp.

    7,203       490,452  

Stryker Corp.

    6,675       1,322,718  

Sun Communities Inc.

    1,800       268,344  

SVB Financial Group(a)(b)

    1,141       291,389  

Synchrony Financial

    10,591       262,763  

Synopsys Inc.(a)

    3,040       672,752  

Sysco Corp.

    9,776       587,929  

T Rowe Price Group Inc.

    4,994       695,215  

Take-Two Interactive Software Inc.(a)

    2,549       436,363  

Target Corp.

    10,516       1,590,124  

TD Ameritrade Holding Corp.

    5,801       222,642  

TE Connectivity Ltd.

    6,201       599,017  

Teladoc Health Inc.(a)

    1,308       282,123  

Teledyne Technologies Inc.(a)

    784       245,870  

Teleflex Inc.

    1,038       407,882  

Tesla Inc.(a)

    14,660       7,305,371  

Texas Instruments Inc.

    17,994           2,557,847  

Textron Inc.(b)

    6,020       237,369  
 

 

 

23  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI World ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States (continued)            

Thermo Fisher Scientific Inc.

    7,931     $   3,402,240  

Tiffany & Co.

    2,401       294,123  

TJX Companies Inc. (The)

    24,604       1,348,053  

T-Mobile U.S. Inc.(a)

    9,216       1,075,323  

Tractor Supply Co.

    2,272       338,142  

Trade Desk Inc. (The), Class A(a)(b)

    784       377,339  

TransDigm Group Inc.

    1,050       524,654  

TransUnion

    4,457       386,511  

Travelers Companies Inc. (The)

    4,601       533,900  

Trimble Inc.(a)

    6,399       335,372  

Truist Financial Corp.

    28,727       1,114,895  

Twilio Inc., Class A(a)

    2,409       649,852  

Twitter Inc.(a)

    15,274       619,819  

Tyler Technologies Inc.(a)

    697       240,681  

Tyson Foods Inc., Class A

    5,847       367,192  

U.S. Bancorp

    28,353       1,032,049  

Uber Technologies Inc.(a)

    18,157       610,620  

UDR Inc.

    7,029       244,679  

Ulta Beauty Inc.(a)

    1,230       285,581  

Union Pacific Corp.

    13,942       2,682,998  

United Parcel Service Inc., Class B

    14,186       2,321,113  

United Rentals Inc.(a)

    1,769       313,201  

UnitedHealth Group Inc.

    19,177       5,993,771  

Universal Health Services Inc., Class B

    1,583       174,684  

Valero Energy Corp.

    9,076       477,307  

Varian Medical Systems Inc.(a)

    2,128       369,570  

Veeva Systems Inc., Class A(a)

    2,914       822,535  

Ventas Inc.

    7,309       301,204  

VEREIT Inc.

    31,622       212,500  

VeriSign Inc.(a)

    2,626       564,065  

Verisk Analytics Inc.

    2,810       524,543  

Verizon Communications Inc.

    82,078       4,864,763  

Vertex Pharmaceuticals Inc.(a)

    5,348       1,492,734  

VF Corp.

    6,759       444,404  

ViacomCBS Inc., Class B, NVS

    13,057       363,637  

Visa Inc., Class A(b)

    33,093       7,015,385  

Vistra Corp.

    12,093       232,548  

VMware Inc., Class A(a)

    1,681       242,804  

Vornado Realty Trust

    5,051       180,977  

Vulcan Materials Co.

    2,730       327,600  

Walgreens Boots Alliance Inc.

    15,230       579,045  

Walmart Inc.

    28,064       3,896,686  

Walt Disney Co. (The)

    36,648       4,832,772  

Waste Management Inc.

    8,649       985,986  

Waters Corp.(a)

    1,605       347,097  

Wayfair Inc., Class A(a)

    1,231       365,065  

WEC Energy Group Inc.

    7,029       661,288  

Wells Fargo & Co.

    77,048       1,860,709  

Welltower Inc.

    8,305       477,704  

West Pharmaceutical Services Inc.(b)

    1,657       470,522  

Western Digital Corp.

    5,994       230,289  

Western Union Co. (The)

    9,140       215,613  

Westinghouse Air Brake Technologies Corp.

    4,075       271,191  

Westrock Co.

    6,441       195,356  

Weyerhaeuser Co.

    15,504       469,926  

Whirlpool Corp.

    1,385       246,142  

Williams Companies Inc. (The)

    24,888       516,675  

Willis Towers Watson PLC

    2,401       493,478  
Security   Shares     Value  
United States (continued)            

Workday Inc., Class A(a)

    3,191     $ 764,915  

WR Berkley Corp.

    4,328       268,552  

WW Grainger Inc.

    831       303,672  

Wynn Resorts Ltd.

    2,127       186,006  

Xcel Energy Inc.

    10,791       749,705  

Xilinx Inc.

    5,258       547,673  

XPO Logistics Inc.(a)

    2,670       235,681  

Xylem Inc./NY

    3,998       320,560  

Yum! Brands Inc.

    6,484       621,491  

Zebra Technologies Corp., Class A(a)

    1,158       331,802  

Zillow Group Inc., Class C, NVS(a)(b)

    3,354       287,639  

Zimmer Biomet Holdings Inc.

    4,091       576,340  

Zoetis Inc.

    9,607       1,538,081  

Zoom Video Communications Inc., Class A(a)

    2,005       651,825  

Zscaler Inc.(a)

    1,452       208,130  
   

 

 

 
      623,267,798  
   

 

 

 

Total Common Stocks — 99.2%
(Cost: $851,430,725)

941,428,880

 

 

   

 

 

 

Preferred Stocks

   
Germany — 0.2%            

Henkel AG & Co. KGaA, Preference Shares, NVS

    4,273       437,237  

Porsche Automobil Holding SE, Preference Shares, NVS

    3,822       234,488  

Sartorius AG, Preference Shares, NVS

    864       366,822  

Volkswagen AG, Preference Shares, NVS

    4,268       711,236  
   

 

 

 
      1,749,783  
   

 

 

 

Total Preferred Stocks — 0.2%
(Cost: $1,793,378)

 

    1,749,783  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 1.1%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
    0.37%(d)(e)(f)

    8,694,327       8,703,021  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
    0.07%(d)(e)

    1,510,000       1,510,000  
   

 

 

 
      10,213,021  
   

 

 

 

Total Short-Term Investments — 1.1%
(Cost: $10,207,022)

 

    10,213,021  
   

 

 

 

Total Investments in Securities — 100.5%
(Cost: $863,431,125)

 

    953,391,684  

Other Assets, Less Liabilities — (0.5)%

 

    (5,144,252
   

 

 

 

Net Assets — 100.0%

    $   948,247,432  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

C H E D U L E  O F  N V E S T M E N  T S

  24


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI World ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

   
   

Affiliated Issuer

 

 

Value at
08/31/19

 

   

Purchases
at Cost

 

   

Proceeds
from Sales

 

   

Net Realized
Gain (Loss)

 

   

 

Change in
Unrealized
Appreciation
(Depreciation)

 

   

Value at
08/31/20

 

   

Shares
Held at
08/31/20

 

   

Income

 

   

Capital Gain
Distributions from
Underlying Funds

 

       
 

 

   

    

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 7,823,920     $ 889,097 (a)    $     $ (14,552   $ 4,556     $ 8,703,021       8,694,327     $ 101,900 (b)    $             
 

BlackRock Cash Funds: Treasury,
SL Agency Shares

    1,335,000       175,000 (a)                        1,510,000       1,510,000       17,201          
 

BlackRock Inc.

    765,256       1,080,361       (384,436     48,696       341,025       1,850,902       3,115       35,225          
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ 34,144     $ 345,581     $ 12,063,923       $ 154,326     $    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 

Description

 

  

Number of
Contracts

 

    

Expiration
Date

 

    

Notional
Amount
(000)

 

    

 

Value/
Unrealized
Appreciation
(Depreciation)

 

 

 

 

Long Contracts

           

Euro STOXX 50 Index

     17        09/18/20      $ 664      $ 1,536  

FTSE 100 Index

     5        09/18/20        399        (13,329

S&P 500 E-Mini Index

     18        09/18/20        3,149        277,351  

TOPIX Index

     4        09/10/20        609        19,331  
           

 

 

 
            $ 284,889  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

 

Equity
Contracts

 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 298,218  
  

 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 13,329  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
    

 

Equity
Contracts

 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 91,076  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 293,459  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

25  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI World ETF

 

   

Futures contracts:

  

Average notional value of contracts — long

   $ 4,002,226  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 941,428,880        $        $        $ 941,428,880  

Preferred Stocks

     1,749,783                            1,749,783  

Money Market Funds

     10,213,021                            10,213,021  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 953,391,684        $        $        $ 953,391,684  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 298,218        $        $        $ 298,218  

Liabilities

                 

Futures Contracts

     (13,329                          (13,329
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 284,889        $        $        $ 284,889  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E  O F  N V E T M E N T  S

  26


 

Statements of Assets and Liabilities

August 31, 2020

 

   

iShares

MSCI

Frontier 100
ETF

   

iShares

MSCI World

ETF

 

 

 

ASSETS

   

Investments in securities, at value (including securities on loan)(a):

   

Unaffiliated(b)

  $ 363,954,906     $ 941,327,761  

Affiliated(c)

    700,350       12,063,923  

Cash

    412,608       8,297  

Foreign currency, at value(d)

    7,736,587       1,238,251  

Cash pledged:

   

Futures contracts

    1,072,000       227,000  

Collateral — OTC derivatives

    260,000        

Foreign currency collateral pledged:

   

Futures contracts(e)

          129,593  

Receivables:

   

Investments sold

    2,720,727       1,684,369  

Securities lending income — Affiliated

    19       4,249  

Dividends

    374,010       1,575,892  

Tax reclaims

          350,010  
 

 

 

   

 

 

 

Total assets

    377,231,207       958,609,345  
 

 

 

   

 

 

 

LIABILITIES

   

Collateral on securities loaned, at value

    16,592       8,710,933  

Payables:

   

Investments purchased

    2,611,617       1,450,745  

Variation margin on futures contracts

    223,735       14,637  

Investment advisory fees

    239,990       185,598  

Unrealized depreciation on:

   

Forward foreign currency exchange contracts

    370,010        
 

 

 

   

 

 

 

Total liabilities

    3,461,944       10,361,913  
 

 

 

   

 

 

 

NET ASSETS

  $ 373,769,263     $ 948,247,432  
 

 

 

   

 

 

 

NET ASSETS CONSIST OF:

   

Paid-in capital

  $ 538,042,778     $ 881,738,126  

Accumulated earnings (loss)

    (164,273,515     66,509,306  
 

 

 

   

 

 

 

NET ASSETS

  $ 373,769,263     $ 948,247,432  
 

 

 

   

 

 

 

Shares outstanding

    14,550,000       9,200,000  
 

 

 

   

 

 

 

Net asset value

  $ 25.69     $ 103.07  
 

 

 

   

 

 

 

Shares authorized

    500 million       500 million  
 

 

 

   

 

 

 

Par value

  $ 0.001     $ 0.001  
 

 

 

   

 

 

 

(a) Securities loaned, at value

  $ 15,303     $ 8,150,728  

(b) Investments, at cost — Unaffiliated

  $ 325,936,434     $ 851,756,678  

(c)  Investments, at cost — Affiliated

  $ 700,349     $ 11,674,447  

(d) Foreign currency, at cost

  $ 9,035,849     $ 1,206,113  

(e) Foreign currency collateral pledged, at cost

  $     $ 129,397  

See notes to financial statements.

 

 

27  

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Statements of Operations

Year Ended August 31, 2020

 

   

iShares

MSCI

Frontier 100

ETF

   

iShares

MSCI World

ETF

 

 

 

INVESTMENT INCOME

   

Dividends — Unaffiliated

  $ 18,682,302     $ 18,616,289  

Dividends — Affiliated

    3,694       52,426  

Securities lending income — Affiliated — net

    330       101,900  

Other income — Unaffiliated

    2,550        

Foreign taxes withheld

    (1,155,083     (839,610
 

 

 

   

 

 

 

Total investment income

    17,533,793       17,931,005  
 

 

 

   

 

 

 

EXPENSES

   

Investment advisory fees

    3,404,850       2,007,056  

Commitment fees

    6,857        

Miscellaneous

    264       264  

Interest expense

    11,809        
 

 

 

   

 

 

 

Total expenses

    3,423,780       2,007,320  
 

 

 

   

 

 

 

Net investment income

    14,110,013       15,923,685  
 

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

   

Net realized gain (loss) from:

   

Investments — Unaffiliated(a)

    (31,819,422     (18,161,906

Investments — Affiliated

    (6     (14,552

In-kind redemptions — Unaffiliated

    47,071       38,639,143  

In-kind redemptions — Affiliated

          48,696  

Futures contracts

    326,432       91,076  

Foreign currency transactions

    (513,195     40,066  
 

 

 

   

 

 

 

Net realized gain (loss)

    (31,959,120     20,642,523  
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

   

Investments — Unaffiliated

    (34,249,051     50,557,618  

Investments — Affiliated

    (2     345,581  

Futures contracts

    282,681       293,459  

Forward foreign currency exchange contracts

    (370,010      

Foreign currency translations

    (1,284,948     76,866  
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    (35,621,330     51,273,524  
 

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    (67,580,450     71,916,047  
 

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (53,470,437   $ 87,839,732  
 

 

 

   

 

 

 

(a) Net of foreign capital gain tax of

  $ 13,900     $  

See notes to financial statements.    

 

 

I N A N C I A L  T A T E M E N T  S

  28


 

Statements of Changes in Net Assets

 

    iShares
MSCI Frontier 100 ETF
    iShares
MSCI World ETF
 
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/20
    Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 14,110,013     $ 18,179,111     $ 15,923,685     $ 13,549,947  

Net realized gain (loss)

    (31,959,120     (20,321,660     20,642,523       52,961,213  

Net change in unrealized appreciation (depreciation)

    (35,621,330     31,730,659       51,273,524       (45,742,348
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (53,470,437     29,588,110       87,839,732       20,768,812  
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (11,997,936     (19,147,709     (16,143,838     (14,268,219
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase (decrease) in net assets derived from capital share transactions

    (57,630,046     (37,018,194     230,092,080       73,716,261  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (123,098,419     (26,577,793     301,787,974       80,216,854  

Beginning of year

    496,867,682       523,445,475       646,459,458       566,242,604  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 373,769,263     $ 496,867,682     $ 948,247,432     $ 646,459,458  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

29  

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Financial Highlights  

(For a share outstanding throughout each period)

 

    iShares MSCI Frontier 100 ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

             $ 28.97                $ 28.29                $ 30.62                $ 24.20                $ 26.20  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.87         1.03         0.87         0.72         0.76  

Net realized and unrealized gain (loss)(b)

      (3.36       0.76         (1.99       6.00         (2.17
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      (2.49       1.79         (1.12       6.72         (1.41
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (0.79       (1.11       (1.21       (0.30       (0.59
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.79       (1.11       (1.21       (0.30       (0.59
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 25.69       $ 28.97       $ 28.29       $ 30.62       $ 24.20  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      (8.44 )%        6.45       (3.92 )%        27.91       (5.45 )% 
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.79       0.79       0.81       0.80       0.79
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      3.27       3.63       2.69       2.65       3.03
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 373,769              $ 496,868       $ 523,445       $ 627,626       $ 407,722  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      25       33       35       32       20
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

 

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

 

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T  S

  30


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI World ETF  
   

Year Ended

08/31/20

   

Year Ended

08/31/19

   

Year Ended

08/31/18

   

Year Ended

08/31/17

    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

             $ 89.79                $ 91.33                $ 82.22                $ 72.15                $ 68.95  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      1.76         1.96         1.84         1.74         1.62  

Net realized and unrealized gain (loss)(b)

      13.35         (1.52       9.15         9.90         3.16  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase from investment operations

      15.11         0.44         10.99         11.64         4.78  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (1.83       (1.98       (1.88       (1.57       (1.58
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (1.83       (1.98       (1.88       (1.57       (1.58
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 103.07       $ 89.79       $ 91.33       $ 82.22       $ 72.15  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      17.04       0.61       13.46       16.29       7.05
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.24       0.24       0.24       0.24       0.24
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      1.90       2.24       2.09       2.25       2.34
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 948,247       $ 646,459       $ 566,243       $ 509,769       $ 288,603  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      7       4       3       3       5
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

 

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

 

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

31  

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Notes to Financial Statements  

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

   
iShares ETF   Diversification  
Classification  

MSCI Frontier 100

  Diversified  

MSCI World

  Diversified  

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

Foreign CurrencyTranslation: 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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security,

 

 

O T E S  T O  I N A N C I A L  T A T E M E NT S

  32


Notes to Financial Statements   (continued)

 

the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

   

Forward foreign currency exchange contracts are valued based on that day’s prevailing forward exchange rate for the underlying currencies.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value

 

 

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Notes to Financial Statements   (continued)

 

of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

                                                                   

 

 

iShares ETF and Counterparty

   
Market Value of
Securities on Loan
 
 
    
Cash Collateral
Received
 
(a) 
   
Non-Cash Collateral
Received
 
 
     Net Amount  

 

 

MSCI Frontier 100

         

Goldman Sachs & Co.

  $ 15,303      $ 15,303     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI World

         

Barclays Capital Inc.

  $ 98,906      $ 98,906     $      $  

BofA Securities, Inc.

    1,141,318        1,141,318               

Citigroup Global Markets Inc.

    191,323        191,323               

Goldman Sachs & Co.

    2,224,557        2,224,557               

JPMorgan Securities LLC

    49,019        49,019               

Morgan Stanley & Co. LLC

    2,195,448        2,195,448               

Nomura Securities International Inc.

    222,106        221,050              (1,056 )(b) 

SG Americas Securities LLC

    521,127        521,127               

TD Prime Services LLC

    257,502        257,502               

UBS AG

    678,054        678,054               

UBS Securities LLC

    95,040        95,040               

Wells Fargo Bank, National Association

    395,493        395,493               

Wells Fargo Securities LLC

    80,835        80,835               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 8,150,728      $ 8,149,672     $      $ (1,056
 

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 
  (b) 

Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

Forward Foreign Currency Exchange Contracts: The iShares MSCI Frontier 100 ETF uses forward foreign currency exchange contracts to hedge the currency exposure of non-U.S. dollar-denominated securities held in its portfolio. A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency against another currency at an agreed upon price and quantity. The contracts are traded over-the-counter (“OTC”) and not on an organized exchange.

 

 

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Notes to Financial Statements   (continued)

 

The contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation or depreciation in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts (“NDFs”) are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a contract changes unfavorably due to movements in the value of the referenced foreign currencies. A fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the fund.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help mitigate its counterparty risk, a fund may enter into an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency, or other events.

The collateral requirements under an ISDA Master Agreement are typically calculated by netting the mark-to-market amount for each transaction under such agreement, and comparing that amount to the value of any collateral currently pledged by a fund and the counterparty. Except for NDFs, the forward foreign currency exchange contracts held by the Funds generally do not require collateral. Cash collateral pledged to the counterparty, if any, is presented as cash pledged as collateral for OTC derivatives on the statement of assets and liabilities. Cash received as collateral from the counterparty may be reinvested in money market funds, including those managed by the Funds’ investment adviser, or its affiliates. Such collateral, if any, is presented in the statement of assets and liabilities as affiliated investments at value and as a liability for cash received as collateral on OTC derivatives. To the extent amounts due to the Funds from the counterparty are not fully collateralized, contractually or otherwise, each Fund bears the risk of loss from counterparty non-performance. Each Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

For financial reporting purposes, each Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the statement of assets and liabilities.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on the average daily net assets of each Fund as follows:

 

 

iShares ETF

 

 

Investment Advisory Fee

 

 

 

MSCI Frontier 100

    0.79

MSCI World

    0.24  

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement,

 

 

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Notes to Financial Statements  (continued)

 

will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

   
iShares ETF  

Fees Paid

to BTC

 

 

MSCI Frontier 100

  $            81  

MSCI World

    26,612  

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

       
iShares ETF   Purchases      Sales     

 

Net Realized

Gain (Loss)

 

 

MSCI World

  $ 9,260,376      $ 9,888,621      $ (2,450,369

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

 

iShares ETF

  Purchases      Sales  

 

MSCI Frontier 100

  $   106,710,471      $   171,904,240  

MSCI World

    66,236,069        56,936,294  

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

     
iShares ETF  

In-kind

Purchases

    

In-kind

Sales

 

MSCI Frontier 100

  $        270,117      $      2,256,829  

MSCI World

    492,122,467        272,519,302  

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions, were reclassified to the following accounts:

 

 

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  36


Notes to Financial Statements  (continued)

 

     
iShares ETF   Paid-in Capital     

Accumulated

Earnings (Loss)

 

MSCI Frontier 100

    $    (274,208)      $          274,208  

MSCI World

    38,116,062        (38,116,062

The tax character of distributions paid was as follows:

 

     
iShares ETF  

Year Ended

08/31/20

    

Year Ended

08/31/19

 

MSCI Frontier 100

    

Ordinary income

  $ 11,997,936      $ 19,147,709  
 

 

 

    

 

 

 

MSCI World

    

Ordinary income

  $ 16,143,838      $ 14,268,219  
 

 

 

    

 

 

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

         

iShares ETF

   

Undistributed

Ordinary Income

 

 

    

Non-expiring
Capital Loss

Carryforwards

 
 

(a) 

    

Net Unrealized

Gains (Losses)

 

(b) 

     Total  

MSCI Frontier 100

  $          1,908,486      $ (178,681,296    $     12,499,295        $  (164,273,515

MSCI World

    3,186,856        (24,330,017      87,652,467        66,509,306  

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the characterization of corporate actions.

 

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

         
iShares ETF   Tax Cost     

Gross Unrealized

Appreciation

    

Gross Unrealized

Depreciation

    

Net Unrealized

Appreciation

(Depreciation)

 

MSCI Frontier 100

  $ 350,485,153      $ 50,069,115      $ (36,269,022    $     13,800,093  

MSCI World

    865,829,506        177,936,183        (90,354,674      87,581,509  

 

9.

LINE OF CREDIT

The iShares MSCI Frontier 100 ETF, along with certain other iShares funds (“Participating Funds”), is a party to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on July 15, 2021. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1, including the Fund, and $200 million with respect to Tier 2. The Fund may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Credit Agreement.

For the year ended August 31, 2020, the maximum amount borrowed, the average daily borrowing and the weighted average interest rate, if any, under the credit agreement were as follows:

 

       
iShares ETF  

Maximum

Amount

Borrowed

    

Average

Borrowing

    

Weighted

Average

Interest Rates

 

MSCI Frontier 100

  $ 5,350,000      $ 907,690        1.25

 

 

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Notes to Financial Statements  (continued)

 

10.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the schedule of investments.

 

 

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Notes to Financial Statements  (continued)

 

Certain Funds invest a significant portion of their assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Funds’ investments.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

11.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
   

Year Ended

08/31/20

   

Year Ended

08/31/19

 
 

 

 

   

 

 

 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

MSCI Frontier 100

       

Shares sold

    400,000     $ 12,960,707       450,000     $ 13,475,673  

Shares redeemed

    (3,000,000     (70,590,753     (1,800,000     (50,493,867
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease

    (2,600,000   $ (57,630,046     (1,350,000   $ (37,018,194
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI World

       

Shares sold

    5,500,000     $ 514,328,676       3,800,000     $ 312,550,041  

Shares redeemed

    (3,500,000     (284,236,596     (2,800,000     (238,833,780
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    2,000,000     $ 230,092,080       1,000,000     $ 73,716,261  
 

 

 

   

 

 

   

 

 

   

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

12.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

 

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Notes to Financial Statements  (continued)

 

13.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

O T E S  T O  I N A N C I A L  T A T E M E N T S

  40


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares MSCI Frontier 100 ETF and iShares MSCI World ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares MSCI Frontier 100 ETF and iShares MSCI World ETF (two of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

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Important Tax Information  (unaudited)

 

For corporate shareholders, the percentage of ordinary income distributions paid during the fiscal year ended August 31, 2020 that qualified for the dividends-received deduction were as follows:

 

   
iShares ETF  

Dividends-Received

Deduction

 

MSCI World

    57.50 %  

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

   
iShares ETF  

Qualified Dividend  

Income   

 

MSCI Frontier 100

  $ 4,478,486    

MSCI World

    17,481,968    

The following maximum amounts are hereby designated as qualified business income for individuals for the fiscal year ended August 31, 2020:

 

   
iShares ETF  

Qualified Business  

Income  

 

MSCI World

  $  113,026    

For the fiscal year ended August 31, 2020, the iShares MSCI Frontier 100 ETF earned foreign source income and paid foreign taxes which it intends to pass through to its shareholders:

 

     
iShares ETF  

Foreign Source

Income Earned

    

Foreign  

Taxes Paid  

 

MSCI Frontier 100

  $  18,692,553      $ 1,157,896    

 

 

M P O R T A N T  A X  N F O R  M A T I O N

  42


Board Review and Approval of Investment Advisory Contract

 

iShares MSCI Frontier 100 ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI World ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

 

O A R D  E V I E W  A N D  P  P R O V A L  O F  N V E S T M E N T  D V I S O R Y  O N T R A C T

  44


Board Review and Approval of Investment Advisory Contract  (continued)

 

service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

 

O A R D  E V I E W  A N D  P  P R O V A L  O F  N V E S T M E N T  D V I S O R Y  O N T R A C T

  46


Supplemental Information  (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

     
    Total Cumulative Distributions 
for the Fiscal Year
    % Breakdown of the Total Cumulative
Distributions for the Fiscal Year
 
iShares ETF   Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
    Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
 

MSCI World(a)

  $ 1.833480     $     $ 0.000956     $ 1.834436       100         0 %(b)      100

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 
  (b) 

Rounds to less than 1%.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (the “Directive”) imposes detailed and prescriptive obligations on fund managers established in the European Union (the “EU”). These do not currently apply to managers established outside of the EU, such as BFA (the “Company”). Rather, non-EU managers are only required to comply with certain disclosure, reporting and transparency obligations of the Directive if such managers market a fund to EU investors.

The Company has registered the iShares MSCI Frontier 100 ETF (the “Fund”) to be marketed to EU investors in the United Kingdom, the Netherlands, Finland, Sweden and Luxembourg.

Report on Remuneration

The Company is required under the Directive to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to both (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Fund.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area.As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well defined pay-for-performance philosophy, and compensation programmes which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

 

 

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Supplemental Information  (unaudited) (continued)

 

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2019 was USD 41.83 thousand. This figure is comprised of fixed remuneration of USD 19.34 thousand and variable remuneration of USD 22.49 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 5.33 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 0.63 thousand.

 

 

U P P L E M E N T A L  N F O R M A T  I O N

  48


 

Director and Officer Information  

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFA or its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       

    Name (Age)

 

  

Position(s)

 

  

Principal Occupation(s)

During the Past 5 Years

 

  

Other Directorships Held by Director

 

Robert S. Kapito(a) (63)    Director (since 2009).    President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).
Salim Ramji(b) (50)    Director (since 2019).    Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

 

(a)  

Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b)  

Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

 

Independent Directors
       

    Name (Age)

 

  

Position(s)

 

  

Principal Occupation(s)

During the Past 5 Years

 

  

Other Directorships Held by Director

 

Cecilia H. Herbert (71)    Director (since 2005);
Independent Board Chair (since 2016).
   Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).
Jane D. Carlin (64)    Director (since 2015); Risk Committee Chair
(since 2016).
   Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).
Richard L. Fagnani (65)    Director (since 2017); Audit Committee Chair
(since 2019).
  

Partner, KPMG LLP (2002-2016).

   Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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Director and Officer Information  (continued)

 

Independent Directors (continued)
       

    Name (Age)

 

  

Position(s)

 

  

Principal Occupation(s)

During the Past 5 Years

 

  

Other Directorships Held by Director

 

John E. Kerrigan (65)    Director (since 2005); Nominating and Governance and Equity Plus Committee Chairs (since 2019).    Chief Investment Officer, Santa Clara University (since 2002).    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).
Drew E. Lawton (61)    Director (since 2017); 15(c) Committee Chair
(since 2017).
   Senior Managing Director of New York Life Insurance Company (2010-2015).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).
John E. Martinez (59)    Director (since 2003); Securities Lending Committee Chair (since 2019).    Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).    Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).
Madhav V. Rajan (56)    Director (since 2011); Fixed Income Plus Committee Chair (since 2019).    Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).
          Officers     
     

    Name (Age)

 

  

Position(s)

 

  

Principal Occupation(s)

During the Past 5 Years

 

Armando Senra (49)    President (since 2019).    Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).
Trent Walker (46)    Treasurer and Chief Financial Officer (since 2020).    Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.
Charles Park (53)    Chief Compliance Officer (since 2006).    Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).
Deepa Damre (45)    Secretary (since 2019).    Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).
Scott Radell (51)    Executive Vice President (since 2012).    Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).
Alan Mason (59)    Executive Vice President (since 2016).    Managing Director, BlackRock, Inc. (since 2009).
Marybeth Leithead (57)    Executive Vice President (since 2019).    Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

I R E C T O R  A N D  F F I C E R   N F O R M A T I O N

  50


General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

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Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
ADR    American Depositary Receipt
GDR    Global Depositary Receipt
JSC    Joint Stock Company
NVS    Non-Voting Shares

 

Counterparty Abbreviations
BOA    Bank of America N.A.
CITI    Citibank N.A.
 
Currency Abbreviations
NGN    Nigerian Naira
USD    United States Dollar

 

 

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  52


 

 

 

 

Want to know more?

iShares.com    |     1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-811-0820

 

 

LOGO

  

LOGO         


 

LOGO

  AUGUST 31, 2020

 

   2020 Annual Report

 

iShares, Inc.

 

·  

iShares MSCI Global Agriculture Producers ETF | VEGI | NYSE Arca

·  

iShares MSCI Global Energy Producers ETF | FILL | NYSE Arca

·  

iShares MSCI Global Gold Miners ETF | RING | NASDAQ

·  

iShares MSCI Global Metals & Mining Producers ETF | PICK | Cboe BZX

·  

iShares MSCI Global Silver and Metals Miners ETF | SLVP | Cboe BZX

 

 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock, Inc.

 

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020
     
      6-Month     12-Month 
   

U.S. large cap equities
(S&P 500® Index)

  19.63%   21.94%
   

U.S. small cap equities
(Russell 2000® Index)

  6.57    6.02 
   

International equities
(MSCI Europe, Australasia, Far East Index)

  7.10    6.13 
   

Emerging market equities
(MSCI Emerging Markets Index)

  11.23      14.49   
   

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

  0.34    1.26 
   

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

  4.67    8.93 
   

U.S. investment grade bonds
(Bloomberg Barclays U.S. Aggregate Bond Index)

  2.98    6.47 
   

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

  0.29    3.15 
   

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2%

Issuer Capped Index)

  3.04    4.65 
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
 

 

 

2  

H I S  A G E   I S   N O T  A R T   O F  O U R  U N D  E P O R T


Table of Contents

 

      Page  

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     15  

Shareholder Expenses

     15  

Schedules of Investments

     16  

Financial Statements

  

Statements of Assets and Liabilities

     32  

Statements of Operations

     34  

Statements of Changes in Net Assets

     36  

Financial Highlights

     39  

Notes to Financial Statements

     44  

Report of Independent Registered Public Accounting Firm

     53  

Important Tax Information (Unaudited)

     54  

Board Review and Approval of Investment Advisory Contract

     55  

Supplemental Information

     57  

Director and Officer Information

     58  

General Information

     60  

Glossary of Terms Used in this Report

     61  

 

 

 


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

A R K E T   O V E R V I E W

  4


Fund Summary as of August 31, 2020    iShares® MSCI Global Agriculture Producers ETF

 

Investment Objective

The iShares MSCI Global Agriculture Producers ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in the business of agriculture, as represented by the MSCI ACWI Select Agriculture Producers Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
           1 Year      5 Years      Since
Inception
 

Fund NAV

    8.41      5.60      3.55       8.41      31.34      34.89

Fund Market

    9.27        5.73        3.59         9.27        32.11        35.32  

Index

    8.45        5.63        3.60               8.45        31.48        35.46  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

 

 

LOGO

The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
    $ 1,000.00        $ 1,133.60        $ 2.09             $ 1,000.00        $ 1,023.20        $ 1.98          0.39

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

5  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Global Agriculture Producers ETF

 

Portfolio Management Commentary

Stocks of global agriculture producers advanced despite a deep global recession driven by coronavirus-related restrictions on travel and business. Broad global food prices increased slightly during the reporting period, although the rise belied price volatility stemming from dramatic supply and demand shifts during the pandemic. Prices of agricultural commodities like meat and milk declined sharply in early 2020 as restaurant and school closures led to acutely lower demand. Sugar and corn prices, key ingredients in ethanol production, declined due to lower gasoline consumption amid global travel restrictions. Meanwhile, limited labor availability and business closures pressured supply.

Agricultural commodities prices generally rebounded in the summer of 2020 as restrictions eased and demand increased. Sugar and corn prices rose as easing travel restrictions increased ethanol demand. Despite production disruptions at slaughterhouses, which constrained supply, meat prices remained low amid stagnant global demand. Commodities, which are generally priced in U.S. dollars, benefited from the U.S. dollar’s deprecation amid unprecedented stimulus measures that drove interest rates to historic lows.

Reflecting these conditions, the industrials sector in the U.S. and Japan drove the majority of the Index’s return. Machinery producers benefited from government stimulus and higher investment in innovative farm equipment designed to increase productivity and reduce production costs as farmers sought to mitigate the effects of lower crop prices. Expectations of resilient demand for equipment drove expanded investments in new manufacturing facilities amid increased housing construction as consumers fled crowded cities in search of more space during the pandemic.

Food products companies supported the consumer staples sector’s contribution, particularly in China and the U.S. Chinese pork producers benefited from decreased production and hoarding by consumers during lockdowns, along with the ongoing effects of African swine fever, leading supplies to dwindle and prices to sharply increase.

On the downside, Canadian chemicals producers in the materials sector detracted from the Index’s performance. Sales of potash fertilizer used for growing crops such as corn declined amid lower ethanol production, as travel restrictions limited demand for fuel.

Portfolio Information

 

ALLOCATION BY SECTOR

Sector   Percent of  
Total Investments(a)

Fertilizers & Agricultural Chemicals

    30.3%  

Agricultural & Farm Machinery

    28.4     

Packaged Foods & Meats

    21.2     

Agricultural Products

    20.1     
   

TEN LARGEST GEOGRAPHIC ALLOCATION

Country/Geographic Region    
Percent of  
Total Investments
 
(a) 

United States

    51.0%  

Japan

    7.4     

Norway

    6.9     

Canada

    5.9     

China

    4.0     

Malaysia

    2.9     

India

    2.8     

Hong Kong

    2.5     

Saudi Arabia

    2.3     

Italy

    2.2     
 

 

  (a) 

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  6


Fund Summary as of August 31, 2020    iShares® MSCI Global Energy Producers ETF

 

Investment Objective

The iShares MSCI Global Energy Producers ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in the business of energy exploration and production, as represented by the MSCI ACWI Select Energy Producers Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
           1 Year      5 Years      Since
Inception
 

Fund NAV

    (28.92 )%       (3.93 )%       (5.13 )%        (28.92 )%       (18.16 )%       (36.37 )% 

Fund Market

    (28.82      (4.07      (5.14       (28.82      (18.75      (36.41

Index

    (29.12      (4.20      (5.32             (29.12      (19.32      (37.45

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

 

LOGO

The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
   

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
    $ 1,000.00        $ 840.20        $ 1.80             $ 1,000.00     $ 1,023.20        $ 1.98          0.39

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

7  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Global Energy Producers ETF

 

Portfolio Management Commentary

Stocks of global energy producers declined sharply for the reporting period in an environment of volatile oil and gas prices and economic uncertainty. Oil prices, which were already low by recent historical standards, began to decline sharply in March 2020 as the coronavirus pandemic’s restrictions and closures led to significantly curtailed economic activity. Demand for oil declined steeply as global trade diminished and industrial output stalled. A production dispute between Russia and Saudi Arabia, two of the world’s largest oil producers, also pressured the price of oil. Despite a moderate rebound near the end of the reporting period, lower oil prices and the onset of a global recession significantly disrupted businesses involved in energy production. Oil producers scaled back production to match declining demand and halted investments in new projects. Meanwhile, OPEC and its allies agreed to production reductions in an attempt to stabilize oil prices.

Natural gas prices also hovered at historic lows, declining significantly even prior to the pandemic due to overproduction and weakening demand prospects. Low prices and pandemic-related economic disruption led natural gas companies to curtail production, which sparked a recovery in prices late in the reporting period, ending slightly higher overall.

Energy companies in the U.S. detracted the most from the Index’s return. The predominance of hydraulic fracturing in the U.S., which is relatively cost-intensive compared to other methods of oil extraction, meant that many companies were particularly sensitive to lower oil prices. Sharply lower revenues and production weighed on integrated oil and gas companies. Despite a reduction in capital expenditures, declining cash flows pressured industry balance sheets in the debt-reliant industry. Oil and gas exploration and production companies also faced headwinds as investments in exploration for new projects declined.

U.K. energy stocks also detracted notably from the Index’s performance. Declining revenues and cash flows led several prominent British integrated oil and gas companies to reduce dividends, making their stocks less attractive to income-seeking investors.

Portfolio Information

 

ALLOCATION BY SECTOR

Sector    
Percent of   
Total Investments(a)
 
 

Integrated Oil & Gas

    60.4%  

Oil & Gas Exploration & Production

    22.6     

Oil & Gas Refining & Marketing

    14.9     

Coal & Consumable Fuels

    2.1     

TEN LARGEST GEOGRAPHIC ALLOCATION

Country/Geographic Region    
Percent of   
Total Investments(a)
 
 

United States

    41.3%  

United Kingdom

    13.3     

France

    7.2     

India

    6.9     

Canada

    5.8     

Russia

    4.7     

China

    2.8     

Brazil

    2.6     

Australia

    2.3     

Japan

    1.8     
 

 

  (a)

Excludes money market funds.

 
  .

 
   

 

 

U N D    S U M M A R Y

  8


Fund Summary as of August 31, 2020    iShares® MSCI Global Gold Miners ETF

 

Investment Objective

The iShares MSCI Global Gold Miners ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in the business of gold mining, as represented by the MSCI ACWI Select Gold Miners Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns            Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
            1 Year     5 Years      Since
Inception
 

Fund NAV

    47.22      26.94      (3.13 )%         47.22     229.59      (23.87 )% 

Fund Market

    47.97        26.93        (3.07        47.97       229.52        (23.48

Index

    47.55        27.25        (2.94              47.55       233.60        (22.62

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

 

LOGO

The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
   

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
      $        1,000.00          $        1,606.50          $        2.56               $      1,000.00       $      1,023.20          $        1.98          0.39

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

9  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Fund Summary as of August 31, 2020  (continued)    iShares® MSCI Global Gold Miners ETF

 

Portfolio Management Commentary

Global gold mining stocks gained significantly for the reporting period, as the price of gold posted new all-time highs and ended the reporting period above $1,900 per ounce. Gold prices increased despite sharp volatility during the coronavirus outbreak. Initial heavy selling by debt-financed gold investors gave way to a strong rally that was largely attributable to the metal’s allure as a store of value amid economic uncertainty.

Leading central banks’ monetary measures, such as near-zero or negative interest rates and large bond-buying programs, further increased the appeal of gold, as the economic stimulus raised the possibility of inflation and reduced the cost of financing gold purchases. Investor demand drove record investments in gold-backed exchange-traded funds (“ETFs”) during the first half of 2020, offsetting a sharp decline in jewelry sales. Central bank gold purchases eased from year-earlier levels in the fourth quarter of 2019 and remained subdued through the first half of 2020.

Despite steadily rising prices, which reached over $2,000 per ounce late in the reporting period, gold supply counterintuitively decreased due to pandemic-related mine closures and reduced recycling activity. Prior to the outbreak, many mining companies announced plans to reduce debt and boost dividend payments instead of investing in new capacity. Increasing costs for finding and mining gold across the globe further limited supply expectations.

From a country perspective, Canadian gold mining companies which represented more than 50% of the Index on average for the reporting period, led contributions to the Index’s return. An industry-leading company effectively managed pandemic-related closures to meet production expectations, and the merger and acquisition market remained active for select deals. U.S. gold mining companies also contributed significantly as an industry-leading company announced that production declines and increased costs due to closures were likely temporary. South African gold mining companies also contributed despite the expectation that pandemic-related declines in production levels could extend into the coming quarters. Notably, all of the country’s mines had reopened by the end of the reporting period.

Portfolio Information

 

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region  

Percent of     

Total Investments(a)

 

Canada

    56.0%  

United States

    19.5     

South Africa

    12.7     

Australia

    6.1     

Russia

    2.4     

United Kingdom

    1.4     

Peru

    1.2     

Other (each representing less than 1%)

    0.7     

TEN LARGEST HOLDINGS

 

Security   Percent of     
Total Investments(a)
 

Newmont Corp.

    18.3%  

Barrick Gold Corp.

    17.9     

Wheaton Precious Metals Corp.

    7.9     

Agnico Eagle Mines Ltd.

    4.5     

Kirkland Lake Gold Ltd.

    4.4     

Gold Fields Ltd.

    4.3     

Newcrest Mining Ltd.

    4.3     

Kinross Gold Corp.

    4.2     

AngloGold Ashanti Ltd.

    4.1     

B2Gold Corp.

    2.7     
 

 

  (a) 

Excludes money market funds.

 

 

 

U N D   S U M M A R Y

     10  


Fund Summary as of August 31, 2020    iShares® MSCI Global Metals & Mining Producers ETF

 

Investment Objective

The iShares MSCI Global Metals & Mining Producers ETF (the “Fund”) seeks to track the investment results of an index composed of global equities of companies primarily engaged in mining, extraction or production of diversified metals, excluding gold and silver, as represented by the MSCI ACWI Select Metals & Mining Producers ex Gold & Silver Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns            Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
            1 Year     5 Years      Since
Inception
 

Fund NAV

    13.00      9.30      (2.78 )%         13.00     56.01      (21.48 )% 

Fund Market

    13.02        9.08        (2.80        13.02       54.43        (21.61

Index

    13.15        9.55        (2.65              13.15       57.76        (20.59

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

 

LOGO

The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual              Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
              

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
      $       1,000.00          $        1,197.90          $        2.15                  $      1,000.00          $      1,023.20          $        1.98          0.39

 

  (a)

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

11  

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Fund Summary as of August 31, 2020  (continued)   

 

iShares® MSCI Global Metals & Mining  Producers ETF

 

Portfolio Management Commentary

Stocks of global metals and mining producers advanced strongly for the reporting period despite a deep global recession precipitated by the coronavirus pandemic. Industrial metals prices, such as copper, steel, and aluminum, were already weakened by slowing global growth and trade tensions at the end of 2019, then declined further following the onset of the coronavirus. Industrial activity and demand for base metals declined first in China, the world’s leading consumer of commodities metals. As the virus spread, supply chain disruptions and closures halted manufacturing globally and constrained supply. Industrial metals prices generally rebounded when social distancing restrictions were eased in the spring of 2020, as optimism about expanding economic activity, most notably in China, drove the resumption of demand. Commodities, which are generally priced in U.S. dollars, also benefited from the U.S. dollar’s deprecation relative to most major currencies amid unprecedented coronavirus stimulus measures that drove interest rates to historic lows.

Australian and U.K. stocks contributed the most to the Index’s return, driven by diversified metals and mining companies. Several diversified Anglo-Australian mining companies increased iron ore production amid strengthening industrial activity in China. Government stimulus encouraged infrastructure projects, driving higher demand and prices for iron ore, a key ingredient used in steelmaking. Higher copper prices and production supported copper mining companies, while rising iron ore prices drove the steel mining industry in Australia. Coronavirus-related closures of Brazilian mines decreased supply, which drove Australian producers to sharply increase iron ore shipments. Consequently, some companies posted record profits and increased dividend payments to shareholders.

Stocks in the U.S. also contributed meaningfully to the Index’s performance, particularly in the copper industry. A copper and gold mining company drove the industry’s contribution, gaining as industrial demand for copper increased while supplies remained limited due to production disruptions in Chile. Sharply higher gold prices, which surpassed $2,000 per ounce for the first time, also contributed to industry gains.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector   Percent of   
Total Investments(a)
 

Diversified Metals & Mining

    54.3%  

Steel

    30.8     

Copper

    8.5     

Aluminum

    3.6     

Precious Metals & Minerals

    2.8     

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region   Percent of   
Total Investments(a)
 

Australia

    30.5%  

United Kingdom

    19.2     

United States

    10.2     

Brazil

    7.1     

Japan

    5.3     

Russia

    3.6     

Canada

    3.4     

South Africa

    2.7     

South Korea

    2.5     

China

    2.2     
 

 

  (a) 

Excludes money market funds.

 

 

 

U N D   S U M M A R Y

  12


Fund Summary as of August 31, 2020    iShares® MSCI Global Silver and Metals Miners ETF

 

Investment Objective

The iShares MSCI Global Silver and Metals Miners ETF (the “Fund”) (formerly the iShares MSCI Global Silver Miners ETF) seeks to track the investment results of an index composed of global equities of companies primarily engaged in the business of silver exploration or metals mining, as represented by the MSCI ACWI Select Silver Miners Investable Market Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns             Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
             1 Year      5 Years     Since
Inception
 

Fund NAV

    62.71      24.73      (2.69 )%          62.71      201.85     (20.87 )% 

Fund Market

    62.60        24.63        (2.68         62.60        200.73       (20.79

Index

    62.36        24.74        (2.72               62.36        202.00       (21.07

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

 

LOGO

The inception date of the Fund was 1/31/12. The first day of secondary market trading was 2/2/12.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
    $         1,000.00          $         1,876.50          $         2.82               $         1,000.00          $         1,023.20          $         1.98          0.39

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

13  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Global Silver and Metals Miners ETF

 

Portfolio Management Commentary

Global silver mining stocks advanced strongly, as the price of silver reached nearly $30.00 per ounce near the end of the reporting period. More than half of all silver production is used for industrial applications, which makes silver both a precious and industrial metal. Following coronavirus-related shutdowns, manufacturing activity slowed sharply, weighing on silver prices. Contracting industrial production in China, which is among the world’s largest consumers of silver for manufacturing, reduced industrial demand. However, robust investment in precious metals drove overall silver demand higher despite weakness in virtually every other segment of demand, including jewelry.

Silver prices began to increase in the spring of 2020, reaching a seven-year high. The U.S. government’s unprecedented monetary and fiscal stimulus led to ultra-low bond yields, weakening the value of the U.S. dollar relative to many other currencies. In this environment, precious metals like gold and silver became more attractive as a store of value, and investor demand drove the metals’ prices sharply higher. Easing restrictions led to rising industrial metals prices as optimism about expanding economic activity, most notably in China, drove the resumption of industrial demand. Meanwhile, pandemic-related mine closures exacerbated ongoing supply constraints and led to further price gains.

Canadian mining companies, which represented nearly 68% of the Index on average during the reporting period, drove the Index’s performance due to the sharp increase in silver prices. Several Canadian mining stocks with exposure to rising gold prices further supported the Index’s performance. Silver and gold deposits are often found in the same base ore material, so many mining companies have stakes in both metals. Streaming companies that finance mine development and receive a portion of output at below-market prices benefited from steep appreciation in precious metals prices.

Silver and gold mining stocks in the U.S. also bolstered the Index’s return. Despite mine closures during the pandemic, higher production and rising prices bolstered profit growth for U.S. metals and mining companies. South Africa’s gold mining industry contributed modestly, driven by the rising price of gold.

Portfolio Information

 

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region   Percent of   
Total Investments(a)
 

 

Canada

    67.6%  

United States

    18.5     

Mexico

    5.6     

United Kingdom

    2.9     

Japan

    2.9     

South Africa

    1.0     

Other (each representing less than 1%)

    1.5     

TEN LARGEST HOLDINGS

 

Security   Percent of   
Total Investments(a)
 

 

Pan American Silver Corp.

    18.3%  

Hecla Mining Co.

    7.6     

Newmont Corp.

    6.5     

SSR Mining Inc.

    6.3     

Industrias Penoles SAB de CV

    5.6     

First Majestic Silver Corp.

    4.6     

Coeur Mining Inc.

    4.4     

Eldorado Gold Corp.

    4.3     

Silvercorp Metals Inc.

    3.6     

Fortuna Silver Mines Inc.

    3.5     
 

 

  (a) 

Excludes money market funds.

 

 

 

U N D  U M M A R Y

  14


About Fund Performance

 

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not trade in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

15  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments

August 31, 2020

  

iShares® MSCI Global Agriculture Producers ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Argentina — 0.1%            

Adecoagro SA(a)

    7,771     $ 39,321  
   

 

 

 
Australia — 1.3%            

Australian Agricultural Co. Ltd.(a)

    20,330       15,712  

Costa Group Holdings Ltd.

    26,790       68,551  

Elders Ltd.

    10,925       81,119  

Inghams Group Ltd.

    22,648       53,933  

Nufarm Ltd./Australia(a)

    20,634       61,497  

Select Harvests Ltd.

    7,201       29,024  

Tassal Group Ltd.

    14,877       40,158  
   

 

 

 
      349,994  
Brazil — 0.3%            

Sao Martinho SA

    13,300       58,598  

SLC Agricola SA

    7,687       35,199  
   

 

 

 
      93,797  
Canada — 5.9%            

Ag Growth International Inc.

    1,425       39,099  

Nutrien Ltd.

    41,534       1,539,973  

Rogers Sugar Inc.

    6,631       24,275  
   

 

 

 
      1,603,347  
China — 4.0%            

Beijing Dabeinong Technology Group Co. Ltd., Class A

    17,100       28,387  

China BlueChemical Ltd., Class H

    138,000       20,299  

China Huishan Dairy Holdings Co. Ltd.(a)(b)

    295,050       1  

China Modern Dairy Holdings Ltd.(a)

    133,000       20,078  

COFCO Meat Holdings Ltd.(c)

    171,000       79,872  

Fujian Sunner Development Co. Ltd.,
Class A(a)

    5,700       22,370  

Heilongjiang Agriculture Co. Ltd., Class A

    7,600       22,370  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    12,200       113,109  

Inner Mongolia Yili Industrial Group Co. Ltd., Class A

    26,600       162,882  

Jiangsu Yangnong Chemical Co. Ltd., Class A

    1,900       25,386  

Jiangxi Zhengbang Technology Co. Ltd., Class A

    11,400       41,361  

Muyuan Foodstuff Co. Ltd., Class A

    16,390       210,105  

New Hope Liuhe Co. Ltd., Class A

    19,000       105,415  

Shandong Hualu Hengsheng Chemical Co. Ltd., Class A

    5,700       22,370  

Sinofert Holdings Ltd.

    152,000       14,317  

Tongwei Co. Ltd., Class A

    19,000       67,687  

Wens Foodstuffs Group Co. Ltd., Class A

    28,120       101,327  

Yuan Longping High-Tech Agriculture Co. Ltd., Class A(a)

    5,700       16,919  
   

 

 

 
            1,074,255  
France — 0.1%            

Vilmorin & Cie SA

    494       28,063  
   

 

 

 
Germany — 1.0%            

K+S AG, Registered

    14,231       99,326  

KWS Saat SE & Co. KGaA

    817       70,644  

Suedzucker AG

    5,168       105,813  
   

 

 

 
      275,783  
Hong Kong — 2.5%            

Ausnutria Dairy Corp. Ltd.

    41,000       67,397  

WH Group Ltd.(d)

    693,500       598,636  
   

 

 

 
      666,033  
India — 2.7%            

Balrampur Chini Mills Ltd.

    8,987       18,003  

Bayer CropScience Ltd./India

    785       62,015  

Chambal Fertilizers and Chemicals Ltd.

    7,448       15,016  
Security   Shares     Value  
India (continued)            

Coromandel International Ltd.

    5,111     $ 52,775  

EID Parry India Ltd.(a)

    4,446       17,314  

Escorts Ltd.

    4,370       64,570  

Kaveri Seed Co. Ltd.(a)

    1,919       15,065  

KRBL Ltd.

    3,477       12,374  

Rallis India Ltd.

    2,983       11,902  

Tata Consumer Products Ltd.

    31,445       227,419  

UPL Ltd.

    36,328       249,705  
   

 

 

 
      746,158  
Indonesia — 1.2%            

Astra Agro Lestari Tbk PT

    34,200       23,896  

Charoen Pokphand Indonesia Tbk PT(a)

    537,700       232,619  

Inti Agri Resources Tbk PT(a)(b)

    2,230,700       5,471  

Japfa Comfeed Indonesia Tbk PT

    338,200       28,333  

Perusahaan Perkebunan London Sumatra Indonesia Tbk PT

    222,300       14,960  

Sawit Sumbermas Sarana Tbk PT(a)

    216,600       12,791  
   

 

 

 
      318,070  
Ireland — 0.1%            

Origin Enterprises PLC

    9,348       38,458  
   

 

 

 
Israel — 0.8%            

ICL Group Ltd.

    51,528       192,015  

Israel Corp. Ltd. (The)(a)

    285       33,978  
   

 

 

 
      225,993  
Italy — 2.2%            

CNH Industrial NV(a)

    74,708       592,728  
   

 

 

 
Japan — 7.3%            

Chubu Shiryo Co. Ltd.

    1,900       29,169  

Hokuto Corp.

    1,900       38,557  

Iseki & Co. Ltd.

    1,500       16,394  

Kubota Corp.

    75,200       1,359,053  

Kumiai Chemical Industry Co. Ltd.

    6,200       60,337  

Maruha Nichiro Corp.

    2,600       58,794  

Mitsui Sugar Co. Ltd.

    1,300       23,709  

NH Foods Ltd.

    5,800       262,803  

Nihon Nohyaku Co. Ltd.

    1,900       8,941  

Nippon Beet Sugar Manufacturing Co. Ltd.

    300       5,194  

Sakata Seed Corp.

    2,200       72,299  

Starzen Co. Ltd.

    300       11,160  

Taki Chemical Co. Ltd.

    300       16,748  

YAMABIKO Corp.

    2,600       26,479  
   

 

 

 
            1,989,637  
Malaysia — 2.9%            

FGV Holdings Bhd

    119,700       35,345  

Genting Plantations Bhd

    19,000       45,339  

IOI Corp. Bhd

    182,400       195,296  

Kuala Lumpur Kepong Bhd

    32,300       175,709  

Leong Hup International Berhad

    100,700       19,823  

QL Resources Bhd

    53,205       122,619  

Sime Darby Plantation Bhd

    150,100       183,774  
   

 

 

 
      777,905  
Netherlands — 0.4%            

ForFarmers NV

    2,508       16,227  

OCI NV(a)(c)

    7,714       104,895  
   

 

 

 
      121,122  
Norway — 6.9%            

Austevoll Seafood ASA

    6,802       63,215  

Bakkafrost P/F(a)

    3,667       231,142  
 

 

 

S C H E D U L E   O F   I N V E S T M E N T S

  16


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Agriculture Producers ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Norway (continued)            

Grieg Seafood ASA

    3,762     $ 38,409  

Leroy Seafood Group ASA

    21,717       138,190  

Mowi ASA

    30,396       598,428  

Norway Royal Salmon ASA

    971       24,751  

Salmar ASA(a)

    4,123       224,964  

Yara International ASA

    12,939       545,710  
   

 

 

 
            1,864,809  
Pakistan — 0.3%            

Engro Corp. Ltd./Pakistan

    19,022       34,229  

Engro Fertilizers Ltd.

    38,521       14,692  

Fauji Fertilizer Co. Ltd.

    40,346       26,311  

Millat Tractors Ltd.

    1,915       10,252  
   

 

 

 
      85,484  
Poland — 0.1%            

Grupa Azoty SA(a)

    3,382       24,799  
   

 

 

 
Russia — 0.4%            

PhosAgro PJSC, GDR, Registered Shares(e)

    9,880       117,770  
   

 

 

 
Saudi Arabia — 2.3%            

Almarai Co. JSC

    18,297       261,982  

National Agriculture Development Co. (The)(a)

    3,648       31,223  

Saudi Arabian Fertilizer Co.

    14,820       327,581  
   

 

 

 
      620,786  
Singapore — 2.1%            

Bumitama Agri Ltd.

    26,600       9,685  

China XLX Fertiliser Ltd.

    19,000       6,202  

First Resources Ltd.

    39,900       38,151  

Golden Agri-Resources Ltd.

    476,900       50,861  

Japfa Ltd.

    26,640       12,246  

Wilmar International Ltd.

    140,600       450,880  
   

 

 

 
      568,025  
South Africa — 0.2%            

Astral Foods Ltd.

    2,888       22,720  

Oceana Group Ltd.

    5,795       21,523  
   

 

 

 
      44,243  
South Korea — 0.1%            

Dongwon Industries Co. Ltd.

    95       17,794  

Harim Holdings Co. Ltd.

    2,204       12,079  

Namhae Chemical Corp.

    1,406       9,741  
   

 

 

 
      39,614  
Sweden — 0.1%            

Scandi Standard AB(a)

    3,230       28,012  
   

 

 

 
Taiwan — 0.5%            

Charoen Pokphand Enterprise

    10,000       23,244  

Taiwan Fertilizer Co. Ltd.

    57,000       105,485  
   

 

 

 
      128,729  
Thailand — 1.2%            

Charoen Pokphand Foods PCL, NVDR

    285,000       295,325  

GFPT PCL, NVDR

    34,200       14,176  

Khon Kaen Sugar Industry PCL, NVDR

    95,054       6,230  
   

 

 

 
      315,731  
United Kingdom — 0.7%            

Cranswick PLC

    3,781       188,834  
   

 

 

 
United States — 50.7%            

AGCO Corp.

    4,636       329,619  

American Vanguard Corp.

    2,071       29,305  
Security   Shares     Value  
United States (continued)            

Archer-Daniels-Midland Co.

    40,546     $ 1,814,839  

Bunge Ltd.

    10,355       472,395  

Cal-Maine Foods Inc.(a)

    2,736       105,582  

CF Industries Holdings Inc.

    15,599       508,995  

Corteva Inc.

    54,663       1,560,629  

Darling Ingredients Inc.(a)

    11,818       377,821  

Deere & Co.

    21,698       4,557,882  

FMC Corp.

    9,462       1,011,109  

Fresh Del Monte Produce Inc.

    2,337       54,195  

Ingredion Inc.

    4,902       394,317  

Lamb Weston Holdings Inc.

    10,678       671,112  

Lindsay Corp.

    779       77,846  

Mosaic Co. (The)

    26,353       480,415  

Pilgrim’s Pride Corp.(a)

    4,541       72,656  

Sanderson Farms Inc.

    1,463       171,113  

Scotts Miracle-Gro Co. (The)

    3,040       512,331  

Toro Co. (The)

    7,790       586,431  
   

 

 

 
      13,788,592  
   

 

 

 

Total Common Stocks — 98.4%
(Cost: $25,788,783)

      26,756,092  
   

 

 

 

Preferred Stocks

   
Chile — 1.0%            

Sociedad Quimica y Minera de Chile SA, Class B, Preference Shares

    8,341       261,371  
   

 

 

 

Total Preferred Stocks — 1.0%
(Cost: $229,448)

      261,371  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 0.8%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 0.37%(f)(g)(h)

    178,959       179,138  

BlackRock Cash Funds: Treasury, SL Agency Shares, 0.07%(f)(g)

    20,000       20,000  
   

 

 

 
      199,138  
   

 

 

 

Total Short-Term Investments — 0.8%
(Cost: $199,075)

      199,138  
   

 

 

 

Total Investments in Securities — 100.2%
(Cost: $26,217,306)

      27,216,601  

Other Assets, Less Liabilities — (0.2)%

      (42,032
   

 

 

 

Net Assets — 100.0%

    $   27,174,569  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(c) 

All or a portion of this security is on loan.

(d) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(e) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(f) 

Affiliate of the Fund.

(g) 

Annualized 7-day yield as of period-end.

(h) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

17  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI Global Agriculture Producers ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
08/31/19
       Purchases
at Cost
       Proceeds
from Sales
     Net Realized
Gain (Loss)
       Change in
Unrealized
Appreciation
(Depreciation)
       Value at
08/31/20
       Shares
Held at
08/31/20
       Income      Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 327,494        $        $ (148,967 )(a)     $ 576        $ 35        $ 179,138          178,959        $ 6,884 (b)     $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

     21,000                   (1,000 )(a)                          20,000          20,000          270         
               

 

 

      

 

 

      

 

 

           

 

 

    

 

 

 
                $ 576        $ 35        $ 199,138             $ 7,154      $  
               

 

 

      

 

 

      

 

 

           

 

 

    

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

      Level 1              Level 2              Level 3      Total  

Investments

           

Assets

           

Common Stocks

   $ 26,750,620      $      $ 5,472      $ 26,756,092  

Preferred Stocks

     261,371                      261,371  

Money Market Funds

     199,138                      199,138  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 27,211,129      $      $ 5,472      $ 27,216,601  
  

 

 

    

 

 

    

 

 

    

 

 

 

See notes to financial statements.

 

 

S C H E D U L E   O F   I N V E S T M E N T S

  18


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Global Energy Producers ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Argentina — 0.1%  

YPF SA, ADR(a)

    6,391     $ 35,662  
   

 

 

 
Australia — 2.2%  

Beach Energy Ltd.

    61,254       68,857  

Cooper Energy Ltd.(a)

    56,025       13,673  

New Hope Corp. Ltd.

    18,426       16,216  

Oil Search Ltd.

    71,878       173,825  

Santos Ltd.

    63,412       265,902  

Washington H Soul Pattinson & Co. Ltd.

    3,927       60,785  

Whitehaven Coal Ltd.

    31,981       21,996  

Woodside Petroleum Ltd.

    34,279       496,373  
   

 

 

 
            1,117,627  
Austria — 0.3%  

OMV AG(a)

    5,312       173,180  
   

 

 

 
Brazil — 1.2%  

Enauta Participacoes SA

    2,600       5,332  

Petro Rio SA(a)

    2,928       22,358  

Petroleo Brasileiro SA

    135,200       550,076  
   

 

 

 
      577,766  
Canada — 5.7%  

Advantage Oil & Gas Ltd.(a)

    6,749       11,240  

ARC Resources Ltd.

    12,616       63,712  

Birchcliff Energy Ltd.

    9,379       11,517  

Cameco Corp.

    14,385       166,819  

Canacol Energy Ltd.

    5,504       14,869  

Canadian Natural Resources Ltd.

    42,911       847,055  

Cenovus Energy Inc.

    37,791       178,666  

Crescent Point Energy Corp.

    19,588       34,427  

Enerplus Corp.

    8,715       23,143  

Freehold Royalties Ltd.

    3,569       11,395  

Frontera Energy Corp.

    2,516       5,272  

Husky Energy Inc.

    12,974       43,912  

Imperial Oil Ltd.

    9,213       152,095  

MEG Energy Corp.(a)

    9,986       27,744  

NexGen Energy Ltd.(a)(b)

    11,703       23,173  

Parex Resources Inc.(a)

    5,229       71,636  

Peyto Exploration & Development Corp.

    5,919       12,947  

PrairieSky Royalty Ltd.

    7,911       57,316  

Seven Generations Energy Ltd., Class A(a)

    10,401       32,889  

Suncor Energy Inc.

    55,112       885,294  

Tourmaline Oil Corp.

    9,405       119,606  

Vermilion Energy Inc.

    5,478       21,778  

Whitecap Resources Inc.

    14,634       28,865  
   

 

 

 
      2,845,370  
China — 2.8%  

China Shenhua Energy Co. Ltd., Class A

    8,300       19,583  

China Shenhua Energy Co. Ltd., Class H

    124,500       207,871  

CNOOC Ltd.

    664,000       755,660  

Guanghui Energy Co. Ltd., Class A(a)

    16,600       7,053  

Inner Mongolia Yitai Coal Co. Ltd., Class B

    41,500       29,050  

PetroChina Co. Ltd., Class A

    45,500       29,429  

PetroChina Co. Ltd., Class H

    744,000       257,275  

Shaanxi Coal Industry Co. Ltd., Class A

    19,200       22,791  

Shanxi Lu’an Environmental Energy Development Co. Ltd., Class A

    8,300       7,635  

Shanxi Meijin Energy Co. Ltd., Class A(a)

    8,300       7,998  

Shanxi Xishan Coal & Electricity Power Co. Ltd., Class A

    10,610       6,537  
Security   Shares     Value  
China (continued)  

Yanzhou Coal Mining Co. Ltd., Class A

    8,300     $ 11,246  

Yanzhou Coal Mining Co. Ltd., Class H

    50,000       38,515  
   

 

 

 
      1,400,643  
Colombia — 0.2%  

Ecopetrol SA

    180,110       105,185  
   

 

 

 
Finland — 1.7%  

Neste OYJ

    15,438       827,331  
   

 

 

 
France — 7.1%  

Etablissements Maurel et Prom SA(a)

    3,154       6,292  

TOTAL SE

    89,474       3,541,914  
   

 

 

 
      3,548,206  
Greece — 0.1%  

Motor Oil Hellas Corinth Refineries SA

    2,100       29,510  
   

 

 

 
Hungary — 0.2%  

MOL Hungarian Oil & Gas PLC(a)

    15,106       85,314  
   

 

 

 
India — 6.8%  

Bharat Petroleum Corp. Ltd.

    25,008       138,549  

Coal India Ltd.

    49,551       90,442  

Hindustan Petroleum Corp. Ltd.

    24,013       65,752  

Indian Oil Corp. Ltd.

    76,028       88,621  

Oil & Natural Gas Corp. Ltd.

    94,039       104,697  

Oil India Ltd.

    9,794       12,607  

Reliance Industries Ltd.

    56,757       1,604,378  

Reliance Industries Ltd., GDR(c)

    22,493       1,302,345  
   

 

 

 
            3,407,391  
Indonesia — 0.3%  

Adaro Energy Tbk PT

    506,300       37,723  

Bukit Asam Tbk PT

    127,100       17,805  

Bumi Resources Tbk PT(a)

    1,120,900       3,848  

Indo Tambangraya Megah Tbk PT

    16,600       9,433  

Medco Energi Internasional Tbk PT(a)

    215,866       8,153  

Sugih Energy Tbk PT(a)(d)

    206,700       0 (e)  

United Tractors Tbk PT

    60,700       95,869  
   

 

 

 
      172,831  
Israel — 0.1%  

Equital Ltd.(a)

    997       19,970  

Naphtha Israel Petroleum Corp. Ltd.(a)

    1,661       6,143  

Oil Refineries Ltd.

    64,932       13,251  

Paz Oil Co. Ltd.

    332       33,757  
   

 

 

 
      73,121  
Italy — 1.8%  

Eni SpA

    92,545       863,298  

Saras SpA(a)

    24,568       17,086  
   

 

 

 
      880,384  
Japan — 1.8%  

Cosmo Energy Holdings Co. Ltd.

    1,836       29,121  

ENEOS Holdings Inc.

    116,200       455,399  

Idemitsu Kosan Co. Ltd.

    6,668       146,885  

Inpex Corp.

    36,900       234,459  

Japan Petroleum Exploration Co. Ltd.

    1,100       19,128  
   

 

 

 
      884,992  
Norway — 1.2%  

DNO ASA(b)

    21,331       13,603  

Equinor ASA

    36,354       593,193  
   

 

 

 
      606,796  
 

 

 

19  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments   (continued)

August 31, 2020

  

iShares® MSCI Global Energy Producers ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Pakistan — 0.1%            

Mari Petroleum Co. Ltd.

    1,660     $ 14,476  

Oil & Gas Development Co. Ltd.

    16,600       11,501  

Pakistan Oilfields Ltd.

    4,697       12,136  

Pakistan Petroleum Ltd.

    16,600       10,172  
   

 

 

 
      48,285  
Philippines — 0.0%            

Petron Corp.

    83,100       5,211  

Pilipinas Shell Petroleum Corp.(a)

    8,300       3,030  

Semirara Mining & Power Corp.

    33,200       6,450  
   

 

 

 
      14,691  
Poland — 0.4%            

Grupa Lotos SA

    3,237       35,700  

Polski Koncern Naftowy ORLEN SA

    10,899       150,448  
   

 

 

 
      186,148  
Portugal — 0.4%            

Galp Energia SGPS SA

    18,260       195,931  
   

 

 

 
Russia — 4.4%            

LUKOIL PJSC

    15,106       1,013,584  

Novatek PJSC, GDR(f)

    3,327       492,729  

Rosneft Oil Co. PJSC

    39,270       197,143  

Rosneft Oil Co. PJSC, GDR(f)

    498       2,530  

Surgutneftegas PJSC

    257,300       126,877  

Surgutneftegas PJSC, ADR

    441       2,191  

Tatneft PJSC

    51,460       378,287  
   

 

 

 
            2,213,341  
Saudi Arabia — 1.6%            

Rabigh Refining & Petrochemical Co.(a)

    7,968       30,338  

Saudi Arabian Oil Co.(c)

    79,431       752,916  
   

 

 

 
      783,254  
South Africa — 0.1%            

Exxaro Resources Ltd.

    9,047       73,257  
   

 

 

 
South Korea — 0.7%            

SK Innovation Co. Ltd.

    2,075       253,283  

S-Oil Corp.

    1,660       78,955  
   

 

 

 
      332,238  
Spain — 0.8%            

Repsol SA

    53,369       422,660  
   

 

 

 
Sweden — 0.3%            

Lundin Energy AB

    6,806       166,817  
   

 

 

 
Thailand — 0.6%            

Bangchak Corp. PCL, NVDR

    41,500       23,602  

Banpu PCL, NVDR

    149,400       27,602  

Esso Thailand PCL, NVDR(a)(b)

    41,500       8,801  

IRPC PCL, NVDR(b)

    431,600       32,450  

PTT Exploration & Production PCL, NVDR

    49,831       142,500  

Thai Oil PCL, NVDR(b)

    41,500       55,338  
   

 

 

 
      290,293  
Turkey — 0.1%            

Tupras Turkiye Petrol Rafinerileri AS(a)

    4,482       48,724  
   

 

 

 
United Arab Emirates — 0.1%            

Dana Gas PJSC

    130,087       25,818  
   

 

 

 
United Kingdom — 13.1%            

Anglo Pacific Group PLC

    6,723       9,542  

BP PLC

    666,200       2,356,686  
Security   Shares     Value  
United Kingdom (continued)            

Cairn Energy PLC(a)

    21,108     $ 39,850  

Diversified Gas & Oil PLC

    21,580       31,900  

Hurricane Energy PLC(a)(b)

    56,881       3,532  

Royal Dutch Shell PLC, Class A

    147,989       2,193,123  

Royal Dutch Shell PLC, Class B

    134,543       1,914,955  

Serica Energy PLC

    6,225       9,952  

Tullow Oil PLC

    48,223       13,249  
   

 

 

 
      6,572,789  
United States — 40.7%            

Antero Resources Corp.(a)

    8,632       27,795  

Apache Corp.(b)

    13,612       201,458  

Arch Resources Inc.

    581       21,886  

Bonanza Creek Energy Inc.(a)

    581       11,643  

Brigham Minerals Inc., Class A

    1,494       17,644  

Cabot Oil & Gas Corp.

    14,442       273,965  

Chevron Corp.

    67,562       5,670,479  

Cimarex Energy Co.

    3,735       103,758  

CNX Resources Corp.(a)

    6,915       75,788  

Concho Resources Inc.

    7,138       371,033  

ConocoPhillips

    38,678       1,465,509  

Continental Resources Inc./OK

    3,346       57,484  

CVR Energy Inc.

    1,079       18,009  

Delek U.S. Holdings Inc.

    2,739       43,084  

Devon Energy Corp.

    13,529       147,060  

Diamondback Energy Inc.

    5,727       223,124  

EOG Resources Inc.

    20,916       948,331  

EQT Corp.

    9,296       147,528  

Exxon Mobil Corp.

    152,720       6,099,637  

Gulfport Energy Corp.(a)

    4,378       3,090  

Hess Corp.

    9,960       458,558  

HollyFrontier Corp.

    5,561       132,741  

Kosmos Energy Ltd.

    15,023       22,084  

Magnolia Oil & Gas Corp., Class A(a)

    4,508       29,032  

Marathon Oil Corp.

    28,827       152,207  

Marathon Petroleum Corp.

    23,572       835,863  

Matador Resources Co.(a)

    3,984       38,764  

Murphy Oil Corp.

    5,312       72,987  

Noble Energy Inc.

    17,264       171,777  

Northern Oil and Gas Inc.(a)

    7,413       5,030  

Occidental Petroleum Corp.

    32,536       414,509  

Ovintiv Inc.

    9,213       102,080  

Par Pacific Holdings Inc.(a)

    1,411       12,247  

Parsley Energy Inc., Class A

    11,122       119,561  

PBF Energy Inc., Class A

    3,735       31,972  

PDC Energy Inc.(a)

    3,592       54,383  

Peabody Energy Corp.

    2,433       6,350  

Pioneer Natural Resources Co.

    5,976       621,086  

Range Resources Corp.

    8,243       61,493  

Southwestern Energy Co.(a)(b)

    21,440       59,603  

Talos Energy Inc.(a)

    773       5,805  

Tellurian Inc.(a)(b)

    3,403       3,161  

Texas Pacific Land Trust

    249       131,153  

Valero Energy Corp.

    14,774       776,965  

Viper Energy Partners LP

    2,075       21,123  

W&T Offshore Inc.(a)(b)

    3,320       7,404  

WPX Energy Inc.(a)(b)

    15,189       84,451  
   

 

 

 
          20,360,694  
   

 

 

 

Total Common Stocks — 97.0%
(Cost: $66,491,292)

      48,506,249  
   

 

 

 
 

 

 

C H E D U L E   O F   I N V E S T M E N T S

  20


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Energy Producers ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Preferred Stocks

   
Brazil — 1.4%            

Petroleo Brasileiro SA, Preference Shares, NVS

    174,337     $ 695,645  
   

 

 

 

Russia — 0.3%

   

Surgutneftegas PJSC, Preference Shares, NVS

    257,300       128,892  
   

 

 

 

Total Preferred Stocks — 1.7%
(Cost: $769,379)

      824,537  
   

 

 

 

Short-Term Investments

   

Money Market Funds — 0.9%

   

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(g)(h)(i)

    458,895       459,354  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(g)(h)

    10,000       10,000  
   

 

 

 
      469,354  
   

 

 

 

Total Short-Term Investments — 0.9%
(Cost: $469,260)

      469,354  
   

 

 

 

Total Investments in Securities — 99.6%
(Cost: $67,729,931)

      49,800,140  

Other Assets, Less Liabilities — 0.4%

      184,404  
   

 

 

 

Net Assets — 100.0%

    $     49,984,544  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

Rounds to less than $1.

(f) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(g) 

Affiliate of the Fund.

(h) 

Annualized 7-day yield as of period-end.

(i) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
08/31/19
       Purchases
at Cost
       Proceeds
from Sales
     Net Realized
Gain (Loss)
       Change in
Unrealized
Appreciation
(Depreciation)
       Value at
08/31/20
       Shares
Held at
08/31/20
       Income      Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 792,619        $        $ (333,950 )(a)     $ 627        $ 58        $ 459,354          458,895        $ 12,943 (b)     $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

     91,000                   (81,000 )(a)                         10,000          10,000          729         
               

 

 

      

 

 

      

 

 

           

 

 

    

 

 

 
                $ 627        $ 58        $ 469,354             $ 13,672      $  
               

 

 

      

 

 

      

 

 

           

 

 

    

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

                 

FTSE 100 Index

     2          09/18/20        $ 160        $ (3,263)  

S&P Select Sector Energy E-Mini Index

     12          09/18/20          442          (16,996)  
                 

 

 

 
                  $ (20,259)  
                 

 

 

 

 

 

21  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Energy Producers ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 20,259  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ (137,745)  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ (20,259)  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 347,755  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1                Level 2                Level 3      Total  

 

 

Investments

               

Assets

               

Common Stocks

   $ 48,506,249        $        $ 0 (a)     $ 48,506,249  

Preferred Stocks

     824,537                          824,537  

Money Market Funds

     469,354                          469,354  
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 49,800,140        $        $ 0 (a)     $ 49,800,140  
  

 

 

      

 

 

      

 

 

    

 

 

 

Derivative financial instruments(b)

               

Liabilities

               

Futures Contracts

   $ (20,259      $        $      $ (20,259)  
  

 

 

      

 

 

      

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 
  (b) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E   O F   I N V E S T M  E N T S

  22


Schedule of Investments

August 31, 2020

  

iShares® MSCI Global Gold Miners ETF

(Percentages shown are based on Net Assets)

 

 

Security   Shares     Value  

Common Stocks

   
Australia — 6.1%            

Newcrest Mining Ltd.

    1,026,568     $     24,263,973  

Resolute Mining Ltd.(a)

    3,396,620       2,775,726  

St. Barbara Ltd.

    2,061,304       5,259,308  

Westgold Resources Ltd.(a)

    1,703,646       2,683,653  
   

 

 

 
      34,982,660  
Canada — 55.8%            

Agnico Eagle Mines Ltd.

    311,242       25,688,602  

Alacer Gold Corp.(a)

    848,563       5,867,879  

Alamos Gold Inc., Class A

    933,635       9,780,972  

B2Gold Corp.

    2,326,285       15,640,091  

Barrick Gold Corp.

    3,448,002       102,253,193  

Centerra Gold Inc.

    568,061       7,407,311  

Eldorado Gold Corp.(a)

    476,761       5,452,043  

Endeavour Mining Corp.(a)(b)

    310,892       8,628,002  

Equinox Gold Corp.(a)

    294,582       3,854,809  

Gran Colombia Gold Corp.(a)(b)

    106,849       492,033  

IAMGOLD Corp.(a)

    1,307,649       5,630,232  

Kinross Gold Corp.(a)

    2,675,904       23,782,162  

Kirkland Lake Gold Ltd.

    475,820       25,380,475  

New Gold Inc.(a)

    2,367,844       3,889,010  

Premier Gold Mines Ltd.(a)(b)

    949,172       1,996,033  

SSR Mining Inc.(a)(b)

    328,977       7,064,566  

Torex Gold Resources Inc.(a)

    271,289       4,193,377  

Wesdome Gold Mines Ltd.(a)

    355,386       3,933,126  

Wheaton Precious Metals Corp.

    847,309       45,299,931  

Yamana Gold Inc.

    2,158,896       13,387,988  
   

 

 

 
      319,621,835  
Indonesia — 0.3%            

Aneka Tambang Tbk

    26,574,200       1,496,367  
   

 

 

 
Peru — 1.2%            

Cia. de Minas Buenaventura SAA, ADR

    505,508       7,117,553  
   

 

 

 
Russia — 2.3%            

Polymetal International PLC

    493,814       13,408,977  
   

 

 

 
South Africa — 12.7%            

AngloGold Ashanti Ltd.

    802,044       23,418,525  

DRDGOLD Ltd.

    504,926       754,055  

Gold Fields Ltd.

    1,881,251       24,326,756  
Security   Shares     Value  
South Africa (continued)            

Harmony Gold Mining Co. Ltd.(a)

    1,349,509     $ 8,810,990  

Sibanye Stillwater Ltd.(a)

    5,053,629       15,299,971  
   

 

 

 
      72,610,297  
Turkey — 0.4%            

Koza Altin Isletmeleri AS(a)(b)

    209,124       2,208,036  
   

 

 

 
United Kingdom — 1.4%            

Centamin PLC

    2,908,605       8,143,349  
   

 

 

 
United States — 19.5%            

Coeur Mining Inc.(a)

    591,612       5,005,037  

McEwen Mining Inc.(a)(b)

    1,381,495       1,740,684  

Newmont Corp.

    1,557,156       104,765,456  
   

 

 

 
      111,511,177  

Total Common Stocks — 99.7%
(Cost: $397,398,516)

 

    571,100,251  
   

 

 

 
Short-Term Investments  
Money Market Funds — 1.2%  

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(c)(d)(e)

    6,571,648       6,578,219  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(c)(d)

    240,000       240,000  
   

 

 

 
      6,818,219  
   

 

 

 

Total Short-Term Investments — 1.2%
(Cost: $6,815,820)

 

    6,818,219  
   

 

 

 

Total Investments in Securities — 100.9%
(Cost: $404,214,336)

 

    577,918,470  

Other Assets, Less Liabilities — (0.9)%

 

    (5,293,676
   

 

 

 

Net Assets — 100.0%

 

  $   572,624,794  
   

 

 

 

 

(a)

Non-income producing security.

(b)

All or a portion of this security is on loan.

(c)

Affiliate of the Fund.

(d)

Annualized 7-day yield as of period-end.

(e)

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 10,245,320     $     $ (3,668,084 )(a)    $ (585   $ 1,568     $ 6,578,219       6,571,648     $ 70,226 (b)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

    98,000       142,000 (a)                        240,000       240,000       2,154        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (585   $ 1,568     $ 6,818,219       $ 72,380     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold)

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

 

 

23  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Gold Miners ETF

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                       

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 571,100,251        $             —        $             —        $ 571,100,251  

Money Market Funds

     6,818,219                            6,818,219  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 577,918,470        $             —        $             —        $ 577,918,470  
  

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

 

S C H E D U L E   O F   I N V E S T M E N T S

  24


Schedule of Investments

August 31, 2020

  

iShares® MSCI Global Metals & Mining Producers ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Australia — 30.3%  

Alumina Ltd.

    1,039,398     $ 1,206,838  

BHP Group Ltd.

    1,243,340       34,858,694  

BHP Group PLC

    895,804       20,543,950  

BlueScope Steel Ltd.

    214,000       2,008,366  

Champion Iron Ltd.(a)

    129,470       294,908  

Fortescue Metals Group Ltd.

    717,823       9,247,683  

IGO Ltd.

    228,338       748,082  

Iluka Resources Ltd.

    177,192       1,328,769  

Jupiter Mines Ltd.

    499,476       101,582  

Lynas Corp. Ltd.(a)(b)

    334,459       603,532  

Mineral Resources Ltd.

    66,768       1,440,858  

Mount Gibson Iron Ltd.

    171,842       99,762  

Orocobre Ltd.(a)(b)

    88,810       170,766  

OZ Minerals Ltd.

    136,104       1,471,586  

Perenti Global Ltd.

    244,816       218,170  

Pilbara Minerals Ltd.(a)(b)

    711,978       181,657  

Rio Tinto Ltd.

    157,932       11,446,261  

Sandfire Resources Ltd.

    71,690       247,596  

Sims Ltd.

    74,686       447,395  

South32 Ltd.

    2,062,318       3,202,892  

Western Areas Ltd.

    118,556       194,645  
   

 

 

 
        90,063,992  
Austria — 0.4%  

voestalpine AG

    49,006       1,219,648  
   

 

 

 
Belgium — 0.1%  

Bekaert SA

    16,264       329,304  
   

 

 

 
Brazil — 6.0%  

Cia. Siderurgica Nacional SA

    299,600       830,660  

Vale SA

    1,562,288       16,995,816  
   

 

 

 
      17,826,476  
Canada — 3.4%  

Altius Minerals Corp.

    16,692       140,023  

ERO Copper Corp.(a)

    27,606       421,415  

First Quantum Minerals Ltd.

    247,598       2,453,272  

Hudbay Minerals Inc.

    99,082       444,859  

Ivanhoe Mines Ltd., Class A(a)

    257,014       1,015,866  

Labrador Iron Ore Royalty Corp.

    27,178       571,323  

Largo Resources Ltd.(a)(b)

    125,832       103,335  

Lithium Americas Corp.(a)(b)

    20,758       163,139  

Lundin Mining Corp.

    279,056       1,749,789  

Stelco Holdings Inc.(a)(b)

    15,194       110,082  

Teck Resources Ltd., Class B

    202,700       2,339,774  

Turquoise Hill Resources Ltd.(a)

    432,012       477,453  

Wallbridge Mining Co. Ltd.(a)

    215,712       170,523  
   

 

 

 
      10,160,853  
Chile — 0.1%  

CAP SA(a)

    26,750       237,986  
   

 

 

 
China — 2.1%  

Aluminum Corp. of China Ltd., Class A(a)

    342,400       157,973  

Aluminum Corp. of China Ltd., Class H(a)

    1,712,000       419,708  

Angang Steel Co. Ltd., Class A

    149,883       58,866  

Baoshan Iron & Steel Co. Ltd., Class A

    470,863       339,613  

China Hongqiao Group Ltd.

    749,000       483,216  

China Metal Recycling Holdings Ltd. (a)(c)

    132,000       0 (d)  

China Molybdenum Co. Ltd., Class A

    443,100       276,891  

China Molybdenum Co. Ltd., Class H

    1,614,000       656,000  
Security   Shares      Value  
China (continued)  

China Northern Rare Earth Group High-Tech Co. Ltd., Class A(a)

    85,670      $ 154,475  

China Oriental Group Co. Ltd.

    428,000        120,390  

China Zhongwang Holdings Ltd.(a)

    684,800        144,910  

Ganfeng Lithium Co. Ltd., Class A

    21,400        157,817  

GEM Co. Ltd., Class A

    100,799        79,766  

Guangdong HEC Technology Holding Co. Ltd., Class A(a)

    77,100        72,945  

Guangdong Hongda Blasting Co. Ltd., Class A

    21,400        168,722  

Hesteel Co. Ltd., Class A(a)

    278,200        90,172  

Hunan Valin Steel Co. Ltd., Class A

    149,800        106,513  

Inner Mongolia BaoTou Steel Union Co. Ltd., Class A(a)

    1,241,298        210,231  

Inner Mongolia Eerduosi Resources Co. Ltd., Class B

    85,696        74,641  

Jiangsu Shagang Co. Ltd., Class A

    64,200        111,544  

Jiangxi Copper Co. Ltd., Class A

    107,000        244,022  

Jiangxi Copper Co. Ltd., Class H

    428,000        504,754  

Jinchuan Group International Resources Co. Ltd.

    1,498,000        173,958  

Jinduicheng Molybdenum Co. Ltd., Class A

    85,600        78,112  

Maanshan Iron & Steel Co. Ltd.,
Class A(a)

    171,200        70,238  

MMG Ltd.(a)

    990,000        264,421  

Pangang Group Vanadium Titanium & Resources Co. Ltd., Class A(a)

    235,400        74,925  

Sansteel Minguang Co. Ltd. Fujian, Class A

    64,451        65,400  

Shandong Nanshan Aluminum Co. Ltd., Class A

    321,000        124,667  

Shanxi Taigang Stainless Steel Co. Ltd., Class A

    168,900        90,256  

Shougang Fushan Resources Group Ltd.

    856,000        194,391  

Tiangong International Co. Ltd.

    428,000        143,584  

Tongling Nonferrous Metals Group Co. Ltd., Class A

    235,400        78,706  

Xiamen Tungsten Co. Ltd., Class A

    36,599        78,551  

Yintai Gold Co. Ltd., Class A

    64,200        151,475  

Zhejiang Huayou Cobalt Co. Ltd., Class A(a)

    21,400        125,479  
    

 

 

 
       6,347,332  
Finland — 0.1%  

Outokumpu OYJ(a)(b)

    131,396        354,986  
    

 

 

 
France — 0.3%  

APERAM SA

    21,186        627,608  

Eramet SA(a)(b)

    4,066        138,685  
    

 

 

 
       766,293  
Germany — 0.8%  

Aurubis AG

    14,338        1,031,253  

Salzgitter AG(a)

    17,120        276,510  

thyssenkrupp AG(a)

    170,558        1,228,769  
    

 

 

 
           2,536,532  
India — 1.9%  

APL Apollo Tubes Ltd.

    2,140        69,866  

Hindalco Industries Ltd.

    491,130        1,236,040  

Jindal Steel & Power Ltd.(a)

    177,303        494,037  

JSW Steel Ltd.

    366,368        1,342,881  

Mishra Dhatu Nigam Ltd.(e)

    19,902        56,388  

MOIL Ltd.

    29,960        60,016  

National Aluminium Co. Ltd.

    230,050        112,044  

Tata Steel Ltd.

    9,936        55,749  

Tata Steel Ltd., GDR(f)

    129,132        705,061  

Tata Steel Ltd., GDR, New(f)

    1,836        10,025  

Vedanta Ltd.

    658,906        1,151,625  

Vedanta Ltd., ADR

    35,738        250,523  
    

 

 

 
       5,544,255  
Japan — 5.3%  

Asahi Holdings Inc.

    21,400        718,412  
 

 

 

25  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

 

iShares® MSCI Global Metals & Mining Producers ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Japan (continued)  

Daido Steel Co. Ltd.

    15,500     $ 515,960  

Dowa Holdings Co. Ltd.

    21,400       664,935  

Hitachi Metals Ltd.

    90,100       1,351,776  

JFE Holdings Inc.

    214,000       1,620,463  

Kobe Steel Ltd.(a)

    128,400       492,798  

Kyoei Steel Ltd.

    10,100       126,958  

Maruichi Steel Tube Ltd.

    23,500       630,020  

Mitsubishi Materials Corp.

    46,900       985,367  

Mitsui Mining & Smelting Co. Ltd.

    21,400       514,189  

Neturen Co. Ltd.

    21,400       100,497  

Nippon Light Metal Holdings Co. Ltd.

    256,800       450,420  

Nippon Steel Corp.

    342,405       3,372,550  

Sumitomo Metal Mining Co. Ltd.

    98,500       3,006,691  

Toho Titanium Co. Ltd.

    21,400       140,050  

Tokyo Steel Manufacturing Co. Ltd.

    42,800       286,961  

UACJ Corp.

    13,238       242,302  

Yamato Kogyo Co. Ltd.

    21,400       513,988  
   

 

 

 
          15,734,337  
Malaysia — 0.2%  

Press Metal Aluminium Holdings Bhd

    599,200       749,450  
   

 

 

 
Mexico — 1.2%  

Grupo Mexico SAB de CV, Series B

    1,326,800       3,540,397  
   

 

 

 
Netherlands — 1.4%            

AMG Advanced Metallurgical Group NV

    12,412       255,616  

ArcelorMittal SA(a)

    303,024       3,842,183  
   

 

 

 
      4,097,799  
Norway — 0.6%            

Norsk Hydro ASA(a)

    565,174       1,816,398  
   

 

 

 
Peru — 0.6%            

Southern Copper Corp.

    35,524       1,708,704  
   

 

 

 
Poland — 0.8%            

Jastrzebska Spolka Weglowa SA(a)

    24,182       103,523  

KGHM Polska Miedz SA(a)

    58,636       2,187,332  
   

 

 

 
      2,290,855  
Qatar — 0.1%            

Qatar Aluminum Manufacturing Co.

    1,107,022       296,914  
   

 

 

 
Russia — 3.6%            

Alrosa PJSC

    1,089,262       965,430  

Magnitogorsk Iron & Steel Works PJSC

    963,000       488,191  

Mechel PJSC, ADR(a)

    44,940       75,949  

MMC Norilsk Nickel PJSC

    26,648       6,925,469  

Novolipetsk Steel PJSC

    504,150       1,049,946  

Severstal PAO

    87,312       1,095,310  
   

 

 

 
      10,600,295  
Saudi Arabia — 0.6%            

Saudi Arabian Mining Co.(a)

    183,612       1,928,919  
   

 

 

 
South Africa — 2.7%            

African Rainbow Minerals Ltd.

    47,508       596,891  

Anglo American Platinum Ltd.

    22,898       1,708,668  

Impala Platinum Holdings Ltd.

    337,050       3,111,017  

Kumba Iron Ore Ltd.

    26,964       845,149  

Northam Platinum Ltd.(a)

    150,014       1,417,235  

Royal Bafokeng Platinum Ltd.(a)

    62,274       237,278  
   

 

 

 
      7,916,238  
Security   Shares      Value  
South Korea — 2.5%             

Dongkuk Steel Mill Co. Ltd.(a)

    24,396      $ 126,714  

Hyundai Steel Co.

    37,450        791,308  

KISWIRE Ltd.

    3,852        46,046  

Korea Zinc Co. Ltd.

    3,638        1,220,425  

Namsun Aluminum Co. Ltd.(a)

    25,680        111,981  

Poongsan Corp.

    8,132        158,478  

POSCO

    31,244        4,852,697  

Seah Besteel Corp.

    5,350        44,047  

SeAH Steel Holdings Corp.

    1        41  

Young Poong Corp.

    214        88,183  
    

 

 

 
       7,439,920  
Spain — 0.2%             

Acerinox SA(a)

    68,480        556,092  
    

 

 

 
Sweden — 1.6%             

Boliden AB

    115,132        3,442,634  

Granges AB(a)

    32,100        286,203  

SSAB AB, Class A(a)

    100,580        329,555  

SSAB AB, Class B(a)

    257,656        798,514  
    

 

 

 
       4,856,906  
Taiwan — 1.7%             

China Metal Products

    214,011        195,474  

China Steel Corp.

    4,922,612        3,338,615  

Chung Hung Steel Corp.(a)

    434,000        137,855  

Feng Hsin Steel Co. Ltd.

    214,000        415,725  

TA Chen Stainless Pipe

    434,742        314,853  

Tung Ho Steel Enterprise Corp.

    214,000        195,099  

YC INOX Co. Ltd.

    214,000        173,584  

Yieh Phui Enterprise Co. Ltd.(a)

    642,644        208,071  
    

 

 

 
       4,979,276  
Turkey — 0.3%             

Eregli Demir ve Celik Fabrikalari TAS

    588,928        697,847  

Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS, Class D

    322,284        133,573  

Koza Anadolu Metal Madencilik Isletmeleri AS(a)

    81,320        141,998  
    

 

 

 
       973,418  
United Kingdom — 19.1%             

Anglo American PLC

    516,810        12,681,274  

Antofagasta PLC

    166,920        2,400,363  

Central Asia Metals PLC

    71,048        168,380  

Evraz PLC

    218,922        950,313  

Ferrexpo PLC

    127,330        314,381  

Glencore PLC(a)

    4,211,092        9,539,114  

Hill & Smith Holdings PLC

    33,812        550,514  

KAZ Minerals PLC

    101,008        784,419  

Rio Tinto PLC

    472,940        29,350,809  
    

 

 

 
           56,739,567  
United States — 10.1%             

Alcoa Corp.(a)

    77,682        1,135,711  

Allegheny Technologies Inc.(a)

    53,286        443,872  

Arconic Corp.(a)

    40,446        899,924  

Carpenter Technology Corp.

    20,544        432,040  

Century Aluminum Co.(a)(b)

    22,747        224,513  

Cleveland-Cliffs Inc.(a)(b)

    168,846        1,111,007  

Commercial Metals Co.

    50,076        1,045,086  

Compass Minerals International Inc.

    14,373        818,255  

Coronado Global Resources Inc. (e)

    91,612        42,006  

Freeport-McMoRan Inc.(a)

    611,184        9,540,582  

Haynes International Inc.

    5,350        100,259  
 

 

 

C H E D U L E   O F   I N V E S T M E N T S

  26


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Metals & Mining Producers ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States (continued)            

Kaiser Aluminum Corp.

    6,848     $ 440,189  

Materion Corp.

    8,560       467,290  

Nucor Corp.

    127,544       5,798,150  

Reliance Steel & Aluminum Co.

    27,834       2,918,952  

Schnitzer Steel Industries Inc., Class A

    11,556       228,115  

Steel Dynamics Inc.

    89,480       2,641,450  

SunCoke Energy Inc.

    36,166       129,474  

U.S. Steel Corp.(b)

    92,662       725,544  

Warrior Met Coal Inc.

    22,123       342,243  

Worthington Industries Inc.

    16,478       684,331  
   

 

 

 
      30,168,993  
   

 

 

 

Total Common Stocks — 98.1%
(Cost: $322,032,470)

      291,782,135  
   

 

 

 

Preferred Stocks

   
Brazil — 1.1%            

Bradespar SA, Preference Shares, NVS

    85,600       686,404  

Cia. Ferro Ligas da Bahia-Ferbasa, Preference Shares, NVS

    21,400       69,787  

Gerdau SA, Preference Shares, NVS

    470,800       1,638,304  

Metalurgica Gerdau SA, Preference Shares, NVS

    321,000       514,335  

Usinas Siderurgicas de Minas Gerais SA Usiminas, Class A, Preference Shares, NVS

    171,200       316,754  
   

 

 

 
      3,225,584  
   

 

 

 

Total Preferred Stocks — 1.1%
(Cost: $1,980,103)

      3,225,584  
   

 

 

 
Security   Shares     Value  

Short-Term Investments

   
Money Market Funds — 0.5%            

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(g)(h)(i)

    1,606,076     $ 1,607,682  
   

 

 

 

Total Short-Term Investments — 0.5%
(Cost: $1,606,072)

      1,607,682  
   

 

 

 

Total Investments in Securities — 99.7%
(Cost: $325,618,645)

      296,615,401  

Other Assets, Less Liabilities — 0.3%

      778,564  
   

 

 

 

Net Assets — 100.0%

    $ 297,393,965  
   

 

 

 

 

(a)

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(d) 

Rounds to less than $1.

(e)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(f)

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(g)

Affiliate of the Fund.

(h)

Annualized 7-day yield as of period-end.

(i)

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

    Affiliated Issuer    Value at
08/31/19
     Purchases
at Cost
     Proceeds
from Sales
     Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
08/31/20
     Shares
Held at
08/31/20
     Income      Capital Gain
Distributions from
Underlying Funds
       

    

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 3,541,909      $      $ (1,935,416 )(a)     $ 769      $ 420      $ 1,607,682        1,606,076      $ 88,042 (b)     $             
 

BlackRock Cash Funds: Treasury,
SL Agency Shares(c)

     186,000               (186,000 )(a)                                    2,249           
             

 

 

    

 

 

    

 

 

       

 

 

    

 

 

   
              $ 769      $ 420      $ 1,607,682         $ 90,291      $    
             

 

 

    

 

 

    

 

 

       

 

 

    

 

 

   
  (a)

Represents net amount purchased (sold)

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 
  (c)

As of period end, the entity is no longer held.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts
MSCI Emerging Markets E-Mini Index

     29          09/18/20        $ 1,595        $ 14,809  

 

 

27  

2 0 2 0  H A R E S   N N U A L  E P O R T  T O  H A R E H O L D E R  S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Metals & Mining Producers ETF

 

Futures Contracts (continued)

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
     Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

S&P Select Sector Energy E-Mini Index

     2        09/18/20      $ 74      $ (2,104)  
           

 

 

 
            $ 12,705  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 14,809  
  

 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 2,104  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 9,629  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 12,705  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 333,868  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

 

C H E D U L E   O F   I N V E S T M E N T S

  28


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Metals & Mining Producers ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

                                                                                                   

 

 
     Level 1                Level 2                Level 3      Total  

 

 

Investments

               

Assets

               

Common Stocks

   $ 291,782,135        $        $ 0 (a)     $ 291,782,135  

Preferred Stocks

     3,225,584                          3,225,584  

Money Market Funds

     1,607,682                          1,607,682  
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 296,615,401        $        $ 0 (a)     $ 296,615,401  
  

 

 

      

 

 

      

 

 

    

 

 

 

Derivative financial instruments(b)

               

Assets

               

Futures Contracts

   $ 14,809        $        $      $ 14,809  

Liabilities

               

Futures Contracts

     (2,104                        (2,104
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 12,705        $        $      $ 12,705  
  

 

 

      

 

 

      

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 
  (b) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

29  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments

August 31, 2020

  

iShares® MSCI Global Silver and Metals Miners ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Canada — 67.3%            

Agnico Eagle Mines Ltd.

    70,792     $ 5,842,873  

Dundee Precious Metals Inc.

    933,298       6,761,835  

Eldorado Gold Corp.(a)

    939,145       10,739,676  

Endeavour Silver Corp.(a)(b)

    1,057,929       4,425,122  

First Majestic Silver Corp.(a)(b)

    931,092       11,583,715  

Fortuna Silver Mines Inc.(a)

    1,204,159       8,779,700  

Kinross Gold Corp.(a)

    360,868       3,207,223  

Lundin Gold Inc.(a)(b)

    440,662       3,757,439  

MAG Silver Corp.(a)(b)

    485,105       8,231,837  

New Gold Inc.(a)

    4,255,252       6,988,940  

Pan American Silver Corp.

    1,263,661       45,670,054  

Premier Gold Mines Ltd.(a)(b)

    1,483,085       3,118,810  

Seabridge Gold Inc.(a)(b)

    307,686       5,868,220  

Silvercorp Metals Inc.

    1,028,912       8,891,783  

SilverCrest Metals Inc.(a)

    636,136       6,322,546  

SSR Mining Inc.(a)(b)

    735,925       15,803,509  

Victoria Gold Corp.(a)

    192,478       3,057,903  

Wheaton Precious Metals Corp.

    132,165       7,065,976  

Yamana Gold Inc.

    426,508       2,644,909  
   

 

 

 
      168,762,070  
Japan — 2.8%            

Asahi Holdings Inc.

    211,800       7,110,264  
   

 

 

 
Mexico — 5.5%            

Industrias Penoles SAB de CV

    830,265       13,848,498  
   

 

 

 
Peru — 0.9%            

Cia. de Minas Buenaventura SAA, ADR

    150,398       2,117,604  
   

 

 

 
Russia — 0.7%            

Polymetal International PLC

    64,863       1,761,284  
   

 

 

 
South Africa — 1.1%            

Harmony Gold Mining Co. Ltd.(a)

    398,494       2,601,781  
   

 

 

 
Security   Shares     Value  
United Kingdom — 2.9%            

Hochschild Mining PLC(a)

    1,638,265     $ 5,277,692  

SolGold PLC(a)

    5,853,405       2,022,053  
   

 

 

 
      7,299,745  
United States — 18.4%            

Coeur Mining Inc.(a)(b)

    1,295,257       10,957,874  

Hecla Mining Co.

    3,149,826       18,961,953  

Newmont Corp.

    239,878       16,138,992  
   

 

 

 
      46,058,819  
   

 

 

 

Total Common Stocks — 99.6%
(Cost: $179,598,369)

      249,560,065  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 8.8%            

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(c)(d)(e)

    21,921,164       21,943,086  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(c)(d)

    140,000       140,000  
   

 

 

 
      22,083,086  
   

 

 

 

Total Short-Term Investments — 8.8% (Cost: $22,074,085)

      22,083,086  
   

 

 

 

Total Investments in Securities — 108.4% (Cost: $201,672,454)

      271,643,151  

Other Assets, Less Liabilities — (8.4)%

      (20,987,132
   

 

 

 

Net Assets — 100.0%

    $   250,656,019  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period-end.

(e) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

    Affiliated Issuer   

Value at

08/31/19

      

Purchases

at Cost

    

Proceeds

from Sales

      

Net Realized

Gain (Loss)

      

Change in

Unrealized

Appreciation

(Depreciation)

      

Value at

08/31/20

      

Shares

Held at

08/31/20

       Income     

Capital Gain

Distributions from

Underlying Funds

 

      

 

BlackRock Cash Funds: Institutional,
SL Agency Shares

   $ 9,552,703        $ 12,382,992 (a)     $        $ 397        $  6,994        $ 21,943,086          21,921,164        $ 243,117 (b)     $  
 

BlackRock Cash Funds: Treasury,
SL Agency Shares

     35,000          105,000 (a)                                   140,000          140,000          606         
                 

 

 

      

 

 

      

 

 

           

 

 

    

 

 

 
                  $ 397        $ 6,994        $ 22,083,086             $ 243,723      $  
                 

 

 

      

 

 

      

 

 

           

 

 

    

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

C H E D U L E   O F   I N V E S T M E N T S

  30


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Silver and Metals Miners ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

      Level 1      Level 2      Level 3      Total  

Investments

           

Assets

           

Common Stocks

   $ 249,560,065      $      $      $ 249,560,065  

Money Market Funds

     22,083,086                      22,083,086  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 271,643,151      $      $      $ 271,643,151  
  

 

 

    

 

 

    

 

 

    

 

 

 

See notes to financial statements.

 

31  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


 

Statements of Assets and Liabilities

August 31, 2020

 

     iShares
MSCI Global
Agriculture
Producers
ETF
    iShares
MSCI Global
Energy
Producers
ETF
    iShares
MSCI Global
Gold Miners
ETF
     iShares
MSCI Global
Metals &
Mining
Producers
ETF
 

ASSETS

        

Investments in securities, at value (including securities on loan)(a):

        

Unaffiliated(b)

  $ 27,017,463     $ 49,330,786     $ 571,100,251      $ 295,007,719  

Affiliated(c)

    199,138       469,354       6,818,219        1,607,682  

Cash

    3,331       2,945       9,805        588,723  

Foreign currency, at value(d)

    29,473       73,627       495,645        166,055  

Cash pledged:

        

Futures contracts

          57,000              181,000  

Foreign currency collateral pledged:

        

Futures contracts(e)

          9,372               

Receivables:

        

Investments sold

    66,823       543,544       20,095,824        159,547  

Securities lending income — Affiliated

    100       443       5,368        5,830  

Capital shares sold

    243,474                    122,012  

Dividends

    69,363       379,168       723,162        1,623,750  

Tax reclaims

    1,947       3,031              45,742  
 

 

 

   

 

 

   

 

 

    

 

 

 

Total assets

    27,631,112       50,869,270       599,248,274        299,508,060  
 

 

 

   

 

 

   

 

 

    

 

 

 

LIABILITIES

        

Collateral on securities loaned, at value

    178,431       458,408       6,579,629        1,602,911  

Deferred foreign capital gain tax

    8,203       54,363               

Payables:

        

Investments purchased

    261,712       344,466       19,858,612        387,074  

Variation margin on futures contracts

          10,655              37,638  

Investment advisory fees

    8,197       16,834       185,239        86,454  

Foreign taxes

                       18  
 

 

 

   

 

 

   

 

 

    

 

 

 

Total liabilities

    456,543       884,726       26,623,480        2,114,095  
 

 

 

   

 

 

   

 

 

    

 

 

 

NET ASSETS

  $ 27,174,569     $ 49,984,544     $ 572,624,794      $ 297,393,965  
 

 

 

   

 

 

   

 

 

    

 

 

 

NET ASSETS CONSIST OF:

        

Paid-in capital

  $ 30,368,179     $ 74,688,961     $ 462,582,201      $ 379,836,594  

Accumulated earnings (loss)

    (3,193,610     (24,704,417     110,042,593        (82,442,629
 

 

 

   

 

 

   

 

 

    

 

 

 

NET ASSETS

  $ 27,174,569     $ 49,984,544     $ 572,624,794      $ 297,393,965  
 

 

 

   

 

 

   

 

 

    

 

 

 

Shares outstanding

    950,000       4,150,000       16,300,000        10,700,000  
 

 

 

   

 

 

   

 

 

    

 

 

 

Net asset value

  $ 28.60     $ 12.04     $ 35.13      $ 27.79  
 

 

 

   

 

 

   

 

 

    

 

 

 

Shares authorized

    500 million       500 million       500 million        500 million  
 

 

 

   

 

 

   

 

 

    

 

 

 

Par value

  $ 0.001     $ 0.001     $ 0.001      $ 0.001  
 

 

 

   

 

 

   

 

 

    

 

 

 

(a) Securities loaned, at value

  $ 167,982     $ 428,813     $ 6,041,045      $ 1,559,627  

(b) Investments, at cost — Unaffiliated

  $ 26,018,231     $ 67,260,671     $ 397,398,516      $ 324,012,573  

(c)  Investments, at cost — Affiliated

  $ 199,075     $ 469,260     $ 6,815,820      $ 1,606,072  

(d) Foreign currency, at cost

  $ 28,868     $ 72,826     $ 482,266      $ 165,851  

(e) Foreign currency collateral pledged, at cost

  $     $ 9,357     $      $  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T S

  32


 

Statements of Assets and Liabilities  (continued)

August 31, 2020

 

    iShares
MSCI Global
Silver and
Metals
Miners ETF
 

 

 

ASSETS

 

Investments in securities, at value (including securities on loan)(a):

 

Unaffiliated(b)

  $ 249,560,065  

Affiliated(c)

    22,083,086  

Cash

    654  

Foreign currency, at value(d)

    171,134  

Receivables:

 

Investments sold

    16,807,636  

Securities lending income — Affiliated

    29,408  

Dividends

    27,804  
 

 

 

 

Total assets

    288,679,787  
 

 

 

 

LIABILITIES

 

Collateral on securities loaned, at value

    21,932,017  

Payables:

 

Investments purchased

    16,011,322  

Investment advisory fees

    80,429  
 

 

 

 

Total liabilities

    38,023,768  
 

 

 

 

NET ASSETS

  $ 250,656,019  
 

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

  $ 195,454,968  

Accumulated earnings

    55,201,051  
 

 

 

 

NET ASSETS

  $ 250,656,019  
 

 

 

 

Shares outstanding

    14,500,000  
 

 

 

 

Net asset value

  $ 17.29  
 

 

 

 

Shares authorized

    500 million  
 

 

 

 

Par value

  $ 0.001  
 

 

 

 

(a) Securities loaned, at value

  $ 21,332,350  

(b) Investments, at cost — Unaffiliated

  $ 179,598,369  

(c)  Investments, at cost — Affiliated

  $ 22,074,085  

(d) Foreign currency, at cost

  $ 165,395  

See notes to financial statements.

 

 

33  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


 

Statements of Operations

Year Ended August 31, 2020

 

   

iShares

MSCI Global
Agriculture
Producers

ETF

   

iShares

MSCI Global
Energy

Producers

ETF

   

iShares

MSCI Global

Gold Miners

ETF

   

iShares

MSCI Global
Metals &

Mining

Producers

ETF

 

 

 

INVESTMENT INCOME

       

Dividends — Unaffiliated

  $ 565,459     $ 2,302,268     $ 4,154,123     $ 9,338,560  

Dividends — Affiliated

    270       729       2,154       2,249  

Interest — Unaffiliated

          26              

Securities lending income — Affiliated — net

    6,884       12,943       70,226       88,042  

Foreign taxes withheld

    (39,285     (115,891     (292,714     (327,139
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    533,328       2,200,075       3,933,789       9,101,712  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory fees

    93,125       171,388       1,457,942       802,532  

Commitment fees

    40       63             200  

Miscellaneous

    264       264       264       264  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    93,429       171,715       1,458,206       802,996  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    439,899       2,028,360       2,475,583       8,298,716  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — Unaffiliated(a)

    (1,018,566     (4,125,436     (10,367,217     (10,647,167

Investments — Affiliated

    576       627       (585     769  

In-kind redemptions — Unaffiliated

    22,970       1,639,482       29,124,289       1,764,872  

Futures contracts

          (137,745           9,629  

Foreign currency transactions

    3,093       (5,126     (37,056     (217,622
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized gain (loss)

    (991,927     (2,628,198     18,719,431       (9,089,519
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — Unaffiliated(b)

    2,188,399       (10,156,265     125,366,562       24,651,508  

Investments — Affiliated

    35       58       1,568       420  

Futures contracts

          (20,259           12,705  

Foreign currency translations

    1,296       2,714       15,536       22,165  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    2,189,730       (10,173,752     125,383,666       24,686,798  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    1,197,803       (12,801,950     144,103,097       15,597,279  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ 1,637,702     $ (10,773,590   $ 146,578,680     $ 23,895,995  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a)  Net of foreign capital gain tax of

  $     $ 2,120     $     $  

(b)  Net of deferred foreign capital gain tax of

  $ (5,647   $ 54,363     $     $  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T S

  34


 

Statements of Operations  (continued)

Year Ended August 31, 2020

 

   

iShares

MSCI Global
Silver and

Metals

Miners ETF

 

 

 

INVESTMENT INCOME

 

Dividends — Unaffiliated

  $ 696,098  

Dividends — Affiliated

    606  

Securities lending income — Affiliated — net

    243,117  

Foreign taxes withheld

    (71,706
 

 

 

 

Total investment income

    868,115  
 

 

 

 

EXPENSES

 

Investment advisory fees

    460,309  

Miscellaneous

    264  
 

 

 

 

Total expenses

    460,573  
 

 

 

 

Net investment income

    407,542  
 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

 

Net realized gain (loss) from:

 

Investments — Unaffiliated

    9,214,959  

Investments — Affiliated

    397  

In-kind redemptions — Unaffiliated

    5,626,356  

Foreign currency transactions

    15,139  
 

 

 

 

Net realized gain

    14,856,851  
 

 

 

 

Net change in unrealized appreciation (depreciation) on:

 

Investments — Unaffiliated

    56,812,414  

Investments — Affiliated

    6,994  

Foreign currency translations

    557  
 

 

 

 

Net change in unrealized appreciation (depreciation)

    56,819,965  
 

 

 

 

Net realized and unrealized gain

    71,676,816  
 

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 72,084,358  
 

 

 

 

See notes to financial statements.

 

 

35  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


 

Statements of Changes in Net Assets

 

    iShares
MSCI Global Agriculture Producers
ETF
          iShares
MSCI Global Energy Producers ETF
 
    Year Ended
08/31/20
           Year Ended
08/31/19
          Year Ended
08/31/20
           Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

               

OPERATIONS

               

Net investment income

  $ 439,899        $ 565,093       $ 2,028,360        $ 1,633,512  

Net realized loss

    (991,927        (727,749       (2,628,198        (686,050

Net change in unrealized appreciation (depreciation)

    2,189,730                (1,730,016             (10,173,752              (10,616,256
 

 

 

      

 

 

     

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

    1,637,702          (1,892,672       (10,773,590        (9,668,794
 

 

 

      

 

 

     

 

 

      

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

               

Decrease in net assets resulting from distributions to shareholders

    (450,377        (581,369       (2,741,742        (1,510,562
 

 

 

      

 

 

     

 

 

      

 

 

 

CAPITAL SHARE TRANSACTIONS

               

Net increase (decrease) in net assets derived from capital share transactions

    452,179          (5,512,108       16,766,537          10,023,638  
 

 

 

      

 

 

     

 

 

      

 

 

 

NET ASSETS

               

Total increase (decrease) in net assets

    1,639,504          (7,986,149       3,251,205          (1,155,718

Beginning of year

    25,535,065          33,521,214         46,733,339          47,889,057  
 

 

 

      

 

 

     

 

 

      

 

 

 

End of year

  $ 27,174,569        $ 25,535,065       $ 49,984,544        $ 46,733,339  
 

 

 

      

 

 

     

 

 

      

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T S

  36


 

Statements of Changes in Net Assets (continued)

 

    iShares
MSCI Global Gold Miners ETF
           iShares
MSCI Global Metals & Mining
Producers ETF
 
    Year Ended
08/31/20
          Year Ended
08/31/19
           Year Ended
08/31/20
          Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

              

OPERATIONS

              

Net investment income

  $ 2,475,583       $ 2,199,144        $ 8,298,716       $ 14,488,853  

Net realized gain (loss)

    18,719,431         (26,319,717        (9,089,519       (16,757,109

Net change in unrealized appreciation (depreciation)

    125,383,666               141,307,485                24,686,798               (30,948,847
 

 

 

     

 

 

      

 

 

     

 

 

 

Net increase (decrease) in net assets resulting from operations

    146,578,680         117,186,912          23,895,995         (33,217,103
 

 

 

     

 

 

      

 

 

     

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

              

Decrease in net assets resulting from distributions to shareholders

    (2,214,520       (2,150,687        (8,667,003       (16,052,832
 

 

 

     

 

 

      

 

 

     

 

 

 

CAPITAL SHARE TRANSACTIONS

              

Net increase (decrease) in net assets derived from capital share transactions

    102,976,575         (22,741,524        60,694,834         (132,895,907
 

 

 

     

 

 

      

 

 

     

 

 

 

NET ASSETS

              

Total increase (decrease) in net assets

    247,340,735         92,294,701          75,923,826         (182,165,842

Beginning of year

    325,284,059         232,989,358          221,470,139         403,635,981  
 

 

 

     

 

 

      

 

 

     

 

 

 

End of year

  $ 572,624,794       $ 325,284,059        $ 297,393,965       $ 221,470,139  
 

 

 

     

 

 

      

 

 

     

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

37  

2 0 2 0   H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


 

Statements of Changes in Net Assets (continued)

 

 

   

iShares

MSCI Global Silver and Metals Miners

ETF

 
 

 

 

 
          Year Ended
08/31/20
          Year Ended
08/31/19
 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

    $ 407,542       $ 575,030  

Net realized gain (loss)

      14,856,851         (8,711,851

Net change in unrealized appreciation (depreciation)

      56,819,965                27,278,361  
   

 

 

     

 

 

 

Net increase in net assets resulting from operations

      72,084,358         19,141,540  
   

 

 

     

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

      (1,984,667       (550,188
   

 

 

     

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net increase in net assets derived from capital share transactions

      80,799,271         30,588,900  
   

 

 

     

 

 

 

NET ASSETS

       

Total increase in net assets

      150,898,962         49,180,252  

Beginning of year

      99,757,057         50,576,805  
   

 

 

     

 

 

 

End of year

    $ 250,656,019       $ 99,757,057  
   

 

 

     

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T S

  38


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares MSCI Global Agriculture Producers ETF  
 

 

 

 
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

    $ 26.88       $ 29.15       $ 27.08       $ 24.31       $ 24.03  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.49         0.53         0.53         0.45         0.54  

Net realized and unrealized gain (loss)(b)

      1.73         (2.25       2.03         2.81         0.27  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      2.22               (1.72       2.56         3.26         0.81  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (0.50       (0.55             (0.49       (0.49       (0.53
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.50       (0.55       (0.49             (0.49             (0.53
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

          $ 28.60       $ 26.88       $ 29.15       $ 27.08       $ 24.31  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      8.41       (5.88 )%        9.49       13.53       3.55
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.39       0.39       0.39       0.39       0.39
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total expenses after fees waived

      0.39       0.39       0.37       0.37       0.38
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      1.84       1.88       1.84       1.76       2.38
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 27,175       $ 25,535       $ 33,521       $ 28,434       $ 27,951  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      9       13       25       16       7
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

39  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

 

    iShares MSCI Global Energy Producers ETF  
 

 

 

 
    Year Ended
08/31/20
    Year Ended
08/31/19
    Year Ended
08/31/18
    Year Ended
08/31/17
    Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

    $ 17.97       $ 22.80       $ 18.57       $ 18.72       $ 17.67  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.68         0.70         0.64         0.60         0.59  

Net realized and unrealized gain (loss)(b)

      (5.61       (4.90       4.23         (0.16       1.00  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      (4.93       (4.20       4.87         0.44         1.59  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

            (1.00             (0.63             (0.64             (0.59             (0.54
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (1.00       (0.63       (0.64       (0.59       (0.54
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 12.04       $ 17.97       $ 22.80       $ 18.57       $ 18.72  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      (28.92 )%        (18.56 )%        26.48       2.26       9.31
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.39       0.39       0.39       0.39       0.39
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      4.62       3.41       2.93       3.10       3.36
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 49,985       $ 46,733       $ 47,889       $ 31,568       $ 37,440  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      12       6       5       4       6
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L  I G H L I G H T S

  40


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Global Gold Miners ETF  
 

 

 

 
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
     
Year Ended
08/31/17
 
(a) 
     
Year Ended
08/31/16
 
(a) 

 

 

Net asset value, beginning of year

    $ 24.01       $ 14.43       $ 19.96       $ 21.20       $ 11.13  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(b)

      0.17         0.18         0.10         0.06         0.02  

Net realized and unrealized gain (loss)(c)

      11.11         9.59         (5.51       (1.04       10.11  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      11.28         9.77         (5.41       (0.98       10.13  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(d)

                   

From net investment income

      (0.16       (0.19       (0.12       (0.26       (0.06
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.16       (0.19       (0.12       (0.26       (0.06
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

          $ 35.13             $ 24.01             $ 14.43             $ 19.96             $ 21.20  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      47.22       68.13       (27.22 )%        (4.30 )%        91.17
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.39       0.39       0.39       0.39       0.39
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      0.66       1.04       0.56       0.38       0.06
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 572,625       $ 325,284       $ 232,989       $ 391,247       $ 266,108  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(e)

      21       15       4       26       30
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Per share amounts reflect a one-for-two reverse stock split effective after the close of trading on November 4, 2016.

(b) 

Based on average shares outstanding.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

41  

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Financial Highlights (continued)

(For a share outstanding throughout each period)

 

   

iShares MSCI Global Metals & Mining Producers ETF

 
 

 

 

 
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
     
Year Ended
08/31/17
 
(a)  
     
Year Ended
08/31/16
 
(a)  

 

 

Net asset value, beginning of year

    $ 25.60       $ 30.93       $ 31.86       $ 21.67       $ 21.30  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(b)

      1.04         1.49         1.06         0.53         0.42  

Net realized and unrealized gain (loss)(c)

            2.26               (5.13             (1.05             10.26               0.41  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      3.30         (3.64       0.01         10.79         0.83  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(d)

                   

From net investment income

      (1.11       (1.69       (0.94       (0.60       (0.46
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (1.11       (1.69       (0.94       (0.60       (0.46
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 27.79       $ 25.60       $ 30.93       $ 31.86       $ 21.67  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      13.00       (12.16 )%        (0.10 )%        50.55       4.52
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.39       0.39       0.39       0.39       0.39
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total expenses after fees waived

      0.39       0.39       0.39       0.39       0.39
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      4.03       5.05       3.15       2.31       2.16
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 297,394       $ 221,470       $ 403,636       $ 347,259       $ 223,182  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(e)

      11       14       14       12       8
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Per share amounts reflect a one-for-two reverse stock split effective after the close of trading on November 4, 2016.

(b) 

Based on average shares outstanding.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

I N A N C I A L  I G H L I G H T S

  42


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Global Silver and Metals Miners ETF  
 

 

 

 
   
Year Ended
08/31/20
 
 
   
Year Ended
08/31/19
 
 
   
Year Ended
08/31/18
 
 
   
Year Ended
08/31/17
 
 
   
Year Ended
08/31/16
 
 

 

 

Net asset value, beginning of year

    $ 10.84       $ 8.43       $ 11.47       $ 13.61       $ 6.14  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.04         0.09         0.10         0.09         0.05  

Net realized and unrealized gain (loss)(b)

      6.62         2.40         (3.05       (1.94       7.44  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      6.66         2.49         (2.95       (1.85       7.49  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

            (0.21             (0.08             (0.09             (0.29             (0.02
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.21       (0.08       (0.09       (0.29       (0.02
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 17.29       $ 10.84       $ 8.43       $ 11.47       $ 13.61  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return

                   

Based on net asset value

      62.71       29.89       (25.87 )%        (13.26 )%        122.11
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets

                   

Total expenses

      0.39       0.39       0.39       0.39       0.39
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      0.35       0.98       0.94       0.79       0.47
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 250,656       $ 99,757       $ 50,577       $ 64,258       $ 87,078  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(d)

      66       27       19       14       27
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

43  

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Notes to Financial Statements  

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

iShares ETF   Diversification  
Classification  

MSCI Global Agriculture Producers

  Non-diversified  

MSCI Global Energy Producers

  Non-diversified  

MSCI Global Gold Miners

  Non-diversified  

MSCI Global Metals & Mining Producers

  Non-diversified  

MSCI Global Silver and Metals Miners

  Non-diversified  

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

 

O T E S   T O   F I N A N C I A L   S T A T E M E N T S

  44


Notes to Financial Statements  (continued)

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral

 

 

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Notes to Financial Statements  (continued)

 

received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

iShares ETF and Counterparty    
Market Value of
Securities on Loan
 
 
    
Cash Collateral
Received
 
(a)  
   
Non-Cash Collateral
Received
 
 
     Net Amount  

MSCI Global Agriculture Producers

         

Citigroup Global Markets Inc.

  $ 71,885      $ 71,885     $      $  

Morgan Stanley & Co. LLC

    96,097        96,097               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 167,982      $ 167,982     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Global Energy Producers

         

Barclays Bank PLC

  $ 78,346      $ 78,346     $      $  

Barclays Capital Inc.

    1,045        1,045               

BofA Securities, Inc.

    17,723        17,723               

Deutsche Bank Securities Inc.

    841        841               

Goldman Sachs & Co.

    199,430        199,430               

JPMorgan Securities LLC

    31,897        31,897               

Morgan Stanley & Co. LLC

    84,455        84,455               

Nomura Securities International Inc.

    13,466        13,466               

Scotia Capital (USA) Inc.

    1,610        1,610               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 428,813      $ 428,813     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Global Gold Miners

         

Barclays Capital Inc.

  $ 960,505      $ 960,505     $      $  

BofA Securities, Inc.

    921,445        921,445               

Citigroup Global Markets Inc.

    137,844        137,844               

JPMorgan Securities LLC

    342,755        342,755               

Morgan Stanley & Co. LLC

    2,561,137        2,561,137               

Scotia Capital (USA) Inc.

    33,645        33,645               

SG Americas Securities LLC

    1,083,714        1,083,714               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 6,041,045      $ 6,041,045     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Global Metals & Mining Producers

         

BofA Securities, Inc.

  $ 73,880      $ 73,880     $      $  

Citigroup Global Markets Inc.

    16,075        16,075               

Credit Suisse AG

    2,626        2,626               

Credit Suisse Securities (USA) LLC

    105,634        105,634               

Deutsche Bank Securities Inc.

    52,115        52,115               

JPMorgan Securities LLC

    156,272        156,272               

Macquarie Bank Limited

    510,513        510,513               

Morgan Stanley & Co. LLC

    219,130        219,130               

National Financial Services LLC

    59,220        59,220               

Scotia Capital (USA) Inc.

    245,945        245,945               

State Street Bank & Trust Company

    61,857        61,857               

UBS AG

    56,360        56,360               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 1,559,627      $ 1,559,627     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

 

 

O T E S   T O   F I N A N C I A L   S T A T E M E N T S

  46


Notes to Financial Statements  (continued)

 

 

iShares ETF and Counterparty    
Market Value of
Securities on Loan
 
 
    
Cash Collateral
Received
 
(a)  
   
Non-Cash Collateral
Received
 
 
     Net Amount  

MSCI Global Silver and Metals Miners

         

BNP Paribas Prime Brokerage International Ltd.

  $ 85,446      $ 85,446     $      $  

BofA Securities, Inc.

    1,184,486        1,129,134              (55,352 )(b)  

Citigroup Global Markets Inc.

    1,104,030        1,104,030               

Goldman Sachs & Co.

    6,988,321        6,988,321               

JPMorgan Securities LLC

    10,040,629        10,040,629               

Morgan Stanley & Co. LLC

    1,223,065        1,223,065               

Scotia Capital (USA) Inc.

    706,373        706,373               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 21,332,350      $ 21,276,998     $      $ (55,352
 

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 
  (b) 

Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee of 0.39%, accrued daily and paid monthly by the Funds, based on the average daily net assets of each Fund.

Expense Waivers: A fund may incur its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses”). For each of the iShares MSCI Global Agriculture Producers and iShares MSCI Global Metals & Mining Producers ETFs, BFA has contractually agreed to waive a portion of its investment advisory fee for each Fund through December 31, 2023 in an amount equal to the acquired fund fees and expenses, if any, attributable to each Fund’s investments in other iShares funds.

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

 

 

47  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Notes to Financial Statements  (continued)

 

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF   Fees Paid   
to BTC   
 

MSCI Global Agriculture Producers

  $ 1,638     

MSCI Global Energy Producers

    3,004     

MSCI Global Gold Miners

    17,260     

MSCI Global Metals & Mining Producers

    20,598     

MSCI Global Silver and Metals Miners

    57,060     

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

iShares ETF   Purchases      Sales      Net Realized   
Gain (Loss)   
 

MSCI Global Agriculture Producers

    $      653,258        $      268,045        $      (82,161)     

MSCI Global Energy Producers

    149,418        151,955        (146,966)     

MSCI Global Gold Miners

    4,651,610        5,929,627        (581,587)     

MSCI Global Metals & Mining Producers

    57,747        547,377        (497,304)     

MSCI Global Silver and Metals Miners

    5,847,260        2,059,178        (1,043,924)     

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

 

N O T E S   T O   F I N A N C I A L   S T A T E M E N T S

  48


Notes to Financial Statements   (continued)

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

iShares ETF   Purchases      Sales     

MSCI Global Agriculture Producers

  $     2,126,038      $     2,109,481     

MSCI Global Energy Producers

    6,321,323        5,363,567     

MSCI Global Gold Miners

    84,675,839        81,147,605     

MSCI Global Metals & Mining Producers

    32,253,174        23,183,255     

MSCI Global Silver and Metals Miners

    82,018,510        82,844,367     

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

iShares ETF   In-kind
Purchases
    

In-kind   

Sales   

 

MSCI Global Agriculture Producers

  $       2,298,988      $       1,923,352     

MSCI Global Energy Producers

    24,719,136        9,820,890     

MSCI Global Gold Miners

    242,770,661        143,871,262     

MSCI Global Metals & Mining Producers

    89,713,226        39,315,482     

MSCI Global Silver and Metals Miners

    92,803,922        13,610,009     

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions is reclassified to the following accounts:

 

iShares ETF   Paid-in Capital       Accumulated    
Earnings (Loss)    
 

MSCI Global Agriculture Producers

    $      (26,464)        $          26,464      

MSCI Global Energy Producers

    683,866         (683,866)     

MSCI Global Gold Miners

    28,332,891         (28,332,891)     

MSCI Global Metals & Mining Producers

    1,248,039         (1,248,039)     

MSCI Global Silver and Metals Miners

    4,842,259         (4,842,259)     

The tax character of distributions paid was as follows:

 

iShares ETF   Year Ended
08/31/20
     Year Ended
08/31/19
 

MSCI Global Agriculture Producers

    

Ordinary income

  $ 450,377      $ 581,369  
 

 

 

    

 

 

 

MSCI Global Energy Producers

    

Ordinary income

  $ 2,741,742      $ 1,510,562  
 

 

 

    

 

 

 

MSCI Global Gold Miners

    

Ordinary income

  $ 2,214,520      $ 2,150,687  
 

 

 

    

 

 

 

MSCI Global Metals & Mining Producers

    

Ordinary income

  $ 8,667,003      $ 16,052,832  
 

 

 

    

 

 

 

MSCI Global Silver and Metals Miners

    

Ordinary income

  $ 1,984,667      $ 550,188  
 

 

 

    

 

 

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

 

49  

2 0 2 0   I S H A R E S   A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Notes to Financial Statements  (continued)

 

iShares ETF    
Undistributed
Ordinary Income
 
 
    

Non-expiring
Capital Loss
Carryforwards
 
 
(a) 
   
Net Unrealized
Gains (Losses)(b)
 
 
    Total     

MSCI Global Agriculture Producers

  $ 125,012      $ (3,827,134   $ 508,512     $ (3,193,610)    

MSCI Global Energy Producers

    580,469        (5,549,371     (19,735,515     (24,704,417)    

MSCI Global Gold Miners

    416,178        (62,335,458     171,961,873       110,042,593     

MSCI Global Metals & Mining Producers

    1,795,080        (49,403,539     (34,834,170     (82,442,629)    

MSCI Global Silver and Metals Miners

    5,266,900        (12,001,411     61,935,562       55,201,051     

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b)

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the characterization of corporate actions.

 

For the year ended August 31, 2020, the iShares MSCI Global Silver and Metals Miners ETF utilized $5,473,595 of its capital loss carryforwards.

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

iShares ETF   Tax Cost      Gross Unrealized
Appreciation
     Gross Unrealized
Depreciation
   

Net Unrealized   

Appreciation   

(Depreciation)   

 

MSCI Global Agriculture Producers

  $ 26,700,802      $ 4,444,328      $ (3,928,529   $ 515,799     

MSCI Global Energy Producers

    69,483,372        2,065,233        (21,748,465     (19,683,232)    

MSCI Global Gold Miners

    405,973,795        175,590,295        (3,645,620     171,944,675     

MSCI Global Metals & Mining Producers

    331,468,972        25,797,375        (60,650,946     (34,853,571)    

MSCI Global Silver and Metals Miners

    209,711,589        61,931,562              61,931,562     

 

9.

LINE OF CREDIT

The iShares MSCI Global Agriculture Producers, iShares MSCI Global Energy Producers and iShares MSCI Global Metals & Mining Producers ETFs, along with certain other iShares funds (“Participating Funds”), are parties to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on July 15, 2021. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1, including the Funds, and $200 million with respect to Tier 2. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Credit Agreement.

The Funds did not borrow under the credit agreement during the year ended August 31, 2020.

 

10.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

 

O T E S   T O   F I N A N C I A L   S T A T E M E N T S

  50


Notes to Financial Statements  (continued)

 

Market Risk: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the schedule of investments.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

11.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

 

 

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Notes to Financial Statements  (continued)

 

Transactions in capital shares were as follows:

 

 

 
    Year Ended
08/31/20
          Year Ended
08/31/19
 
iShares ETF     Shares         Amount         Shares         Amount  

 

 

MSCI Global Agriculture Producers

             

Shares sold

    100,000       $ 2,774,184               $ 359  

Shares redeemed

    (100,000       (2,322,005       (200,000       (5,512,467
 

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease)

          $ 452,179         (200,000     $ (5,512,108
 

 

 

     

 

 

     

 

 

     

 

 

 

MSCI Global Energy Producers

             

Shares sold

    2,200,000       $ 27,372,026         600,000       $ 11,989,843  

Shares redeemed

    (650,000       (10,605,489       (100,000       (1,966,205
 

 

 

     

 

 

     

 

 

     

 

 

 

Net increase

    1,550,000       $ 16,766,537         500,000       $ 10,023,638  
 

 

 

     

 

 

     

 

 

     

 

 

 

MSCI Global Gold Miners

             

Shares sold

    9,600,000       $ 251,993,214         5,300,000       $ 103,615,697  

Shares redeemed

    (6,850,000             (149,016,639             (7,900,000             (126,357,221
 

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease)

    2,750,000       $ 102,976,575         (2,600,000     $ (22,741,524
 

 

 

     

 

 

     

 

 

     

 

 

 

MSCI Global Metals & Mining Producers

             

Shares sold

    3,850,000       $ 108,039,671         2,600,000       $ 74,143,858  

Shares redeemed

    (1,800,000       (47,344,837       (7,000,000       (207,039,765
 

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease)

    2,050,000       $ 60,694,834         (4,400,000     $ (132,895,907
 

 

 

     

 

 

     

 

 

     

 

 

 

MSCI Global Silver and Metals Miners

             

Shares sold

    6,500,000       $ 94,504,256         3,200,000       $ 30,588,900  

Shares redeemed

    (1,200,000       (13,704,985                
 

 

 

     

 

 

     

 

 

     

 

 

 

Net increase

    5,300,000       $ 80,799,271         3,200,000       $ 30,588,900  
 

 

 

     

 

 

     

 

 

     

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

12.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

13.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

O T E S   T O   F I N A N C I A L   S T A T E M E N T S

  52


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares MSCI Global Agriculture Producers ETF,

iShares MSCI Global Energy Producers ETF, iShares MSCI Global Gold Miners ETF,

iShares MSCI Global Metals & Mining Producers ETF and

iShares MSCI Global Silver and Metal Miners ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares MSCI Global Agriculture Producers ETF, iShares MSCI Global Energy Producers ETF, iShares MSCI Global Gold Miners ETF, iShares MSCI Global Metals & Mining Producers ETF and iShares MSCI Global Silver and Metal Miners ETF (five of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

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Important Tax Information  (unaudited)   

 

For corporate shareholders, the percentage of ordinary income distributions paid during the fiscal year ended August 31, 2020 that qualified for the dividends-received deduction were as follows:

 

iShares ETF   Dividends-Received
Deduction
 

MSCI Global Agriculture Producers

    46.13

MSCI Global Energy Producers

    45.13

MSCI Global Gold Miners

    36.87

MSCI Global Metals & Mining Producers

    5.69

MSCI Global Silver and Metals Miners

    1.33

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

iShares ETF  

Qualified Dividend  

Income  

 

MSCI Global Agriculture Producers

  $ 514,247    

MSCI Global Energy Producers

    2,243,019    

MSCI Global Gold Miners

    3,364,766    

MSCI Global Metals & Mining Producers

    8,608,705    

MSCI Global Silver and Metals Miners

    665,759    

For the fiscal year ended August 31, 2020, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders:

 

iShares ETF   Foreign Source
Income Earned
    

Foreign  

Taxes Paid  

 

MSCI Global Agriculture Producers

  $ 357,579      $ 41,446    

MSCI Global Energy Producers

    1,328,169        119,432    

MSCI Global Gold Miners

    3,160,561        252,540    

MSCI Global Metals & Mining Producers

    8,841,248        322,275    

MSCI Global Silver and Metals Miners

    620,834        71,684    

 

 

M P O R T A N T  A X   I N F O R M A T I O N

  54


Board Review and Approval of Investment Advisory Contract

 

iShares MSCI Global Agriculture Producers ETF, iShares MSCI Global Energy Producers ETF, iShares MSCI Global Gold Miners ETF, iShares MSCI Global Metals & Mining Producers ETF, iShares MSCI Global Silver and Metals Miners ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

 

B O A R D   R E V I E W   A N D   A P P R O V A L   O F   I N V E S T M E N T    A D V I S O R Y    C O N T R A C T

  56


Supplemental Information  (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

       
    Total Cumulative Distributions
for the Fiscal Year
          % Breakdown of the Total Cumulative
Distributions for the Fiscal Year
 
iShares ETF   Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
           Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
 

MSCI Global Agriculture Producers

  $   0.498926     $     $     $   0.498926                  100             100

MSCI Global Energy Producers

    1.003649                   1.003649         100                   100  

MSCI Global Metals & Mining Producers(a)

    1.099377             0.015245       1.114622               99             1       100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

 

 

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Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFA or its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors

         
Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

        Other Directorships Held by Director

Robert S.
Kapito(a)

(63)

   Director
(since 2009).
   President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).        Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(50)

  

Director

(since 2019).

   Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).        Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).
(a)

Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b) 

Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

 

Independent Directors

         
Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

       Other Directorships Held by Director

Cecilia H. Herbert

(71)

  

Director

(since 2005);

Independent Board Chair

(since 2016).

   Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.        Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).

Jane D. Carlin

(64)

  

Director

(since 2015);

Risk Committee Chair

(since 2016).

   Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).       Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L. Fagnani

(65)

  

Director

(since 2017);

Audit Committee Chair

(since 2019).

  

Partner, KPMG LLP (2002-2016).

      Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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  58


Director and Officer Information  (continued)

 

Independent Directors (continued)
         
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

       Other Directorships Held by Director

John E.

Kerrigan (65)

   Director (since 2005); Nominating and Governance and Equity Plus Committee Chairs (since 2019).    Chief Investment Officer, Santa Clara University (since 2002).       Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E.

Lawton (61)

   Director (since 2017); 15(c) Committee Chair (since 2017).    Senior Managing Director of New York Life Insurance Company (2010-2015).       Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

John E.

Martinez (59)

   Director (since 2003); Securities Lending Committee Chair (since 2019).    Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).        Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

Madhav V.

Rajan (56)

   Director (since 2011); Fixed Income Plus Committee Chair (since 2019).    Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).       Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).

 

Officers
     
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

Armando

Senra (49)

   President (since 2019).    Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

Trent

Walker (46)

   Treasurer and Chief Financial Officer (since 2020).    Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Charles

Park (53)

   Chief Compliance Officer (since 2006).    Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

Deepa

Damre (45)

   Secretary (since 2019).    Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

Scott

Radell (51)

   Executive Vice President (since 2012).    Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

Alan

Mason (59)

   Executive Vice President (since 2016).    Managing Director, BlackRock, Inc. (since 2009).

Marybeth

Leithead (57)

   Executive Vice President (since 2019).    Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

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General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

E N E R A L    I N F O R M A T I O N

  60


Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
ADR    American Depositary Receipt
GDR    Global Depositary Receipt
JSC    Joint Stock Company
NVDR    Non-Voting Depositary Receipt
NVS    Non-Voting Shares
PJSC    Public Joint Stock Company

 

 

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Want to know more?

iShares.com  |  1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-812-0820

 

LOGO

   LOGO


 

LOGO

  AUGUST 31, 2020

 

 

   

   2020 Annual Report

 

iShares, Inc.

 

·  

iShares Currency Hedged MSCI Emerging Markets ETF | HEEM | Cboe BZX

 

·  

iShares MSCI Emerging Markets ETF | EEM | NYSE Arca

 

 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020

 

    

 

6-Month 

 

 

 

12-Month

 

   

U.S. large cap equities
(S&P 500® Index)

 

  19.63%   21.94%

 

U.S. small cap equities
(Russell 2000® Index)

 

  6.57     6.02  

 

International equities
(MSCI Europe, Australasia, Far East Index)

 

  7.10     6.13  

 

Emerging market equities
(MSCI Emerging Markets Index)

 

  11.23     14.49  

 

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

 

  0.34     1.26  

 

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

 

  4.67     8.93  

 

U.S. investment grade bonds
(Bloomberg Barclays U.S. Aggregate Bond Index)

 

  2.98     6.47  

 

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

 

  0.29     3.15  

 

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

 

  3.04     4.65  

 

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

 

 

2  

H I S  A G E   I S   N O T  A R T   O F  O U R  U N D  E P O R T


Table of Contents

 

      Page  

The Markets in Review

     2  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     9  

Shareholder Expenses

     9  

Schedules of Investments

     10  

Financial Statements

  

Statements of Assets and Liabilities

     28  

Statements of Operations

     29  

Statements of Changes in Net Assets

     30  

Financial Highlights

     31  

Notes to Financial Statements

     33  

Report of Independent Registered Public Accounting Firm

     43  

Important Tax Information (Unaudited)

     44  

Board Review and Approval of Investment Advisory Contract

     45  

Supplemental Information

     49  

Director and Officer Information

     50  

General Information

     52  

Glossary of Terms Used in this Report

     53  

 

 

 


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

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Fund Summary  as of August 31, 2020    iShares® Currency Hedged MSCI Emerging Markets ETF

 

Investment Objective

The iShares Currency Hedged MSCI Emerging Markets ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities while mitigating exposure to fluctuations between the value of the component currencies and the U.S. dollar, as represented by the MSCI Emerging Markets 100% Hedged to USD Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. The Fund currently seeks to achieve its investment objective by investing a substantial portion of its assets in one underlying fund, the iShares MSCI Emerging Markets ETF.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
           1 Year      5 Years      Since
Inception
 

Fund NAV

    15.49      8.28      5.05       15.49      48.87      33.96

Fund Market

    15.33        8.23        5.00         15.33        48.52        33.64  

Index

    16.44        8.64        5.46               16.44        51.33        37.08  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 9/23/14. The first day of secondary market trading was 9/25/14.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 9 for more information.

Expense Example

 

Actual          

Hypothetical 5% Return

       
 

Beginning
Account Value
(03/01/20)
 
 
 
   

Ending
Account Value
(08/31/20)
 
 
 
   

Expenses
Paid During
the Period
 
 
 (a)(b) 
          Beginning
Account Value
(03/01/20)
   

Ending
Account Value
(08/31/20)
 
 
 
   

Expenses
Paid During

the Period


 

 (a)(b) 

   

Annualized
Expense
Ratio
 
 
 
  $         1,000.00     $ 1,122.90     $ 0.00             $         1,000.00   $ 1,025.10     $ 0.00       0.00

 

  (a) 

Annualized expense ratio and expenses paid during the period do not include fees and expenses of the underlying fund in which the Fund invests.

 
  (b) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 9 for more information.

 

 

 

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Fund Summary  as of August 31, 2020  (continued)    iShares® Currency Hedged MSCI Emerging Markets ETF

 

Portfolio Management Commentary

Emerging markets stocks advanced strongly during the reporting period, despite coronavirus-related restrictions that led to a worldwide recession. Chinese equities contributed the most to the Index’s return in U.S. dollar terms, driven primarily by the consumer discretionary sector. Internet and direct marketing retail companies advanced as consumers and businesses limiting physical interaction accelerated the migration to digital platforms. Temporary closures of brick-and-mortar stores led both merchants and customers to increase use of online platforms, driving sharply higher revenues for goods and services such as food delivery. Companies providing cloud computing services gained as closed offices and schools led to sharply increased demand for remote working and remote education capabilities, such as video conferencing and productivity tracking tools.

The Chinese communication services sector was also a notable contributor, bolstered by strong gains in the interactive media and services industry. Homebound consumers supported demand growth for online gaming, while increased use of social media drove stronger revenues for digital content and online advertising.

Information technology stocks in both Taiwan and South Korea contributed meaningfully to the Index’s return. Taiwan’s semiconductors industry benefited from growth in global demand. An increase in online activity and upgrades to mobile networks to support next-generation phones drove substantial revenue growth for companies producing high-performance computing semiconductors, including those used in data center hardware and 5G equipment. An increase in telecommuting drove considerable demand for high-speed Wi-Fi chips. The technology hardware and equipment industry drove contribution in South Korea, as companies responded to the pandemic by expanding online sales channels. Profits from sales of computer memory strengthened due to higher prices and substantial demand from data centers. The industry mitigated the impact of lower smartphone purchases by reducing expenses.

On the downside, Brazilian stocks detracted substantially from the Index’s return in U.S. dollar terms, weighed down by the financials sector. Bank profits dropped sharply as declining economic activity led to lower income from interest, fees, and insurance. Deteriorating demand for consumer credit, as well as sharply rising loan default provisions, also weighed on bank stocks.

In terms of currency performance, emerging market currencies were mixed relative to the U.S. dollar for the reporting period. The Brazilian real depreciated against the U.S. dollar by approximately 24% amid multiple interest rate decreases and a high number of coronavirus cases. However, most Asian currencies gained relative to the U.S. dollar as Chinese economic growth rebounded late in the reporting period. The South Korean won, Chinese yuan, and Taiwanese new dollar appreciated relative to the U.S. dollar by approximately 2%, 4%, and 7%, respectively.

The negative performance of some foreign currencies meant hedging activity contributed to the Index’s return. A fully hedged investor seeks to bypass the currency fluctuations — both on the upside and on the downside — related to holding foreign-currency-denominated securities. The Index’s hedging activity offset the negative impact of foreign currency performance relative to the U.S. dollar, resulting in an Index return that was relatively close to the Index’s return measured in local currencies.

Portfolio Information

 

ALLOCATION BY INVESTMENT TYPE

Investment Type   Percent of
Net Assets
 

Investment Companies

    99.9
Forward foreign currency exchange contracts, net cumulative depreciation     (0.1

Other assets less liabilities

    0.2  

ALLOCATION BY SECTOR (of the UNDERLYING FUND)

Sector  

Percent of

Total Investment(a)

 

Consumer Discretionary

    19.6

Financials

    17.7  

Information Technology

    17.5  

Communication Services

    13.0  

Materials

    7.0  

Consumer Staples

    6.2  

Energy

    5.7  

Health Care

    4.5  

Industrials

    4.4  

Real Estate

    2.4  

Utilities

    2.0  

 

  (a)

Excludes money market funds.

 
 

 

 

U N D   S U M M A R Y

  6


Fund Summary  as of August 31, 2020    iShares® MSCI Emerging Markets ETF

 

Investment Objective

The iShares MSCI Emerging Markets ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities, as represented by the MSCI Emerging Markets Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      10 Years            1 Year      5 Years      10 Years  

Fund NAV

    13.82      8.05      3.16       13.82      47.25      36.45

Fund Market

    13.89        8.02        3.18         13.89        47.07        36.81  

Index

    14.49        8.66        3.76               14.49        51.45        44.62  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 9 for more information.

Expense Example

 

Actual           Hypothetical 5% Return         
 

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
    

Annualized
Expense

Ratio

 
 

 

    $      1,000.00        $ 1,109.20        $ 3.76             $ 1,000.00        $ 1,021.60        $ 3.61        0.71

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 9 for more information.

 

 

 

7  

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Fund Summary  as of August 31, 2020   (continued)    iShares® MSCI Emerging Markets ETF

 

Portfolio Management Commentary

Emerging markets stocks advanced strongly during the reporting period, despite coronavirus-related restrictions that led to a worldwide recession. Chinese equities contributed the most to the Index’s return, driven primarily by the consumer discretionary sector. Internet and direct marketing retail companies advanced as consumers and businesses limiting physical interaction accelerated the migration to digital platforms. Temporary closures of brick-and-mortar stores led both merchants and customers to increase use of online platforms, driving sharply higher revenues for goods and services such as food delivery. Companies providing cloud computing services gained as closed offices and schools led to sharply increased demand for remote working and remote education capabilities, such as video conferencing and productivity tracking tools.

The Chinese communication services sector was also a notable contributor, bolstered by strong gains in the interactive media and services industry. Homebound consumers supported demand growth for online gaming, while increased use of social media drove stronger revenues for digital content and online advertising.

Information technology stocks in both Taiwan and South Korea contributed meaningfully to the Index’s return. Taiwan’s semiconductors industry benefited from growth in global demand. An increase in online activity and upgrades to mobile networks to support next-generation phones drove substantial revenue growth for companies producing high-performance computing semiconductors, including those used in data center hardware and 5G equipment. An increase in telecommuting drove considerable demand for high-speed Wi-Fi chips. The technology hardware and equipment industry drove contribution in South Korea, as companies responded to the pandemic by expanding online sales channels. Profits from sales of computer memory strengthened due to higher prices and substantial demand from data centers. The industry mitigated the impact of lower smartphone purchases by reducing expenses.

On the downside, Brazilian stocks detracted substantially from the Index’s return, weighed down by the financials sector. Bank profits dropped sharply as declining economic activity led to lower income from interest, fees, and insurance. Deteriorating demand for consumer credit, as well as sharply rising loan default provisions, also weighed on bank stocks.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector   Percent of    
Total Investments(a)
 

Consumer Discretionary

    19.6%  

Financials

    17.7      

Information Technology

    17.5      

Communication Services

    13.0      

Materials

    7.0      

Consumer Staples

    6.2      

Energy

    5.7      

Health Care

    4.5      

Industrials

    4.4      

Real Estate

    2.4      

Utilities

    2.0      

 

  (a)

Excludes money market funds.

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region   Percent of    
Total Investments(a)
 

China

    42.4%  

Taiwan

    12.3      

South Korea

    11.6      

India

    8.1      

Brazil

    4.9      

South Africa

    3.5      

Russia

    3.2      

Saudi Arabia

    2.7      

Thailand

    1.9      

Malaysia

    1.7      
 

 

 

U N D   S U M M A R Y

  8


About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not trade in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

9  

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Schedule of Investments

August 31, 2020

  

iShares® Currency Hedged MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  
Investment Companies             
Exchange-Traded Funds — 99.9%             

iShares MSCI Emerging Markets ETF(a)

    4,120,402      $ 183,522,705  
    

 

 

 

Total Investment Companies — 99.9%
(Cost: $177,646,177)

       183,522,705  
    

 

 

 

Total Investments in Securities — 99.9%
(Cost: $177,646,177)

 

     183,522,705  

Other Assets, Less Liabilities — 0.1%

       103,295  
    

 

 

 

Net Assets — 100.0%

     $   183,626,000  
    

 

 

 

 

(a)

Affiliate of the Fund.

 

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares(a)

  $ 71,508,989     $     $ (71,411,182 )(b)    $ (104,955   $ 7,148     $           $ 48,386 (c)     $  

BlackRock Cash Funds: Treasury, SL Agency Shares(a)

    4,729,000             (4,729,000 )(b)                              6,048        

iShares MSCI Emerging Markets ETF

    180,528,858       60,759,459       (75,252,672     156,891       17,330,169       183,522,705       4,120,402       4,874,941        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 51,936     $ 17,337,317     $ 183,522,705       $ 4,929,375     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

As of period end, the entity is no longer held.

 
  (b) 

Represents net amount purchased (sold).

 
  (c) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Forward Foreign Currency Exchange Contracts

 

Currency Purchased      Currency Sold      Counterparty      Settlement Date          Unrealized
Appreciation
(Depreciation)
 
BRL     51,805,000      USD     9,443,989      MS      09/03/20       $
 
 
11,820
 
 
CNY     532,000      USD     76,006      MS      09/03/20         1,647  
EUR     57,000      USD     67,281      MS      09/03/20         741  
HKD     325,556,000      USD     42,005,323      MS      09/03/20         315  
INR     9,646,000      USD     128,394      MS      09/03/20         2,709  
KRW     97,149,000      USD     81,369      MS      09/03/20         415  
MXN     67,261,000      USD     3,071,470      MS      09/03/20         1,950  
MYR     128,000      USD     30,260      MS      09/03/20         479  
RUB     350,082,000      USD     4,718,939      MS      09/03/20         6,269  
THB     4,080,000      USD     130,508      MS      09/03/20         586  
TRY     4,893,000      USD     664,775      MS      09/03/20         1,555  
TWD             687,095,000      USD     23,382,906      MS      09/03/20         30,164  
USD     10,072,472      BRL     52,468,000      MS      09/03/20         495,648  
USD     1,400,460      CLP             1,059,885,000      MS      09/03/20         37,256  
USD     42,155,456      HKD     326,709,000      MS      09/03/20         1,049  

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  10


Schedule of Investments  (continued)

August 31, 2020

  

iShares® Currency Hedged MSCI Emerging Markets ETF

 

Forward Foreign Currency Exchange Contracts (continued)

 

Currency Purchased     

Currency Sold

     Counterparty      Settlement Date          Unrealized
Appreciation
(Depreciation)
 
USD     187,713      KRW     222,319,000      MS      09/03/20       $ 558  
USD     36,511      RUB     2,687,000      MS      09/03/20         243  
USD     731,877      TRY     5,248,000      MS      09/03/20         17,203  
USD     23,459,538      TWD     687,095,000      MS      09/03/20         46,468  
ZAR     2,856,000      USD     167,296      MS      09/03/20         1,163  
BRL     2,481,000      USD     451,896      MS      10/05/20         493  
MYR     485,000      USD     116,457      MS      10/05/20         260  
TRY     105,000      USD     14,096      MS      10/05/20         47  
USD     206,528      BRL     1,132,000      MS      10/05/20         117  
USD     1,346,905      CLP     1,045,351,000      MS      10/05/20         2,429  
USD     2,157,850      EUR     1,803,000      MS      10/05/20         4,645  
USD     4,749,017      RUB     353,475,000      MS      10/05/20         7,833  
USD     3,614,674      THB     112,472,000      MS      10/05/20         1,292  
USD     6,707,302      ZAR     114,056,000      MS      10/05/20         3,448  
TWD     1,150,000      USD     39,203      MS      10/07/20         31  
USD     28,253      HKD     219,000      MS      10/07/20         3  
USD     15,596,008      INR     1,145,558,000      MS      10/07/20         27,841  
USD     25,448,710      KRW             30,211,131,000      MS      10/07/20         8,684  
USD     9,152,884      CNY     62,864,320      MS      10/13/20         773  
                    

 

 

 
                       716,134  
                    

 

 

 
BRL     663,000      USD     127,498      MS      09/03/20         (6,482
CLP     1,059,885,000      USD     1,366,765      MS      09/03/20         (3,561
CNY     61,701,320      USD     9,007,882      MS      09/03/20         (1,668
EUR     1,743,000      USD     2,084,555      MS      09/03/20         (4,503
HKD     3,685,000      USD     475,530      MS      09/03/20         (65
INR     1,099,155,000      USD     14,970,377      MS      09/03/20         (31,218
KRW             29,434,626,000      USD     24,797,745      MS      09/03/20         (18,815
MYR     13,390,000      USD     3,220,732      MS      09/03/20         (5,140
THB     112,004,000      USD     3,608,411      MS      09/03/20         (9,625
TRY     355,000      USD     49,516      MS      09/03/20         (1,172
USD     8,899,490      CNY     62,233,320      MS      09/03/20         (184,378
USD     2,129,857      EUR     1,800,000      MS      09/03/20         (18,217
USD     14,746,916      INR     1,108,801,000      MS      09/03/20         (323,346
USD     24,561,683      KRW     29,309,456,000      MS      09/03/20         (111,876
USD     3,019,090      MXN     67,261,000      MS      09/03/20         (54,330
USD     3,185,374      MYR     13,518,000      MS      09/03/20         (60,956
USD     4,663,264      RUB     347,395,000      MS      09/03/20         (25,676
USD     3,712,693      THB     116,084,000      MS      09/03/20         (17,187
USD     6,816,557      ZAR     116,480,000      MS      09/03/20         (53,917
ZAR     113,624,000      USD     6,706,284      MS      09/03/20         (4,269
MYR     187,000      USD     45,100      MS      10/05/20         (97
RUB     176,000      USD     2,370      MS      10/05/20         (10
USD     9,435,904      BRL     51,805,000      MS      10/05/20         (10,291
USD     3,051,496      MXN     67,060,000      MS      10/05/20         (803
USD     3,215,164      MYR     13,390,000      MS      10/05/20         (7,189
USD     661,044      TRY     4,924,000      MS      10/05/20         (2,212
ZAR     692,000      USD     40,727      MS      10/05/20         (54
TWD     3,526,000      USD     120,327      MS      10/07/20         (31
USD     44,043,040      HKD     341,446,000      MS      10/07/20         (2,200

 

 

11  

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Schedule of Investments  (continued)

August 31, 2020

  

iShares® Currency Hedged MSCI Emerging Markets ETF

 

Forward Foreign Currency Exchange Contracts (continued)

 

Currency Purchased     

Currency Sold

     Counterparty      Settlement Date          Unrealized
Appreciation
(Depreciation)
 
USD     185,940      INR     13,704,000      MS      10/07/20       $ (297
USD     135,323      KRW     160,783,000      MS      10/07/20         (68
USD             23,422,762      TWD             687,095,000      MS      10/07/20         (18,722
USD     291,573      CNY     2,003,000      MS      10/13/20         (34
                    

 

 

 
                       (978,409
                    

 

 

 
    Net unrealized depreciation                 $ (262,275
                    

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Foreign
Currency
Exchange
Contracts
 

Assets — Derivative Financial Instruments

  

Forward foreign currency exchange contracts

  

Unrealized appreciation on forward foreign currency exchange contracts

   $ 716,134  
  

 

 

 
Liabilities — Derivative Financial Instruments       

Forward foreign currency exchange contracts

  

Unrealized depreciation on forward foreign currency exchange contracts

   $ 978,409  
  

 

 

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Foreign
Currency
Exchange
Contracts
 

Net Realized Gain (Loss) from:

  

Forward foreign currency exchange contracts

   $ 5,523,655  
  

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:       

Forward foreign currency exchange contracts

   $ (4,141,358
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Forward foreign currency exchange contracts:

        

Average amounts purchased — in USD

   $ 197,975,270  

Average amounts sold — in USD

   $ 346,773,315  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Derivative Financial Instruments - Offsetting as of Year End

The Fund’s derivative assets and liabilities (by type) were as follows:

 

      Assets      Liabilities  

Derivative Financial Instruments:

     

Forward foreign currency exchange contracts

   $ 716,134      $ 978,409  
  

 

 

    

 

 

 

Total derivative assets and liabilities in the Statement of Assets and Liabilities

   $ 716,134      $ 978,409  

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

             
  

 

 

    

 

 

 

Total derivative assets and liabilities subject to an MNA

   $ 716,134      $ 978,409  
  

 

 

    

 

 

 

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  12


Schedule of Investments  (continued)

August 31, 2020

  

iShares® Currency Hedged MSCI Emerging Markets ETF

 

Counterparty       



Derivative
Assets
Subject to

an MNA by
Counterparty

 
 
 

 
 

        

Derivatives
Available
for Offset
 
 
(a) 
      

Cash
Collateral
Received
 
 
 
        

Net Amount
of Derivative
Assets
 
 
 

Morgan Stanley & Co. International PLC

     $   716,134        $ (716,134 )      $             —        $             —
    

 

 

        

 

 

      

 

 

        

 

 

 

 

Counterparty       



Derivative
Liabilities
Subject to

an MNA by
Counterparty

 
 
 

 
 

        

Derivatives
Available
for Offset
 
 
(a) 
      

Cash
Collateral
Pledged
 
 
(b) 
      

Net Amount
of Derivative
Liabilities
 
 
 

Morgan Stanley & Co. International PLC

     $ 978,409        $ (716,134 )      $ (262,275 )      $             —
    

 

 

        

 

 

      

 

 

      

 

 

 

 

  (a) 

The amount of derivatives available for offset is limited to the amount of derivatives assets and/or liabilities that are subject to an MNA.

 
  (b) 

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

      Level 1      Level 2      Level 3      Total

Investments

                         

Assets

                         

Investment Companies

     $ 183,522,705        $        $        $ 183,522,705
    

 

 

        

 

 

        

 

 

        

 

 

 

Derivative financial instruments(a)

                         

Assets

                         

Forward Foreign Currency Exchange Contracts

     $        $     716,134        $        $ 716,134

Liabilities

                         

Forward Foreign Currency Exchange Contracts

                (978,409 )                   (978,409 )
    

 

 

        

 

 

        

 

 

        

 

 

 
     $        $ (262,275 )        $             —        $ (262,275 )
    

 

 

        

 

 

        

 

 

        

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

13  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Consolidated Schedule of Investments

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Argentina — 0.1%  

Globant SA(a)

    135,469     $ 24,056,585  

Telecom Argentina SA, ADR

    325,953       2,203,442  

YPF SA, ADR(a)

    656,515       3,663,354  
   

 

 

 
      29,923,381  
Brazil — 3.5%  

Ambev SA

    17,062,515       38,287,165  

Atacadao SA

    1,422,700       5,070,050  

B2W Cia. Digital(a)

    820,329       16,761,275  

B3 SA - Brasil, Bolsa, Balcao

    7,592,001       81,374,006  

Banco Bradesco SA

    4,930,635       17,103,845  

Banco BTG Pactual SA

    843,500       12,351,365  

Banco do Brasil SA

    3,096,574       18,429,636  

Banco Santander Brasil SA

    1,435,000       7,397,474  

BB Seguridade Participacoes SA

    2,497,700       12,010,668  

BRF SA(a)

    2,072,485       7,400,788  

CCR SA

    4,542,200       11,036,936  

Centrais Eletricas Brasileiras SA

    1,124,173       7,276,725  

Cia Brasileira de Distribuicao

    571,686       6,618,381  

Cia. de Saneamento Basico do Estado de Sao Paulo

    1,272,924       11,079,699  

Cia. Siderurgica Nacional SA

    2,511,828       6,964,200  

Cielo SA

    4,490,176       3,732,332  

Cogna Educacao

    6,694,680       6,955,955  

Cosan SA

    602,200       9,138,546  

CPFL Energia SA

    834,000       4,369,230  

Energisa SA

    635,000       5,029,394  

Engie Brasil Energia SA

    734,150       5,704,955  

Equatorial Energia SA

    3,241,600       13,708,803  

Hapvida Participacoes e Investimentos
SA(b)

    838,100       9,889,027  

Hypera SA

    1,438,000       8,296,305  

IRB Brasil Resseguros S/A

    2,091,600       2,718,443  

IRB Brasil Resseguros S/A(a)

    949,611       1,197,854  

JBS SA

    3,972,365       16,248,905  

Klabin SA

    2,545,600       11,925,467  

Localiza Rent a Car SA

    2,264,808       19,911,353  

Lojas Renner SA

    2,990,889       23,699,656  

Magazine Luiza SA

    2,738,600       46,536,082  

Multiplan Empreendimentos Imobiliarios SA

    1,061,109       4,027,104  

Natura & Co. Holding SA

    2,755,447       24,782,398  

Notre Dame Intermedica Participacoes SA

    1,808,500       24,428,052  

Petrobras Distribuidora SA

    2,785,100       10,833,962  

Petroleo Brasileiro SA

    14,028,274       57,075,608  

Porto Seguro SA

    358,800       3,457,257  

Raia Drogasil SA

    795,700       15,635,805  

Rumo SA(a)

    4,075,900       16,791,290  

Sul America SA

    1,071,336       8,432,580  

Suzano SA(a)

    1,999,500       18,296,888  

TIM Participacoes SA

    3,193,876       8,337,065  

Ultrapar Participacoes SA

    2,704,800       9,584,811  

Vale SA

    13,552,709       147,437,189  

Via Varejo SA(a)

    4,574,300       17,093,485  

WEG SA

    3,109,506       36,627,769  
   

 

 

 
      851,065,783  
Chile — 0.5%  

Aguas Andinas SA, Class A

    10,112,361       3,037,998  

Banco de Chile

    167,895,600       14,069,053  

Banco de Credito e Inversiones SA

    198,482       6,269,981  

Banco Santander Chile

    244,732,427       9,434,996  
Security   Shares     Value  
Chile (continued)  

Cencosud SA

    5,327,198     $ 7,899,065  

Cencosud Shopping SA

    1,525,715       2,284,136  

Cia. Cervecerias Unidas SA

    563,736       3,715,088  

Colbun SA

    30,802,750       4,765,953  

Empresa Nacional de Telecomunicaciones SA

    595,319       3,612,581  

Empresas CMPC SA

    4,172,247       8,688,034  

Empresas COPEC SA

    1,441,474       10,595,876  

Enel Americas SA

    126,924,718       18,307,913  

Enel Chile SA

    104,870,090       8,085,964  

Falabella SA

    2,733,001       8,633,460  
   

 

 

 
      109,400,098  
China — 42.0%  

360 Security Technology Inc., Class A

    479,690       1,308,280  

3SBio Inc.(a)(b)(c)

    4,785,500       5,618,994  

51job Inc., ADR(a)(c)

    100,683       6,598,764  

58.com Inc., ADR(a)(c)

    353,113       19,548,336  

AAC Technologies Holdings Inc.(c)

    2,703,500       17,057,883  

AECC Aviation Power Co. Ltd., Class A

    566,273       3,690,739  

Agile Group Holdings Ltd.

    4,750,000       6,557,938  

Agricultural Bank of China Ltd., Class A

    17,421,900       8,165,144  

Agricultural Bank of China Ltd., Class H

    98,286,000       32,845,911  

Aier Eye Hospital Group Co. Ltd., Class A

    942,936       7,154,812  

Air China Ltd., Class A

    1,472,693       1,558,883  

Air China Ltd., Class H

    6,894,000       4,750,096  

Aisino Corp., Class A

    1,019,274       2,680,205  

AK Medical Holdings Ltd.(b)

    1,464,000       3,743,989  

Alibaba Group Holding Ltd., ADR(a)

    6,884,781       1,976,138,690  

Alibaba Health Information Technology
Ltd.(a)

    12,184,000       29,429,686  

Alibaba Pictures Group Ltd.(a)(c)

    49,420,000       7,014,316  

A-Living Services Co. Ltd., Class H(b)(c)

    1,658,000       8,557,254  

Aluminum Corp. of China Ltd., Class A(a)

    2,899,700       1,337,838  

Aluminum Corp. of China Ltd., Class H(a)

    16,424,000       4,026,451  

Angang Steel Co. Ltd., Class A

    3,819,877       1,500,255  

Anhui Conch Cement Co. Ltd., Class A

    977,386       8,691,966  

Anhui Conch Cement Co. Ltd., Class H

    4,470,000       32,414,082  

Anhui Gujing Distillery Co. Ltd., Class A

    116,585       4,397,757  

Anhui Gujing Distillery Co. Ltd., Class B

    319,600       4,057,810  

Anhui Kouzi Distillery Co. Ltd., Class A

    240,152       2,107,289  

ANTA Sports Products Ltd.

    3,990,402       39,414,111  

Asymchem Laboratories Tianjin Co. Ltd., Class A

    84,300       3,372,418  

Autobio Diagnostics Co. Ltd., Class A

    96,692       2,275,579  

Autohome Inc., ADR

    219,975       17,650,794  

AVIC Aircraft Co. Ltd., Class A

    947,886       3,349,152  

Avic Capital Co. Ltd., Class A

    4,667,689       3,427,940  

AVIC Jonhon Optronic Technology Co. Ltd., Class A

    464,993       3,279,117  

AVIC Shenyang Aircraft Co. Ltd., Class A

    233,600       2,013,984  

AviChina Industry & Technology Co. Ltd., Class H

    9,361,000       5,845,982  

AVICOPTER PLC, Class A

    257,153       2,147,588  

BAIC Motor Corp. Ltd., Class H(b)

    6,291,000       3,011,504  

Baidu Inc., ADR(a)(c)

    1,001,633       124,773,423  

Bank of Beijing Co. Ltd., Class A

    5,446,206       3,872,455  

Bank of Chengdu Co. Ltd., Class A

    1,671,395       2,479,340  

Bank of China Ltd., Class A

    8,681,200       4,157,353  

Bank of China Ltd., Class H

    285,301,000       93,503,292  

Bank of Communications Co. Ltd., Class A

    10,246,373       7,076,111  

Bank of Communications Co. Ltd., Class H

    29,005,600       15,157,472  

Bank of Hangzhou Co. Ltd., Class A

    2,259,445       4,272,036  

Bank of Jiangsu Co. Ltd., Class A

    3,234,985       3,032,289  

Bank of Nanjing Co. Ltd., Class A

    2,336,446       2,930,301  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  14


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)  

Bank of Ningbo Co. Ltd., Class A

    1,371,981     $ 7,111,149  

Bank of Shanghai Co. Ltd., Class A

    3,452,242       4,244,012  

Baoshan Iron & Steel Co. Ltd., Class A

    4,365,973       3,148,990  

Baozun Inc., ADR(a)(c)

    166,275       6,890,436  

Beijing Capital International Airport Co. Ltd.,

   

Class H(a)

    6,854,000       4,846,347  

Beijing Enlight Media Co. Ltd., Class A

    1,078,295       2,550,445  

Beijing Enterprises Holdings Ltd.

    1,865,500       5,933,379  

Beijing Enterprises Water Group Ltd.(a)(c)

    19,312,000       7,600,059  

Beijing New Building Materials PLC, Class A

    627,713       3,006,064  

Beijing Oriental Yuhong Waterproof Technology Co. Ltd., Class A

    480,086       4,201,449  

Beijing Shiji Information Technology Co. Ltd., Class A

    311,330       1,495,479  

Beijing Shunxin Agriculture Co. Ltd., Class A

    241,700       2,655,501  

Beijing Sinnet Technology Co. Ltd., Class A

    556,386       2,141,337  

Beijing Tiantan Biological Products Corp. Ltd., Class A

    392,245       2,424,203  

Beijing Tongrentang Co. Ltd., Class A

    603,212       2,615,711  

BEST Inc., ADR(a)(c)

    734,954       2,939,816  

Betta Pharmaceuticals Co. Ltd., Class A

    113,996       2,177,677  

BGI Genomics Co. Ltd., Class A(a)

    109,900       2,350,708  

Bilibili Inc., ADR(a)(c)

    418,237       19,761,698  

BOC Aviation Ltd.(b)

    780,300       5,804,313  

BOE Technology Group Co. Ltd., Class A

    7,880,600       6,328,274  

Bosideng International Holdings Ltd.(c)

    12,398,000       3,551,358  

Brilliance China Automotive Holdings Ltd.

    11,476,000       10,276,374  

BYD Co. Ltd., Class A

    429,912       5,335,336  

BYD Co. Ltd., Class H(c)

    2,355,000       23,397,612  

BYD Electronic International Co. Ltd.(c)

    2,571,000       10,897,512  

Caitong Securities Co. Ltd., Class A

    1,319,065       2,804,083  

CanSino Biologics Inc., Class H(a)(b)(c)

    223,400       4,735,988  

Centre Testing International Group Co. Ltd., Class A

    536,800       2,144,331  

CGN Power Co. Ltd., Class H(b)

    34,256,000       7,425,673  

Changchun High & New Technology Industry Group Inc., Class A

    91,194       6,225,928  

Changjiang Securities Co. Ltd., Class A

    2,755,535       3,431,771  

Chaozhou Three-Circle Group Co. Ltd., Class A

    371,005       1,515,622  

China Aoyuan Group Ltd.

    4,617,000       5,325,830  

China Cinda Asset Management Co. Ltd., Class H

    32,475,000       6,201,557  

China CITIC Bank Corp. Ltd., Class A

    4,638,099       3,534,873  

China CITIC Bank Corp. Ltd., Class H

    28,262,800       11,815,445  

China Communications Construction Co. Ltd., Class H

    17,778,000       9,978,426  

China Communications Services Corp. Ltd., Class H

    9,276,000       6,092,120  

China Conch Venture Holdings Ltd.

    6,107,500       26,478,455  

China Construction Bank Corp., Class A

    2,491,868       2,255,693  

China Construction Bank Corp., Class H

    351,223,760       248,797,564  

China East Education Holdings Ltd.(b)(c)

    1,903,000       4,203,707  

China Eastern Airlines Corp. Ltd., Class A

    4,431,697       3,267,569  

China Eastern Airlines Corp. Ltd., Class H(c)

    3,796,000       1,567,350  

China Education Group Holdings Ltd.(c)

    2,398,000       4,715,460  

China Everbright Bank Co. Ltd., Class A

    9,226,503       5,172,871  

China Everbright Bank Co. Ltd., Class H

    11,330,000       4,064,102  

China Everbright International Ltd.

    14,009,813       8,459,956  

China Everbright Ltd.

    3,688,000       5,681,789  

China Evergrande Group

    6,863,388       16,029,022  

China Feihe Ltd.(b)

    3,595,000       7,282,633  
Security   Shares     Value  
China (continued)  

China Fortune Land Development Co. Ltd., Class A

    1,001,435     $ 2,456,379  

China Galaxy Securities Co. Ltd., Class A

    959,100       1,897,433  

China Galaxy Securities Co. Ltd., Class H

    13,264,500       7,992,776  

China Gas Holdings Ltd.

    9,632,600       26,411,457  

China Greatwall Technology Group Co. Ltd., Class A

    824,473       2,131,858  

China Hongqiao Group Ltd.

    6,913,000       4,459,914  

China Huarong Asset Management Co. Ltd., Class H(b)

    36,938,000       4,241,830  

China Huishan Dairy Holdings Co. Ltd.(a)(d)

    5,603,350       7  

China International Capital Corp. Ltd.,
Class H(a)(b)(c)

    5,008,000       11,902,655  

China Jinmao Holdings Group Ltd.

    20,024,000       12,530,906  

China Jushi Co. Ltd., Class A

    1,299,192       2,816,846  

China Lesso Group Holdings Ltd.

    3,943,000       7,356,732  

China Life Insurance Co. Ltd., Class A

    672,512       4,288,901  

China Life Insurance Co. Ltd., Class H

    27,178,000       66,207,833  

China Literature Ltd.(a)(b)(c)

    1,135,600       7,055,236  

China Longyuan Power Group Corp. Ltd., Class H

    11,766,000       7,423,823  

China Medical System Holdings Ltd.

    5,240,000       5,916,015  

China Mengniu Dairy Co. Ltd.(a)

    10,221,000       50,246,782  

China Merchants Bank Co. Ltd., Class A

    4,548,089       25,027,554  

China Merchants Bank Co. Ltd., Class H

    14,290,467       68,224,135  

China Merchants Energy Shipping Co. Ltd., Class A

    1,786,957       1,685,427  

China Merchants Port Holdings Co. Ltd.

    5,450,000       6,237,492  

China Merchants Securities Co. Ltd., Class A(a)

    1,880,179       5,915,750  

China Merchants Shekou Industrial Zone Holdings Co. Ltd., Class A

    1,633,890       3,983,847  

China Minsheng Banking Corp. Ltd., Class A

    9,164,155       7,425,894  

China Minsheng Banking Corp. Ltd., Class H

    19,770,048       12,040,364  

China Mobile Ltd.

    22,453,000       156,878,248  

China Molybdenum Co. Ltd., Class A

    5,151,798       3,219,333  

China Molybdenum Co. Ltd., Class H

    12,129,000       4,929,756  

China National Building Material Co. Ltd., Class H

    14,250,000       20,041,548  

China National Chemical Engineering Co. Ltd., Class A

    3,354,567       2,870,103  

China National Nuclear Power Co. Ltd., Class A

    4,340,400       2,953,106  

China National Software & Service Co. Ltd., Class A

    129,399       1,867,355  

China Northern Rare Earth Group High-Tech Co. Ltd., Class A(a)

    1,375,154       2,479,600  

China Oilfield Services Ltd., Class H

    6,446,000       5,065,210  

China Overseas Land & Investment Ltd.

    14,018,960       40,608,976  

China Overseas Property Holdings Ltd.

    4,680,000       4,220,976  

China Pacific Insurance Group Co. Ltd., Class A

    1,440,348       6,481,319  

China Pacific Insurance Group Co. Ltd., Class H

    10,056,000       27,961,627  

China Petroleum & Chemical Corp., Class A(a)

    6,111,289       3,595,847  

China Petroleum & Chemical Corp., Class H

    87,512,800       40,424,485  

China Power International Development Ltd.

    16,060,000       3,108,327  

China Railway Construction Corp. Ltd., Class A

    2,963,520       3,863,871  

China Railway Construction Corp. Ltd., Class H

    6,904,500       5,309,680  

China Railway Group Ltd., Class A

    5,143,800       4,205,672  

China Railway Group Ltd., Class H

    13,222,000       6,790,005  

China Railway Signal & Communication Corp. Ltd., Class H(b)

    6,074,000       2,460,902  

China Reinsurance Group Corp., Class H

    20,014,000       2,143,393  

China Resources Beer Holdings Co. Ltd.

    5,432,000       35,324,839  

China Resources Cement Holdings Ltd.

    9,334,000       13,609,311  
 

 

 

15  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)  

China Resources Gas Group Ltd.

    3,340,000     $ 15,686,922  

China Resources Land Ltd.

    11,789,333       54,534,117  

China Resources Pharmaceutical Group
Ltd.(b)

    6,071,000       3,438,861  

China Resources Power Holdings Co. Ltd.

    7,126,999       8,460,274  

China Resources Sanjiu Medical & Pharmaceutical Co. Ltd., Class A

    380,956       1,585,196  

China Shenhua Energy Co. Ltd., Class A

    1,098,094       2,590,861  

China Shenhua Energy Co. Ltd., Class H

    12,576,000           20,997,457  

China Shipbuilding Industry Co. Ltd.,
Class A(a)

    5,354,192       3,791,395  

China Southern Airlines Co. Ltd.,
Class A(a)

    2,269,000       1,941,312  

China Southern Airlines Co. Ltd.,
Class H(a)(c)

    6,176,000       3,259,271  

China Spacesat Co. Ltd., Class A

    294,500       1,696,703  

China State Construction Engineering Corp. Ltd., Class A

    8,647,671       6,489,715  

China State Construction International Holdings Ltd.

    7,610,000       5,901,318  

China Taiping Insurance Holdings Co. Ltd.

    6,124,660       9,736,045  

China Telecom Corp. Ltd., Class H

    47,700,000       15,632,988  

China Tourism Group Duty Free Corp. Ltd., Class A

    452,032       13,727,639  

China Tower Corp. Ltd., Class H(b)

    160,770,000       30,701,290  

China Traditional Chinese Medicine Holdings Co. Ltd.(a)

    9,486,000       4,051,362  

China TransInfo Technology Co. Ltd., Class A

    560,300       2,000,969  

China Unicom Hong Kong Ltd.

    22,312,000       15,805,227  

China United Network Communications Ltd., Class A

    7,014,098       5,314,991  

China Vanke Co. Ltd., Class A

    2,219,559       8,837,210  

China Vanke Co. Ltd., Class H

    6,198,631       19,275,370  

China Yangtze Power Co. Ltd., Class A

    4,924,515       13,876,633  

China Yuhua Education Corp Ltd.(b)

    4,270,000       4,093,611  

Chongqing Changan Automobile Co. Ltd., Class A(a)

    1,211,787       2,071,794  

Chongqing Rural Commercial Bank Co. Ltd., Class H

    9,368,000       3,819,653  

Chongqing Zhifei Biological Products Co. Ltd., Class A

    340,976       6,728,266  

CIFI Holdings Group Co. Ltd.

    11,064,000       9,422,063  

CITIC Ltd.

    20,888,000       19,054,878  

CITIC Securities Co. Ltd., Class A

    2,467,351       11,455,693  

CITIC Securities Co. Ltd., Class H(c)

    7,411,000       17,805,181  

CNOOC Ltd.

    65,366,000       74,389,285  

Contemporary Amperex Technology Co. Ltd., Class A

    513,329       15,465,487  

COSCO SHIPPING Energy Transportation Co. Ltd., Class H

    5,954,000       2,742,628  

COSCO SHIPPING Holdings Co. Ltd., Class A(a)

    3,175,788       2,522,399  

COSCO SHIPPING Holdings Co. Ltd., Class H(a)

    8,392,000       4,212,161  

COSCO SHIPPING Ports Ltd.

    7,074,000       4,007,001  

Country Garden Holdings Co. Ltd.(c)

    28,239,939       35,016,847  

Country Garden Services Holdings Co. Ltd.(c)

    4,947,000       34,500,668  

CRRC Corp. Ltd., Class A

    6,347,320       5,430,644  

CRRC Corp. Ltd., Class H

    14,804,300       6,685,683  

CSC Financial Co. Ltd., Class A

    637,397       4,864,361  

CSPC Pharmaceutical Group Ltd.(c)

    20,844,800       46,314,904  

Dali Foods Group Co. Ltd.(b)

    7,982,000       4,892,099  

Daqin Railway Co. Ltd., Class A

    3,465,055       3,349,126  

Dawning Information Industry Co. Ltd., Class A

    378,498       2,497,292  

DHC Software Co. Ltd., Class A

    887,398       1,510,707  

Dongfeng Motor Group Co. Ltd., Class H

    10,036,000       6,966,792  
Security   Shares     Value  
China (continued)  

Dongxing Securities Co. Ltd., Class A

    239,897     $ 467,595  

East Money Information Co. Ltd., Class A

    1,816,911       6,939,604  

ENN Energy Holdings Ltd.

    2,938,900           32,611,678  

Eve Energy Co. Ltd., Class A

    481,153       3,442,954  

Everbright Securities Co. Ltd., Class A

    1,051,883       3,366,443  

Fangda Carbon New Material Co. Ltd.,
Class A(a)

    555,134       545,477  

Far East Horizon Ltd.

    8,669,000       7,673,315  

Fiberhome Telecommunication Technologies Co. Ltd., Class A

    375,590       1,442,225  

First Capital Securities Co. Ltd., Class A

    1,379,000       2,164,393  

Focus Media Information Technology Co. Ltd., Class A

    3,593,878       3,956,380  

Foshan Haitian Flavouring & Food Co. Ltd., Class A

    625,018       16,717,884  

Fosun International Ltd.

    9,709,500       10,811,789  

Founder Securities Co. Ltd., Class A(a)

    2,538,887       3,250,920  

Foxconn Industrial Internet Co. Ltd., Class A

    1,035,997       2,229,561  

Fuyao Glass Industry Group Co. Ltd., Class A

    925,072       3,914,148  

Fuyao Glass Industry Group Co. Ltd.,
Class H(b)

    1,530,400       4,926,805  

Ganfeng Lithium Co. Ltd., Class A

    285,581       2,106,056  

GCL System Integration Technology Co. Ltd., Class A(a)

    1,572,900       989,787  

GD Power Development Co. Ltd., Class A

    9,512,000       2,847,010  

GDS Holdings Ltd., ADR(a)(c)

    293,751       23,776,206  

Geely Automobile Holdings Ltd.

    21,665,000       45,789,140  

Gemdale Corp., Class A

    1,564,730       3,271,491  

Genscript Biotech Corp.(a)(c)

    3,768,000       7,283,038  

GF Securities Co. Ltd., Class A

    1,557,994       3,678,232  

GF Securities Co. Ltd., Class H

    4,925,400       5,827,748  

Gigadevice Semiconductor Beijing Inc., Class A

    115,910       3,376,700  

Glodon Co. Ltd., Class A

    312,193       3,176,103  

GoerTek Inc., Class A

    857,600       5,144,986  

GOME Retail Holdings Ltd.(a)(c)

    36,114,200       5,172,385  

Great Wall Motor Co. Ltd., Class H

    11,518,000       12,498,646  

Gree Electric Appliances Inc. of Zhuhai, Class A

    648,810       5,162,706  

Greenland Holdings Corp. Ltd., Class A

    2,359,718       2,635,633  

Greentown Service Group Co. Ltd.

    5,048,000       6,786,986  

GSX Techedu Inc., ADR(a)(c)

    218,247       18,638,294  

Guangdong Haid Group Co. Ltd., Class A

    469,027       4,846,301  

Guangdong Investment Ltd.

    11,002,110       17,177,155  

Guangzhou Automobile Group Co. Ltd., Class H

    10,837,838       9,313,368  

Guangzhou Baiyun International Airport Co. Ltd., Class A

    692,391       1,538,613  

Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., Class A

    483,995       2,297,318  

Guangzhou Kingmed Diagnostics Group Co. Ltd., Class A

    158,484       2,491,631  

Guangzhou R&F Properties Co. Ltd., Class H

    4,618,400       5,875,683  

Guangzhou Shiyuan Electronic Technology Co. Ltd., Class A

    146,491       2,140,531  

Guosen Securities Co. Ltd., Class A

    1,652,342       3,379,881  

Guotai Junan Securities Co. Ltd., Class A

    2,198,140       6,206,906  

Guotai Junan Securities Co. Ltd., Class H(b)

    2,094,200       3,269,591  

Haidilao International Holding Ltd.(b)

    2,907,000       18,754,476  

Haier Electronics Group Co. Ltd.

    4,817,000       16,501,790  

Haier Smart Home Co. Ltd., Class A

    1,457,041       4,743,948  

Haitian International Holdings Ltd.

    2,546,000       6,162,843  

Haitong Securities Co. Ltd., Class A(a)

    1,977,201       4,379,250  

Haitong Securities Co. Ltd., Class H(a)

    10,155,600       9,225,037  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  16


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Hangzhou Hikvision Digital Technology Co. Ltd., Class A

    2,071,602     $ 11,318,097  

Hangzhou Robam Appliances Co. Ltd., Class A

    420,564       2,394,749  

Hangzhou Tigermed Consulting Co. Ltd., Class A

    193,200       3,159,283  

Hansoh Pharmaceutical Group Co. Ltd.(a)(b)

    4,252,000       20,162,319  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    717,700       6,653,957  

Hengan International Group Co. Ltd.

    2,462,500       19,413,657  

Hengli Petrochemical Co. Ltd., Class A

    1,438,291       4,416,206  

Hengtong Optic-Electric Co. Ltd., Class A

    793,253       1,893,620  

Hengyi Petrochemical Co. Ltd., Class A

    1,462,229       2,657,958  

Hithink RoyalFlush Information Network Co. Ltd., Class A

    142,300       3,488,756  

Hua Hong Semiconductor Ltd.(a)(b)(c)

    1,729,000       6,246,589  

Huadong Medicine Co. Ltd., Class A

    577,905       2,359,158  

Hualan Biological Engineering Inc., Class A

    508,476       4,276,183  

Huaneng Power International Inc., Class H

    15,296,000       6,374,855  

Huatai Securities Co. Ltd., Class A

    1,677,409       5,243,472  

Huatai Securities Co. Ltd., Class H(b)

    5,585,200       9,800,935  

Huaxia Bank Co. Ltd., Class A

    3,837,380       3,602,542  

Huaxin Cement Co. Ltd., Class A

    447,906       1,828,468  

Huayu Automotive Systems Co. Ltd., Class A

    735,368       2,671,274  

Huazhu Group Ltd., ADR(c)

    499,387       22,337,581  

Hubei Biocause Pharmaceutical Co. Ltd., Class A

    2,196,499       1,805,522  

Hundsun Technologies Inc., Class A

    283,832       4,618,126  

Hutchison China MediTech Ltd., ADR(a)

    254,351       8,449,540  

HUYA Inc., ADR(a)(c)

    231,766       6,656,320  

Iflytek Co. Ltd., Class A

    555,975       3,059,460  

Industrial & Commercial Bank of China Ltd., Class A

    12,964,862       9,388,861  

Industrial & Commercial Bank of China Ltd., Class H

    219,200,085       122,749,672  

Industrial Bank Co. Ltd., Class A

    4,539,322       10,710,153  

Industrial Securities Co. Ltd., Class A

    2,874,151       3,449,409  

Inner Mongolia BaoTou Steel Union Co. Ltd., Class A(a)

    15,261,800       2,584,801  

Inner Mongolia Junzheng Energy & Chemical Industry Group Co. Ltd., Class A

    1,544,000       2,110,019  

Inner Mongolia Yili Industrial Group Co. Ltd., Class A

    1,301,670       7,970,630  

Inner Mongolia Yitai Coal Co. Ltd., Class B

    4,309,617       3,016,732  

Innovent Biologics Inc.(a)(b)

    3,467,500       23,108,762  

Inspur Electronic Information Industry Co. Ltd., Class A

    373,590       1,969,091  

iQIYI Inc., ADR(a)(c)

    817,917       17,707,903  

Jafron Biomedical Co. Ltd., Class A

    264,027       2,937,809  

JD.com Inc., ADR(a)

    3,119,666       245,330,534  

Jiangsu Expressway Co. Ltd., Class H

    4,876,000       4,882,197  

Jiangsu Hengli Hydraulic Co. Ltd., Class A

    405,888       3,882,193  

Jiangsu Hengrui Medicine Co. Ltd., Class A

    1,257,518       17,418,327  

Jiangsu King’s Luck Brewery JSC Ltd., Class A

    418,686       3,330,342  

Jiangsu Yanghe Brewery Joint-Stock Co. Ltd., Class A

    338,550       6,974,007  

Jiangsu Zhongnan Construction Group Co. Ltd., Class A

    1,345,087       1,912,814  

Jiangxi Copper Co. Ltd., Class A

    460,800       1,050,889  

Jiangxi Copper Co. Ltd., Class H

    5,006,000       5,903,736  

Jiangxi Zhengbang Technology Co. Ltd., Class A

    658,324       2,388,523  

Jinke Properties Group Co. Ltd., Class A

    1,965,882       2,933,403  
Security   Shares     Value  
China (continued)            

Jonjee Hi-Tech Industrial And Commercial Holding Co. Ltd., Class A

    286,925     $ 3,418,392  

JOYY Inc.(a)(c)

    213,865       18,272,626  

Juewei Food Co. Ltd., Class A

    211,914       2,914,566  

Kaisa Group Holdings Ltd.(a)

    9,472,000       4,766,463  

KE Holdings Inc.(a)

    328,449       16,846,149  

Kingboard Holdings Ltd.

    2,712,500       8,732,331  

Kingboard Laminates Holdings Ltd.

    4,217,000       5,316,038  

Kingdee International Software Group Co.
Ltd.(a)(c)

    8,725,000       22,245,505  

Kingsoft Corp. Ltd.

    3,108,000       16,642,517  

Koolearn Technology Holding Ltd.(a)(b)(c)

    900,500       4,310,697  

Kunlun Energy Co. Ltd.

    14,060,000       10,485,836  

Kweichow Moutai Co. Ltd., Class A

    281,187       73,343,492  

KWG Group Holdings Ltd.

    4,830,000       9,186,171  

Lee & Man Paper Manufacturing Ltd.

    5,198,000       3,112,033  

Legend Holdings Corp., Class H(b)

    1,890,400       2,785,542  

Lenovo Group Ltd.(c)

    26,288,000       17,570,220  

Lens Technology Co. Ltd., Class A

    741,900       3,739,207  

Lepu Medical Technology Beijing Co. Ltd., Class A

    492,235       2,785,605  

Li Ning Co. Ltd.

    7,685,500       32,526,390  

Lingyi iTech Guangdong Co., Class A(a)

    1,440,180       2,514,845  

Logan Group Co. Ltd.

    5,282,000       9,841,368  

Longfor Group Holdings Ltd.(b)

    6,648,000       35,212,273  

LONGi Green Energy Technology Co. Ltd., Class A

    852,741       7,878,562  

Luxshare Precision Industry Co. Ltd., Class A

    1,590,446       12,771,589  

Luye Pharma Group Ltd.(b)(c)

    6,215,500       3,368,335  

Luzhou Laojiao Co. Ltd., Class A

    359,939       7,856,578  

Maanshan Iron & Steel Co. Ltd., Class A(a)

    6,632,700       2,721,197  

Mango Excellent Media Co. Ltd., Class A

    460,100       4,769,512  

Maxscend Microelectronics Co. Ltd., Class A

    32,200       1,847,616  

Meinian Onehealth Healthcare Holdings Co. Ltd., Class A(a)

    1,079,480       2,767,594  

Meituan Dianping, Class B(a)(c)

    13,081,700       431,434,555  

Metallurgical Corp. of China Ltd., Class A

    7,613,490       3,134,702  

Momo Inc., ADR

    561,729       11,459,272  

Muyuan Foodstuff Co. Ltd., Class A

    862,085       11,051,162  

NanJi E-Commerce Co. Ltd., Class A

    548,400       1,483,666  

Nanjing King-Friend Biochemical Pharmaceutical Co. Ltd., Class A

    270,097       1,940,602  

Nanjing Securities Co. Ltd., Class A

    782,100       1,687,719  

NARI Technology Co. Ltd., Class A

    1,093,424       3,576,020  

NAURA Technology Group Co. Ltd., Class A

    119,100       3,204,796  

NavInfo Co. Ltd., Class A

    688,900       1,653,565  

NetEase Inc., ADR

    301,528       146,907,457  

New China Life Insurance Co. Ltd., Class A

    656,892       5,740,126  

New China Life Insurance Co. Ltd., Class H

    2,811,900       11,229,241  

New Hope Liuhe Co. Ltd., Class A

    1,008,997       5,598,050  

New Oriental Education & Technology Group Inc., ADR(a)

    526,939       77,265,066  

Nine Dragons Paper Holdings Ltd.

    6,207,000       6,887,634  

Ninestar Corp., Class A

    323,900       1,727,523  

Ningbo Joyson Electronic Corp., Class A

    312,900       1,048,916  

Ningbo Zhoushan Port Co. Ltd., Class A

    187,000       101,293  

NIO Inc., ADR(a)(c)

    3,335,765       63,479,608  

Noah Holdings Ltd.(a)(c)

    126,166       3,532,648  

Offcn Education Technology Co. Ltd., Class A

    367,100       1,913,981  

OFILM Group Co. Ltd., Class A

    748,065       2,065,353  

Orient Securities Co. Ltd., Class A

    1,562,186       2,693,680  

Oriental Pearl Group Co. Ltd., Class A

    193,400       301,007  
 

 

 

17  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  
China (continued)             

Ovctek China Inc., Class A

    251,100      $ 2,394,361  

People’s Insurance Co. Group of China Ltd. (The), Class A

    1,205,400        1,270,667  

People’s Insurance Co. Group of China Ltd. (The), Class H

    30,540,000        9,969,639  

Perfect World Co. Ltd., Class A

    533,600        2,852,193  

PetroChina Co. Ltd., Class A

    2,930,500        1,895,434  

PetroChina Co. Ltd., Class H

    78,472,000        27,135,599  

PICC Property & Casualty Co. Ltd., Class H

    24,985,192        19,310,762  

Pinduoduo Inc., ADR(a)(c)

    990,418        88,087,777  

Ping An Bank Co. Ltd., Class A

    4,349,467        9,576,365  

Ping An Healthcare and Technology Co. Ltd.(a)(b)(c)

    1,381,900        20,148,604  

Ping An Insurance Group Co. of China Ltd., Class A

    2,294,084        25,663,435  

Ping An Insurance Group Co. of China Ltd., Class H

    21,871,500        232,962,243  

Poly Developments and Holdings Group Co. Ltd., Class A

    2,713,984        6,379,645  

Poly Property Services Co. Ltd.(c)

    396,600        3,472,102  

Postal Savings Bank of China Co. Ltd., Class H(b)

    34,980,000        16,564,402  

Power Construction Corp. of China Ltd., Class A

    4,059,500        2,412,294  

RiseSun Real Estate Development Co. Ltd., Class A

    2,093,400        2,518,505  

Rongsheng Petro Chemical Co. Ltd., Class A

    1,474,772        4,263,374  

SAIC Motor Corp. Ltd., Class A

    1,672,206        4,555,801  

Sanan Optoelectronics Co. Ltd., Class A

    1,012,400        4,011,671  

Sangfor Technologies Inc., Class A

    87,900        2,823,159  

Sany Heavy Industry Co. Ltd., Class A

    2,006,752        6,486,862  

SDIC Capital Co. Ltd., Class A

    1,138,400        2,523,074  

SDIC Power Holdings Co. Ltd., Class A

    1,830,790        2,421,754  

Seazen Group Ltd.(a)

    8,056,000        7,307,430  

Seazen Holdings Co. Ltd., Class A

    535,373        2,806,172  

Semiconductor Manufacturing International Corp.(a)(c)

    12,880,499        41,382,996  

SF Holding Co. Ltd., Class A

    517,200        6,426,158  

SG Micro Corp., Class A

    34,900        1,452,988  

Shaanxi Coal Industry Co. Ltd., Class A

    2,194,170        2,604,499  

Shandong Gold Mining Co. Ltd., Class A

    919,156        3,890,458  

Shandong Weigao Group Medical Polymer Co. Ltd., Class H

    9,140,000        21,345,909  

Shanghai Baosight Software Co. Ltd., Class A

    257,030        2,608,897  

Shanghai Construction Group Co. Ltd., Class A

    6,107,095        2,835,470  

Shanghai Electric Group Co. Ltd., Class A(a)

    359,700        291,997  

Shanghai Electric Group Co. Ltd., Class H(a)

    13,170,000        3,874,454  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class A

    614,700        4,920,005  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class H

    1,685,000        7,120,346  

Shanghai Industrial Holdings Ltd.

    2,208,000        3,316,209  

Shanghai International Airport Co. Ltd., Class A

    240,298        2,680,445  

Shanghai International Port Group Co. Ltd., Class A

    3,411,699        2,211,653  

Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., Class B

    4,465,006        3,835,440  

Shanghai M&G Stationery Inc., Class A

    301,137        3,055,711  

Shanghai Pharmaceuticals Holding Co. Ltd., Class A

    424,700        1,376,571  

Shanghai Pharmaceuticals Holding Co. Ltd., Class H

    3,357,900        5,987,778  
Security   Shares      Value  
China (continued)             

Shanghai Pudong Development Bank Co. Ltd., Class A

    6,262,896      $ 9,473,234  

Shanghai RAAS Blood Products Co. Ltd., Class A

    1,260,800        1,654,890  

Shanxi Meijin Energy Co. Ltd., Class A(a)

    1,161,200        1,118,959  

Shanxi Xinghuacun Fen Wine Factory Co. Ltd., Class A

    223,700        6,441,400  

Shengyi Technology Co. Ltd., Class A

    589,600        2,135,736  

Shennan Circuits Co. Ltd., Class A

    128,340        2,598,036  

Shenwan Hongyuan Group Co. Ltd., Class A

    6,922,970        5,700,788  

Shenzhen Expressway Co. Ltd., Class H

    2,034,000        1,842,375  

Shenzhen Goodix Technology Co. Ltd., Class A

    93,100        2,432,454  

Shenzhen Inovance Technology Co. Ltd., Class A

    555,300        4,524,027  

Shenzhen International Holdings Ltd.

    3,933,000        6,312,977  

Shenzhen Investment Ltd.

    11,922,000        4,045,710  

Shenzhen Kangtai Biological Products Co. Ltd., Class A

    173,886        5,026,818  

Shenzhen Mindray Bio-Medical Electronics Co. Ltd., Class A

    225,432        11,271,353  

Shenzhen Overseas Chinese Town Co. Ltd., Class A

    3,103,000        3,239,300  

Shenzhen Sunway Communication Co. Ltd., Class A

    285,240        2,582,888  

Shenzhou International Group Holdings Ltd.

    3,011,900        48,578,092  

Shimao Group Holdings Ltd.

    4,405,500        19,838,577  

Sichuan Chuantou Energy Co. Ltd., Class A

    1,957,760        2,864,115  

Sichuan Kelun Pharmaceutical Co. Ltd., Class A

    522,478        1,887,257  

Sichuan Swellfun Co. Ltd., Class A

    171,993        1,910,740  

Silergy Corp.

    277,000        17,606,632  

SINA Corp.(a)

    217,138        8,834,260  

Sino Biopharmaceutical Ltd.

    38,602,750        44,579,087  

Sino-Ocean Group Holding Ltd.

    12,005,000        2,772,714  

Sinopec Engineering Group Co. Ltd., Class H

    5,525,000        2,452,340  

Sinopec Shanghai Petrochemical Co. Ltd., Class H

    14,623,000        3,018,884  

Sinopharm Group Co. Ltd., Class H

    4,898,400        12,059,311  

Sinotruk Hong Kong Ltd.

    2,616,500        6,802,768  

SOHO China Ltd.(a)

    7,902,500        2,436,982  

Songcheng Performance Development Co. Ltd., Class A

    999,913        2,610,316  

Spring Airlines Co. Ltd., Class A

    474,173        3,054,468  

SSY Group Ltd.

    5,972,000        3,806,595  

Sun Art Retail Group Ltd.

    9,000,500        11,729,457  

Sunac China Holdings Ltd.

    9,375,000        39,434,721  

Suning.com Co. Ltd., Class A

    2,478,738        3,564,759  

Sunny Optical Technology Group Co. Ltd.(c)

    2,636,700        39,090,447  

Suzhou Dongshan Precision Manufacturing Co. Ltd., Class A

    452,600        1,836,396  

TAL Education Group, ADR(a)

    1,397,832        103,173,980  

TCL Technology Group Corp., Class A

    4,094,355        4,232,355  

Tencent Holdings Ltd.

    21,019,200        1,438,770,295  

Tencent Music Entertainment Group, ADR(a)(c)

    1,342,575        20,984,447  

Tianjin Zhonghuan Semiconductor Co. Ltd., Class A

    768,193        2,430,483  

Tianma Microelectronics Co. Ltd., Class A

    749,179        1,797,159  

Tianqi Lithium Corp., Class A(a)

    430,704        1,427,474  

Tingyi Cayman Islands Holding Corp.

    7,402,000        13,905,940  

Tongcheng-Elong Holdings Ltd.(a)

    3,046,000        5,973,975  

Tonghua Dongbao Pharmaceutical Co. Ltd., Class A

    724,900        1,506,074  

Tongwei Co. Ltd., Class A

    964,984        3,437,742  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  18


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

Topchoice Medical Corp., Class A(a)

    115,100     $ 3,802,805  

Topsports International Holdings Ltd.(b)

    4,481,000       5,544,769  

Transfar Zhilian Co. Ltd., Class A

    1,324,798       1,168,288  

TravelSky Technology Ltd., Class H

    3,595,000       7,477,455  

Trip.com Group Ltd., ADR(a)(c)

    1,740,072       52,619,777  

Tsingtao Brewery Co. Ltd., Class A

    282,900       3,608,352  

Tsingtao Brewery Co. Ltd., Class H

    1,388,000       12,643,988  

Unigroup Guoxin Microelectronics Co. Ltd., Class A

    165,300       3,024,038  

Uni-President China Holdings Ltd.

    5,069,000       4,617,606  

Unisplendour Corp. Ltd., Class A

    623,788       2,987,268  

Venustech Group Inc., Class A

    343,503       1,912,822  

Vinda International Holdings Ltd.

    1,296,000       4,431,398  

Vipshop Holdings Ltd., ADR(a)(c)

    1,634,880       26,991,869  

Walvax Biotechnology Co. Ltd., Class A

    400,594       3,713,996  

Wanda Film Holding Co. Ltd., Class A(a)

    359,752       973,289  

Wanhua Chemical Group Co. Ltd., Class A

    733,791       7,852,002  

Want Want China Holdings Ltd.

    19,000,000       13,042,328  

Weibo Corp., ADR(a)(c)

    208,164       7,764,517  

Weichai Power Co. Ltd., Class A

    1,487,644       3,218,923  

Weichai Power Co. Ltd., Class H

    7,235,800       14,620,701  

Wens Foodstuffs Group Co. Ltd., Class A

    1,433,590       5,165,751  

Western Securities Co. Ltd., Class A

    251,380       358,215  

Wharf Holdings Ltd. (The)

    5,112,000       9,973,154  

Will Semiconductor Ltd., Class A

    137,300       3,364,368  

Wingtech Technology Co. Ltd., Class A

    208,300       4,198,754  

Winning Health Technology Group Co. Ltd., Class A

    658,524       2,038,313  

Wuhan Guide Infrared Co. Ltd., Class A

    403,090       2,258,173  

Wuhu Sanqi Interactive Entertainment Network Technology Group Co. Ltd., Class A

    528,588       3,518,441  

Wuliangye Yibin Co. Ltd., Class A

    896,428       31,411,594  

WUS Printed Circuit Kunshan Co. Ltd., Class A

    462,883       1,421,937  

WuXi AppTec Co. Ltd., Class A

    547,608       8,787,601  

WuXi AppTec Co. Ltd., Class H(b)

    908,092       13,451,219  

Wuxi Biologics Cayman Inc.(a)(b)

    3,665,500       95,253,860  

Wuxi Lead Intelligent Equipment Co. Ltd., Class A

    280,025       1,837,356  

XCMG Construction Machinery Co. Ltd., Class A

    3,397,169       3,080,151  

Xiaomi Corp., Class B(a)(b)

    38,663,800       117,236,350  

Xinhu Zhongbao Co. Ltd., Class A

    2,395,950       1,231,356  

Xinjiang Goldwind Science & Technology Co. Ltd., Class A

    1,677,793       2,675,003  

Xinjiang Goldwind Science & Technology Co. Ltd., Class H

    1,873,046       1,611,997  

Xinyi Solar Holdings Ltd.

    14,870,000       18,783,804  

Yantai Jereh Oilfield Services Group Co. Ltd., Class A

    330,098       1,650,695  

Yanzhou Coal Mining Co. Ltd., Class H

    6,562,800       5,055,375  

Yealink Network Technology Corp. Ltd., Class A

    224,980       1,850,978  

Yifeng Pharmacy Chain Co. Ltd., Class A

    192,159       2,828,034  

Yihai International Holding Ltd.(a)

    1,779,000       27,958,452  

Yonghui Superstores Co. Ltd., Class A

    2,337,900       3,031,114  

Yonyou Network Technology Co. Ltd., Class A

    789,351       4,830,045  

Yuexiu Property Co. Ltd.

    24,942,000       4,763,025  

Yum China Holdings Inc.(a)

    1,323,194       76,361,526  

Yunda Holding Co. Ltd., Class A

    643,704       1,952,968  

Yunnan Baiyao Group Co. Ltd., Class A

    326,101       5,509,172  

Yunnan Energy New Material Co. Ltd., Class A

    162,700       1,857,861  

Yuzhou Group Holdings Co. Ltd.

    6,987,000       3,263,542  

Zai Lab Ltd., ADR(a)(c)

    193,006       15,318,886  
Security   Shares     Value  
China (continued)            

Zhangzhou Pientzehuang Pharmaceutical Co. Ltd., Class A

    158,250     $ 5,819,240  

Zhaojin Mining Industry Co. Ltd., Class H

    4,172,000       4,672,550  

Zhejiang Century Huatong Group Co. Ltd., Class A(a)

    1,111,378       1,796,275  

Zhejiang Chint Electrics Co. Ltd., Class A(a)

    803,923       4,045,936  

Zhejiang Dahua Technology Co. Ltd., Class A

    1,065,684       3,556,870  

Zhejiang Expressway Co. Ltd., Class H

    5,902,000       3,982,821  

Zhejiang Huahai Pharmaceutical Co. Ltd., Class A

    341,394       2,186,688  

Zhejiang Huayou Cobalt Co. Ltd., Class A(a)

    285,694       1,675,167  

Zhejiang Longsheng Group Co. Ltd., Class A

    725,700       1,520,451  

Zhejiang NHU Co. Ltd., Class A

    833,878       3,989,719  

Zhejiang Sanhua Intelligent Controls Co. Ltd., Class A

    1,061,917       3,503,986  

Zhejiang Supor Co. Ltd., Class A

    240,082       2,970,726  

Zhejiang Wolwo Bio-Pharmaceutical Co. Ltd., Class A

    172,647       1,506,374  

Zhengzhou Yutong Bus Co. Ltd., Class A

    1,003,467       2,081,903  

Zhenro Properties Group Ltd.(c)

    5,151,000       3,010,784  

Zheshang Securities Co. Ltd., Class A

    654,700       1,422,357  

ZhongAn Online P&C Insurance Co. Ltd., Class H(a)(b)

    1,396,400       9,198,044  

Zhongji Innolight Co. Ltd., Class A

    163,600       1,414,300  

Zhongsheng Group Holdings Ltd.

    2,135,000       13,333,161  

Zhuzhou CRRC Times Electric Co. Ltd., Class H

    2,057,000       6,608,814  

Zijin Mining Group Co. Ltd., Class A

    5,039,700       5,290,502  

Zijin Mining Group Co. Ltd., Class H

    20,798,000       14,196,037  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class A(a)

    1,670,468       2,077,979  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class H(a)

    5,142,600       5,149,136  

ZTE Corp., Class A

    855,000       4,868,487  

ZTE Corp., Class H

    2,834,200       8,246,448  

ZTO Express Cayman Inc., ADR

    1,385,628       46,460,107  
   

 

 

 
      10,077,856,533  
Colombia — 0.1%            

Bancolombia SA

    881,176       6,109,519  

Ecopetrol SA

    18,517,392       10,814,215  

Grupo de Inversiones Suramericana SA

    978,862       5,481,656  

Interconexion Electrica SA ESP

    1,697,617       9,479,544  
   

 

 

 
      31,884,934  
Czech Republic — 0.1%            

CEZ AS

    576,118       11,891,644  

Komercni Banka AS(a)

    280,300       6,761,641  

Moneta Money Bank AS(b)

    1,882,725       4,755,903  
   

 

 

 
      23,409,188  
Egypt — 0.1%            

Commercial International Bank Egypt SAE

    5,440,898       23,195,046  

Eastern Co. SAE

    4,643,222       3,726,295  

EISewedy Electric Co.

    3,669,043       1,738,455  
   

 

 

 
      28,659,796  
Greece — 0.1%            

FF Group(a)(d)

    246,892       2,953  

Hellenic Telecommunications Organization SA

    872,163       14,289,974  

JUMBO SA

    419,090       7,292,618  

Motor Oil Hellas Corinth Refineries SA

    251,798       3,538,371  

OPAP SA

    732,748       6,730,217  
   

 

 

 
      31,854,133  
 

 

 

19  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Hungary — 0.2%            

MOL Hungarian Oil & Gas PLC(a)

    1,554,135     $ 8,777,231  

OTP Bank Nyrt(a)

    829,203       28,053,649  

Richter Gedeon Nyrt

    547,285       13,407,344  
   

 

 

 
      50,238,224  
India — 8.0%            

Adani Ports & Special Economic Zone Ltd.

    1,851,024       8,946,124  

Ambuja Cements Ltd.

    2,396,936       6,856,297  

Asian Paints Ltd.

    1,044,639       26,952,062  

Aurobindo Pharma Ltd.

    1,048,239       11,519,485  

Avenue Supermarts Ltd.(a)(b)

    571,378       17,475,321  

Axis Bank Ltd.(a)

    8,324,708       56,180,399  

Bajaj Auto Ltd.

    260,715       10,509,003  

Bajaj Finance Ltd.

    664,043       31,464,853  

Bajaj Finserv Ltd.

    142,798       12,009,233  

Bandhan Bank Ltd.(a)(b)

    2,692,461       11,185,743  

Berger Paints India Ltd.

    857,865       6,266,671  

Bharat Forge Ltd.

    805,307       5,374,001  

Bharat Petroleum Corp. Ltd.

    2,419,264       13,403,198  

Bharti Airtel Ltd.

    4,722,030       32,916,124  

Bharti Infratel Ltd.

    1,249,058       3,369,228  

Biocon Ltd.(a)

    977,390       4,994,671  

Bosch Ltd.

    25,331       4,409,760  

Britannia Industries Ltd.

    217,637       11,016,898  

Cipla Ltd.

    1,283,921       12,446,311  

Coal India Ltd.

    4,400,935       8,032,682  

Colgate-Palmolive India Ltd.

    233,852       4,331,063  

Container Corp. of India Ltd.

    808,120       4,314,658  

Dabur India Ltd.

    1,958,774       12,629,612  

Divi’s Laboratories Ltd.

    304,618       12,923,426  

DLF Ltd.

    2,180,312       4,690,451  

Dr. Reddy’s Laboratories Ltd.

    425,749       24,667,211  

Eicher Motors Ltd.

    490,320       13,935,393  

GAIL India Ltd.

    5,841,470       7,590,756  

Godrej Consumer Products Ltd.

    1,488,230       13,168,280  

Grasim Industries Ltd.

    1,093,576       10,026,149  

Havells India Ltd.

    924,262       7,729,232  

HCL Technologies Ltd.

    3,985,663       37,600,032  

HDFC Asset Management Co. Ltd.(b)

    153,928       5,041,674  

HDFC Life Insurance Co. Ltd.(a)(b)

    2,568,371       20,056,375  

Hero MotoCorp Ltd.

    360,693       14,730,309  

Hindalco Industries Ltd.

    4,254,208       10,706,681  

Hindustan Petroleum Corp. Ltd.

    2,251,452       6,164,863  

Hindustan Unilever Ltd.

    3,016,508       86,771,093  

Housing Development Finance Corp. Ltd.

    6,028,202       150,083,660  

ICICI Bank Ltd.(a)

    18,769,627       100,621,469  

ICICI Lombard General Insurance Co. Ltd.(b)

    738,131       12,602,102  

ICICI Prudential Life Insurance Co. Ltd.(b)

    1,257,235       7,218,971  

Indian Oil Corp. Ltd.

    6,756,390       7,875,533  

Indraprastha Gas Ltd.(a)

    753,041       4,035,418  

Info Edge India Ltd.

    224,514       9,954,626  

Infosys Ltd.

    12,491,922       157,592,620  

InterGlobe Aviation Ltd.(a)(b)

    342,460       5,579,063  

ITC Ltd.

    10,855,398       28,182,815  

JSW Steel Ltd.

    3,091,903       11,333,022  

Jubilant Foodworks Ltd.

    273,336       7,787,054  

Larsen & Toubro Ltd.

    1,654,446       21,239,259  

LIC Housing Finance Ltd.

    1,081,568       4,427,218  

Lupin Ltd.

    825,308       10,399,952  

Mahindra & Mahindra Ltd.

    2,772,527       22,859,717  

Marico Ltd.

    1,633,876       8,188,525  
Security   Shares     Value  
India (continued)            

Maruti Suzuki India Ltd.

    436,540     $ 40,565,320  

Motherson Sumi Systems Ltd.

    3,405,225       5,074,934  

Nestle India Ltd.

    85,776       18,586,266  

NTPC Ltd.

    8,435,019       11,046,916  

Oil & Natural Gas Corp. Ltd.

    9,100,831       10,132,298  

Page Industries Ltd.

    20,632       5,322,205  

Petronet LNG Ltd.

    2,372,115       7,745,649  

Pidilite Industries Ltd.

    454,176       8,655,614  

Piramal Enterprises Ltd.

    350,374       6,508,391  

Power Grid Corp. of India Ltd.

    6,618,596       16,090,721  

REC Ltd.

    2,530,279       3,648,937  

Reliance Industries Ltd.

    10,462,932       295,760,929  

SBI Life Insurance Co. Ltd.(a)(b)

    1,452,955       16,339,143  

Shree Cement Ltd.

    32,260       8,889,442  

Shriram Transport Finance Co. Ltd.

    347,342       3,314,749  

Siemens Ltd.

    252,967       3,986,058  

State Bank of India(a)

    6,513,327       18,759,302  

Sun Pharmaceutical Industries Ltd.

    3,101,187       21,918,861  

Tata Consultancy Services Ltd.

    3,290,522       100,907,255  

Tata Consumer Products Ltd.

    1,577,203       11,406,773  

Tata Motors Ltd.(a)

    6,024,368       11,720,130  

Tata Steel Ltd.

    1,224,409       6,869,965  

Tech Mahindra Ltd.

    1,689,374       17,006,774  

Titan Co. Ltd.

    1,123,939       16,803,924  

Torrent Pharmaceuticals Ltd.

    179,831       6,502,574  

UltraTech Cement Ltd.

    417,573       22,146,417  

United Spirits Ltd.(a)

    1,102,193       8,185,495  

UPL Ltd.

    1,848,899       12,708,630  

Vedanta Ltd.

    6,781,802       11,853,124  

Wipro Ltd.

    4,180,701       15,409,084  

Zee Entertainment Enterprises Ltd.

    3,151,248       8,714,282  
   

 

 

 
      1,914,966,508  
Indonesia — 1.4%            

Ace Hardware Indonesia Tbk PT

    15,303,900       1,623,658  

Adaro Energy Tbk PT

    54,984,700       4,096,714  

Astra International Tbk PT

    73,673,200       25,801,430  

Bank Central Asia Tbk PT

    36,287,600       78,181,868  

Bank Mandiri Persero Tbk PT

    68,454,100       27,969,229  

Bank Negara Indonesia Persero Tbk PT

    27,444,176       9,611,351  

Bank Rakyat Indonesia Persero Tbk PT

    203,500,610       49,049,761  

Barito Pacific Tbk PT(a)

    99,649,100       5,748,000  

Charoen Pokphand Indonesia Tbk PT(a)

    27,570,545       11,927,515  

Gudang Garam Tbk PT(a)

    1,783,400       5,817,099  

Hanjaya Mandala Sampoerna Tbk PT

    34,021,200       3,854,763  

Indah Kiat Pulp & Paper Corp. Tbk PT

    10,351,300       6,610,616  

Indocement Tunggal Prakarsa Tbk PT

    5,865,200       4,782,781  

Indofood CBP Sukses Makmur Tbk PT

    8,491,100       5,961,991  

Indofood Sukses Makmur Tbk PT

    16,047,700       8,402,658  

Kalbe Farma Tbk PT

    79,155,415       8,588,193  

Perusahaan Gas Negara Tbk PT

    40,068,700       3,453,131  

Semen Indonesia Persero Tbk PT

    11,042,300       7,999,743  

Telekomunikasi Indonesia Persero Tbk PT

    179,736,300       35,299,284  

Unilever Indonesia Tbk PT

    27,825,300       15,715,920  

United Tractors Tbk PT

    6,218,053       9,820,787  

XL Axiata Tbk PT

    13,076,900       2,191,082  
   

 

 

 
      332,507,574  
Malaysia — 1.7%            

AMMB Holdings Bhd

    6,530,175       4,577,628  

Axiata Group Bhd

    10,384,900       7,504,153  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  20


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Malaysia (continued)            

Carlsberg Brewery Malaysia Bhd

    564,000     $ 2,954,382  

CIMB Group Holdings Bhd(c)

    21,380,200       16,937,861  

Dialog Group Bhd

    14,283,712       12,310,293  

DiGi.Com Bhd

    11,723,400       11,116,896  

Fraser & Neave Holdings Bhd

    525,000       3,859,201  

Gamuda Bhd

    6,582,100       5,372,498  

Genting Bhd

    8,230,100       6,934,978  

Genting Malaysia Bhd

    11,285,200       6,176,991  

Genting Plantations Bhd

    1,161,600       2,771,889  

HAP Seng Consolidated Bhd

    2,348,400       4,059,172  

Hartalega Holdings Bhd

    6,205,200       24,609,268  

Hong Leong Bank Bhd

    2,511,900       8,442,348  

Hong Leong Financial Group Bhd

    913,300       2,705,587  

IHH Healthcare Bhd

    8,374,600       10,776,103  

IJM Corp. Bhd

    183,800       52,949  

IOI Corp. Bhd

    7,740,520       8,287,773  

Kossan Rubber Industries

    2,167,500       8,315,124  

Kuala Lumpur Kepong Bhd

    1,668,600       9,077,056  

Malayan Banking Bhd

    14,414,500       25,365,091  

Malaysia Airports Holdings Bhd

    3,991,900       4,887,454  

Maxis Bhd(c)

    8,908,600       10,693,314  

MISC Bhd

    4,720,100       8,623,205  

Nestle Malaysia Bhd

    267,700       8,945,826  

Petronas Chemicals Group Bhd

    8,992,000       11,786,417  

Petronas Dagangan Bhd

    1,009,300       4,991,377  

Petronas Gas Bhd

    2,700,800       10,698,164  

PPB Group Bhd

    2,345,760       10,136,521  

Press Metal Aluminium Holdings Bhd

    5,560,200       6,954,421  

Public Bank Bhd

    10,760,530       42,416,973  

QL Resources Bhd

    2,336,100       5,383,882  

RHB Bank Bhd

    5,954,125       6,546,607  

Sime Darby Bhd

    10,111,773       5,316,236  

Sime Darby Plantation Bhd

    8,141,373       9,967,832  

Supermax Corp. Bhd(a)

    2,568,600       13,652,336  

Telekom Malaysia Bhd(c)

    4,264,400       4,248,532  

Tenaga Nasional Bhd

    8,203,750       21,388,243  

Top Glove Corp. Bhd

    5,698,300       35,950,384  

Westports Holdings Bhd

    3,610,400       3,163,596  

YTL Corp. Bhd(a)

    11,620,989       1,869,178  
   

 

 

 
      409,827,739  
Mexico — 1.6%            

Alfa SAB de CV, Class A

    10,842,700       6,970,519  

America Movil SAB de CV, Series L, NVS

    123,286,900       74,864,429  

Arca Continental SAB de CV

    1,587,436       7,240,873  

Becle SAB de CV

    1,533,000       2,928,572  

Cemex SAB de CV, CPO, NVS

    55,836,473       17,909,716  

Coca-Cola Femsa SAB de CV

    1,884,003       7,902,379  

Fibra Uno Administracion SA de CV

    11,647,700       9,089,953  

Fomento Economico Mexicano SAB de CV

    7,113,100       41,392,873  

Gruma SAB de CV, Class B

    792,770       9,374,797  

Grupo Aeroportuario del Pacifico SAB de CV, Class B

    1,410,300       10,966,136  

Grupo Aeroportuario del Sureste SAB de CV, Class B(a)(c)

    773,235       8,761,163  

Grupo Bimbo SAB de CV, Series A(c)

    5,878,500       10,856,665  

Grupo Carso SAB de CV, Series A1

    1,774,241       3,502,922  

Grupo Financiero Banorte SAB de CV, Class O(a)

    9,551,356       33,023,445  

Grupo Financiero Inbursa SAB de CV, Class O(a)(c)

    8,622,300       6,307,367  

Grupo Mexico SAB de CV, Series B

    11,415,388       30,460,507  
Security   Shares     Value  
Mexico (continued)            

Grupo Televisa SAB, CPO(a)

    8,820,200     $ 10,889,235  

Industrias Penoles SAB de CV

    518,673       8,651,265  

Infraestructura Energetica Nova SAB de CV

    2,002,100       5,862,862  

Kimberly-Clark de Mexico SAB de CV, Class A

    5,607,200       9,008,003  

Megacable Holdings SAB de CV, CPO

    1,164,560       3,351,715  

Orbia Advance Corp. SAB de CV

    3,891,334       6,251,453  

Promotora y Operadora de Infraestructura SAB de CV(a)(c)

    865,905       6,436,326  

Wal-Mart de Mexico SAB de CV

    18,836,400       45,210,458  
   

 

 

 
      377,213,633  
Pakistan — 0.0%            

Habib Bank Ltd.(a)

    2,354,165       1,911,191  

MCB Bank Ltd.(a)

    1,637,146       1,690,968  

Oil & Gas Development Co. Ltd.

    2,671,630       1,850,986  
   

 

 

 
      5,453,145  
Peru — 0.3%            

Cia. de Minas Buenaventura SAA, ADR

    805,741       11,344,833  

Credicorp Ltd.

    247,489       32,292,365  

Southern Copper Corp.

    312,727       15,042,169  
   

 

 

 
      58,679,367  
Philippines — 0.7%            

Aboitiz Equity Ventures Inc.

    7,379,120       7,305,306  

Aboitiz Power Corp.

    5,251,564       2,886,546  

Ayala Corp.

    1,055,296       15,964,930  

Ayala Land Inc.

    28,102,900       16,693,071  

Bank of the Philippine Islands

    3,283,924       4,537,958  

BDO Unibank Inc.

    7,394,521       13,115,991  

Globe Telecom Inc.

    124,310       5,353,394  

GT Capital Holdings Inc.

    360,342       2,972,812  

International Container Terminal Services Inc.

    3,674,900       7,958,431  

JG Summit Holdings Inc.

    10,681,454       14,165,567  

Jollibee Foods Corp.

    1,674,579       4,666,095  

Manila Electric Co.

    802,850       4,454,298  

Megaworld Corp.(a)

    41,987,900       2,520,053  

Metro Pacific Investments Corp.

    53,871,500       3,733,283  

Metropolitan Bank & Trust Co.

    6,428,165       4,441,446  

PLDT Inc.

    318,163       9,705,333  

Puregold Price Club Inc.

    2,725,270       3,035,260  

Robinsons Land Corp.

    7,974,506       2,404,605  

SM Investments Corp.

    908,107       15,920,201  

SM Prime Holdings Inc.

    37,785,425       22,756,201  

Universal Robina Corp.

    3,308,760       9,403,880  
   

 

 

 
      173,994,661  
Poland — 0.7%            

Bank Polska Kasa Opieki SA(a)

    673,808       9,606,018  

CD Projekt SA(a)

    249,723       29,849,269  

Cyfrowy Polsat SA(a)

    974,271       7,637,904  

Dino Polska SA(a)(b)

    183,234       11,168,206  

Grupa Lotos SA

    347,705       3,834,797  

KGHM Polska Miedz SA(a)

    512,724       19,126,434  

LPP SA(a)

    4,838       9,475,414  

mBank SA(a)

    54,370       2,787,749  

Orange Polska SA(a)

    2,468,852       4,862,263  

PGE Polska Grupa Energetyczna SA(a)

    3,097,452       5,098,040  

Polski Koncern Naftowy ORLEN SA

    1,101,611       15,206,439  

Polskie Gornictwo Naftowe i Gazownictwo SA

    6,373,105       8,911,976  

Powszechna Kasa Oszczednosci Bank Polski SA(a)

    3,200,289       18,816,763  

Powszechny Zaklad Ubezpieczen SA(a)

    2,184,514       16,178,939  
 

 

 

21  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Poland (continued)            

Santander Bank Polska SA(a)

    129,858     $ 5,362,742  
   

 

 

 
      167,922,953  
Qatar — 0.8%            

Barwa Real Estate Co.

    7,018,511       6,518,759  

Commercial Bank PSQC (The)

    7,545,834       8,535,165  

Industries Qatar QSC

    6,602,655       17,726,938  

Masraf Al Rayan QSC

    13,930,676       15,817,813  

Mesaieed Petrochemical Holding Co.

    16,444,205       9,492,638  

Ooredoo QPSC

    3,089,576       5,553,245  

Qatar Electricity & Water Co. QSC

    1,973,329       9,242,004  

Qatar Fuel QSC

    1,875,552       9,396,911  

Qatar International Islamic Bank QSC

    1,916,940       4,468,075  

Qatar Islamic Bank SAQ

    4,382,357       19,092,638  

Qatar National Bank QPSC

    16,571,311       81,220,857  
   

 

 

 
      187,065,043  
Russia — 3.1%            

Alrosa PJSC

    9,336,080       8,274,717  

Gazprom PJSC

    40,567,049       98,976,816  

Gazprom PJSC, ADR

    1,391,486       6,770,971  

Inter RAO UES PJSC

    135,515,000       9,513,593  

LUKOIL PJSC

    1,534,863       102,986,393  

Magnit PJSC, GDR(e)

    1,328,469       19,488,640  

Magnitogorsk Iron & Steel Works PJSC

    8,272,000       4,193,477  

MMC Norilsk Nickel PJSC

    232,377       60,391,764  

Mobile TeleSystems PJSC, ADR

    1,697,697       15,822,536  

Moscow Exchange MICEX-RTS PJSC

    5,002,920       9,229,688  

Novatek PJSC, GDR(e)

    337,838       50,033,808  

Novolipetsk Steel PJSC

    4,358,810       9,077,685  

PhosAgro PJSC, GDR, Registered Shares(e)

    475,120       5,663,430  

Polymetal International PLC

    866,089       23,128,244  

Polyus PJSC

    123,418       29,978,631  

Rosneft Oil Co. PJSC

    4,318,797       21,681,255  

Rosneft Oil Co. PJSC, GDR(e)

    43,520       221,082  

Sberbank of Russia PJSC(a)

    39,342,681       119,508,918  

Severstal PAO

    734,218       9,210,603  

Surgutneftegas PJSC

    21,401,560       10,553,330  

Surgutneftegas PJSC, ADR

    578,751       2,875,235  

Tatneft PJSC

    5,235,339       38,485,447  

VTB Bank PJSC(a)

    12,032,231,998       5,694,427  

X5 Retail Group NV, GDR(e)

    459,415       16,538,671  

Yandex NV, Class A(a)

    856,977       59,757,626  
   

 

 

 
      738,056,987  
Saudi Arabia — 2.7%            

Abdullah Al Othaim Markets Co.

    130,281       4,335,231  

Advanced Petrochemical Co.

    338,692       4,975,917  

Al Rajhi Bank

    4,503,439       77,930,166  

Alinma Bank(a)

    3,971,808       16,414,837  

Almarai Co. JSC

    937,777       13,427,355  

Arab National Bank

    2,091,507       11,577,194  

Bank AlBilad

    1,338,652       8,573,483  

Bank Al-Jazira

    1,745,347       6,077,732  

Banque Saudi Fransi

    2,128,705       18,134,390  

Bupa Arabia for Cooperative Insurance Co.(a)

    221,592       7,326,430  

Co for Cooperative Insurance (The)(a)

    212,703       4,480,406  

Dar Al Arkan Real Estate Development Co.(a)

    2,186,499       4,728,101  

Emaar Economic City(a)

    1,357,733       2,921,491  

Etihad Etisalat Co.(a)

    1,532,395       10,950,202  

Jarir Marketing Co.

    207,484       9,039,685  

National Commercial Bank(a)

    5,428,751       53,846,748  
Security   Shares     Value  
Saudi Arabia (continued)            

National Industrialization Co.(a)

    1,287,690     $ 4,058,312  

Rabigh Refining & Petrochemical Co.(a)

    836,977       3,186,826  

Riyad Bank

    4,846,395       24,784,721  

Sahara International Petrochemical Co.

    1,295,180       5,497,811  

Samba Financial Group

    3,756,064       27,591,239  

Saudi Airlines Catering Co.

    121,795       2,601,229  

Saudi Arabian Fertilizer Co.

    699,883       15,470,224  

Saudi Arabian Mining Co.(a)

    1,626,545       17,087,516  

Saudi Arabian Oil Co.(b)

    7,680,142       72,799,010  

Saudi Basic Industries Corp.

    3,323,719       77,987,247  

Saudi British Bank (The)

    2,571,582       18,410,318  

Saudi Cement Co.

    259,184       3,890,749  

Saudi Electricity Co.

    3,171,956       13,464,395  

Saudi Industrial Investment Group

    771,514       4,505,101  

Saudi Kayan Petrochemical Co.(a)

    3,102,010       7,510,099  

Saudi Telecom Co.

    2,213,905       56,669,168  

Savola Group (The)

    969,075       12,557,705  

Yanbu National Petrochemical Co.

    902,662       12,876,433  
   

 

 

 
      635,687,471  
South Africa — 3.5%            

Absa Group Ltd.

    2,622,810       11,959,688  

Anglo American Platinum Ltd.

    202,273       15,093,778  

AngloGold Ashanti Ltd.

    1,548,228       45,206,019  

Aspen Pharmacare Holdings Ltd.(a)

    1,451,370       11,640,088  

Bid Corp. Ltd.

    1,252,734       20,698,164  

Bidvest Group Ltd. (The)

    1,013,325       8,141,292  

Capitec Bank Holdings Ltd.(c)

    255,448       12,590,516  

Clicks Group Ltd.

    921,022       12,504,099  

Discovery Ltd.

    1,495,967       10,687,339  

Exxaro Resources Ltd.

    942,969       7,635,593  

FirstRand Ltd.

    17,508,974       39,118,404  

Gold Fields Ltd.

    3,265,236       42,223,286  

Growthpoint Properties Ltd.

    10,484,802       7,556,670  

Harmony Gold Mining Co. Ltd.(a)

    1,866,823       12,188,551  

Impala Platinum Holdings Ltd.

    2,975,014       27,459,777  

Kumba Iron Ore Ltd.

    236,851       7,423,766  

Life Healthcare Group Holdings Ltd.

    5,116,115       4,994,941  

Momentum Metropolitan Holdings

    3,561,153       3,186,724  

Mr. Price Group Ltd.

    958,978       6,559,514  

MTN Group Ltd.

    6,240,136       22,494,509  

MultiChoice Group Ltd.(a)

    1,619,331       9,261,240  

Naspers Ltd., Class N

    1,598,346       291,789,838  

Nedbank Group Ltd.

    1,362,150       7,718,012  

NEPI Rockcastle PLC

    1,478,499       6,919,807  

Northam Platinum Ltd.(a)

    1,334,890       12,611,179  

Old Mutual Ltd.

    17,615,937       11,635,643  

Pepkor Holdings Ltd.(b)

    2,566,982       1,469,769  

Pick n Pay Stores Ltd.

    61,507       151,505  

Rand Merchant Investment Holdings Ltd.

    2,970,728       5,272,916  

Reinet Investments SCA

    567,633       10,826,449  

Remgro Ltd.

    1,891,470       9,816,161  

Sanlam Ltd.

    6,812,653       22,109,329  

Sasol Ltd.(a)

    2,078,239       16,998,839  

Shoprite Holdings Ltd.

    1,814,361       11,834,244  

Sibanye Stillwater Ltd.(a)

    8,471,448       25,647,492  

SPAR Group Ltd. (The)

    697,362       6,654,500  

Standard Bank Group Ltd.

    4,711,509       29,365,498  

Tiger Brands Ltd.

    589,502       6,000,019  

Vodacom Group Ltd.

    2,323,482       17,537,292  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  22


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Africa (continued)            

Woolworths Holdings Ltd.

    3,586,008     $ 6,729,090  
   

 

 

 
      839,711,540  
South Korea — 10.8%            

Alteogen Inc.(a)

    63,509       11,173,820  

Amorepacific Corp.

    118,157       16,710,477  

AMOREPACIFIC Group

    108,975       4,678,614  

BGF retail Co. Ltd.

    30,264       3,248,304  

BNK Financial Group Inc.

    1,037,991       4,438,921  

Celltrion Healthcare Co. Ltd.(a)

    251,761       21,214,981  

Celltrion Inc.(a)(c)

    347,940       86,992,323  

Celltrion Pharm Inc.(a)

    57,994       5,423,970  

Cheil Worldwide Inc.

    267,934       4,116,336  

CJ CheilJedang Corp.

    30,743       10,533,211  

CJ Corp.

    54,910       3,744,179  

CJ ENM Co. Ltd.

    41,099       4,106,786  

CJ Logistics Corp.(a)

    33,715       4,299,876  

Coway Co. Ltd.(a)

    181,557       12,196,522  

Daelim Industrial Co. Ltd.

    101,937       7,457,130  

Daewoo Engineering & Construction Co. Ltd.(a)

    8,037       19,925  

Daewoo Shipbuilding & Marine Engineering Co. Ltd.(a)

    140,201       2,614,237  

DB Insurance Co. Ltd.

    185,007       6,798,178  

Doosan Bobcat Inc.

    187,905       4,160,200  

Douzone Bizon Co. Ltd.

    71,060       6,041,805  

E-MART Inc.

    70,543       7,126,155  

Fila Holdings Corp.

    184,040       5,376,032  

GS Engineering & Construction Corp.

    219,932       4,573,045  

GS Holdings Corp.

    189,189       5,176,061  

GS Retail Co. Ltd.

    100,051       2,775,217  

Hana Financial Group Inc.

    1,103,288       26,191,364  

Hankook Tire & Technology Co. Ltd.

    272,547       6,768,361  

Hanmi Pharm Co. Ltd.

    24,499       6,321,192  

Hanon Systems

    688,305       7,474,648  

Hanwha Corp.

    141,429       3,274,095  

Hanwha Solutions Corp.

    390,269       13,125,050  

HLB Inc.(a)(c)

    162,481       11,872,507  

Hotel Shilla Co. Ltd.(c)

    116,109       6,871,338  

Hyundai Department Store Co. Ltd.

    672       30,378  

Hyundai Engineering & Construction Co. Ltd.

    287,623       7,808,605  

Hyundai Glovis Co. Ltd.

    70,129       8,589,755  

Hyundai Heavy Industries Holdings Co. Ltd.

    36,117       6,871,321  

Hyundai Marine & Fire Insurance Co. Ltd.

    231,863       4,313,639  

Hyundai Mobis Co. Ltd.(a)

    245,315       46,258,574  

Hyundai Motor Co.(a)

    545,003       80,977,380  

Hyundai Steel Co.

    319,192       6,744,439  

Industrial Bank of Korea

    933,628       6,358,322  

Kakao Corp.

    207,638       71,141,229  

Kangwon Land Inc.

    420,089       7,302,667  

KB Financial Group Inc.

    1,453,646       45,093,741  

Kia Motors Corp.

    964,865       34,479,770  

KMW Co. Ltd.(a)(c)

    97,976       6,301,344  

Korea Aerospace Industries Ltd.(c)

    276,360       5,222,899  

Korea Electric Power Corp.(a)

    936,728       16,165,438  

Korea Gas Corp.

    100,922       2,005,017  

Korea Investment Holdings Co. Ltd.

    155,891       7,992,055  

Korea Shipbuilding & Offshore Engineering Co. Ltd.(a)

    142,678       10,353,433  

Korea Zinc Co. Ltd.

    31,935       10,713,105  

Korean Air Lines Co. Ltd.(a)

    288,959       4,293,397  

KT&G Corp.

    425,547       29,769,304  
Security   Shares     Value  
South Korea (continued)            

Kumho Petrochemical Co. Ltd.

    68,546     $ 5,799,203  

LG Chem Ltd.

    168,391       104,898,847  

LG Corp.

    344,625       23,992,329  

LG Display Co. Ltd.(a)

    857,763       10,542,419  

LG Electronics Inc.

    386,980       27,429,679  

LG Household & Health Care Ltd.

    34,410       42,668,516  

LG Innotek Co. Ltd.

    53,979       6,588,901  

LG Uplus Corp.

    726,453       7,307,950  

Lotte Chemical Corp.(c)

    63,212       10,083,908  

Lotte Corp.

    99,262       2,506,827  

Lotte Shopping Co. Ltd.

    41,398       2,648,580  

Meritz Securities Co. Ltd.

    1,002,331       2,704,328  

Mirae Asset Daewoo Co. Ltd.

    1,151,713       9,016,694  

NAVER Corp.

    455,693       123,714,953  

NCSoft Corp.

    61,091       42,427,877  

Netmarble Corp.(a)(b)(c)

    81,196       11,380,700  

NH Investment & Securities Co. Ltd.

    457,789       3,452,975  

Orion Corp./Republic of Korea

    90,110       10,657,846  

Ottogi Corp.

    5,201       2,635,745  

Pan Ocean Co. Ltd.(a)

    1,033,319       2,953,210  

Pearl Abyss Corp.(a)(c)

    23,422       3,588,521  

POSCO

    270,851       42,067,522  

POSCO Chemical Co. Ltd.

    81,791       6,127,956  

Posco International Corp.

    182,200       2,085,967  

S-1 Corp.

    66,199       4,859,460  

Samsung Biologics Co. Ltd.(a)(b)

    61,233       40,103,775  

Samsung C&T Corp.

    310,836       28,260,197  

Samsung Card Co. Ltd.

    111,382       2,695,709  

Samsung Electro-Mechanics Co. Ltd.

    206,858       21,680,125  

Samsung Electronics Co. Ltd.

    17,500,285       795,534,464  

Samsung Engineering Co. Ltd.(a)

    584,998       5,564,843  

Samsung Fire & Marine Insurance Co. Ltd.

    114,177       17,973,819  

Samsung Heavy Industries Co. Ltd.(a)

    1,751,560       7,608,426  

Samsung Life Insurance Co. Ltd.

    259,510       13,369,822  

Samsung SDI Co. Ltd.

    202,703       77,214,502  

Samsung SDS Co. Ltd.

    129,672       17,192,811  

Samsung Securities Co. Ltd.

    230,796       5,857,816  

Seegene Inc.

    65,409       14,481,494  

Shin Poong Pharmaceutical Co. Ltd.(a)

    72,042       8,278,250  

Shinhan Financial Group Co. Ltd.

    1,683,471       42,019,459  

Shinsegae Inc.

    27,526       4,703,913  

SK Holdings Co. Ltd.

    129,739       23,372,461  

SK Hynix Inc.

    2,007,217       126,897,884  

SK Innovation Co. Ltd.

    205,535       25,088,454  

SK Telecom Co. Ltd.

    127,447       26,607,337  

S-Oil Corp.(c)

    167,019       7,943,912  

Woori Financial Group Inc.

    2,010,227       14,316,458  

Yuhan Corp.

    178,349       10,059,250  
   

 

 

 
      2,594,646,766  
Taiwan — 12.1%            

Accton Technology Corp.

    1,896,000       15,120,699  

Acer Inc.(a)

    10,633,121       8,461,850  

Advantech Co. Ltd.(c)

    1,429,455       14,785,870  

Airtac International Group

    463,000       10,272,583  

ASE Technology Holding Co. Ltd.(c)

    12,244,110       25,538,556  

Asia Cement Corp.(c)

    8,081,077       11,705,120  

ASMedia Technology Inc.

    86,000       5,173,219  

Asustek Computer Inc.(c)

    2,499,968       20,704,198  

AU Optronics Corp.(a)(c)

    32,045,000       11,412,854  

Catcher Technology Co. Ltd.

    2,507,210       17,132,580  
 

 

 

23  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)            

Cathay Financial Holding Co. Ltd.

    28,757,710     $ 39,057,129  

Chailease Holding Co. Ltd.

    4,511,990       19,913,866  

Chang Hwa Commercial Bank Ltd.(c)

    20,732,653       12,895,418  

Cheng Shin Rubber Industry Co. Ltd.(c)

    6,839,128       8,391,139  

Chicony Electronics Co. Ltd.

    2,210,998       6,668,825  

China Development Financial Holding Corp.

    47,745,848       13,896,684  

China Life Insurance Co. Ltd.

    10,062,490       7,047,498  

China Steel Corp.(c)

    42,068,313       28,531,583  

Chunghwa Telecom Co. Ltd.

    13,509,410       49,955,557  

Compal Electronics Inc.(c)

    13,775,908       8,685,797  

CTBC Financial Holding Co. Ltd.

    64,122,772       41,413,238  

Delta Electronics Inc.

    7,147,000       46,036,603  

E.Sun Financial Holding Co. Ltd.

    41,773,186       38,724,355  

Eclat Textile Co. Ltd.

    712,427       9,408,703  

Eva Airways Corp.

    8,645,109       3,388,332  

Evergreen Marine Corp. Taiwan Ltd.(a)

    8,650,810       5,130,075  

Far Eastern New Century Corp.(c)

    10,909,038       9,833,991  

Far EasTone Telecommunications Co. Ltd.

    5,563,000       11,622,170  

Feng TAY Enterprise Co. Ltd.(c)

    1,452,137       8,438,197  

First Financial Holding Co. Ltd.(c)

    37,751,586       27,340,838  

Formosa Chemicals & Fibre Corp.

    12,965,090       29,958,697  

Formosa Petrochemical Corp.

    4,327,000       12,092,565  

Formosa Plastics Corp.(c)

    14,166,280       37,755,503  

Formosa Taffeta Co. Ltd.(c)

    3,109,000       3,353,607  

Foxconn Technology Co. Ltd.(c)

    3,524,637       6,270,506  

Fubon Financial Holding Co. Ltd.

    23,540,969       34,338,854  

Giant Manufacturing Co. Ltd.

    1,122,203       11,665,113  

Globalwafers Co. Ltd.(c)

    814,000       10,930,457  

Highwealth Construction Corp.(c)

    2,993,170       4,733,333  

Hiwin Technologies Corp.

    914,278       10,033,486  

Hon Hai Precision Industry Co. Ltd.(c)

    45,563,873       119,416,589  

Hotai Motor Co. Ltd.

    1,137,000       23,134,093  

Hua Nan Financial Holdings Co. Ltd.

    31,187,327       19,185,497  

Innolux Corp.(a)(c)

    30,721,002       9,548,780  

Inventec Corp.(c)

    9,077,281       7,038,091  

Largan Precision Co. Ltd.(c)

    371,000       42,800,641  

Lite-On Technology Corp.

    7,715,246       12,200,720  

MediaTek Inc.

    5,550,338       105,174,852  

Mega Financial Holding Co. Ltd.(c)

    39,374,162       39,251,376  

Micro-Star International Co. Ltd.

    2,513,000       11,605,116  

Nan Ya Plastics Corp.

    19,156,160       40,151,452  

Nanya Technology Corp.(c)

    4,577,000       8,095,915  

Nien Made Enterprise Co. Ltd.

    623,000       7,176,661  

Novatek Microelectronics Corp.

    2,152,000       17,602,372  

Pegatron Corp.

    7,069,414       15,058,479  

Phison Electronics Corp.(c)

    565,535       5,338,963  

Pou Chen Corp.(c)

    8,620,220       8,137,965  

Powertech Technology Inc.

    2,736,300       8,057,404  

President Chain Store Corp.

    2,095,000       19,278,156  

Quanta Computer Inc.

    10,243,000       26,880,391  

Realtek Semiconductor Corp.(c)

    1,798,637       23,294,039  

Ruentex Development Co. Ltd.(c)

    3,267,687       4,811,072  

Shanghai Commercial & Savings Bank Ltd. (The)

    12,647,318       18,017,412  

Shin Kong Financial Holding Co. Ltd.(c)

    40,784,582       11,536,971  

SinoPac Financial Holdings Co. Ltd.

    39,310,626       14,469,429  

Standard Foods Corp.

    1,718,615       3,731,090  

Synnex Technology International Corp.

    4,855,834       7,232,076  

Taishin Financial Holding Co. Ltd.

    35,883,877       16,204,399  

Taiwan Business Bank(c)

    18,747,817       6,389,522  

Taiwan Cement Corp.(c)

    18,017,726       26,343,590  
Security   Shares     Value  
Taiwan (continued)            

Taiwan Cooperative Financial Holding Co. Ltd.

    34,233,975     $ 23,393,187  

Taiwan High Speed Rail Corp.

    7,370,000       8,163,352  

Taiwan Mobile Co. Ltd.

    5,847,600       20,228,393  

Taiwan Semiconductor Manufacturing Co. Ltd.

    90,272,000       1,312,169,044  

Uni-President Enterprises Corp.

    17,634,839       40,027,956  

United Microelectronics Corp.(c)

    41,047,000       29,657,529  

Vanguard International Semiconductor
Corp.(c)

    3,319,000       10,576,368  

Walsin Technology Corp.(c)

    1,188,000       6,478,196  

Win Semiconductors Corp.(c)

    1,253,000       12,213,350  

Winbond Electronics Corp.(c)

    11,177,000       4,628,276  

Wistron Corp.

    10,398,940       11,305,700  

Wiwynn Corp.(c)

    296,000       7,888,895  

WPG Holdings Ltd.

    5,867,449       8,218,808  

Yageo Corp.(c)

    1,369,861       15,546,707  

Yuanta Financial Holding Co. Ltd.

    35,585,980       22,315,902  

Zhen Ding Technology Holding Ltd.(c)

    2,100,075       8,803,545  
   

 

 

 
      2,916,597,969  
Thailand — 1.9%            

Advanced Info Service PCL, NVDR

    4,307,900       25,330,410  

Airports of Thailand PCL, NVDR(c)

    15,797,700       28,425,454  

Asset World Corp. PCL, NVDR(c)

    23,559,300       2,997,665  

B Grimm Power PCL, NVDR

    2,850,600       4,236,172  

Bangkok Bank PCL, Foreign(c)

    1,732,600       5,928,891  

Bangkok Commercial Asset Management PCL, NVDR(c)

    6,544,500       4,899,569  

Bangkok Dusit Medical Services PCL, NVDR

    34,664,400       23,167,147  

Bangkok Expressway & Metro PCL, NVDR

    28,732,400       8,354,991  

Berli Jucker PCL, NVDR(c)

    4,249,600       5,052,139  

BTS Group Holdings PCL, NVDR

    26,920,300       8,995,779  

Bumrungrad Hospital PCL, NVDR

    1,495,500       5,309,752  

Central Pattana PCL, NVDR(c)

    8,699,700       13,137,952  

Central Retail Corp. PCL, NVDR(a)

    6,392,934       6,111,006  

Charoen Pokphand Foods PCL, NVDR

    14,801,900       15,338,140  

CP ALL PCL, NVDR(a)

    21,215,900       43,287,321  

Electricity Generating PCL, NVDR

    1,102,900       7,867,099  

Energy Absolute PCL, NVDR(c)

    5,833,400       7,872,208  

Global Power Synergy PCL, NVDR

    2,626,600       5,401,314  

Gulf Energy Development PCL, NVDR

    8,282,700       8,383,165  

Home Product Center PCL, NVDR

    22,909,214       10,967,862  

Indorama Ventures PCL, NVDR(c)

    6,356,980       4,840,884  

Intouch Holdings PCL, NVDR

    8,388,800       14,690,002  

IRPC PCL, NVDR(c)

    42,763,800       3,215,272  

Kasikornbank PCL, Foreign(c)

    4,374,800       11,842,779  

Kasikornbank PCL, NVDR

    2,101,100       5,687,772  

Krung Thai Bank PCL, NVDR

    12,081,700       3,707,293  

Krungthai Card PCL, NVDR

    2,515,900       2,485,788  

Land & Houses PCL, NVDR

    29,763,700       7,076,918  

Minor International PCL, NVDR(a)(c)

    11,279,720       8,118,426  

Muangthai Capital PCL, NVDR(a)(c)

    2,662,200       4,255,585  

Osotspa PCL, NVDR

    2,593,000       3,228,492  

PTT Exploration & Production PCL, NVDR

    5,149,939       14,727,113  

PTT Global Chemical PCL, NVDR

    8,400,630       12,483,867  

PTT PCL, NVDR

    42,149,100       48,754,682  

Ratch Group PCL, NVDR

    2,857,400       5,141,438  

Siam Cement PCL (The), NVDR

    2,838,900       32,290,806  

Siam Commercial Bank PCL (The), NVDR(c)

    3,096,100       7,212,379  

Srisawad Corp PCL, NVDR(c)

    2,674,500       3,931,509  

Thai Oil PCL, NVDR(c)

    4,361,600       5,815,934  

Thai Union Group PCL, NVDR

    11,714,200       5,307,100  

TMB Bank PCL, NVDR

    80,417,063       2,428,855  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  24


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Thailand (continued)            

Total Access Communication PCL, NVDR

    2,660,900     $ 3,056,540  

True Corp. PCL, NVDR(c)

    42,561,301       4,540,237  
   

 

 

 
      455,903,707  
Turkey — 0.3%            

Akbank T.A.S.(a)

    11,121,774       7,390,335  

Anadolu Efes Biracilik Ve Malt Sanayii AS

    810,918       2,141,070  

Aselsan Elektronik Sanayi Ve Ticaret AS

    2,567,040       5,664,999  

BIM Birlesik Magazalar AS

    1,664,185       15,343,790  

Enka Insaat ve Sanayi AS

    2       1  

Eregli Demir ve Celik Fabrikalari TAS

    5,128,898       6,077,455  

Ford Otomotiv Sanayi AS

    260,811       2,994,772  

Haci Omer Sabanci Holding AS

    3,514,855       3,692,055  

KOC Holding AS

    2,649,844       5,365,223  

TAV Havalimanlari Holding AS

    171,580       349,735  

Tupras Turkiye Petrol Rafinerileri AS(a)(c)

    469,946       5,108,803  

Turk Hava Yollari AO(a)(c)

    1,967,478       2,823,287  

Turkcell Iletisim Hizmetleri AS

    4,007,910       7,799,059  

Turkiye Garanti Bankasi AS(a)

    8,288,022       7,613,402  

Turkiye Is Bankasi AS, Class C(a)

    5,557,716       3,708,165  

Yapi ve Kredi Bankasi AS(a)

    9,555,079       2,635,794  
   

 

 

 
      78,707,945  
United Arab Emirates — 0.5%            

Abu Dhabi Commercial Bank PJSC

    10,597,170       15,983,099  

Aldar Properties PJSC

    14,565,345       8,049,671  

Dubai Islamic Bank PJSC

    6,712,701       7,492,772  

Emaar Malls PJSC(a)

    9,373,558       3,547,159  

Emaar Properties PJSC(a)

    13,502,634       10,586,986  

Emirates NBD Bank PJSC

    8,098,366       23,811,266  

Emirates Telecommunications Group Co. PJSC

    6,454,369       29,098,825  

First Abu Dhabi Bank PJSC

    10,262,373       32,017,967  
   

 

 

 
      130,587,745  
   

 

 

 

Total Common Stocks — 96.8%
(Cost: $18,977,043,291)

      23,251,822,823  
   

 

 

 

Preferred Stocks

   
Brazil — 1.2%            

Banco Bradesco SA, Preference Shares, NVS

    16,012,926       60,538,487  

Braskem SA, Class A, Preference Shares, NVS

    712,100       2,763,559  

Centrais Eletricas Brasileiras SA, Class B, Preference Shares, NVS

    980,237       6,412,933  

Cia. Energetica de Minas Gerais, Preference Shares, NVS

    3,542,425       6,799,566  

Cia. Paranaense de Energia, Preference Shares, NVS

    305,900       3,444,923  

Gerdau SA, Preference Shares, NVS

    3,987,285       13,875,074  

Itau Unibanco Holding SA, Preference Shares, NVS

    17,626,579       75,667,791  

Itausa SA, Preference Shares, NVS

    16,257,292       27,945,508  

Lojas Americanas SA, Preference Shares, NVS

    3,344,129       19,671,347  

Petroleo Brasileiro SA, Preference Shares, NVS

    17,155,827       68,455,687  

Telefonica Brasil SA, Preference Shares, NVS

    1,618,067       14,110,415  
   

 

 

 
      299,685,290  
Chile — 0.1%            

Embotelladora Andina SA, Class B, Preference Shares

    1,241,388       2,650,616  
Security   Shares     Value  
Chile (continued)            

Sociedad Quimica y Minera de Chile SA, Class B, Preference Shares

    429,745     $ 13,466,345  
   

 

 

 
      16,116,961  
Colombia — 0.1%            

Bancolombia SA, Preference Shares, NVS

    1,725,527       12,295,020  
   

 

 

 
Russia — 0.1%            

Surgutneftegas PJSC, Preference Shares, NVS

    25,401,200       12,724,494  
   

 

 

 
South Korea — 0.6%            

Amorepacific Corp., Preference Shares, NVS

    34,650       1,741,397  

Hyundai Motor Co.

   

Preference Shares, NVS

    88,925       6,512,732  

Series 2, Preference Shares, NVS

    138,191       10,283,765  

LG Chem Ltd., Preference Shares, NVS

    28,593       9,026,328  

LG Household & Health Care Ltd., Preference Shares, NVS

    7,965       4,700,282  

Samsung Electronics Co. Ltd., Preference Shares, NVS

    3,028,409       121,095,570  
   

 

 

 
      153,360,074  
   

 

 

 

Total Preferred Stocks — 2.1%
(Cost: $401,354,665)

      494,181,839  
   

 

 

 

Rights

   

China — 0.0%

   

Legend Holdings Corp. Class H,
(Expires 05/19/23)(a)(d)

    188,246       0 (f)  
   

 

 

 
Thailand — 0.0%            

Gulf Energy Development PCL,
(Expires 09/25/20)(a)

    828,270       39,920  
   

 

 

 

Total Rights — 0.0%
(Cost: $0)

      39,920  
   

 

 

 

Warrants

   

Thailand — 0.0%

   

Minor International PCL
(Expires 07/31/23)(a)(c)

    512,715       162,270  

Srisawad Corp. PCL (Expires 09/21/25)(a)(d)

    106,980       0 (f)  
   

 

 

 
      162,270  
   

 

 

 

Total Warrants — 0.0%
(Cost: $0)

      162,270  
   

 

 

 

Short-Term Investments

   

Money Market Funds — 4.2%

   

BlackRock Cash Funds: Institutional, SL Agency Shares, 0.37%(g)(h)(i)

    765,219,115       765,984,334  
 

 

 

25  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Money Market Funds (continued)            

BlackRock Cash Funds: Treasury, SL Agency Shares, 0.07%(g)(h)

    251,040,000     $ 251,040,000  
   

 

 

 
      1,017,024,334  
   

 

 

 

Total Short-Term Investments — 4.2%
(Cost: $ 1,016,521,199)

 

    1,017,024,334  
   

 

 

 

Total Investments in Securities — 103.1%
(Cost: $ 20,394,919,155)

 

    24,763,231,186  

Other Assets, Less Liabilities — (3.1)%

 

    (738,660,589
   

 

 

 

Net Assets — 100.0%

    $   24,024,570,597  
   

 

 

 

 

(a)

Non-income producing security.

(b)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(c) 

All or a portion of this security is on loan.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(f) 

Rounds to less than $1.

(g) 

Affiliate of the Fund.

(h) 

Annualized 7-day yield as of period-end.

(i) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 639,975,935     $ 125,874,583 (a)    $     $ (75,718   $ 209,534     $ 765,984,334       765,219,115     $ 12,196,548 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    50,332,000       200,708,000 (a)                        251,040,000       251,040,000       548,494        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (75,718   $ 209,534     $ 1,017,024,334       $ 12,745,042     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

                 

MSCI Emerging Markets E-Mini Index

     4,860          09/18/20        $ 267,397        $ 22,025,639  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Consolidated Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 22,025,639  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Consolidated Schedule of Investments. In the Consolidated Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  26


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ETF

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Consolidated Statements of Operations was as follows:

 

      Equity
Contracts
 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 64,077,120  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 24,174,008  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Futures contracts:

  

Average notional value of contracts — long

   $ 134,696,202  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Consolidated Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Consolidated Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Consolidated Schedule of Investments above.

 

      Level 1        Level 2        Level 3      Total  

Investments

               

Assets

               

Common Stocks

   $ 23,251,819,863        $        $ 2,960      $ 23,251,822,823  

Preferred Stocks

     494,181,839                          494,181,839  

Rights

              39,920          0 (a)        39,920  

Warrants

     162,270                   0 (a)        162,270  

Money Market Funds

     1,017,024,334                          1,017,024,334  
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 24,763,188,306        $             39,920        $               2,960      $ 24,763,231,186  
  

 

 

      

 

 

      

 

 

    

 

 

 

Derivative financial instruments(b)

               

Assets

               

Futures Contracts

   $ 22,025,639        $        $      $ 22,025,639  
  

 

 

      

 

 

      

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 
  (b) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

27  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


 

Statements of Assets and Liabilities

August 31, 2020

 

    

iShares
Currency
Hedged

MSCI
Emerging
Markets ETF

     iShares
MSCI Emerging
Markets ETF
(Consolidated)
 

ASSETS

    

Investments in securities, at value (including securities on loan)(a):

    

Unaffiliated(b)

  $      $ 23,746,206,852  

Affiliated(c)

    183,522,705        1,017,024,334  

Cash

           7,306  

Foreign currency, at value(d)

    97        48,123,689  

Cash pledged:

    

Futures contracts

           29,715,000  

Collateral — OTC derivatives

    550,000         

Receivables:

    

Investments sold

    485,344        205,033,444  

Securities lending income — Affiliated

           675,243  

Dividends

    34        27,324,426  

Tax reclaims

           419,936  

Unrealized appreciation on:

    

Forward foreign currency exchange contracts

    716,134         
 

 

 

    

 

 

 

Total assets

    185,274,314        25,074,530,230  
 

 

 

    

 

 

 

LIABILITIES

    

Bank overdraft

    467,657         

Collateral on securities loaned, at value

           764,921,847  

Deferred foreign capital gain tax

           4,752,029  

Payables:

    

Investments purchased

    202,248        259,052,793  

Variation margin on futures contracts

           6,917,348  

Investment advisory fees

           14,204,566  

Foreign taxes

           111,050  

Unrealized depreciation on:

    

Forward foreign currency exchange contracts

    978,409         
 

 

 

    

 

 

 

Total liabilities

    1,648,314        1,049,959,633  
 

 

 

    

 

 

 

NET ASSETS

  $ 183,626,000      $ 24,024,570,597  
 

 

 

    

 

 

 

NET ASSETS CONSIST OF:

    

Paid-in capital

  $ 181,809,372      $ 31,582,559,225  

Accumulated earnings (loss)

    1,816,628        (7,557,988,628
 

 

 

    

 

 

 

NET ASSETS

  $ 183,626,000      $ 24,024,570,597  
 

 

 

    

 

 

 

Shares outstanding

    6,700,000        539,100,000  
 

 

 

    

 

 

 

Net asset value

  $ 27.41      $ 44.56  
 

 

 

    

 

 

 

Shares authorized

    250 million        4 billion  
 

 

 

    

 

 

 

Par value

  $ 0.001      $ 0.001  
 

 

 

    

 

 

 

(a) Securities loaned, at value

  $      $ 714,692,627  

(b) Investments, at cost — Unaffiliated

  $      $ 19,378,397,956  

(c)  Investments, at cost — Affiliated

  $ 177,646,177      $ 1,016,521,199  

(d) Foreign currency, at cost

  $ 97      $ 48,051,579  

See notes to financial statements.

 

 

I N A N C I A L   S T A T E M E N T  S

  28


Statements of Operations

Year Ended August 31, 2020

 

    

iShares
Currency
Hedged

MSCI
Emerging
Markets ETF

    iShares
MSCI Emerging
Markets ETF
(Consolidated)
 

INVESTMENT INCOME

   

Dividends — Unaffiliated

  $     $ 619,296,794  

Dividends — Affiliated

    4,880,989       548,494  

Non-cash dividends — Unaffiliated

          197,336,273  

Interest — Unaffiliated

          22,638  

Securities lending income — Affiliated — net(a)

    48,386       12,196,548  

Other income — Unaffiliated

          2,705,237  

Foreign taxes withheld

          (69,657,456

Foreign withholding tax claims

          64,822  

Other foreign taxes

          (24,428
 

 

 

   

 

 

 

Total investment income

    4,929,375       762,488,922  
 

 

 

   

 

 

 

EXPENSES

   

Investment advisory fees

    1,354,740       172,140,562  

Commitment fees

          145,381  

Professional fees

          283,993  

Miscellaneous

    264       264  

Mauritius income taxes

          1,096,331  

Interest expense

          49,360  
 

 

 

   

 

 

 

Total expenses

    1,355,004       173,715,891  

Less:

   

Investment advisory fees waived

    (1,354,740      
 

 

 

   

 

 

 

Total expenses after fees waived

    264       173,715,891  
 

 

 

   

 

 

 

Net investment income

    4,929,111       588,773,031  
 

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

   

Net realized gain (loss) from:

   

Investments — Unaffiliated(b)

          (719,890,093

Investments — Affiliated

    (1,316,028     (75,718

In-kind redemptions — Unaffiliated

          403,062,453  

In-kind redemptions — Affiliated

    1,367,964        

Futures contracts

          64,077,120  

Forward foreign currency exchange contracts

    5,523,655        

Foreign currency transactions

    (55,213     (10,520,865
 

 

 

   

 

 

 

Net realized gain (loss)

    5,520,378       (263,347,103
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

   

Investments — Unaffiliated(c)

          2,204,922,007  

Investments — Affiliated

    17,337,317       209,534  

Futures contracts

          24,174,008  

Forward foreign currency exchange contracts

    (4,141,358      

Foreign currency translations

          313,479  
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    13,195,959       2,229,619,028  
 

 

 

   

 

 

 

Net realized and unrealized gain

    18,716,337       1,966,271,925  
 

 

 

   

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 23,645,448     $ 2,555,044,956  
 

 

 

   

 

 

 

(a) Net of securities lending income tax paid of

  $     $ 504,225  

(b) Net of foreign capital gain tax of

  $     $ 25,106  

(c)  Net of deferred foreign capital gain tax of

  $     $ (17,492,226)  

See notes to financial statements.

 

 

29  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


 

Statements of Changes in Net Assets

    

 

    iShares
Currency Hedged MSCI Emerging Markets
ETF
      iShares
MSCI Emerging Markets ETF
(Consolidated)
     Year Ended
08/31/20
  Year Ended
08/31/19
       Year Ended
08/31/20
  Year Ended
08/31/19

INCREASE (DECREASE) IN NET ASSETS

 

               

OPERATIONS

                   

Net investment income

    $ 4,929,111     $ 5,827,092         $ 588,773,031     $ 676,194,320

Net realized gain (loss)

      5,520,378       9,528,491           (263,347,103 )       230,083,592

Net change in unrealized appreciation (depreciation)

      13,195,959       (26,344,690 )           2,229,619,028       (2,464,390,731 )
   

 

 

     

 

 

         

 

 

     

 

 

 

Net increase (decrease) in net assets resulting from operations

      23,645,448       (10,989,107 )           2,555,044,956       (1,558,112,819 )
   

 

 

     

 

 

         

 

 

     

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

                   

Decrease in net assets resulting from distributions to shareholders

      (4,943,833 )       (5,899,803 )           (724,261,397 )       (665,424,186 )
   

 

 

     

 

 

         

 

 

     

 

 

 

CAPITAL SHARE TRANSACTIONS

                   

Net decrease in net assets derived from capital share transactions

      (15,451,158 )       (147,063,312 )           (2,437,787,553 )       (4,293,900,423 )
   

 

 

     

 

 

         

 

 

     

 

 

 

NET ASSETS

                   

Total increase (decrease) in net assets

      3,250,457       (163,952,222 )           (607,003,994 )       (6,517,437,428 )

Beginning of year

      180,375,543       344,327,765           24,631,574,591       31,149,012,019
   

 

 

     

 

 

         

 

 

     

 

 

 

End of year

    $ 183,626,000     $ 180,375,543         $ 24,024,570,597     $ 24,631,574,591
   

 

 

     

 

 

         

 

 

     

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L   S T A T E M E N T  S

  30


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares Currency Hedged MSCI Emerging Markets ETF  
    Year Ended
08/31/20
    Year Ended
08/31/19
     Year Ended
08/31/18
     Year Ended
08/31/17
     Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 24.38     $ 25.70      $ 25.57      $ 21.72      $ 21.40  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.71       0.55        0.60        0.36        0.50  

Net realized and unrealized gain (loss)(b)

    3.03       (1.27      0.12        3.83        1.08  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    3.74       (0.72      0.72        4.19        1.58  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(c)

            

From net investment income

    (0.71     (0.60      (0.59      (0.34      (0.48

From net realized gain

                               (0.78
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.71     (0.60      (0.59      (0.34      (1.26
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 27.41     $ 24.38      $ 25.70      $ 25.57      $ 21.72  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Return

            

Based on net asset value

    15.49     (2.72 )%       2.77      19.55      7.84
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets

            

Total expenses(d)

    0.78     0.78      0.78      0.78      0.78
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived(d)

    0.00 %(e)       0.00      0.00      0.00      0.00
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    2.84     2.22      2.25      1.56      2.42
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

            

Net assets, end of year (000)

  $ 183,626     $ 180,376      $ 344,328      $ 393,757      $ 180,254  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(f)(g)

    9     7      7      4      11
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

The Fund indirectly bears its proportionate share of fees and expenses incurred by the underlying fund in which the Fund is invested. This ratio does not include these indirect fees and expenses.

(e) 

Rounds to less than 0.01%.

(f) 

Portfolio turnover rate excludes in-kind transactions.

(g) 

Portfolio turnover rate excludes the portfolio activity of the underlying fund in which the Fund is invested. See the underlying fund’s financial highlights for its respective portfolio turnover rates.

See notes to financial statements.

 

 

31  

2 0 2 0   H A R E S  N N U A L  E P O R T   T O  H A R E H O L D E R S


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Emerging Markets ETF
(Consolidated)
 
    Year Ended
08/31/20
     Year Ended
08/31/19
     Year Ended
08/31/18
    Year Ended
08/31/17
     Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 40.22      $ 43.24      $ 44.76     $ 36.74      $ 33.79  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net investment income(a)

    0.98        0.90        0.83 (b)       0.75        0.72  

Net realized and unrealized gain (loss)(c)

    4.52        (3.02      (1.36     7.86        3.00  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net increase (decrease) from investment operations

    5.50        (2.12      (0.53     8.61        3.72  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Distributions(d)

            

From net investment income

    (1.16      (0.90      (0.99     (0.59      (0.77
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total distributions

    (1.16      (0.90      (0.99     (0.59      (0.77
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net asset value, end of year

  $ 44.56      $ 40.22      $ 43.24     $ 44.76      $ 36.74  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total Return

            

Based on net asset value

    13.82      (4.87 )%       (1.28 )%(b)       23.80      11.28
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Ratios to Average Net Assets

            

Total expenses

    0.70      0.68      0.67     0.69      0.72
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total expenses after fees waived

    0.70      0.68      0.67     0.69      0.72
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    0.70      0.68      0.67     0.69      N/A  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net investment income

    2.38      2.16      1.78 %(b)       1.92      2.15
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Supplemental Data

            

Net assets, end of year (000)

  $ 24,024,571      $ 24,631,575      $ 31,149,012     $ 35,891,890      $ 30,866,469  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Portfolio turnover rate(e)

    19      15      16     9      23
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

Reflects the one-time, positive effect of foreign withholding tax claims, net of the associated professional fees, which resulted in the following increases for the year ended August 31, 2018:

 

Net investment income per share by $0.02.

 

Total return by 0.07%.

 

Ratio of net investment income to average net assets by 0.04%.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L   S T A T E M E N T  S

  32


Notes to Financial Statements

 

1.

ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

iShares ETF   Diversification
Classification
 

Currency Hedged MSCI Emerging Markets

    Diversified  

MSCI Emerging Markets

    Diversified  

Currently the iShares Currency Hedged MSCI Emerging Markets ETF seeks to achieve its investment objective by investing a substantial portion of its assets in the iShares MSCI Emerging Markets ETF (the “underlying fund”). The financial statements and schedule of investments for the underlying fund are included in this report and should be read in conjunction with the financial statements of the iShares Currency Hedged MSCI Emerging Markets ETF.

Basis of Consolidation: The accompanying consolidated financial statements for the iShares MSCI Emerging Markets ETF includes the accounts of its subsidiary in the Republic of Mauritius, which is a wholly-owned subsidiary (the “Subsidiary”) of the Fund that invests in Indian securities. Through this investment structure, the Fund expects to obtain certain benefits under a current tax treaty between Mauritius and India. Intercompany accounts and transactions, if any, have been eliminated.

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income, including amortization and accretion of premiums and discounts on debt securities, and payment- in-kind interest income, if any, are recognized daily on the accrual basis.

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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes. However, the currency hedged fund has elected to treat realized gains (losses) from certain foreign currency contracts as capital gain (loss) for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

The iShares MSCI Emerging Markets ETF conducts its investment activities in India through its Subsidiary and expects to obtain benefits under the Double Tax Avoidance Agreement (“DTAA”) between India and Mauritius. In order to be eligible to claim benefits under the DTAA, the Subsidiary must have commercial substance, on an annual basis, to satisfy certain tests and conditions, including the establishment and maintenance of valid tax residence in Mauritius, have the place of effective management outside of India, and related requirements. The Fund has obtained a current tax residence certificate issued by the Mauritian Revenue Authorities.

Based upon current interpretation and practice of the current tax laws in India and Mauritius and the DTAA, the Subsidiary is subject to tax in Mauritius on its net income at the rate of 15%. However, the Subsidiary is entitled to a tax credit equivalent to the higher of the actual foreign tax incurred or 80% of the Mauritius tax on its foreign source income, thus reducing its maximum effective tax rate to 3% up to June 30, 2021. After June 30, 2021, under the new tax regime and subject to meeting the necessary substance requirements as required under the Financial Services Act 2007 (as amended by the Finance Act 2018) and such guidelines issued by the FSC, the Subsidiary

 

 

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Notes to Financial Statements  (continued)

 

is entitled to either (a) a foreign tax credit equivalent to the actual foreign tax suffered on its foreign income against the Subsidiary’s tax liability computed at 15% on such income, or (b) a partial exemption of 80% of some of the income derived, including interest income or foreign source dividends. Taxes on income, if any, are paid by the Subsidiary and are disclosed in its consolidated statement of operations. Any dividends paid by the Subsidiary to its Fund are not subject to tax in Mauritius. The Subsidiary is currently exempt from tax in Mauritius on any gains from the sale of securities.

The DTAA provides that capital gains will be taxable in India with respect to the sale of shares acquired on or after April 1, 2017. Capital gains arising from shares acquired before April 1, 2017, regardless of when they are sold, will continue to be exempt from taxation under the amended DTAA, assuming requirements for eligibility under the DTAA are satisfied. There can be no assurance, however, that the DTAA will remain in effect during the Subsidiary’s existence or that it will continue to enjoy its benefits on the shares acquired prior to April 1, 2017.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Exchange-traded funds and closed-end funds traded on a recognized securities exchange are valued at that day’s last traded price or official closing price, as applicable, on the exchange where the fund is primarily traded. Funds traded on a recognized exchange for which there were no sales on that day may be valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

   

Forward foreign currency exchange contracts are valued based on that day’s prevailing forward exchange rate for the underlying currencies.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

 

 

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Notes to Financial Statements  (continued)

 

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

 

 

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Notes to Financial Statements  (continued)

 

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

iShares ETF and Counterparty    
Market Value of
Securities on Loan
 
 
    
Cash Collateral
Received
 
(a)  
   
Non-Cash Collateral
Received
 
 
     Net Amount  

MSCI Emerging Markets

         

Barclays Capital Inc.

  $ 341,291      $ 341,291     $      $  

BNP Paribas Prime Brokerage International Ltd.

    15,537,599        15,537,599               

BNP Paribas Securities Corp.

    12,158,098        12,158,098               

BofA Securities, Inc.

    153,935,971        153,935,971               

Citigroup Global Markets Inc.

    27,051,374        27,051,374               

Citigroup Global Markets Ltd.

    5,925,396        5,925,396               

Credit Suisse Securities (Europe) Ltd.

    9,258,698        9,258,698               

Credit Suisse Securities (USA) LLC

    10,004,074        10,004,074               

Deutsche Bank Securities Inc.

    400,103        400,103               

Goldman Sachs & Co.

    75,462,660        75,462,660               

Goldman Sachs International

    9,077,639        9,077,639               

HSBC Bank PLC

    17,690,627        17,690,627               

Jefferies LLC

    23,369,704        23,369,704               

JPMorgan Securities LLC

    92,596,243        92,596,243               

JPMorgan Securities PLC

    72,666,543        72,666,543               

Macquarie Bank Limited

    19,803,682        19,803,682               

Morgan Stanley & Co. International PLC

    34,841,441        34,841,441               

Morgan Stanley & Co. LLC

    91,945,816        91,945,816               

National Financial Services LLC

    251,332        245,345              (5,987 )(b) 

Nomura Securities International Inc.

    63,620        63,620               

Scotia Capital (USA) Inc.

    1,598,571        1,598,571               

SG Americas Securities LLC

    99,828        99,828               

State Street Bank & Trust Company

    2,337,431        2,337,431               

UBS AG

    6,720,784        6,720,784               

UBS Securities LLC

    30,687,135        30,558,242              (128,893 )(b) 

Wells Fargo Securities LLC

    866,967        866,967               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 714,692,627      $ 714,557,747     $      $ (134,880
 

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 
  (b) 

Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

 

 

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Notes to Financial Statements  (continued)

 

Forward Foreign Currency Exchange Contracts: The currency-hedged fund uses forward foreign currency exchange contracts to hedge the currency exposure of non-U.S. dollar-denominated securities held in its portfolio or its underlying fund’s portfolio. A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency against another currency at an agreed upon price and quantity. The contracts are traded over-the-counter (“OTC”) and not on an organized exchange.

The contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation or depreciation in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts (“NDFs”) are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a contract changes unfavorably due to movements in the value of the referenced foreign currencies. A fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the fund.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help mitigate its counterparty risk, a fund may enter into an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency, or other events.

The collateral requirements under an ISDA Master Agreement are typically calculated by netting the mark-to-market amount for each transaction under such agreement, and comparing that amount to the value of any collateral currently pledged by a fund and the counterparty. Except for NDFs, the forward foreign currency exchange contracts held by the Funds generally do not require collateral. Cash collateral pledged to the counterparty, if any, is presented as cash pledged as collateral for OTC derivatives on the statement of assets and liabilities. Cash received as collateral from the counterparty may be reinvested in money market funds, including those managed by the Funds’ investment adviser, or its affiliates. Such collateral, if any, is presented in the statement of assets and liabilities as affiliated investments at value and as a liability for cash received as collateral on OTC derivatives. To the extent amounts due to the Funds from the counterparty are not fully collateralized, contractually or otherwise, each Fund bears the risk of loss from counterparty non-performance. Each Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

For financial reporting purposes, each Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the statement of assets and liabilities.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to the following Fund, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the average daily net assets of the Fund as follows:

 

iShares ETF   Investment Advisory Fee  

Currency Hedged MSCI Emerging Markets

    0.78 %  

For its investment advisory services to the iShares MSCI Emerging Markets ETF, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $14 billion

    0.75 %  

Over $14 billion, up to and including $28 billion

    0.68  

Over $28 billion, up to and including $42 billion

    0.61  

Over $42 billion, up to and including $56 billion

    0.54  

Over $56 billion, up to and including $70 billion

    0.47  

Over $70 billion, up to and including $84 billion

    0.41  

Over $84 billion

    0.35  

The Subsidiary has entered into a separate contract with BFA under which BFA provides investment advisory services to the Subsidiary but does not receive separate compensation from the Subsidiary for providing it with such services. The Subsidiary has also entered into separate arrangements that provide for the provision of other services to the Subsidiary (including administrative, custody, transfer agency and other services), and BFA pays the costs and expenses related to the provision of those services.

 

 

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Notes to Financial Statements  (continued)

 

Expense Waivers: A fund may incur its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses”). The total of the investment advisory fee and any other fund expenses are a fund’s total annual operating expenses.

For the iShares Currency Hedged MSCI Emerging Markets ETF, BFA has contractually agreed to waive a portion of its investment advisory fee for the Fund through December 31, 2020 so that the Fund’s total annual operating expenses after fee waiver is equal to the acquired fund fees and expenses attributable to the Fund’s investment in the iShares MSCI Emerging Markets ETF (“EEM”), after taking into account any fee waivers by EEM.

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF   Fees Paid
to BTC
 

Currency Hedged MSCI Emerging Markets

  $ 15,461  

MSCI Emerging Markets

    3,027,170    

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

iShares ETF   Purchases      Sales      Net Realized
Gain (Loss)
 

MSCI Emerging Markets

  $ 48,974,442      $ 206,895,992      $ (48,897,633 )   

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends — affiliated in the statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

 

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Notes to Financial Statements  (continued)

 

iShares ETF   Purchases      Sales  

Currency Hedged MSCI Emerging Markets

  $ 17,157,103      $ 16,345,821    

MSCI Emerging Markets

    4,658,766,533        5,520,630,805  

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

iShares ETF   In-kind
Purchases
    

In-kind

Sales

 

Currency Hedged MSCI Emerging Markets

  $ 43,602,357      $ 58,906,851    

MSCI Emerging Markets

    1,242,903,912        3,047,119,114  

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions, were reclassified to the following accounts:

 

iShares ETF   Paid-in Capital      Accumulated
Earnings (Loss)
 

Currency Hedged MSCI Emerging Markets

  $ 950,012      $ (950,012 )   

MSCI Emerging Markets

    272,986,236        (272,986,236

The tax character of distributions paid was as follows:

 

iShares ETF   Year Ended
08/31/20
     Year Ended
08/31/19
 

Currency Hedged MSCI Emerging Markets

    

Ordinary income

  $ 4,943,833      $ 5,899,803  
 

 

 

    

 

 

 

MSCI Emerging Markets

    

Ordinary income

  $ 724,261,397      $ 665,424,186  
 

 

 

    

 

 

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

iShares ETF    
Undistributed
Ordinary Income
 
 
    

Non-expiring
Capital Loss
Carryforwards
 
 
(a)  
   
Net Unrealized
Gains (Losses)
 
(b) 
    Total  

Currency Hedged MSCI Emerging Markets

  $ 1,102      $ (3,048,680   $ 4,864,206     $ 1,816,628  

MSCI Emerging Markets

    197,574,787        (11,365,234,737     3,609,671,322       (7,557,988,628

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts and foreign currency contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the characterization of corporate actions.

 

For the year ended August 31, 2020, the iShares Currency Hedged MSCI Emerging Markets ETF utilized $367,120 of its capital loss carryforwards.

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

 

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Notes to Financial Statements  (continued)

 

iShares ETF   Tax Cost      Gross Unrealized
Appreciation
     Gross Unrealized
Depreciation
    Net Unrealized
Appreciation
(Depreciation)
 

Currency Hedged MSCI Emerging Markets

  $ 178,617,934      $ 4,864,206      $     $ 4,864,206  

MSCI Emerging Markets

    21,148,606,869        7,507,359,607        (3,892,735,290     3,614,624,317  

 

9.

LINE OF CREDIT

The iShares MSCI Emerging Markets ETF, along with certain other iShares funds (“Participating Funds”), is a party to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on July 15, 2021. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1, including the Fund, and $200 million with respect to Tier 2. The Fund may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Credit Agreement.

For the year ended August 31, 2020, the maximum amount borrowed, the average daily borrowing and the weighted average interest rate, if any, under the credit agreement were as follows:

 

iShares ETF   Maximum
Amount
Borrowed
     Average
Borrowing
     Weighted
Average
Interest Rates
 

MSCI Emerging Markets

  $ 87,556,215      $ 1,737,742        2.70 %  

 

10.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: Investments in the securities of issuers domiciled in countries with emerging capital markets involve certain additional risks that do not generally apply to investments in securities of issuers in more developed capital markets, such as (i) low or nonexistent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities; (ii) uncertain national policies and social, political and economic instability, increasing the potential for expropriation of assets, confiscatory taxation, high rates of inflation or unfavorable diplomatic developments; and (iii) possible fluctuations in exchange rates, differing legal systems and the existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to such investments.

An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience

 

 

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  40


Notes to Financial Statements  (continued)

 

significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the schedule of investments.

Investments in Chinese securities, including certain Hong Kong-listed securities, involves risks specific to China. China may be subject to considerable degrees of economic, political and social instability and demonstrates significantly higher volatility from time to time in comparison to developed markets. Chinese markets generally continue to experience inefficiency, volatility and pricing anomalies resulting from governmental influence, a lack of publicly available information and/or political and social instability. Internal social unrest or confrontations with other neighboring countries may disrupt economic development in China and result in a greater risk of currency fluctuations, currency non-convertibility, interest rate fluctuations and higher rates of inflation. Incidents involving China’s or the region’s security may cause uncertainty in Chinese markets and may adversely affect the Chinese economy and a fund’s investments. Reduction in spending on Chinese products and services, institution of tariffs or other trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy.

Certain Funds invest a significant portion of their assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Funds’ investments.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

 

11.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

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Notes to Financial Statements  (continued)

 

      Year Ended
08/31/20
        Year Ended
08/31/19
iShares ETF    Shares   Amount         Shares   Amount

Currency Hedged MSCI Emerging Markets

                     

Shares sold

       1,750,000     $ 43,700,195            3,450,000     $ 84,956,699

Shares redeemed

       (2,450,000 )       (59,151,353 )            (9,450,000 )       (232,020,011 )
    

 

 

     

 

 

          

 

 

     

 

 

 

Net decrease

       (700,000 )     $ (15,451,158 )            (6,000,000 )     $ (147,063,312 )
    

 

 

     

 

 

          

 

 

     

 

 

 

MSCI Emerging Markets

                     

Shares sold

       91,350,000     $ 4,015,282,149            90,000,000     $ 3,758,906,782

Shares redeemed

       (164,700,000 )       (6,453,069,702 )            (198,000,000 )       (8,052,807,205 )
    

 

 

     

 

 

          

 

 

     

 

 

 

Net decrease

       (73,350,000 )     $ (2,437,787,553 )            (108,000,000 )     $ (4,293,900,423 )
    

 

 

     

 

 

          

 

 

     

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

12.

FOREIGN WITHHOLDING TAX CLAIMS

The iShares MSCI Emerging Markets ETF has filed claims to recover taxes withheld by Poland on dividend income on the basis that Poland had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. The Fund has received payments on certain of the claims resulting from a favorable court ruling that the imposition of a withholding tax by a European Union member state on dividends paid to a nonresident company, including the Fund, while exempting domestic funds from such taxes results in discriminatory tax withholding contrary to the free movement of capital. The Fund continues to evaluate developments in Poland for potential impacts to the receivables and payables recorded. Polish withholding tax claims received are disclosed in the statement of operations. Professional fees associated with the filing of tax claims in Poland that result in the recovery of foreign withholding taxes have been approved by the Board as appropriate expenses of the Fund.

The Internal Revenue Service has issued guidance to address U.S. income tax liabilities attributable to fund shareholders resulting from the recovery of foreign taxes withheld in prior calendar years. These withheld foreign taxes were passed through to shareholders in the form of foreign tax credits in the year the taxes were withheld. Assuming there are sufficient foreign taxes paid which the Fund is able to pass through to its shareholders as a foreign tax credit in the current year, the Fund will be able to offset the prior years’ withholding taxes recovered against the foreign taxes paid in the current year. Accordingly, no federal income tax liability is recorded by the Fund.

 

13.

LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

 

14.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

O T E S   T O   F I N A N C I A  L   S T A T E M E N T S

  42


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares Currency Hedged MSCI Emerging Markets ETF and

iShares MSCI Emerging Markets ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares Currency Hedged MSCI Emerging Markets ETF and iShares MSCI Emerging Markets ETF (two of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the five years in the period ended August 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

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Important Tax Information (unaudited)

 

For corporate shareholders, the percentage of ordinary income distributions paid during the fiscal year ended August 31, 2020 that qualified for the dividends-received deduction were as follows:

 

iShares ETF   Dividends-Received
Deduction
 

Currency Hedged MSCI Emerging Markets

    0.17 %  

MSCI Emerging Markets

    0.15

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

iShares ETF   Qualified Dividend
Income
 

Currency Hedged MSCI Emerging Markets

  $ 2,971,559  

MSCI Emerging Markets

    375,124,733      

For the fiscal year ended August 31, 2020, the iShares Currency Hedged MSCI Emerging Markets ETF intends to pass through to its shareholders foreign source income earned and foreign taxes paid by the underlying funds:

 

iShares ETF   Foreign Source
Income Earned
     Foreign
Taxes Paid
 

Currency Hedged MSCI Emerging Markets

  $ 5,822,644      $ 936,170      

For the fiscal year ended August 31, 2020, the iShares MSCI Emerging Markets ETF earned foreign source income and paid foreign taxes which it intends to pass through to its shareholders:

 

iShares ETF   Foreign Source
Income Earned
     Foreign
Taxes Paid
 

MSCI Emerging Markets

  $ 815,629,018      $ 70,293,535      

 

 

M P O R T A N T   T A X   I N F  O R M A T I O N

  44


Board Review and Approval of Investment Advisory Contract

 

iShares Currency Hedged MSCI Emerging Markets ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Emerging Markets ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

 

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Supplemental Information (unaudited)

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (the “Directive”) imposes detailed and prescriptive obligations on fund managers established in the European Union (the “EU”). These do not currently apply to managers established outside of the EU, such as BFA (the “Company”). Rather, non-EU managers are only required to comply with certain disclosure, reporting and transparency obligations of the Directive if such managers market a fund to EU investors.

The Company has registered the iShares MSCI Emerging Markets ETF (the “Fund”) to be marketed to EU investors in the United Kingdom, the Netherlands, Finland, Sweden, and Luxembourg.

Report on Remuneration

The Company is required under the Directive to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Fund.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well defined pay-for-performance philosophy, and compensation programmes which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2019 was USD 2.47 million. This figure is comprised of fixed remuneration of USD 1.14 million and variable remuneration of USD 1.33 million. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 314.75 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 36.99 thousand.

 

 

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Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFA or its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., ParkAvenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Robert S. Kapito(a)

(63)

   Director (since 2009).    President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(50)

   Director (since 2019).    Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

 

(a) Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

(b) Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates.

 

     Independent Directors     
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Cecilia H. Herbert

(71)

   Director (since 2005); Independent Board Chair (since 2016).    Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).

Jane D. Carlin

(64)

   Director (since 2015); Risk Committee Chair (since 2016).    Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L. Fagnani

(65)

   Director (since 2017); Audit Committee Chair (since 2019).    Partner, KPMG LLP (2002-2016).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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  50


Director and Officer Information  (continued)

 

Independent Directors (continued)
       
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

John E. Kerrigan

(65)

  

Director (since 2005); Nominating and Governance and Equity Plus Committee Chairs

(since 2019).

   Chief Investment Officer, Santa Clara University (since 2002).    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E. Lawton

(61)

  

Director (since 2017); 15(c) Committee Chair

(since 2017).

   Senior Managing Director of New York Life Insurance Company (2010-2015).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

John E. Martinez

(59)

  

Director (since 2003); Securities Lending Committee Chair

(since 2019).

   Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).    Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

Madhav V. Rajan

(56)

  

Director (since 2011); Fixed Income Plus Committee Chair

(since 2019).

   Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).

 

Officers
     
 Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

Armando Senra

(49)

   President (since 2019).    Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

Trent Walker

(46)

   Treasurer and Chief Financial Officer (since 2020).    Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Charles Park

(53)

   Chief Compliance Officer (since 2006).    Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

Deepa Damre

(45)

   Secretary (since 2019).    Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

Scott Radell

(51)

   Executive Vice President (since 2012).    Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

Alan Mason

(59)

   Executive Vice President (since 2016).    Managing Director, BlackRock, Inc. (since 2009).

Marybeth Leithead

(57)

   Executive Vice President (since 2019).    Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

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General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

E N E R A L  N F O R M A T I O N

  52


Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
ADR    American Depositary Receipt
CPO    Certificates of Participation (Ordinary)
GDR    Global Depositary Receipt
JSC    Joint Stock Company
NVDR    Non-Voting Depositary Receipt
NVS    Non-Voting Shares
PJSC    Public Joint Stock Company

Currency Abbreviations

BRL    Brazilian Real
CLP    Chilean Peso
CNY    Chinese Yuan
EUR    Euro
HKD    Hong Kong Dollar
INR    Indian Rupee
KRW    South Korean Won
MXN    Mexican Peso
MYR    Malaysian Ringgit
RUB    New Russian Ruble
THB    Thai Baht
TRY    Turkish Lira
TWD    New Taiwan Dollar
USD    United States Dollar
ZAR    South African Rand
Counterparty Abbreviations
MS    Morgan Stanley & Co. International PLC
 

 

 

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Want to know more?

iShares.com     |     1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-805-0820

 

 

LOGO

   LOGO


 

LOGO

  AUGUST 31, 2020

 

 

   

  

2020 Annual Report

 

 

iShares, Inc.

 

·  

iShares ESG Aware MSCI EM ETF  |  ESGE  |  NASDAQ

·  

iShares MSCI Emerging Markets ex China ETF  |  EMXC  |  NASDAQ

·  

iShares MSCI Emerging Markets Min Vol Factor ETF  |  EEMV  |  Cboe BZX

·  

iShares MSCI Emerging Markets Multifactor ETF  |  EMGF  |  Cboe BZX

·  

iShares MSCI Global Min Vol Factor ETF  |  ACWV  |  Cboe BZX

 

 

 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds held with your financial intermediary.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary. Please note that not all financial intermediaries may offer this service.


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of August 31, 2020 has been a time of sudden change in global financial markets, as the emergence and spread of the coronavirus led to a vast disruption in the global economy and financial markets. For most of the first half of the reporting period, U.S. equities and bonds both delivered impressive returns, despite fears and doubts about the economy that were ultimately laid to rest with unprecedented monetary stimulus and a sluggish yet resolute performance from the U.S. economy. But as the threat from the coronavirus became more apparent throughout February and March 2020, countries around the world took economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.

After markets hit their lowest point during the reporting period in late March 2020, a steady recovery ensued, as businesses began to re-open and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. By the end of the reporting period, all major investment categories posted positive returns, and many equity indices were near all-time highs. In the United States, large-capitalization stocks advanced significantly, outperforming small-capitalization stocks, which also gained for the reporting period. International equities from developed economies also turned in a positive performance while lagging emerging market stocks, which rebounded sharply.

During the market downturn, the performance of different types of fixed-income securities initially diverged due to a reduced investor appetite for risk. U.S. Treasuries benefited from the risk-off environment, and posted solid returns, as the 10-year U.S. Treasury yield (which is inversely related to bond prices) touched an all-time low. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and both investment-grade and high-yield bonds recovered to post positive returns.

The Fed reduced interest rates twice in late 2019 to support slowing economic growth. After the coronavirus outbreak, the Fed instituted two emergency rate cuts, pushing short-term interest rates close to zero. To stabilize credit markets, the Fed also implemented a new bond-buying program, as did several other central banks around the world, including the European Central Bank and the Bank of Japan.

Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion is likely to continue as economic activity resumes. Several risks remain, however, including a potential resurgence of the coronavirus amid loosened restrictions, policy fatigue among governments already deep into deficit spending, and structural damage to the financial system from lengthy economic interruptions.

Overall, we favor a moderately positive stance toward risk, and in particular toward credit given the extraordinary central bank measures taken in recent months. This support extends beyond investment-grade corporates and into high-yield, leading to attractive opportunities in that end of the market. We believe that international diversification and sustainable investments can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments. We remain neutral on equities overall while favoring European stocks, which are poised for cyclical upside as re-openings continue.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit ishares.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of August 31, 2020

 

 
    

 

6-Month 

 

   

 

12-Month 

 

 

 

U.S. large cap equities
(S&P 500® Index)

 

    19.63%       21.94%  

 

U.S. small cap equities
(Russell 2000® Index)

 

    6.57          6.02     

 

International equities
(MSCI Europe, Australasia, Far East Index)

 

    7.10          6.13     

 

Emerging market equities
(MSCI Emerging Markets Index)

 

    11.23          14.49     

 

3-month Treasury bills
(ICE BofA 3-Month
U.S. Treasury Bill Index)

 

    0.34          1.26     

 

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

 

    4.67          8.93     

 

U.S. investment grade bonds
(Bloomberg Barclays U.S. Aggregate Bond Index)

 

    2.98          6.47     

 

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

 

    0.29          3.15     

 

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)

 

    3.04          4.65     

 

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

 

 

 

2  

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Table of Contents

 

     Page  

 

 

 

The Markets in Review

  

 

 

 

2

 

 

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     15  

Shareholder Expenses

     15  

Schedules of Investments

     16  

Financial Statements

  

Statements of Assets and Liabilities

     46  

Statements of Operations

     48  

Statements of Changes in Net Assets

     50  

Financial Highlights

     53  

Notes to Financial Statements

     58  

Report of Independent Registered Public Accounting Firm

     69  

Important Tax Information (Unaudited)

     70  

Board Review and Approval of Investment Advisory Contract

     71  

Supplemental Information

     79  

Director and Officer Information

     81  

General Information

     83  

Glossary of Terms Used in this Report

     84  

 

 

 


Market Overview

 

iShares, Inc.

Global Market Overview

Global equity markets advanced strongly during the 12 months ended August 31, 2020 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 16.52% in U.S. dollar terms for the reporting period.

Global stocks gained steadily for much of the first half of the reporting period, supported by slowing but resilient growth and accommodative monetary policy from major central banks. Equity markets ended 2019 on a positive note, as a trade agreement between the U.S. and China helped alleviate one of the world economy’s most significant risks.

However, the spread of the coronavirus upended global equity markets in early 2020. As the extent of the outbreak became apparent in February 2020, restrictions on travel and work disrupted the global economy and precipitated a sharp decline in equity prices. Beginning in late March 2020, equity prices posted a strong recovery, buoyed by massive stimulus from the world’s largest central banks and governments, the phased reopening of countries’ economies, and optimism surrounding prospective vaccines. By the end of the reporting period, equities posted positive returns in all of the world’s major regions despite the onset of a significant global recession.

In the U.S., following the issuance of stay-at-home orders, nonessential business closures, and other coronavirus-related restrictions on public gatherings, whole portions of the economy shut down. Businesses associated with travel and leisure were particularly affected, as air traffic declined, and conferences and events were postponed. The disruption created by these sudden changes led to an annualized economic contraction of 31.7% in the second quarter of 2020.

In response to the pandemic, the federal government enacted over U.S. $2 trillion in stimulus spending. The U.S. Federal Reserve Bank (“Fed”) also acted to stabilize markets by implementing two emergency interest rate reductions and launching a bond-buying program that included U.S. Treasuries, corporate and municipal bonds, and securities backed by mortgages and auto loans. The unprecedented level of Fed intervention and support from government stimulus led to a significant recovery in U.S. stock prices, many of which reached record highs by the end of the reporting period.

Europe was similarly affected by the coronavirus, as many of the area’s largest economies instituted social distancing policies that significantly limited economic activity, leading to a rapid decline in stock prices. To mitigate the economic impact of this disruption, many countries individually implemented fiscal stimulus plans. In July 2020, Eurozone countries reached a historic deal for a collective 750 billion in stimulus spending, in addition to a large European Central Bank (“ECB”) bond-buying plan. European stocks recovered late in the reporting period to post positive returns overall but trailed most other regions of the globe.

Asia-Pacific stocks posted strong returns despite a sharp decline during the first quarter of 2020 as the coronavirus outbreaks worsened. Although widespread business and factory closures led to economic weakness initially, the Chinese economy showed signs of recovery late in the reporting period, leading to a significant rise in Asia-Pacific equity markets, which are highly sensitive to economic conditions in China.

Emerging market stocks outside of Asia declined, driven by sharply weaker currencies and lower commodities prices, which weighed on economies reliant on these exports. Latin America drove emerging markets declines, hindered by mass business closures and bankruptcies, political and social unrest, and among the world’s highest level of coronavirus cases.

 

 

A R K E T   O V E R V I E W

  4


Fund Summary as of August 31, 2020     iShares® ESG Aware MSCI EM ETF

 

Investment Objective

The iShares ESG Aware MSCI EM ETF (the “Fund”) (formerly the iShares ESG MSCI EM ETF) seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities that have positive environmental, social and governance characteristics, as represented by the MSCI Emerging Markets Extended ESG Focus Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns             Cumulative Total Returns    
     1 Year     

Since

Inception

           1 Year     

Since

Inception

 

Fund NAV

    15.11      10.91       15.11      54.14

Fund Market

    15.50        10.93         15.50        54.26  

Index

    15.50        11.46               15.50        57.25  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 6/28/16. The first day of secondary market trading was 6/30/16.

Index performance through May 31, 2018 reflects the performance of the MSCI Emerging Markets ESG Focus Index. Index performance beginning on June 1, 2018 reflects the performance of the MSCI Emerging Markets Extended ESG Focus Index.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning

    Account Value

(03/01/20)

 

 

 

      

Ending
Account Value

(08/31/20)

 
 

 

      

Expenses

Paid During

the Period

 

 

 (a) 

           

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses

Paid During

the Period

 

 

 (a) 

      

Annualized

Expense

Ratio

 

 

 

  $      1,000.00          $      1,114.10          $        1.33               $      1,000.00          $      1,023.90          $        1.27          0.25

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

5  

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Fund Summary as of August 31, 2020   (continued)    iShares® ESG Aware MSCI EM ETF

 

Portfolio Management Commentary

Investor interest in the environmental, social, and governance (“ESG”) attributes of companies continued to grow during the reporting period, even as the coronavirus pandemic disrupted financial markets. For many investors, the threat to public health from the virus underscored the importance of a financial reporting system that accounts for the larger effects of company behavior on global social and environmental well-being. Emerging market investors increasingly sought out ESG-oriented stocks, and growing efforts to address environmental problems in these countries led to more investment opportunities.

In this environment, emerging market stocks with positive ESG characteristics posted significant gains for the reporting period. Stocks in China, where new regulations were proposed to mandate environmental disclosures, contributed the majority of the Index’s return. The consumer discretionary sector drove performance, particularly stocks in the internet and direct marketing retail industry. Coronavirus-related restrictions closed brick-and-mortar retail stores, leading customers and merchants to migrate to online platforms, driving sharply higher e-commerce sales. Changing consumer behavior also benefited the communication services sector, as increased use of social media led to higher digital advertising revenues in the interactive media and services industry.

Taiwanese and South Korean information technology stocks also advanced. In Taiwan, semiconductor companies benefited from increased demand for semiconductors to power data centers and 5G equipment. Higher computer memory sales to data centers also drove contribution in the South Korean technology hardware and equipment industry.

In terms of relative performance, the Index outperformed the broader market, as represented by the MSCI Emerging Markets Index, while tracking it relatively closely. Relative to the broader market, the ESG selection process leads to overweight stocks with higher ESG ratings and underweight stocks with lower ESG characteristics. Consequently, the Index achieved an ESG quality score that was 63.1% higher than the broader market. The Index held an overweight position in the financials and information technology sectors and an underweight in materials. Stock selection in the industrials and materials sectors were the largest contributors to the Index’s relative performance, while the overweight position in financials detracted.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector

   

Percent of

Total Investments

 

(a) 

Financials

    20.6

Consumer Discretionary

    19.8  

Information Technology

    18.9  

Communication Services

    12.4  

Energy

    6.0  

Consumer Staples

    5.8  

Materials

    5.5  

Industrials

    3.9  

Health Care

    3.9  

Real Estate

    1.6  

Utilities

    1.6  

 

  (a) 

Excludes money market funds.

 

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region

   

Percent of

Total Investments

 

(a) 

China

    40.7

Taiwan

    13.1  

South Korea

    11.7  

India

    8.3  

Brazil

    4.6  

South Africa

    3.9  

Russia

    3.0  

Saudi Arabia

    2.5  

Thailand

    2.5  

Malaysia

    2.4  
 

 

 

U N D   S U M M A R Y

  6


Fund Summary as of August 31, 2020     iShares® MSCI Emerging Markets ex China ETF

 

Investment Objective

The iShares MSCI Emerging Markets ex China ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities, excluding China, as represented by the MSCI Emerging Markets ex China Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns             Cumulative Total Returns    
     1 Year      Since
Inception
           1 Year      Since
Inception
 

Fund NAV

    2.87      (0.41 )%        2.87      (1.29 )% 

Fund Market

    3.60        (0.20       3.60        (0.62

Index

    2.43        (0.19             2.43        (0.58

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 7/18/17. The first day of secondary market trading was 7/20/17.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

    Actual     Hypothetical 5% Return           
 

 

 

     

 

 

      
   

Beginning
Account Value
(03/01/20)


 
      

Ending
Account Value
(08/31/20)


 
      

Expenses

Paid During

the Period

 

 

 (a) 

           

Beginning
Account Value
(03/01/20)


 
      

Ending
Account Value
(08/31/20)


 
      

Expenses

Paid During

the Period

 

 

 (a) 

      

Annualized

Expense

Ratio

 

 

 

       $ 1,000.00        $ 1,034.80        $ 0.82             $ 1,000.00        $ 1,024.30        $ 0.81          0.16

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Emerging Markets ex China ETF

 

Portfolio Management Commentary

Emerging market stocks outside of China advanced modestly during the reporting period, despite a worldwide recession. Taiwanese equities in the information technology sector contributed the most to the Index’s return, as pandemic-related closures and restrictions increased global demand for semiconductors. The semiconductor industry posted substantial earnings growth from high-performance computing, including data center hardware and 5G equipment. High bandwidth usage increased as remote work and distance learning utilized video and streaming services, resulting in higher demand for data center hardware. Continued rollouts of 5G products benefited chipmakers. Toward the end of the reporting period, U.S. restrictions on the sale of semiconductors to a Chinese telecommunications giant helped increase Taiwan’s exports as the company stockpiled chips before a September 2020 deadline. Technology hardware and equipment stocks benefited from increased personal computer purchases, despite pandemic-related supply chain disruptions. Expectations for a rebound in smartphone sales from new models also supported the industry’s gains.

The technology hardware and equipment industry also bolstered returns in South Korea. Profits from computer memory strengthened amid higher prices and substantial demand from data centers. While smartphone sales slowed during the pandemic, expanded online sales channels and cost reductions served as tailwinds for hardware manufacturers. The communication services sector was supported by the interactive media and services industry, which benefited from robust demand for cloud computing services for remote learning and increased video game use.

On the downside, Brazilian equities detracted from the Index’s return, primarily due to the financials sector. Declining economic activity reduced income from interest, fees, and insurance, pressuring banks’ profits. Deteriorating demand for consumer credit and sharply rising loan default provisions also weighed on the banking industry. Brazilian consumer staples stocks declined as restaurant and bar closures reduced demand for beer, constraining returns in the food, beverage, and tobacco industry. Thai stocks also retreated, weighed down by the financials and energy sectors. Banks increased provisions for loan defaults amid persistently low interest rates, and slower growth in fee revenue, while declining oil prices and sales volumes weighed on energy stocks.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Information Technology

    24.0

Financials

    17.4  

Exchanged-Traded Funds

    14.0  

Materials

    9.9  

Consumer Discretionary

    6.6  

Communication Services

    6.5  

Consumer Staples

    6.0  

Energy

    5.9  

Industrials

    3.8  

Health Care

    3.0  

Utilities

    1.9  

Real Estate

    1.0  

 

  (a)

Excludes money market funds.

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a) 

Taiwan

    21.4

South Korea

    20.0  

India

    14.0  

Brazil

    8.4  

South Africa

    6.2  

Russia

    5.4  

Saudi Arabia

    4.7  

Thailand

    3.4  

Malaysia

    3.0  

Mexico

    2.8  
 

 

 

U N D   S U M M A R Y

  8


Fund Summary as of August 31, 2020     iShares® MSCI Emerging Markets Min Vol Factor ETF

 

Investment Objective

The iShares MSCI Emerging Markets Min Vol Factor ETF (the “Fund”) (formerly the iShares Edge MSCI Min Vol Emerging Markets ETF) seeks to track the investment results of an index composed of emerging market equities that, in the aggregate, have lower volatility characteristics relative to the broader emerging equity markets, as represented by the MSCI Emerging Markets Minimum Volatility (USD) Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
           1 Year      5 Years      Since
Inception
 

Fund NAV

    1.07      4.49      4.00       1.07      24.55      41.63

Fund Market

    0.62        4.43        3.93         0.62        24.21        40.83  

Index

    1.21        4.74        4.22               1.21        26.08        44.34  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 10/18/11. The first day of secondary market trading was 10/20/11.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

    Actual     Hypothetical 5% Return           
 

 

 

     

 

 

      
   

Beginning
Account Value
(03/01/20)


 
      

Ending
Account Value
(08/31/20)


 
      

Expenses

Paid During

the Period

 

 

 (a) 

           

Beginning
Account Value
(03/01/20)


 
      

Ending
Account Value
(08/31/20)


 
      

Expenses

Paid During

the Period

 

 

 (a) 

      

Annualized

Expense

Ratio

 

 

 

       $ 1,000.00        $ 1,062.60        $ 1.30             $ 1,000.00        $ 1,023.90        $ 1.27          0.25

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

9  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Emerging Markets Min Vol Factor ETF

 

Portfolio Management Commentary

Lower volatility emerging market stocks advanced modestly for the reporting period amid the global recession that followed significant pandemic-related economic disruption. Chinese stocks were the leading contributors to the Index’s return, as the Chinese economy returned to growth in the second quarter of 2020, even as global economic contraction continued. The consumer discretionary sector was China’s principal source of strength. Internet and direct marketing retailers advanced amid a shift toward online shopping following the implementation of lockdowns. The Chinese consumer staples sector was another solid contributor, driven by strength in the packaged food and meats industry, where higher prices for meat boosted profits.

Taiwanese stocks also contributed notably to the Index’s return. The information technology sector led the advance as the semiconductor industry posted substantial growth in revenue from high-performance computing, including data center hardware and 5G equipment. The technology hardware and equipment industry benefited from increased sales of laptop and desktop personal computers during the pandemic. In the financials sector, improved demand for loans, particularly mortgage and smaller business loans, bolstered the diversified banking industry. The materials sector drove gains in Russia as record-high gold prices drove profit growth in the metals and mining industry.

On the downside, Thai stocks detracted from the Index’s return. The industrials sector led the decline as revenue for airport services companies decreased due to the substantial pandemic-driven reduction in travel. Bank stocks retreated in Chile, where higher provisions for bad loans weighed on profits, and in the Philippines, where store closures led to an increase in loan delinquencies.

In terms of relative performance, the Index significantly underperformed the broader market, as measured by the MSCI Emerging Markets Index. Stocks with low-volatility characteristics trailed the broader market during the stock market rebound that followed the pandemic-related downturn. Looking at countries, stock selection in China and Taiwan drove the majority of underperformance. Positioning in South Korea, Malaysia, and the Philippines also weighed on relative performance, while underweight positions in Brazilian and South African stocks bolstered relative returns. Turning to sectors, positioning in the consumer discretionary and information technology sectors detracted from the Index’s relative return, as did stock selection in the communication services sector. An underweight position in the energy sector, which was pressured by low oil prices, contributed modestly to relative performance.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Financials

    22.5

Consumer Discretionary

    14.7  

Communication Services

    14.0  

Information Technology

    13.1  

Consumer Staples

    11.4  

Industrials

    6.2  

Utilities

    5.9  

Materials

    4.7  

Health Care

    4.3  

Energy

    2.5  

Real Estate

    0.7  

 

  (a)

Excludes money market funds.

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a) 

China

    37.3

Taiwan

    16.4  

India

    9.3  

South Korea

    6.7  

Saudi Arabia

    6.4  

Thailand

    6.0  

Malaysia

    5.0  

Qatar

    2.6  

Philippines

    2.0  

United Arab Emirates

    1.7  
 

 

 

U N D   S U M M A R Y

  10


Fund Summary as of August 31, 2020    iShares® MSCI Emerging Markets Multifactor ETF

 

Investment Objective

The iShares MSCI Emerging Markets Multifactor ETF (the “Fund”) (formerly the iShares Edge MSCI Multifactor Emerging Markets ETF) seeks to track the investment results of an index composed of stocks of large- and mid-capitalization companies in emerging markets that have favorable exposure to target style factors subject to constraints, as represented by the MSCI Emerging Markets Diversified Multiple-Factor Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year     

Since

Inception

           1 Year     

Since

Inception

 

Fund NAV

    12.17      8.11       12.17      44.68

Fund Market

    13.09        8.24         13.09        45.46  

Index

    12.94        8.43               12.94        46.59  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 12/8/15. The first day of secondary market trading was 12/10/15.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

    Actual     Hypothetical 5% Return           
 

 

 

     

 

 

      
   

Beginning
Account Value
(03/01/20)


 
      

Ending
Account Value
(08/31/20)


 
      

Expenses

Paid During

the Period

 

 

 (a) 

           

Beginning
Account Value
(03/01/20)


 
      

Ending
Account Value
(08/31/20)


 
      

Expenses

Paid During

the Period 

 

 

(a) 

      

Annualized

Expense

Ratio

 

 

 

       $ 1,000.00        $ 1,098.20        $ 2.37             $ 1,000.00        $ 1,022.90        $ 2.29          0.45

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

11  

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Emerging Markets Multifactor ETF

 

Portfolio Management Commentary

Emerging market stocks with exposure to target factors advanced significantly for the reporting period, despite the onset of a global coronavirus-related recession. Chinese stocks were the leading contributors to the Index’s return, as the Chinese economy returned to growth in the second quarter of 2020, even as most of the rest of the world’s economies continued to contract. The consumer discretionary sector was China’s principal source of strength. The internet and direct marketing retail industry posted solid gains amid a shift toward online shopping following the implementation of lockdowns to slow the spread of the coronavirus.

The Chinese communication services sector was another solid contributor, driven by strength in the interactive media and services industry. Homebound consumers supported demand growth for video games, while increased social media use drove stronger revenues for digital content and online advertising. Healthcare stocks also advanced due to gains in the pharmaceuticals industry, where strong sales of finished drugs helped to offset lower vitamin sales.

Taiwanese and Indian stocks also contributed to the Index’s performance, boosted by gains of information technology stocks. High demand for semiconductors used in 5G and data centers drove returns in Taiwan. Information technology services stocks in India benefited from the increase in work-from-home arrangements. On the downside, Brazilian equities weighed on performance, particularly in the financials sector, where an insurance company stock declined sharply after reports of an ownership stake by a prominent investor were revealed to be false.

For the reporting period, the Index underperformed compared with the broader market, as represented by the MSCI Emerging Markets Index. The Index’s research-based selection process focuses on four investment factors: value, quality, momentum, and size. Of the four target style factors, size and value detracted from the Index’s performance, while quality and momentum contributed to relative performance.

From a country perspective, an overweight position in Brazil and stock selection in China and South Korea were the largest drivers of underperformance. In contrast, stock selection in India and no exposure in Thailand benefited relative return. Turning to sectors, stock selection in the consumer discretionary and communication services sectors detracted from the Index’s relative return. Stock selection in the materials and industrials sectors benefited relative performance. An overweight position in the information technology sector, which advanced significantly in the latter part of the reporting period, was another notable contributor.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector   Percent of   
Total Investments(a)

Information Technology

  22.2%

Consumer Discretionary

  17.2   

Financials

  13.2   

Communication Services

  11.0   

Materials

  9.4   

Health Care

  7.7   

Industrials

  5.9   

Consumer Staples

  5.5   

Real Estate

  3.4   

Utilities

  2.4   

Energy

  2.1   

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region   Percent of   
Total Investments(a)

China

  46.1%

Taiwan

  15.4   

South Africa

  8.2   

India

  7.3   

South Korea

  7.1   

Brazil

  5.3   

Saudi Arabia

  3.0   

Qatar

  2.5   

Russia

  1.1   

Indonesia

  0.8   
 

 

  (a) 

Excludes money market funds.

 

 

 

U N D   S U M M A R Y

  12


Fund Summary as of August 31, 2020    iShares® MSCI Global Min Vol Factor ETF

 

Investment Objective

The iShares MSCI Global Min Vol Factor ETF (the “Fund”) (formerly the iShares Edge MSCI Min Vol Global ETF) seeks to track the investment results of an index composed of developed and emerging market equities that, in the aggregate, have lower volatility characteristics relative to the broader developed and emerging equity markets, as represented by the MSCI ACWI Minimum Volatility (USD) Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      5 Years     

Since

Inception

           1 Year      5 Years     

Since

Inception

 

Fund NAV

    2.13      9.16      9.72       2.13      55.03      127.69

Fund Market

    1.95        9.18        9.70         1.95        55.12        127.36  

Index

    1.88        8.91        9.45               1.88        53.26        122.76  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was 10/18/11. The first day of secondary market trading was 10/20/11.

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” on page 15 for more information.

Expense Example

 

    Actual     Hypothetical 5% Return           
 

 

 

     

 

 

      
   

Beginning
Account Value
(03/01/20)
 
 
 
      

Ending
Account Value
(08/31/20)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning

Account Value

(03/01/20)

 

 

 

      

Ending

Account Value

(08/31/20)

 

 

 

      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized

Expense

Ratio

 

 

 

       $ 1,000.00        $ 1,047.10        $ 1.03             $ 1,000.00        $ 1,024.10        $ 1.02          0.20

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (366 days). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Shareholder Expenses” on page 15 for more information.

 

 

 

13  

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Fund Summary as of August 31, 2020   (continued)    iShares® MSCI Global Min Vol Factor ETF

 

Portfolio Management Commentary

Lower volatility global stocks advanced modestly during the reporting period, as countries around the world experienced significant pandemic-related economic disruption. Stocks in the U.S., which represented approximately 52% of the Index on average, contributed the most to the Index’s return.

The U.S. consumer staples sector was the leading source of strength, helped by brisk sales of household goods as consumers stocked up on cleaning and personal care products. The packaged foods and meats industry gained due to changing purchasing patterns, as strength in consumer sales outweighed the effect of reduced sales to restaurants. The materials sector also advanced, supported by increasing gold prices, which benefited the metals and mining industry.

The materials sector also drove contribution in Canada. Monetary policy easing to mitigate the economic impact of the pandemic led to ultra-low bond yields, making gold more attractive as a store of value. In this environment, investor demand drove the metal’s price sharply higher, bolstering profitability of the metals and mining industry.

Taiwanese stocks were modest contributors, driven by strength in the information technology sector, where increased demand from at-home workers boosted computer sales. Swiss stocks also gained as the pharmaceuticals industry benefited from emergency approval of coronavirus tests by the U.S. Food and Drug Administration.

On the downside, Japanese stocks faltered due to weakness in the real estate sector as cancelled office leases and missed rent payments by retailers and hotel operators weighed on equity real estate investment trusts. Hong Kong industrials stocks also detracted from the Index’s return, as economic disruption and lower auto sales weighed on the profits of industrial conglomerates.

In terms of relative performance, the Index significantly underperformed the broader market, as measured by the MSCI ACWI Index. Stocks with low-volatility characteristics trailed the broader market during the rebound that followed the pandemic-related downturn. Looking at countries, stock selection in the U.S. drove the majority of underperformance. Stock selection in Japan and China also negatively affected relative performance, while an underweight position in U.K. stocks was beneficial. Turning to sectors, stock selection and an underweight allocation to the information technology sector detracted from the Index’s relative performance, as did stock selection in the consumer discretionary and communication services sectors. A significant underweight to the energy sector, which was pressured by low oil prices, contributed to relative performance.

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector   Percent of   
Total Investments(a)

Information Technology

  15.4%

Financials

  13.9   

Consumer Staples

  13.8   

Communication Services

  12.5   

Health Care

  11.5   

Utilities

  7.9   

Industrials

  7.7   

Consumer Discretionary

  7.0   

Materials

  6.3   

Real Estate

  3.5   

Energy

  0.5   

TEN LARGEST GEOGRAPHIC ALLOCATION

 

Country/Geographic Region   Percent of   
Total Investments(a)

United States

  52.8%

Japan

  11.6   

Canada

  5.8   

Switzerland

  5.1   

Taiwan

  4.2   

China

  2.8   

India

  2.6   

Hong Kong

  2.6   

Germany

  1.1   

Saudi Arabia

  0.9   
 

 

  (a)

Excludes money market funds.

 

 

 

U N D   S U M M A R Y

  14


About Fund Performance

 

Past performance is no guarantee of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not trade in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike a fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by a fund. These expenses negatively impact fund performance. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

15  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments

August 31, 2020

  

iShares® ESG Aware MSCI EM ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Argentina — 0.1%  

Globant SA(a)

    28,187     $ 5,005,447  
   

 

 

 
Brazil — 3.5%  

Atacadao SA

    1,547,800       5,515,866  

B2W Cia. Digital(a)

    176,000       3,596,099  

B3 SA - Brasil, Bolsa, Balcao

    2,177,900       23,343,575  

Banco Bradesco SA

    1,032,546       3,581,792  

Banco do Brasil SA

    1,178,500       7,013,986  

Banco Santander Brasil SA

    1,455,400       7,502,636  

Cia Brasileira de Distribuicao

    373,900       4,328,622  

Cosan SA

    457,100       6,936,615  

CPFL Energia SA

    608,200       3,186,290  

Energisa SA

    446,500       3,536,416  

Equatorial Energia SA

    964,700       4,079,739  

Klabin SA

    778,700       3,648,005  

Localiza Rent a Car SA

    1,266,221       11,132,146  

Lojas Renner SA

    735,310       5,826,560  

Natura & Co. Holding SA

    1,243,756       11,186,300  

Petrobras Distribuidora SA

    973,800       3,788,055  

Ultrapar Participacoes SA

    2,616,600       9,272,262  

Via Varejo SA(a)

    996,500       3,723,774  

WEG SA

    463,300       5,457,344  
   

 

 

 
          126,656,082  
Chile — 0.7%  

Cia. Cervecerias Unidas SA

    891,376       5,874,276  

Empresas COPEC SA

    985,392       7,243,343  

Enel Americas SA

    64,168,456       9,255,806  

Enel Chile SA

    37,138,937       2,863,582  
   

 

 

 
      25,237,007  
China — 40.5%  

360 Security Technology Inc., Class A

    1,633,200       4,454,301  

3SBio Inc.(a)(b)

    2,932,000       3,442,669  

AAC Technologies Holdings Inc.(c)

    913,000       5,760,624  

Agricultural Bank of China Ltd., Class H

    15,219,000       5,085,993  

Alibaba Group Holding Ltd., ADR(a)

    1,069,375       306,942,706  

Alibaba Health Information Technology Ltd.(a)

    3,590,000       8,671,419  

A-Living Services Co. Ltd., Class H(b)

    957,000       4,939,259  

ANTA Sports Products Ltd.

    446,000       4,405,244  

BAIC Motor Corp. Ltd., Class H(b)

    17,304,000       8,283,432  

Baidu Inc., ADR(a)

    117,272       14,608,573  

Bank of China Ltd., Class H

    13,566,000       4,446,061  

Baozun Inc., ADR(a)

    80,529       3,337,122  

Beijing Oriental Yuhong Waterproof Technology Co. Ltd., Class A

    876,812       7,673,377  

BOC Aviation Ltd.(b)

    607,000       4,515,209  

BOE Technology Group Co. Ltd., Class A

    7,001,600       5,622,420  

Brilliance China Automotive Holdings Ltd.

    3,752,000       3,359,791  

BYD Co. Ltd., Class A

    372,616       4,624,276  

BYD Co. Ltd., Class H(c)

    785,500       7,804,172  

BYD Electronic International Co. Ltd.(c)

    1,089,000       4,615,866  

Caitong Securities Co. Ltd., Class A

    1,630,787       3,466,745  

CanSino Biologics Inc., Class H(a)(b)

    133,800       2,836,505  

China CITIC Bank Corp. Ltd., Class H

    7,979,000       3,335,672  

China Construction Bank Corp., Class H

    52,725,000       37,348,987  

China Eastern Airlines Corp. Ltd., Class A

    5,812,200       4,285,438  

China Eastern Airlines Corp. Ltd., Class H

    8,012,000       3,308,117  

China Everbright Bank Co. Ltd., Class H

    12,757,000       4,575,971  

China Everbright International Ltd.

    5,627,666       3,398,318  
Security   Shares     Value  
China (continued)  

China Gas Holdings Ltd.

    1,308,400     $ 3,587,479  

China International Capital Corp. Ltd.,
Class H(a)(b)

    3,139,200       7,461,025  

China Lesso Group Holdings Ltd.

    3,258,000       6,078,680  

China Life Insurance Co. Ltd., Class H

    3,734,000       9,096,330  

China Mengniu Dairy Co. Ltd.(a)

    1,103,000       5,422,385  

China Merchants Bank Co. Ltd., Class H

    3,909,500       18,664,349  

China Merchants Shekou Industrial Zone Holdings Co. Ltd., Class A

    3,399,357       8,288,512  

China Minsheng Banking Corp. Ltd., Class H

    12,666,000       7,713,853  

China Mobile Ltd.

    3,233,500           22,592,340  

China Molybdenum Co. Ltd., Class A

    5,555,100       3,471,355  

China Molybdenum Co. Ltd., Class H

    10,563,000       4,293,265  

China National Software & Service Co. Ltd., Class A

    232,200       3,350,875  

China Overseas Land & Investment Ltd.

    1,387,000       4,017,748  

China Overseas Property Holdings Ltd.

    3,410,000       3,075,541  

China Pacific Insurance Group Co. Ltd., Class H

    1,686,400       4,689,189  

China Resources Land Ltd.

    1,108,000       5,125,294  

China TransInfo Technology Co. Ltd., Class A

    974,509       3,480,211  

China Vanke Co. Ltd., Class H

    1,164,100       3,619,905  

CNOOC Ltd.

    5,956,000       6,778,181  

Country Garden Services Holdings Co. Ltd.

    1,936,000       13,501,777  

CSPC Pharmaceutical Group Ltd.

    3,085,200       6,854,983  

ENN Energy Holdings Ltd.

    331,200       3,675,181  

Eve Energy Co. Ltd., Class A

    499,125       3,571,555  

Everbright Securities Co. Ltd., Class A

    1,134,797       3,631,801  

Fosun International Ltd.

    8,738,500       9,730,554  

Founder Securities Co. Ltd., Class A(a)

    2,896,637       3,709,001  

Geely Automobile Holdings Ltd.

    7,915,000       16,728,412  

Genscript Biotech Corp.(a)

    1,750,000       3,382,515  

Glodon Co. Ltd., Class A

    388,085       3,948,193  

GoerTek Inc., Class A

    958,400       5,749,714  

Greentown Service Group Co. Ltd.

    3,752,000       5,044,527  

GSX Techedu Inc., ADR(a)

    29,317       2,503,672  

Guangzhou Automobile Group Co. Ltd., Class H

    3,785,200       3,252,767  

Haitong Securities Co. Ltd., Class A(a)

    1,591,300       3,524,528  

Haitong Securities Co. Ltd., Class H(a)

    3,695,200       3,356,607  

Hangzhou Robam Appliances Co. Ltd., Class A

    604,482       3,442,004  

Huadong Medicine Co. Ltd., Class A

    1,073,893       4,383,909  

Huaxia Bank Co. Ltd., Class A

    8,496,232       7,976,285  

Hutchison China MediTech Ltd., ADR(a)

    112,957       3,752,432  

Industrial & Commercial Bank of China Ltd., Class H

    23,138,000       12,957,029  

Industrial Bank Co. Ltd., Class A

    1,895,868       4,473,143  

JD.com Inc., ADR(a)

    459,592       36,142,315  

Kingboard Laminates Holdings Ltd.

    3,356,000       4,230,643  

Kingdee International Software Group Co. Ltd.(a)

    4,146,000       10,570,758  

Kingsoft Corp. Ltd.

    774,000       4,144,565  

Koolearn Technology Holding Ltd.(a)(b)

    813,000       3,891,834  

Kweichow Moutai Co. Ltd., Class A

    16,000       4,173,365  

Legend Holdings Corp., Class H(b)

    4,647,500       6,848,184  

Lenovo Group Ltd.

    12,820,000       8,568,557  

Li Ning Co. Ltd.

    925,500       3,916,879  

Meituan Dianping, Class B(a)

    2,155,700       71,095,001  

NetEase Inc., ADR

    43,707       21,294,488  

New Oriental Education & Technology Group Inc., ADR(a)

    53,825       7,892,360  

NIO Inc., ADR(a)(c)

    669,435       12,739,348  

Orient Securities Co. Ltd., Class A

    2,479,132       4,274,771  

Pinduoduo Inc., ADR(a)(c)

    156,191       13,891,628  

Ping An Healthcare and Technology Co.
Ltd.(a)(b)(c)

    353,600       5,155,616  

Ping An Insurance Group Co. of China Ltd., Class A

    362,901       4,059,697  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  16


Schedule of Investments  (continued)

August 31, 2020

  

iShares® ESG Aware MSCI EM ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)  

Ping An Insurance Group Co. of China Ltd., Class H

    4,615,500     $ 49,161,568  

Semiconductor Manufacturing International Corp.(a)

    1,801,500       5,787,933  

Shanghai Pharmaceuticals Holding Co. Ltd., Class A

    1,239,679       4,018,144  

Shanghai Pharmaceuticals Holding Co. Ltd., Class H

    5,042,300       8,991,386  

Shanghai Pudong Development Bank Co. Ltd., Class A

    2,232,264       3,376,515  

Shenzhen Inovance Technology Co. Ltd., Class A

    918,500       7,483,016  

Shenzhen Mindray Bio-Medical Electronics Co. Ltd., Class A

    77,500       3,874,915  

Shenzhou International Group Holdings Ltd.

    687,400       11,086,882  

Sino Biopharmaceutical Ltd.

    5,543,000       6,401,147  

Sinopharm Group Co. Ltd., Class H

    1,666,000       4,101,505  

SOHO China Ltd.(a)

    13,820,000       4,261,827  

Sunac China Holdings Ltd.

    1,294,000       5,443,043  

Suning.com Co. Ltd., Class A

    6,270,238       9,017,447  

Sunny Optical Technology Group Co. Ltd.

    492,000       7,294,156  

TAL Education Group, ADR(a)

    167,930       12,394,913  

TCL Technology Group Corp., Class A

    5,603,962       5,792,843  

Tencent Holdings Ltd.

    3,439,500       235,434,766  

Tencent Music Entertainment Group, ADR(a)(c)

    255,743       3,997,263  

Tongcheng-Elong Holdings Ltd.(a)

    2,041,200       4,003,308  

TravelSky Technology Ltd., Class H

    1,764,000       3,669,049  

Trip.com Group Ltd., ADR(a)

    271,263       8,202,993  

Unisplendour Corp. Ltd., Class A

    1,269,302       6,078,580  

Vipshop Holdings Ltd., ADR(a)

    340,739       5,625,601  

Wanda Film Holding Co. Ltd., Class A(a)

    1,407,560       3,808,077  

Wuliangye Yibin Co. Ltd., Class A

    118,360       4,147,434  

WuXi AppTec Co. Ltd., Class A

    367,229       5,893,014  

WuXi AppTec Co. Ltd., Class H(b)

    423,200       6,268,699  

Wuxi Biologics Cayman Inc.(a)(b)

    928,500       24,128,552  

Xiaomi Corp., Class B(a)(b)

    5,019,800       15,221,034  

Xinjiang Goldwind Science & Technology Co. Ltd., Class A

    2,306,120       3,676,782  

Xinjiang Goldwind Science & Technology Co. Ltd., Class H

    4,507,536       3,879,314  

Xinyi Solar Holdings Ltd.

    5,254,000       6,636,860  

Yihai International Holding Ltd.(a)

    285,000       4,479,010  

Yum China Holdings Inc.(a)

    174,717       10,082,918  

Yuzhou Group Holdings Co. Ltd.

    20,656,000       9,648,164  

Zai Lab Ltd., ADR(a)(c)

    45,333       3,598,080  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class H(a)

    5,010,400       5,016,768  
   

 

 

 
          1,479,978,888  
Colombia — 0.2%  

Ecopetrol SA

    6,685,228       3,904,194  

Interconexion Electrica SA ESP

    662,776       3,700,961  
   

 

 

 
      7,605,155  
Czech Republic — 0.1%  

Komercni Banka AS(a)

    204,417       4,931,125  
   

 

 

 
Greece — 0.1%  

OPAP SA

    489,155       4,492,840  
   

 

 

 
Hungary — 0.4%  

MOL Hungarian Oil & Gas PLC(a)

    2,452,404       13,850,352  
   

 

 

 
India — 8.3%  

Asian Paints Ltd.

    668,857       17,256,751  

Axis Bank Ltd.(a)

    920,204       6,210,119  

Axis Bank Ltd., GDR(d)

    99,425       3,499,760  

Bajaj Finance Ltd.

    115,360       5,466,190  
Security   Shares     Value  
India (continued)  

Bandhan Bank Ltd.(a)(b)

    934,979     $ 3,884,340  

Bharat Petroleum Corp. Ltd.

    801,628       4,441,177  

Bharti Airtel Ltd.

    1,040,782       7,255,039  

Dabur India Ltd.

    2,033,132       13,109,051  

Eicher Motors Ltd.

    174,736       4,966,175  

HCL Technologies Ltd.

    1,102,968       10,405,203  

Hero MotoCorp Ltd.

    117,726       4,807,802  

Hindalco Industries Ltd.

    1,428,628       3,595,467  

Hindustan Unilever Ltd.

    684,079       19,677,814  

Housing Development Finance Corp. Ltd.

    1,257,935       31,318,706  

ICICI Bank Ltd.(a)

    1,810,087       9,703,635  

Indian Oil Corp. Ltd.

    3,291,958       3,837,245  

Info Edge India Ltd.

    78,281       3,470,866  

Infosys Ltd.

    2,564,522       32,352,887  

Mahindra & Mahindra Ltd.

    122,540       1,010,353  

Mahindra & Mahindra Ltd., GDR

    884,601       7,412,956  

Marico Ltd.

    1,771,514       8,878,328  

Nestle India Ltd.

    58,146       12,599,294  

Power Grid Corp. of India Ltd.

    1,752,641       4,260,912  

Reliance Industries Ltd.

    1,263,189       35,707,195  

Reliance Industries Ltd., GDR(b)

    127,416       7,377,386  

Tata Consultancy Services Ltd.

    761,131       23,340,868  

Tata Steel Ltd.

    21,587       121,121  

Titan Co. Ltd.

    523,797       7,831,248  

UPL Ltd.

    570,136       3,918,898  

Wipro Ltd.

    1,420,161       5,234,381  
   

 

 

 
          302,951,167  
Indonesia — 1.4%  

Bank Central Asia Tbk PT

    9,112,900       19,633,802  

Bank Negara Indonesia Persero Tbk PT

    13,885,500       4,862,905  

Bank Rakyat Indonesia Persero Tbk PT

    50,220,900       12,104,745  

Kalbe Farma Tbk PT

    35,597,200       3,862,220  

Telekomunikasi Indonesia Persero Tbk PT

    24,951,800       4,900,405  

Unilever Indonesia Tbk PT

    7,324,900       4,137,154  
   

 

 

 
      49,501,231  
Malaysia — 2.4%  

AMMB Holdings Bhd

    4,873,900       3,416,586  

Axiata Group Bhd

    4,817,400       3,481,064  

Hartalega Holdings Bhd

    1,191,100       4,723,796  

Malayan Banking Bhd

    4,537,500       7,984,606  

Maxis Bhd

    6,080,800       7,299,004  

Nestle Malaysia Bhd

    498,800       16,668,578  

Petronas Dagangan Bhd

    1,061,600       5,250,020  

Public Bank Bhd

    4,136,600       16,306,079  

RHB Bank Bhd

    5,552,200       6,104,687  

Sime Darby Plantation Bhd

    4,901,900       6,001,606  

Supermax Corp. Bhd(a)

    686,800       3,650,403  

Telekom Malaysia Bhd(c)

    3,983,000       3,968,179  

Top Glove Corp. Bhd

    548,800       3,462,361  
   

 

 

 
      88,316,969  
Mexico — 1.4%  

Arca Continental SAB de CV

    728,500       3,322,953  

Cemex SAB de CV, CPO, NVS

    17,453,600       5,598,294  

Coca-Cola Femsa SAB de CV

    1,577,283       6,615,854  

Fomento Economico Mexicano SAB de CV

    595,200       3,463,615  

Grupo Financiero Banorte SAB de CV, Class O(a)

    2,315,200       8,004,715  

Infraestructura Energetica Nova SAB de CV

    3,910,329       11,450,836  

Wal-Mart de Mexico SAB de CV

    5,127,200       12,306,123  
   

 

 

 
      50,762,390  
 

 

 

17  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® ESG Aware MSCI EM ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Peru — 0.1%  

Credicorp Ltd.

    28,206     $ 3,680,319  
   

 

 

 
Philippines — 0.4%            

BDO Unibank Inc.

    4,812,920       8,536,890  

Globe Telecom Inc.

    86,745       3,735,662  

SM Prime Holdings Inc.

    5,762,300       3,470,334  
   

 

 

 
      15,742,886  
Poland — 0.8%  

Bank Polska Kasa Opieki SA(a)

    246,488       3,514,010  

CD Projekt SA(a)

    32,684       3,906,703  

KGHM Polska Miedz SA(a)

    332,299       12,395,938  

Polski Koncern Naftowy ORLEN SA

    438,441       6,052,160  

Santander Bank Polska SA(a)

    83,527       3,449,412  
   

 

 

 
      29,318,223  
Qatar — 0.7%  

Commercial Bank PSQC (The)

    5,368,388       6,072,235  

Qatar Fuel QSC

    147,828       740,650  

Qatar National Bank QPSC

    3,874,492       18,990,022  
   

 

 

 
          25,802,907  
Russia — 3.0%  

Gazprom PJSC

    5,984,710       14,601,692  

Gazprom PJSC, ADR

    521,356       2,536,918  

LUKOIL PJSC

    431,665       28,963,902  

Novatek PJSC, GDR(d)

    92,056       13,633,493  

Novolipetsk Steel PJSC

    3,259,410       6,788,068  

Polymetal International PLC

    369,744       9,873,730  

Polyus PJSC

    50,566       12,282,645  

Rosneft Oil Co. PJSC

    211,930       1,063,932  

Rosneft Oil Co. PJSC, GDR(d)

    344,670       1,750,924  

Sberbank of Russia PJSC(a)

    5,886,140       17,879,977  

Surgutneftegas PJSC

    1,348,000       664,713  
   

 

 

 
          110,039,994  
Saudi Arabia — 2.5%  

Al Rajhi Bank

    530,353       9,177,541  

Almarai Co. JSC

    408,120       5,843,577  

Arab National Bank

    632,162       3,499,229  

Bank AlBilad

    550,374       3,524,906  

Banque Saudi Fransi

    910,790       7,759,000  

National Commercial Bank(a)

    739,595       7,335,902  

Samba Financial Group

    720,128       5,289,906  

Saudi Arabian Mining Co.(a)

    651,505       6,844,325  

Saudi Arabian Oil Co.(b)

    1,178,441       11,170,280  

Saudi Basic Industries Corp.

    1,017,000       23,862,736  

Saudi British Bank (The)

    543,756       3,892,826  

Savola Group (The)

    313,269       4,059,479  
   

 

 

 
      92,259,707  
South Africa — 3.9%  

Absa Group Ltd.

    769,789       3,510,142  

AngloGold Ashanti Ltd.

    160,382       4,682,922  

Bidvest Group Ltd. (The)

    410,036       3,294,326  

Clicks Group Ltd.

    425,241       5,773,212  

FirstRand Ltd.

    1,580,069       3,530,177  

Gold Fields Ltd.

    579,906       7,498,857  

Growthpoint Properties Ltd.

    5,421,630       3,907,510  

Impala Platinum Holdings Ltd.

    434,372       4,009,312  

Kumba Iron Ore Ltd.

    214,959       6,737,592  

MTN Group Ltd.

    900,690       3,246,817  

MultiChoice Group Ltd.(a)

    640,098       3,660,834  

Naspers Ltd., Class N

    264,310       48,251,738  
Security   Shares     Value  
South Africa (continued)  

Nedbank Group Ltd.

    598,984     $ 3,393,874  

NEPI Rockcastle PLC

    1,074,122       5,027,205  

Old Mutual Ltd.

    14,109,401       9,319,513  

Sibanye Stillwater Ltd.(a)

    1,222,722       3,701,817  

Standard Bank Group Ltd.

    1,368,882       8,531,853  

Vodacom Group Ltd.

    1,388,474       10,479,992  

Woolworths Holdings Ltd.

    2,274,836       4,268,695  
   

 

 

 
      142,826,388  
South Korea — 11.0%  

Amorepacific Corp.

    38,369       5,426,376  

AMOREPACIFIC Group

    119,450       5,128,336  

BNK Financial Group Inc.

    777,087       3,323,177  

Celltrion Inc.(a)

    33,649       8,412,958  

CJ CheilJedang Corp.

    10,089       3,456,708  

GS Holdings Corp.

    137,427       3,759,893  

Hana Financial Group Inc.

    141,265       3,353,542  

Hankook Tire & Technology Co. Ltd.

    167,338       4,155,628  

Hyundai Marine & Fire Insurance Co. Ltd.

    177,184       3,296,377  

Hyundai Motor Co.(a)

    29,664       4,407,523  

Kakao Corp.

    24,799       8,496,669  

KB Financial Group Inc.

    380,662       11,808,565  

LG Chem Ltd.

    33,676       20,978,399  

LG Corp.

    153,286       10,671,565  

LG Display Co. Ltd.(a)

    563,014       6,919,778  

LG Electronics Inc.

    224,475       15,911,099  

LG Household & Health Care Ltd.

    7,321       9,078,065  

LG Innotek Co. Ltd.

    36,531       4,459,125  

NAVER Corp.

    91,974       24,969,791  

NCSoft Corp.

    10,874       7,552,025  

POSCO

    82,842       12,866,697  

Samsung Biologics Co. Ltd.(a)(b)

    6,177       4,045,548  

Samsung Card Co. Ltd.

    140,143       3,391,793  

Samsung Electro-Mechanics Co. Ltd.

    35,598       3,730,913  

Samsung Electronics Co. Ltd.

    2,803,969       127,463,866  

Samsung Fire & Marine Insurance Co. Ltd.

    27,706       4,361,497  

Samsung SDI Co. Ltd.

    49,156       18,724,716  

Shinhan Financial Group Co. Ltd.

    577,461       14,413,434  

SK Holdings Co. Ltd.

    46,391       8,357,331  

SK Hynix Inc.

    262,304       16,583,071  

SK Innovation Co. Ltd.

    52,811       6,446,330  

SK Telecom Co. Ltd.

    46,924       9,796,407  

S-Oil Corp.

    83,700       3,981,017  
   

 

 

 
          399,728,219  
Taiwan — 13.0%  

Acer Inc.(a)

    10,773,000       8,573,166  

ASE Technology Holding Co. Ltd.

    1,623,186       3,385,614  

Cathay Financial Holding Co. Ltd.

    12,612,110       17,129,069  

Chailease Holding Co. Ltd.

    1,290,352       5,695,025  

China Steel Corp.

    4,994,000       3,387,032  

Chunghwa Telecom Co. Ltd.

    3,969,000       14,676,704  

CTBC Financial Holding Co. Ltd.

    16,759,000       10,823,681  

Delta Electronics Inc.

    2,304,000       14,840,959  

E.Sun Financial Holding Co. Ltd.

    18,702,509       17,337,500  

Eva Airways Corp.

    9,763,000       3,826,474  

Evergreen Marine Corp. Taiwan Ltd.(a)

    6,768,000       4,013,537  

Far Eastern New Century Corp.

    6,352,000       5,726,033  

Far EasTone Telecommunications Co. Ltd.

    1,927,000       4,025,871  

First Financial Holding Co. Ltd.

    25,749,960       18,648,898  

Fubon Financial Holding Co. Ltd.

    12,742,000       18,586,562  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  18


Schedule of Investments  (continued)

August 31, 2020

  

iShares® ESG Aware MSCI EM ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)  

Hiwin Technologies Corp.

    320,551     $ 3,517,796  

Hon Hai Precision Industry Co. Ltd.

    2,905,000       7,613,602  

Hotai Motor Co. Ltd.

    320,000       6,510,915  

Inventec Corp.

    6,376,000       4,943,646  

Lite-On Technology Corp.

    4,463,039       7,057,751  

MediaTek Inc.

    699,000       13,245,540  

President Chain Store Corp.

    1,306,000       12,017,791  

Taishin Financial Holding Co. Ltd.

    38,293,224       17,292,409  

Taiwan Business Bank

    23,520,875       8,016,248  

Taiwan Mobile Co. Ltd.

    1,066,000       3,687,576  

Taiwan Semiconductor Manufacturing Co. Ltd.

    14,987,000       217,846,923  

United Microelectronics Corp.

    5,782,000       4,177,646  

Win Semiconductors Corp.

    369,000       3,596,749  

Wistron Corp.

    8,946,768       9,726,902  

Yuanta Financial Holding Co. Ltd.

    8,373,040       5,250,718  
   

 

 

 
      475,178,337  
Thailand — 2.4%  

Advanced Info Service PCL, NVDR

    612,400       3,600,906  

Airports of Thailand PCL, NVDR

    2,141,400       3,853,110  

Bangkok Dusit Medical Services PCL, NVDR

    10,488,100       7,009,478  

BTS Group Holdings PCL, NVDR

    14,863,900       4,966,971  

Central Pattana PCL, NVDR

    2,320,000       3,503,575  

Home Product Center PCL, NVDR

    8,905,300       4,263,442  

Intouch Holdings PCL, NVDR

    2,028,900       3,552,897  

Kasikornbank PCL, Foreign

    1,184,600       3,206,765  

Kasikornbank PCL, NVDR

    1,772,000       4,796,883  

Minor International PCL, NVDR(a)

    9,326,300       6,712,479  

PTT Exploration & Production PCL, NVDR

    1,898,400       5,428,793  

PTT PCL, NVDR

    10,742,200       12,425,711  

Siam Cement PCL (The), NVDR

    1,250,800       14,227,109  

Siam Commercial Bank PCL (The), NVDR

    3,304,300       7,697,381  

Total Access Communication PCL, NVDR

    3,178,400       3,650,986  
   

 

 

 
      88,896,486  
Turkey — 0.2%  

Anadolu Efes Biracilik Ve Malt Sanayii AS

    1,331,891       3,516,598  

Turkcell Iletisim Hizmetleri AS

    2,389,642       4,650,044  
   

 

 

 
      8,166,642  
United Arab Emirates — 0.6%  

Abu Dhabi Commercial Bank PJSC

    5,208,247       7,855,298  

First Abu Dhabi Bank PJSC

    4,071,425       12,702,593  
   

 

 

 
      20,557,891  
   

 

 

 

Total Common Stocks — 97.7%
(Cost: $3,117,387,327)

 

    3,571,486,652  
   

 

 

 

Preferred Stocks

   
Brazil — 1.0%  

Banco Bradesco SA, Preference Shares, NVS

    2,784,070       10,525,458  

Cia. Energetica de Minas Gerais, Preference Shares, NVS

    4,256,023       8,169,293  

Itau Unibanco Holding SA, Preference Shares, NVS

    2,323,110       9,972,701  
Security   Shares     Value  
Brazil (continued)  

Itausa SA, Preference Shares, NVS

    2,445,131     $ 4,203,063  

Telefonica Brasil SA, Preference Shares, NVS

    695,800       6,067,751  
   

 

 

 
      38,938,266  
Colombia — 0.1%  

Bancolombia SA, Preference Shares, NVS

    510,068       3,634,424  
   

 

 

 
South Korea — 0.7%  

LG Household & Health Care Ltd., Preference Shares, NVS

    5,589       3,298,164  

Samsung Electronics Co. Ltd., Preference Shares, NVS

    528,545       21,134,681  
   

 

 

 
      24,432,845  
   

 

 

 

Total Preferred Stocks — 1.8%
(Cost: $79,081,771)

      67,005,535  
   

 

 

 

Rights

   
China — 0.0%  

Legend Holdings Corp. Class H,
(Expires 05/19/23)(a)(e)

    29,546       0 (f) 
   

 

 

 

Total Rights — 0.0%
(Cost: $0)

      0 (f) 
   

 

 

 
Short-Term Investments  
Money Market Funds — 0.6%  

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(g)(h)(i)

    16,661,989       16,678,651  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(g)(h)

    3,950,000       3,950,000  
   

 

 

 
      20,628,651  
   

 

 

 

Total Short-Term Investments — 0.6%
(Cost: $20,616,633)

 

    20,628,651  
   

 

 

 

Total Investments in Securities — 100.1%
(Cost: $3,217,085,731)

 

    3,659,120,838  

Other Assets, Less Liabilities — (0.1)%

      (4,640,747
   

 

 

 

Net Assets — 100.0%

    $  3,654,480,091  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

All or a portion of this security is on loan.

(d) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(e) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(f) 

Rounds to less than $1.

(g) 

Affiliate of the Fund.

(h) 

Annualized 7-day yield as of period-end.

(i) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

19  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® ESG Aware MSCI EM ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 5,715,338     $ 10,965,034 (a)    $     $ (12,034   $ 10,313     $ 16,678,651       16,661,989     $ 315,587 (b)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

    1,431,000       2,519,000 (a)                        3,950,000       3,950,000       20,408        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (12,034   $ 10,313     $ 20,628,651       $ 335,995     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

                 

MSCI Emerging Markets E-Mini Index

     159          09/18/20        $ 8,748        $ 184,117  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 184,117  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 3,099,320  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 208,615  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 6,485,688        

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  20


Schedule of Investments  (continued)

August 31, 2020

  

iShares® ESG Aware MSCI EM ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

 
     Level 1        Level 2        Level 3      Total  

 

 

Investments

               

Assets

               

Common Stocks

   $ 3,571,486,652        $        $      $ 3,571,486,652  

Preferred Stocks

     67,005,535                          67,005,535  

Rights

                       0 (a)       0 (a) 

Money Market Funds

     20,628,651                          20,628,651  
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 3,659,120,838        $             —        $             0 (a)     $ 3,659,120,838  
  

 

 

      

 

 

      

 

 

    

 

 

 

Derivative financial instruments(b)

               

Assets

               

Futures Contracts

   $ 184,117        $        $      $ 184,117  
  

 

 

      

 

 

      

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 
  (b) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

21  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments

August 31, 2020

  

iShares® MSCI Emerging Markets ex China ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Argentina — 0.2%  

Globant SA(a)

    708     $ 125,727  

Telecom Argentina SA, ADR

    1,746       11,803  

YPF SA, ADR(a)

    2,864       15,981  
   

 

 

 
      153,511  
Brazil — 6.3%            

Ambev SA

    92,800       208,237  

Atacadao SA

    8,000       28,509  

B2W Cia. Digital(a)

    4,868       99,465  

B3 SA - Brasil, Bolsa, Balcao

    41,600       445,885  

Banco Bradesco SA

    22,628       78,494  

Banco BTG Pactual SA

    4,800       70,286  

Banco do Brasil SA

    17,600       104,749  

Banco Santander Brasil SA

    8,000       41,240  

BB Seguridade Participacoes SA

    14,400       69,245  

BRF SA(a)

    8,321       29,714  

CCR SA

    24,000       58,317  

Centrais Eletricas Brasileiras SA

    6,491       42,016  

Cia Brasileira de Distribuicao

    3,200       37,046  

Cia. de Saneamento Basico do Estado de Sao Paulo

    6,400       55,706  

Cia. Siderurgica Nacional SA

    14,400       39,925  

Cielo SA

    24,000       19,949  

Cogna Educacao

    32,000       33,249  

Cosan SA

    4,800       72,841  

Energisa SA

    3,200       25,345  

Engie Brasil Energia SA

    4,800       37,300  

Equatorial Energia SA

    19,200       81,197  

Hapvida Participacoes e Investimentos SA(b)

    4,800       56,637  

Hypera SA

    8,000       46,155  

IRB Brasil Resseguros S/A

    14,400       18,716  

IRB Brasil Resseguros S/A(a)

    4,204       5,303  

JBS SA

    22,400       91,627  

Klabin SA

    12,800       59,965  

Localiza Rent a Car SA

    13,040       114,643  

Lojas Renner SA

    17,630       139,699  

Magazine Luiza SA

    14,400       244,694  

Multiplan Empreendimentos Imobiliarios SA

    9,600       36,434  

Natura & Co. Holding SA

    14,694       132,157  

Notre Dame Intermedica Participacoes SA

    9,600       129,671  

Petrobras Distribuidora SA

    12,800       49,792  

Petroleo Brasileiro SA

    74,600       303,519  

Raia Drogasil SA

    4,800       94,322  

Rumo SA(a)

    24,000       98,872  

Sul America SA

    4,800       37,781  

Suzano SA(a)

    11,200       102,488  

TIM Participacoes SA

    9,628       25,132  

Ultrapar Participacoes SA

    14,400       51,028  

Vale SA

    72,071       784,046  

Via Varejo SA(a)

    27,200       101,642  

WEG SA

    17,640       207,787  
   

 

 

 
          4,610,825  
Chile — 0.7%            

Banco de Chile

    682,042       57,153  

Banco de Credito e Inversiones SA

    1,295       40,909  

Banco Santander Chile

    876,161       33,778  

Cencosud SA

    30,320       44,958  

Cia. Cervecerias Unidas SA

    4,384       28,891  

Empresa Nacional de Telecomunicaciones SA

    272       1,651  

Empresas CMPC SA

    28,384       59,105  
Security   Shares     Value  
Chile (continued)  

Empresas COPEC SA

    9,520     $ 69,979  

Enel Americas SA

    776,288       111,973  

Enel Chile SA

    572,592       44,149  

Falabella SA

    18,304       57,822  
   

 

 

 
      550,368  
China — 0.1%            

Silergy Corp.

    1,000       63,562  
   

 

 

 
Colombia — 0.3%            

Bancolombia SA

    6,320       43,819  

Ecopetrol SA

    94,272       55,055  

Grupo de Inversiones Suramericana SA

    6,464       36,199  

Interconexion Electrica SA ESP

    11,008       61,469  
   

 

 

 
      196,542  
Czech Republic — 0.2%            

CEZ AS

    2,912       60,107  

Komercni Banka AS(a)

    1,632       39,368  

Moneta Money Bank AS(b)

    14,432       36,456  
   

 

 

 
      135,931  
Egypt — 0.1%            

Commercial International Bank Egypt SAE

    20,088       85,637  

Eastern Co. SAE

    19,938       16,001  
   

 

 

 
      101,638  
Greece — 0.2%            

Hellenic Telecommunications Organization SA

    3,923       64,276  

JUMBO SA

    1,893       32,940  

Motor Oil Hellas Corinth Refineries SA

    55       773  

OPAP SA

    3,493       32,083  
   

 

 

 
      130,072  
Hungary — 0.4%            

MOL Hungarian Oil & Gas PLC(a)

    9,504       53,676  

OTP Bank Nyrt(a)

    4,720       159,687  

Richter Gedeon Nyrt

    2,864       70,162  
   

 

 

 
      283,525  
Indonesia — 2.4%            

Adaro Energy Tbk PT

    299,200       22,292  

Astra International Tbk PT

    425,600       149,051  

Bank Central Asia Tbk PT

    193,600       417,113  

Bank Mandiri Persero Tbk PT

    374,400       152,974  

Bank Negara Indonesia Persero Tbk PT

    155,200       54,353  

Bank Rakyat Indonesia Persero Tbk PT

    1,110,400       267,640  

Barito Pacific Tbk PT(a)

    566,400       32,671  

Charoen Pokphand Indonesia Tbk PT(a)

    152,000       65,758  

Gudang Garam Tbk PT(a)

    11,200       36,532  

Hanjaya Mandala Sampoerna Tbk PT

    142,400       16,135  

Indah Kiat Pulp & Paper Corp. Tbk PT

    48,000       30,654  

Indocement Tunggal Prakarsa Tbk PT

    40,000       32,618  

Indofood CBP Sukses Makmur Tbk PT

    45,700       32,088  

Indofood Sukses Makmur Tbk PT

    76,800       40,213  

Kalbe Farma Tbk PT

    456,000       49,475  

Perusahaan Gas Negara Tbk PT

    248,000       21,373  

Semen Indonesia Persero Tbk PT

    72,000       52,161  

Telekomunikasi Indonesia Persero Tbk PT

    882,000       173,220  

Unilever Indonesia Tbk PT

    151,000       85,286  

United Tractors Tbk PT

    36,800       58,122  

XL Axiata Tbk PT

    28,800       4,826  
   

 

 

 
          1,794,555  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  22


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ex China ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Malaysia — 3.0%  

Axiata Group Bhd

    62,400     $ 45,090  

CIMB Group Holdings Bhd

    110,400       87,461  

Dialog Group Bhd

    70,400       60,674  

DiGi.Com Bhd

    81,600       77,379  

Gamuda Bhd

    51,200       41,791  

Genting Bhd

    54,400       45,839  

Genting Malaysia Bhd

    64,000       35,031  

Hartalega Holdings Bhd

    36,800       145,946  

Hong Leong Bank Bhd

    19,200       64,530  

IHH Healthcare Bhd

    48,000       61,765  

IOI Corp. Bhd

    33,600       35,976  

Kossan Rubber Industries

    12,800       49,104  

Kuala Lumpur Kepong Bhd

    11,200       60,927  

Malayan Banking Bhd

    86,400       152,037  

Malaysia Airports Holdings Bhd

    22,544       27,602  

Maxis Bhd

    54,400       65,298  

MISC Bhd

    28,800       52,615  

Petronas Chemicals Group Bhd

    44,800       58,722  

Petronas Dagangan Bhd

    3,200       15,825  

Petronas Gas Bhd

    16,000       63,378  

PPB Group Bhd

    14,440       62,398  

Press Metal Aluminium Holdings Bhd

    38,400       48,029  

Public Bank Bhd

    59,200       233,361  

RHB Bank Bhd

    32,000       35,184  

Sime Darby Bhd

    73,600       38,695  

Sime Darby Plantation Bhd

    49,600       60,727  

Supermax Corp. Bhd(a)

    15,400       81,852  

Telekom Malaysia Bhd

    9,600       9,564  

Tenaga Nasional Bhd

    52,800       137,657  

Top Glove Corp. Bhd

    32,000       201,887  

YTL Corp. Bhd(a)

    97,640       15,705  
   

 

 

 
         2,172,049  
Mexico — 2.8%  

Alfa SAB de CV, Class A

    36,400       23,401  

America Movil SAB de CV, Series L, NVS

    645,200       391,790  

Arca Continental SAB de CV

    9,600       43,789  

Cemex SAB de CV, CPO, NVS

    294,400       94,430  

Coca-Cola Femsa SAB de CV

    11,200       46,978  

Fibra Uno Administracion SA de CV

    68,800       53,692  

Fomento Economico Mexicano SAB de CV

    38,400       223,459  

Gruma SAB de CV, Class B

    4,160       49,194  

Grupo Aeroportuario del Pacifico SAB de CV, Class B

    8,000       62,206  

Grupo Aeroportuario del Sureste SAB de CV, Class B(a)

    4,115       46,625  

Grupo Bimbo SAB de CV, Series A

    33,602       62,058  

Grupo Financiero Banorte SAB de CV, Class O(a)

    52,800       182,554  

Grupo Financiero Inbursa SAB de CV, Class O(a)

    56,000       40,965  

Grupo Mexico SAB de CV, Series B

    62,400       166,506  

Grupo Televisa SAB, CPO(a)

    53,700       66,297  

Industrias Penoles SAB de CV

    2,887       48,154  

Infraestructura Energetica Nova SAB de CV

    6,400       18,741  

Kimberly-Clark de Mexico SAB de CV, Class A

    30,400       48,838  

Megacable Holdings SAB de CV, CPO

    8,000       23,025  

Orbia Advance Corp. SAB de CV

    20,800       33,415  

Promotora y Operadora de Infraestructura SAB de CV(a)

    6,880       51,139  

Wal-Mart de Mexico SAB de CV

    105,600       253,457  
   

 

 

 
      2,030,713  
Pakistan — 0.0%  

MCB Bank Ltd.(a)

    30,192       31,184  
   

 

 

 
Security   Shares     Value  
Peru — 0.4%  

Cia. de Minas Buenaventura SAA, ADR

    4,496     $ 63,304  

Credicorp Ltd.

    1,376       179,540  

Southern Copper Corp.

    1,776       85,426  
   

 

 

 
      328,270  
Philippines — 1.2%  

Aboitiz Equity Ventures Inc.

    45,050       44,599  

Ayala Corp.

    5,920       89,560  

Ayala Land Inc.

    160,200       95,159  

BDO Unibank Inc.

    39,680       70,382  

Globe Telecom Inc.

    400       17,226  

GT Capital Holdings Inc.

    2,724       22,473  

International Container Terminal Services Inc.

    20,480       44,352  

JG Summit Holdings Inc.

    64,360       85,353  

Jollibee Foods Corp.

    11,040       30,762  

Metro Pacific Investments Corp.

    416,600       28,870  

Metropolitan Bank & Trust Co.

    25,647       17,721  

PLDT Inc.

    1,600       48,807  

SM Investments Corp.

    5,925       103,872  

SM Prime Holdings Inc.

    228,800       137,795  

Universal Robina Corp.

    20,640       58,661  
   

 

 

 
            895,592  
Poland — 1.3%  

Bank Polska Kasa Opieki SA(a)

    3,536       50,410  

CD Projekt SA(a)

    1,392       166,385  

Dino Polska SA(a)(b)

    784       47,785  

Grupa Lotos SA

    2,048       22,587  

KGHM Polska Miedz SA(a)

    2,704       100,869  

LPP SA(a)

    41       80,300  

mBank SA(a)

    432       22,150  

Orange Polska SA(a)

    13,920       27,415  

PGE Polska Grupa Energetyczna SA(a)

    18,560       30,548  

Polski Koncern Naftowy ORLEN SA

    6,368       87,903  

Polskie Gornictwo Naftowe i Gazownictwo SA

    39,584       55,353  

Powszechna Kasa Oszczednosci Bank Polski SA(a)

    18,080       106,305  

Powszechny Zaklad Ubezpieczen SA(a)

    12,016       88,993  

Santander Bank Polska SA(a)

    784       32,377  
   

 

 

 
      919,380  
Qatar — 1.4%  

Commercial Bank PSQC (The)

    37,600       42,530  

Industries Qatar QSC

    34,176       91,756  

Masraf Al Rayan QSC

    89,280       101,374  

Mesaieed Petrochemical Holding Co.

    87,680       50,615  

Ooredoo QPSC

    25,200       45,295  

Qatar Electricity & Water Co. QSC

    14,080       65,943  

Qatar Fuel QSC

    2,576       12,906  

Qatar International Islamic Bank QSC

    11,472       26,739  

Qatar Islamic Bank SAQ

    23,680       103,167  

Qatar National Bank QPSC

    92,608       453,899  
   

 

 

 
      994,224  
Russia — 5.3%  

Alrosa PJSC

    49,923       44,248  

Gazprom PJSC

    228,480       557,453  

Inter RAO UES PJSC

    944,000       66,272  

LUKOIL PJSC

    8,544       573,286  

Magnit PJSC, GDR(c)

    5,630       82,592  

Magnitogorsk Iron & Steel Works PJSC

    40,000       20,278  

MMC Norilsk Nickel PJSC

    1,344       349,288  

Mobile TeleSystems PJSC, ADR

    12,528       116,761  

Novatek PJSC, GDR(c)

    1,792       265,395  
 

 

 

23  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ex China ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Russia (continued)  

Novolipetsk Steel PJSC

    22,080     $ 45,984  

PhosAgro PJSC, GDR, Registered Shares(c)

    2,752       32,804  

Polymetal International PLC

    4,565       121,905  

Polyus PJSC

    621       150,843  

Rosneft Oil Co. PJSC, GDR(c)

    23,639       120,086  

Sberbank of Russia PJSC(a)

    202,900       616,337  

Severstal PAO

    4,119       51,672  

Surgutneftegas PJSC

    140,100       69,085  

Tatneft PJSC

    30,720       225,825  

VTB Bank PJSC, GDR(a)(c)

    33,344       30,476  

X5 Retail Group NV, GDR(c)

    2,848       102,526  

Yandex NV, Class A(a)

    3,900       271,950  
   

 

 

 
         3,915,066  
Saudi Arabia — 4.7%  

Abdullah Al Othaim Markets Co.

    1,216       40,464  

Advanced Petrochemical Co.

    3,776       55,475  

Al Rajhi Bank

    25,248       436,906  

Alinma Bank(a)

    15,811       65,344  

Almarai Co. JSC

    5,136       73,539  

Arab National Bank

    9,456       52,342  

Bank AlBilad

    9,392       60,152  

Bank Al-Jazira

    13,408       46,690  

Banque Saudi Fransi

    11,136       94,867  

Bupa Arabia for Cooperative Insurance Co.(a)

    1,376       45,494  

Co for Cooperative Insurance (The)(a)

    2,176       45,836  

Dar Al Arkan Real Estate Development Co.(a)

    8,160       17,645  

Emaar Economic City(a)

    7,650       16,461  

Etihad Etisalat Co.(a)

    6,960       49,735  

Jarir Marketing Co.

    1,408       61,344  

National Commercial Bank(a)

    26,352       261,381  

National Industrialization Co.(a)

    6,552       20,649  

Rabigh Refining & Petrochemical Co.(a)

    3,408       12,976  

Riyad Bank

    25,232       129,038  

Sahara International Petrochemical Co.

    10,384       44,078  

Samba Financial Group

    20,112       147,739  

Saudi Airlines Catering Co.

    1,344       28,704  

Saudi Arabian Fertilizer Co.

    3,552       78,514  

Saudi Arabian Mining Co.(a)

    6,864       72,109  

Saudi Arabian Oil Co.(b)

    39,152       371,117  

Saudi Basic Industries Corp.

    16,848       395,319  

Saudi British Bank (The)

    12,928       92,553  

Saudi Cement Co.

    2,144       32,185  

Saudi Electricity Co.

    17,408       73,894  

Saudi Industrial Investment Group

    7,584       44,285  

Saudi Kayan Petrochemical Co.(a)

    19,584       47,414  

Saudi Telecom Co.

    11,600       296,924  

Savola Group (The)

    4,976       64,481  

Yanbu National Petrochemical Co.

    4,576       65,276  
   

 

 

 
      3,440,930  
South Africa — 6.2%  

Absa Group Ltd.

    14,896       67,924  

Anglo American Platinum Ltd.

    848       63,279  

AngloGold Ashanti Ltd.

    8,624       251,808  

Aspen Pharmacare Holdings Ltd.(a)

    7,840       62,877  

Bid Corp. Ltd.

    6,816       112,617  

Bidvest Group Ltd. (The)

    6,528       52,448  

Capitec Bank Holdings Ltd.

    1,455       71,714  

Clicks Group Ltd.

    5,200       70,597  

Discovery Ltd.

    8,096       57,839  
Security   Shares     Value  
South Africa (continued)  

Exxaro Resources Ltd.

    5,616     $ 45,475  

FirstRand Ltd.

    96,008       214,500  

Gold Fields Ltd.

    17,840       230,692  

Growthpoint Properties Ltd.

    61,008       43,970  

Harmony Gold Mining Co. Ltd.(a)

    10,304       67,275  

Impala Platinum Holdings Ltd.

    15,936       147,091  

Kumba Iron Ore Ltd.

    816       25,576  

Life Healthcare Group Holdings Ltd.

    33,360       32,570  

Mr. Price Group Ltd.

    5,109       34,946  

MTN Group Ltd.

    33,648       121,295  

MultiChoice Group Ltd.(a)

    10,240       58,564  

Naspers Ltd., Class N

    8,592       1,568,533  

Nedbank Group Ltd.

    7,537       42,705  

NEPI Rockcastle PLC

    8,832       41,336  

Northam Platinum Ltd.(a)

    6,432       60,765  

Old Mutual Ltd.

    99,632       65,809  

Pick n Pay Stores Ltd.

    386       951  

Rand Merchant Investment Holdings Ltd.

    15,072       26,752  

Reinet Investments SCA

    3,264       62,254  

Remgro Ltd.

    9,905       51,404  

Sanlam Ltd.

    39,696       128,827  

Sasol Ltd.(a)

    11,056       90,432  

Shoprite Holdings Ltd.

    9,184       59,903  

Sibanye Stillwater Ltd.(a)

    44,757       135,503  

SPAR Group Ltd. (The)

    3,760       35,879  

Standard Bank Group Ltd.

    26,384       164,444  

Tiger Brands Ltd.

    3,088       31,430  

Vodacom Group Ltd.

    12,336       93,110  

Woolworths Holdings Ltd.

    19,904       37,350  
   

 

 

 
          4,530,444  
South Korea — 18.9%  

Alteogen Inc.(a)

    366       64,394  

Amorepacific Corp.

    720       101,827  

AMOREPACIFIC Group

    576       24,729  

BGF retail Co. Ltd.

    225       24,150  

BNK Financial Group Inc.

    3,136       13,411  

Celltrion Healthcare Co. Ltd.(a)

    1,171       98,676  

Celltrion Inc.(a)

    1,908       477,040  

Celltrion Pharm Inc.(a)

    200       18,705  

CJ CheilJedang Corp.

    208       71,265  

CJ ENM Co. Ltd.

    288       28,778  

Coway Co. Ltd.(a)

    1,120       75,239  

Daelim Industrial Co. Ltd.

    720       52,671  

Daewoo Shipbuilding & Marine Engineering Co. Ltd.(a)

    1,888       35,204  

DB Insurance Co. Ltd.

    1,024       37,627  

Douzone Bizon Co. Ltd.

    384       32,649  

E-MART Inc.

    464       46,873  

Fila Holdings Corp.

    976       28,510  

GS Engineering & Construction Corp.

    1,632       33,934  

GS Holdings Corp.

    1,232       33,707  

Hana Financial Group Inc.

    5,472       129,902  

Hankook Tire & Technology Co. Ltd.

    1,477       36,679  

Hanmi Pharm Co. Ltd.

    161       41,541  

Hanon Systems

    4,896       53,168  

Hanwha Corp.

    1,248       28,891  

Hanwha Solutions Corp.

    2,336       78,562  

HLB Inc.(a)

    914       66,786  

Hotel Shilla Co. Ltd.

    736       43,557  

Hyundai Engineering & Construction Co. Ltd.

    1,664       45,176  

Hyundai Glovis Co. Ltd.

    432       52,914  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  24


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ex China ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Korea (continued)  

Hyundai Heavy Industries Holdings Co. Ltd.

    187     $ 35,577  

Hyundai Marine & Fire Insurance Co. Ltd.

    1,312       24,409  

Hyundai Mobis Co. Ltd.(a)

    1,344       253,435  

Hyundai Motor Co.(a)

    3,056       454,065  

Hyundai Steel Co.

    1,536       32,455  

Industrial Bank of Korea

    1,664       11,332  

Kakao Corp.

    1,120       383,736  

Kangwon Land Inc.

    1,936       33,655  

KB Financial Group Inc.

    7,680       238,242  

Kia Motors Corp.

    5,104       182,393  

KMW Co. Ltd.(a)

    368       23,668  

Korea Aerospace Industries Ltd.

    1,856       35,076  

Korea Electric Power Corp.(a)

    5,072       87,529  

Korea Investment Holdings Co. Ltd.

    912       46,755  

Korea Shipbuilding & Offshore Engineering Co. Ltd.(a)

    1,216       88,239  

Korea Zinc Co. Ltd.

    160       53,675  

KT&G Corp.

    2,336       163,416  

Kumho Petrochemical Co. Ltd.

    128       10,829  

LG Chem Ltd.

    976       607,997  

LG Corp.

    1,872       130,326  

LG Display Co. Ltd.(a)

    4,480       55,062  

LG Electronics Inc.

    2,304       163,311  

LG Household & Health Care Ltd.

    208       257,921  

LG Innotek Co. Ltd.

    272       33,201  

LG Uplus Corp.

    2,752       27,685  

Lotte Chemical Corp.

    352       56,153  

Lotte Corp.

    624       15,759  

Lotte Shopping Co. Ltd.

    273       17,466  

Mirae Asset Daewoo Co. Ltd.

    7,360       57,621  

NAVER Corp.

    2,496       677,633  

NCSoft Corp.

    336       233,353  

Netmarble Corp.(a)(b)

    544       76,249  

NH Investment & Securities Co. Ltd.

    3,152       23,775  

Orion Corp./Republic of Korea

    544       64,342  

Pearl Abyss Corp.(a)

    128       19,611  

POSCO

    1,472       228,625  

POSCO Chemical Co. Ltd.

    544       40,758  

S-1 Corp.

    240       17,618  

Samsung Biologics Co. Ltd.(a)(b)

    336       220,059  

Samsung C&T Corp.

    1,584       144,012  

Samsung Electro-Mechanics Co. Ltd.

    1,216       127,445  

Samsung Electronics Co. Ltd.

    93,456       4,248,358  

Samsung Engineering Co. Ltd.(a)

    3,120       29,679  

Samsung Fire & Marine Insurance Co. Ltd.

    656       103,268  

Samsung Heavy Industries Co. Ltd.(a)

    12,512       54,350  

Samsung Life Insurance Co. Ltd.

    1,408       72,539  

Samsung SDI Co. Ltd.

    1,088       414,446  

Samsung SDS Co. Ltd.

    688       91,220  

Samsung Securities Co. Ltd.

    944       23,960  

Seegene Inc.

    352       77,933  

Shinhan Financial Group Co. Ltd.

    8,592       214,456  

Shinsegae Inc.

    160       27,342  

SK Holdings Co. Ltd.

    720       129,708  

SK Hynix Inc.

    10,976       693,912  

SK Innovation Co. Ltd.

    1,088       132,806  

SK Telecom Co. Ltd.

    608       126,933  

S-Oil Corp.

    992       47,182  

Woori Financial Group Inc.

    8,056       57,373  

Yuhan Corp.

    1,170       65,990  
   

 

 

 
      13,942,488  
Security   Shares     Value  
Taiwan — 21.3%  

Accton Technology Corp.

    10,000     $ 79,750  

Acer Inc.(a)

    64,000       50,931  

Advantech Co. Ltd.

    4,299       44,468  

ASE Technology Holding Co. Ltd.

    64,000       133,490  

Asia Cement Corp.

    48,000       69,526  

Asustek Computer Inc.

    16,000       132,509  

AU Optronics Corp.(a)

    176,000       62,683  

Catcher Technology Co. Ltd.

    16,000       109,333  

Cathay Financial Holding Co. Ltd.

    160,063       217,389  

Chailease Holding Co. Ltd.

    33,419       147,496  

Chang Hwa Commercial Bank Ltd.

    133,599       83,097  

Cheng Shin Rubber Industry Co. Ltd.

    32,000       39,262  

China Development Financial Holding Corp.

    336,000       97,795  

China Life Insurance Co. Ltd.

    64,507       45,179  

China Steel Corp.

    224,000       151,921  

Chunghwa Telecom Co. Ltd.

    68,000       251,453  

Compal Electronics Inc.

    80,000       50,440  

CTBC Financial Holding Co. Ltd.

    352,000       227,337  

Delta Electronics Inc.

    39,000       251,214  

E.Sun Financial Holding Co. Ltd.

    259,286       240,362  

Eva Airways Corp.

    48,000       18,813  

Evergreen Marine Corp. Taiwan Ltd.(a)

    48,000       28,465  

Far Eastern New Century Corp.

    64,000       57,693  

Far EasTone Telecommunications Co. Ltd.

    34,000       71,032  

First Financial Holding Co. Ltd.

    215,859       156,332  

Formosa Chemicals & Fibre Corp.

    80,000       184,858  

Formosa Petrochemical Corp.

    16,000       44,715  

Formosa Plastics Corp.

    80,000       213,213  

Foxconn Technology Co. Ltd.

    32,000       56,930  

Fubon Financial Holding Co. Ltd.

    128,000       186,712  

Globalwafers Co. Ltd.

    2,000       26,856  

Highwealth Construction Corp.

    32,000       50,604  

Hon Hai Precision Industry Co. Ltd.

    256,200       671,465  

Hotai Motor Co. Ltd.

    5,600       113,941  

Hua Nan Financial Holdings Co. Ltd.

    202,831       124,775  

Innolux Corp.(a)

    144,000       44,758  

Inventec Corp.

    64,000       49,623  

Largan Precision Co. Ltd.

    2,000       230,731  

Lite-On Technology Corp.

    48,000       75,906  

MediaTek Inc.

    32,000       606,377  

Mega Financial Holding Co. Ltd.

    208,000       207,351  

Micro-Star International Co. Ltd.

    16,000       73,888  

Nan Ya Plastics Corp.

    96,000       201,217  

Nanya Technology Corp.

    32,000       56,602  

Novatek Microelectronics Corp.

    16,000       130,873  

Pegatron Corp.

    48,000       102,244  

Pou Chen Corp.

    85,000       80,245  

Powertech Technology Inc.

    16,000       47,114  

President Chain Store Corp.

    16,000       147,232  

Quanta Computer Inc.

    64,000       167,953  

Realtek Semiconductor Corp.

    7,000       90,657  

Shanghai Commercial & Savings Bank Ltd. (The)

    80,437       114,591  

Shin Kong Financial Holding Co. Ltd.

    212,930       60,233  

SinoPac Financial Holdings Co. Ltd.

    224,259       82,545  

Synnex Technology International Corp.

    32,000       47,659  

Taishin Financial Holding Co. Ltd.

    231,130       104,373  

Taiwan Business Bank

    118,755       40,473  

Taiwan Cement Corp.

    100,983       147,646  

Taiwan Cooperative Financial Holding Co. Ltd.

    198,443       135,602  

Taiwan High Speed Rail Corp.

    48,000       53,167  
 

 

 

25  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ex China ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Taiwan (continued)            

Taiwan Mobile Co. Ltd.

    33,000     $ 114,156  

Taiwan Semiconductor Manufacturing Co. Ltd.

    488,000       7,093,434  

Uni-President Enterprises Corp.

    96,000       217,903  

United Microelectronics Corp.

    240,000       173,406  

Vanguard International Semiconductor Corp.

    19,000       60,546  

Win Semiconductors Corp.

    5,000       48,736  

Winbond Electronics Corp.

    64,000       26,502  

Wistron Corp.

    64,598       70,231  

WPG Holdings Ltd.

    33,520       46,953  

Yageo Corp.

    7,000       79,444  

Yuanta Financial Holding Co. Ltd.

    216,320       135,654  

Zhen Ding Technology Holding Ltd.

    8,000       33,536  
   

 

 

 
      15,691,600  
Thailand — 3.3%            

Advanced Info Service PCL, NVDR

    25,600       150,528  

Airports of Thailand PCL, NVDR

    91,200       164,100  

Asset World Corp. PCL, NVDR

    52,800       6,718  

B Grimm Power PCL, NVDR

    19,200       28,532  

Bangkok Bank PCL, Foreign

    11,200       38,326  

Bangkok Commercial Asset Management PCL, NVDR

    14,400       10,781  

Bangkok Dusit Medical Services PCL, NVDR

    195,200       130,457  

Bangkok Expressway & Metro PCL, NVDR

    150,400       43,734  

Berli Jucker PCL, NVDR

    30,400       36,141  

BTS Group Holdings PCL, NVDR

    136,000       45,446  

Bumrungrad Hospital PCL, NVDR

    9,600       34,085  

Central Pattana PCL, NVDR

    48,000       72,488  

Charoen Pokphand Foods PCL, NVDR

    46,400       48,081  

CP ALL PCL, NVDR(a)

    118,400       241,575  

Electricity Generating PCL, NVDR

    6,400       45,652  

Energy Absolute PCL, NVDR

    33,600       45,343  

Global Power Synergy PCL, NVDR

    16,000       32,902  

Gulf Energy Development PCL, NVDR

    40,500       40,991  

Home Product Center PCL, NVDR

    102,400       49,024  

Indorama Ventures PCL, NVDR

    40,000       30,460  

Intouch Holdings PCL, NVDR

    36,800       64,442  

Kasikornbank PCL, Foreign

    24,000       64,969  

Kasikornbank PCL, NVDR

    12,800       34,650  

Krung Thai Bank PCL, NVDR

    72,000       22,093  

Krungthai Card PCL, NVDR

    8,000       7,904  

Land & Houses PCL, NVDR

    182,400       43,369  

Minor International PCL, NVDR(a)

    65,600       47,215  

Muangthai Capital PCL, NVDR(a)

    16,000       25,576  

Osotspa PCL, NVDR

    19,200       23,906  

PTT Exploration & Production PCL, NVDR

    30,400       86,934  

PTT Global Chemical PCL, NVDR

    49,600       73,709  

PTT PCL, NVDR

    240,000       277,613  

Ratch Group PCL, NVDR

    22,400       40,305  

Siam Cement PCL (The), NVDR

    14,400       163,792  

Siam Commercial Bank PCL (The), NVDR

    19,200       44,727  

Srisawad Corp PCL, NVDR

    22,400       32,928  

Thai Oil PCL, NVDR

    36,800       49,071  

Thai Union Group PCL, NVDR

    64,000       28,995  

True Corp. PCL, NVDR

    268,800       28,674  
   

 

 

 
      2,456,236  
Turkey — 0.5%            

Akbank T.A.S.(a)

    59,696       39,668  

Anadolu Efes Biracilik Ve Malt Sanayii AS

    5,808       15,335  

Aselsan Elektronik Sanayi Ve Ticaret AS

    7,140       15,757  

BIM Birlesik Magazalar AS

    9,792       90,282  
Security   Shares     Value  
Turkey (continued)            

Eregli Demir ve Celik Fabrikalari TAS

    30,832     $ 36,534  

Haci Omer Sabanci Holding AS

    18,245       19,165  

KOC Holding AS

    19,440       39,361  

Tupras Turkiye Petrol Rafinerileri AS(a)

    2,848       30,961  

Turk Hava Yollari AO(a)

    14,832       21,284  

Turkcell Iletisim Hizmetleri AS

    17,872       34,777  

Turkiye Garanti Bankasi AS(a)

    52,048       47,811  

Turkiye Is Bankasi AS, Class C(a)

    19,104       12,746  
   

 

 

 
      403,681  
United Arab Emirates — 1.0%            

Abu Dhabi Commercial Bank PJSC

    50,400       76,015  

Aldar Properties PJSC

    106,576       58,900  

Dubai Islamic Bank PJSC

    34,128       38,094  

Emaar Malls PJSC(a)

    48,848       18,485  

Emaar Properties PJSC(a)

    77,504       60,769  

Emirates NBD Bank PJSC

    49,632       145,931  

Emirates Telecommunications Group Co. PJSC

    33,984       153,213  

First Abu Dhabi Bank PJSC

    54,592       170,324  
   

 

 

 
      721,731  
   

 

 

 

Total Common Stocks — 82.2%
(Cost: $57,324,253)

      60,494,117  
   

 

 

 

Investment Companies

   

India — 14.0%

   

iShares MSCI India ETF(d)

    308,360       10,289,973  
   

 

 

 

Total Investment Companies — 14.0%
(Cost: $9,541,904)

      10,289,973  
   

 

 

 

Preferred Stocks

   

Brazil — 2.1%

   

Banco Bradesco SA, Preference Shares, NVS

    91,403       345,558  

Braskem SA, Class A, Preference Shares, NVS

    1,811       7,028  

Centrais Eletricas Brasileiras SA, Class B, Preference Shares, NVS

    3,200       20,935  

Cia. Energetica de Minas Gerais, Preference Shares, NVS

    13,269       25,469  

Gerdau SA, Preference Shares, NVS

    24,000       83,516  

Itau Unibanco Holding SA, Preference Shares, NVS

    96,000       412,111  

Itausa SA, Preference Shares, NVS

    91,234       156,827  

Lojas Americanas SA, Preference Shares, NVS

    17,657       103,865  

Petroleo Brasileiro SA, Preference Shares, NVS

    89,600       357,525  

Telefonica Brasil SA, Preference Shares, NVS

    8,000       69,764  
   

 

 

 
      1,582,598  
Chile — 0.2%            

Embotelladora Andina SA, Class B, Preference Shares

    17,184       36,691  

Sociedad Quimica y Minera de Chile SA, Class B, Preference Shares

    2,464       77,211  
   

 

 

 
      113,902  
Colombia — 0.1%            

Bancolombia SA, Preference Shares, NVS

    7,376       52,557  
   

 

 

 
Russia — 0.1%            

Surgutneftegas PJSC, Preference Shares, NVS

    150,400       75,342  
   

 

 

 
South Korea — 1.0%            

Hyundai Motor Co.

   

Preference Shares, NVS

    448       32,811  

Series 2, Preference Shares, NVS

    723       53,803  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  26


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ex China ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Korea (continued)            

Samsung Electronics Co. Ltd., Preference Shares, NVS

    16,656     $ 666,016  
   

 

 

 
      752,630  
   

 

 

 

Total Preferred Stocks — 3.5%
(Cost: $2,890,260)

      2,577,029  
   

 

 

 

Rights

   

Thailand — 0.0%

   

Gulf Energy Development PCL,
(Expires 09/16/20)(a)

    4,050       195  
   

 

 

 

Total Rights — 0.0%
(Cost: $0)

      195  
   

 

 

 

Warrants

   

Thailand — 0.0%

   

Srisawad Corp. PCL (Expires 08/17/21)(a)(e)

    896       0 (f) 
   

 

 

 

Total Warrants — 0.0%
(Cost: $0)

      0 (f) 
   

 

 

 

Short-Term Investments

   

Money Market Funds — 0.1%

   

BlackRock Cash Funds: Treasury, SL Agency Shares, 0.07%(d)(g)

    110,000       110,000  
   

 

 

 

Total Short-Term Investments — 0.1%
(Cost: $110,000)

      110,000  
   

 

 

 

Total Investments in Securities — 99.8%
(Cost: $69,866,417)

      73,471,314  

Other Assets, Less Liabilities — 0.2%

      134,478  
   

 

 

 

Net Assets — 100.0%

    $   73,605,792  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(d) 

Affiliate of the Fund.

(e) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(f)

Rounds to less than $1.

(g) 

Annualized 7-day yield as of period-end.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Treasury,
SL Agency Shares

  $ 73,000     $ 37,000 (a)    $     $     $     $ 110,000       110,000     $ 476     $  

iShares MSCI India ETF

    3,534,716       6,811,336       (952,556     (97,875     994,352       10,289,973       308,360       20,283        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (97,875   $ 994,352     $ 10,399,973       $ 20,759     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

 

 

27  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets ex China ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

      Level 1        Level 2        Level 3      Total  

Investments

               

Assets

               

Common Stocks

   $ 60,494,117        $        $      $ 60,494,117  

Investment Companies

     10,289,973                          10,289,973  

Preferred Stocks

     2,577,029                          2,577,029  

Rights

                      195                 195  

Warrants

                       0 (a)       0 (a) 

Money Market Funds

     110,000                           —        110,000  
  

 

 

      

 

 

      

 

 

    

 

 

 
   $ 73,471,119        $ 195        $ 0 (a)     $ 73,471,314  
  

 

 

      

 

 

      

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 

See notes to financial statements.

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  28


Consolidated Schedule of Investments

August 31, 2020

  

iShares® MSCI Emerging Markets Min Vol Factor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Brazil — 0.1%

 

Raia Drogasil SA

    136,200     $ 2,676,381  

Rumo SA(a)

    743,700       3,063,786  
   

 

 

 
      5,740,167  
Chile — 0.7%  

Banco de Chile

    314,942,617       26,391,068  

Cia. Cervecerias Unidas SA

    289,939       1,910,733  
   

 

 

 
      28,301,801  
China — 37.2%  

Agricultural Bank of China Ltd., Class A

    24,218,798       11,350,655  

Agricultural Bank of China Ltd., Class H

    71,554,000       23,912,422  

Alibaba Group Holding Ltd., ADR(a)

    265,878       76,314,962  

ANTA Sports Products Ltd.(b)

    2,176,000       21,492,849  

AVIC Jonhon Optronic Technology Co. Ltd., Class A

    948,386       6,687,990  

Bank of Beijing Co. Ltd., Class A

    9,057,424       6,440,165  

Bank of China Ltd., Class A

    29,952,300       14,343,903  

Bank of China Ltd., Class H

    94,921,000       31,108,990  

Bank of Communications Co. Ltd., Class A

    16,887,474       11,662,433  

Bank of Communications Co. Ltd., Class H

    10,526,000       5,500,577  

Bank of Hangzhou Co. Ltd., Class A

    4,661,593       8,813,886  

Bank of Jiangsu Co. Ltd., Class A

    9,970,014       9,345,319  

Bank of Nanjing Co. Ltd., Class A

    2,077,621       2,605,690  

Bank of Ningbo Co. Ltd., Class A

    562,796       2,917,042  

Bank of Shanghai Co. Ltd., Class A

    11,187,332       13,753,142  

Beijing Capital International Airport Co. Ltd., Class H(a)

    7,042,000       4,979,279  

Beijing Sinnet Technology Co. Ltd., Class A

    1,323,273       5,092,818  

Beijing Tiantan Biological Products Corp. Ltd., Class A

    1,081,895       6,686,467  

BOE Technology Group Co. Ltd., Class A

    5,256,400       4,220,991  

BYD Co. Ltd., Class H

    331,500       3,293,549  

CGN Power Co. Ltd., Class H(c)

    56,889,000       12,331,828  

China CITIC Bank Corp. Ltd., Class H

    17,952,000       7,504,949  

China Construction Bank Corp., Class A

    2,813,784       2,547,099  

China Construction Bank Corp., Class H

    7,581,000       5,370,179  

China Everbright Bank Co. Ltd., Class H

    15,695,000       5,629,839  

China Gas Holdings Ltd.

    1,938,600       5,315,413  

China Huishan Dairy Holdings Co. Ltd.(a)(d)

    22,241,266       29  

China Life Insurance Co. Ltd., Class H

    1,520,000       3,702,844  

China Mengniu Dairy Co. Ltd.(a)(b)

    2,611,000       12,835,765  

China Merchants Port Holdings Co. Ltd.

    1,500,000       1,716,741  

China Minsheng Banking Corp. Ltd., Class A

    16,015,554       12,977,716  

China Mobile Ltd.

    7,194,000       50,264,201  

China National Medicines Corp. Ltd., Class A

    649,900       4,253,815  

China Petroleum & Chemical Corp., Class H

    43,618,000       20,148,312  

China Railway Signal & Communication Corp. Ltd., Class H(c)

    22,367,000       9,062,067  

China Reinsurance Group Corp., Class H

    81,610,000       8,739,999  

China Resources Beer Holdings Co. Ltd.

    3,990,000       25,947,369  

China Resources Gas Group Ltd.

    2,152,000       10,107,262  

China Resources Power Holdings Co. Ltd.

    3,190,000       3,786,765  

China Shenhua Energy Co. Ltd., Class A

    2,242,413       5,290,787  

China Shenhua Energy Co. Ltd., Class H

    1,167,000       1,948,476  

China South Publishing & Media Group Co. Ltd., Class A

    1,547,024       2,529,755  

China Telecom Corp. Ltd., Class H

    88,730,000       29,079,979  

China Tourism Group Duty Free Corp. Ltd., Class A

    816,381       24,792,456  

China Tower Corp. Ltd., Class H(c)

    63,668,000       12,158,299  

China Unicom Hong Kong Ltd.

    3,042,000       2,154,872  

China Yangtze Power Co. Ltd., Class A

    16,675,805       46,990,216  

CITIC Ltd.

    13,219,000       12,058,906  
Security   Shares     Value  
China (continued)            

COSCO SHIPPING Ports Ltd.

    11,468,000     $ 6,495,941  

CRRC Corp. Ltd., Class H

    8,631,000       3,897,796  

Dali Foods Group Co. Ltd.(c)

    4,618,500       2,830,639  

Daqin Railway Co. Ltd., Class A

    12,806,233       12,377,779  

Dongfeng Motor Group Co. Ltd., Class H

    6,366,000       4,419,151  

ENN Energy Holdings Ltd.

    947,900       10,518,429  

Fiberhome Telecommunication Technologies Co. Ltd., Class A

    1,002,582       3,849,807  

Foshan Haitian Flavouring & Food Co. Ltd., Class A

    191,194       5,114,027  

Fuyao Glass Industry Group Co. Ltd., Class A

    987,303       4,177,459  

GD Power Development Co. Ltd., Class A

    9,686,300       2,899,179  

Giant Network Group Co. Ltd., Class A

    1,226,853       3,706,093  

Glodon Co. Ltd., Class A

    789,588       8,032,893  

GOME Retail Holdings Ltd.(a)(b)

    123,896,000       17,744,761  

Gree Electric Appliances Inc. of Zhuhai, Class A

    295,695       2,352,902  

Guangdong Haid Group Co. Ltd., Class A

    1,361,288       14,065,738  

Guangdong Investment Ltd.

    28,546,000       44,567,731  

Haidilao International Holding Ltd.(b)(c)

    3,211,000       20,715,728  

Haier Electronics Group Co. Ltd.

    3,608,000       12,360,070  

Hangzhou Hikvision Digital Technology Co. Ltd., Class A

    1,162,583       6,351,716  

Hansoh Pharmaceutical Group Co. Ltd.(a)(c)

    1,048,000       4,969,452  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    1,263,994       11,718,771  

Hengan International Group Co. Ltd.

    2,286,500       18,026,122  

Hengtong Optic-Electric Co. Ltd., Class A

    818,300       1,953,411  

Hualan Biological Engineering Inc., Class A

    537,980       4,524,306  

Huaneng Power International Inc., Class H

    28,110,000       11,715,296  

Huaxia Bank Co. Ltd., Class A

    6,556,020       6,154,809  

Industrial & Commercial Bank of China Ltd., Class A

    2,918,500       2,113,512  

Industrial & Commercial Bank of China Ltd., Class H

    63,468,000       35,541,392  

Industrial Bank Co. Ltd., Class A

    5,497,612       12,971,158  

Inner Mongolia Yitai Coal Co. Ltd., Class B

    10,238,927       7,167,249  

JD.com Inc., ADR(a)

    528,692       41,576,339  

Jiangsu Expressway Co. Ltd., Class H

    17,512,000       17,534,257  

Jiangsu Hengrui Medicine Co. Ltd., Class A

    667,931       9,251,749  

Jinyu Bio-Technology Co. Ltd., Class A

    978,104       4,112,831  

Jointown Pharmaceutical Group Co. Ltd., Class A(a)

    1,613,778       4,175,138  

Kingdee International Software Group Co.
Ltd.(a)(b)

    2,547,000       6,493,903  

Kweichow Moutai Co. Ltd., Class A

    26,890       7,013,861  

Laobaixing Pharmacy Chain JSC, Class A

    293,142       3,805,755  

Lenovo Group Ltd.

    20,872,000       13,950,306  

Meituan Dianping, Class B(a)

    1,746,400       57,596,284  

NetEase Inc., ADR

    26,773       13,044,073  

New Oriental Education & Technology Group Inc., ADR(a)

    165,959       24,334,568  

PetroChina Co. Ltd., Class A

    3,111,900       2,012,763  

PetroChina Co. Ltd., Class H

    41,430,000       14,326,484  

Pinduoduo Inc., ADR(a)(b)

    203,436       18,093,598  

Ping An Insurance Group Co. of China Ltd., Class H

    841,000       8,957,833  

Postal Savings Bank of China Co. Ltd.,
Class H(c)

    43,790,000       20,736,283  

SAIC Motor Corp. Ltd., Class A

    1,264,444       3,444,884  

Sangfor Technologies Inc., Class A

    121,800       3,911,955  

SDIC Power Holdings Co. Ltd., Class A

    5,298,572       7,008,908  

Shandong Gold Mining Co. Ltd., Class A

    3,135,468       13,271,314  

Shandong Weigao Group Medical Polymer Co. Ltd., Class H

    3,256,000       7,604,188  

Shanghai Jahwa United Co. Ltd., Class A

    577,400       3,503,609  

Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., Class B

    15,802,822       13,574,624  
 

 

 

29  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Min Vol Factor  ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)  

Shanghai M&G Stationery Inc., Class A

    399,200     $ 4,050,780  

Shanghai Pharmaceuticals Holding Co. Ltd., Class H

    3,269,700       5,830,501  

Shanghai Pudong Development Bank Co. Ltd., Class A

    7,767,368       11,748,893  

Shenzhen Airport Co. Ltd., Class A

    1,741,600       2,341,916  

Shenzhen Expressway Co. Ltd., Class H(b)

    10,200,000       9,239,047  

Shenzhen International Holdings Ltd.

    2,160,500       3,467,884  

Shenzhen Mindray Bio-Medical Electronics Co. Ltd., Class A

    103,200       5,159,887  

Shenzhou International Group Holdings Ltd.

    2,216,200       35,744,469  

Sichuan Chuantou Energy Co. Ltd., Class A

    3,769,957       5,515,278  

Sinopec Shanghai Petrochemical Co. Ltd., Class A

    4,120,064       2,099,388  

Sinopec Shanghai Petrochemical Co. Ltd., Class H

    8,302,000       1,713,928  

Sinopharm Group Co. Ltd., Class H

    2,164,800       5,329,495  

Songcheng Performance Development Co. Ltd., Class A

    1,951,959       5,095,673  

Sun Art Retail Group Ltd.

    6,405,500       8,347,651  

Suning.com Co. Ltd., Class A

    2,759,179       3,968,071  

TAL Education Group, ADR(a)(b)

    269,470       19,889,581  

Tencent Holdings Ltd.

    487,200       33,348,980  

Topchoice Medical Corp., Class A(a)

    276,999       9,151,808  

TravelSky Technology Ltd., Class H

    1,565,000       3,255,137  

Uni-President China Holdings Ltd.(b)

    2,278,000       2,075,144  

Vipshop Holdings Ltd., ADR(a)

    125,648       2,074,449  

Visionox Technology Inc., Class A(a)

    1,064,070       2,485,727  

Want Want China Holdings Ltd.(b)

    3,982,000       2,733,397  

Wens Foodstuffs Group Co. Ltd., Class A

    2,186,489       7,878,722  

WuXi AppTec Co. Ltd., Class H(c)

    244,220       3,617,537  

Xiaomi Corp., Class B(a)(c)

    7,342,600       22,264,227  

Yum China Holdings Inc.(a)

    893,793       51,580,794  

Yunnan Baiyao Group Co. Ltd., Class A

    431,867       7,295,990  

Zhaojin Mining Industry Co. Ltd., Class H(b)

    15,030,000       16,833,274  

Zhejiang Supor Co. Ltd., Class A

    197,585       2,444,877  

Zhongjin Gold Corp. Ltd., Class A

    2,974,168       4,733,205  

Zhongsheng Group Holdings Ltd.(b)

    1,036,500       6,472,984  

Zhuzhou CRRC Times Electric Co. Ltd., Class H

    632,000       2,030,516  

Zijin Mining Group Co. Ltd., Class A

    9,947,500       10,442,540  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class A(a)

    2,644,200       3,289,253  

ZTE Corp., Class H

    1,531,000       4,454,630  

ZTO Express Cayman Inc., ADR

    585,635       19,636,342  
   

 

 

 
      1,580,079,866  
Czech Republic — 0.2%  

CEZ AS

    115,966       2,393,653  

Komercni Banka AS(a)

    249,605       6,021,189  
   

 

 

 
      8,414,842  
Egypt — 0.4%  

Commercial International Bank Egypt SAE

    3,673,717       15,661,392  
   

 

 

 
Greece — 0.3%            

Hellenic Telecommunications Organization SA

    331,511       5,431,649  

JUMBO SA

    162,673       2,830,686  

OPAP SA

    398,858       3,663,471  
   

 

 

 
      11,925,806  
Hungary — 0.7%  

OTP Bank Nyrt(a)

    174,672       5,909,514  

Richter Gedeon Nyrt

    911,496       22,329,755  
   

 

 

 
      28,239,269  
India — 9.3%  

Asian Paints Ltd.

    961,931       24,818,166  
Security   Shares     Value  
India (continued)            

Bajaj Auto Ltd.

    230,802     $ 9,303,258  

Bharat Petroleum Corp. Ltd.

    621,112       3,441,082  

Bharti Infratel Ltd.

    888,169       2,395,761  

Britannia Industries Ltd.

    388,463       19,664,199  

Cipla Ltd.

    350,496       3,397,703  

Coal India Ltd.

    1,179,355       2,152,584  

Colgate-Palmolive India Ltd.

    149,883       2,775,913  

Dabur India Ltd.

    3,306,045       21,316,428  

Dr. Reddy’s Laboratories Ltd.

    60,579       3,509,850  

Eicher Motors Ltd.

    503,090       14,298,329  

HCL Technologies Ltd.

    3,393,504       32,013,710  

Hindustan Petroleum Corp. Ltd.

    918,726       2,515,630  

Hindustan Unilever Ltd.

    1,114,153       32,049,069  

Housing Development Finance Corp. Ltd.

    353,127       8,791,774  

Infosys Ltd.

    3,809,601       48,060,259  

ITC Ltd.

    847,650       2,200,671  

Lupin Ltd.

    215,445       2,714,886  

Marico Ltd.

    3,250,744       16,291,811  

Maruti Suzuki India Ltd.

    30,029       2,790,434  

Nestle India Ltd.

    35,049       7,594,549  

Page Industries Ltd.

    42,587       10,985,690  

Petronet LNG Ltd.

    2,756,707       9,001,454  

Pidilite Industries Ltd.

    178,601       3,403,749  

Power Grid Corp. of India Ltd.

    2,199,364       5,346,958  

Reliance Industries Ltd.

    465,146       13,148,514  

Sun Pharmaceutical Industries Ltd.

    727,982       5,145,300  

Tata Consultancy Services Ltd.

    1,160,004       35,572,721  

Tech Mahindra Ltd.

    1,711,763       17,232,162  

Titan Co. Ltd.

    593,841       8,878,471  

Wipro Ltd.

    6,887,995       25,387,536  
   

 

 

 
      396,198,621  
Indonesia — 0.5%  

Bank Central Asia Tbk PT

    7,143,200       15,390,071  

Telekomunikasi Indonesia Persero Tbk PT

    33,143,100       6,509,134  
   

 

 

 
      21,899,205  
Malaysia — 5.0%  

DiGi.Com Bhd

    3,691,800       3,500,807  

Fraser & Neave Holdings Bhd

    1,233,200       9,065,078  

HAP Seng Consolidated Bhd

    6,841,300       11,825,078  

Hong Leong Bank Bhd

    4,125,300       13,864,890  

IHH Healthcare Bhd

    14,632,200       18,828,134  

IOI Corp. Bhd

    2,119,200       2,269,027  

Kuala Lumpur Kepong Bhd

    2,380,400       12,949,193  

Malayan Banking Bhd

    22,680,000       39,909,831  

Maxis Bhd(b)

    7,609,200       9,133,597  

Nestle Malaysia Bhd

    232,400       7,766,194  

Petronas Chemicals Group Bhd

    4,929,400       6,461,295  

Petronas Dagangan Bhd

    1,249,300       6,178,269  

PPB Group Bhd

    3,118,300       13,474,829  

Public Bank Bhd

    10,489,880       41,350,097  

Tenaga Nasional Bhd

    5,272,400       13,745,832  

Westports Holdings Bhd

    3,504,100       3,070,451  
   

 

 

 
      213,392,602  
Mexico — 1.0%            

Arca Continental SAB de CV

    2,223,600       10,142,648  

Coca-Cola Femsa SAB de CV

    636,200       2,668,517  

Gruma SAB de CV, Class B

    734,440       8,685,023  

Wal-Mart de Mexico SAB de CV

    9,131,300       21,916,622  
   

 

 

 
      43,412,810  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  30


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Min Vol Factor  ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Pakistan — 0.1%  

MCB Bank Ltd.(a)

    2,776,846     $ 2,868,136  
   

 

 

 
Peru — 0.7%            

Cia. de Minas Buenaventura SAA, ADR

    398,354       5,608,825  

Credicorp Ltd.

    195,411       25,497,227  
   

 

 

 
      31,106,052  
Philippines — 2.0%  

Aboitiz Power Corp.

    17,136,100       9,418,935  

Bank of the Philippine Islands

    12,887,988       17,809,533  

BDO Unibank Inc.

    9,953,543       17,655,042  

Globe Telecom Inc.

    219,725       9,462,428  

International Container Terminal Services Inc.

    4,124,510       8,932,114  

Manila Electric Co.

    1,587,490       8,807,565  

Metropolitan Bank & Trust Co.

    4,861,803       3,359,191  

SM Investments Corp.

    128,335       2,249,866  

Universal Robina Corp.

    2,583,100       7,341,470  
   

 

 

 
      85,036,144  
Poland — 0.1%  

Cyfrowy Polsat SA(a)

    587,941       4,609,228  
   

 

 

 
Qatar — 2.6%  

Barwa Real Estate Co.

    13,478,483       12,518,749  

Masraf Al Rayan QSC

    25,816,002       29,313,200  

Qatar Electricity & Water Co. QSC

    4,792,293       22,444,504  

Qatar Fuel QSC

    830,158       4,159,267  

Qatar Islamic Bank SAQ

    3,995,773       17,408,405  

Qatar National Bank QPSC

    5,041,719       24,710,944  
   

 

 

 
      110,555,069  
Russia — 1.2%  

Polymetal International PLC

    441,074       11,778,543  

Polyus PJSC

    136,611       33,183,253  

Rosneft Oil Co. PJSC

    1,128,670       5,666,157  
   

 

 

 
      50,627,953  
Saudi Arabia — 6.4%  

Abdullah Al Othaim Markets Co.

    448,654       14,929,413  

Al Rajhi Bank

    765,076       13,239,327  

Alinma Bank(a)

    5,643,658       23,324,321  

Bank AlBilad

    1,146,749       7,344,428  

Bank Al-Jazira

    1,294,995       4,509,495  

Bupa Arabia for Cooperative Insurance Co.(a)

    416,902       13,783,905  

Co for Cooperative Insurance (The)(a)

    483,919       10,193,337  

Emaar Economic City(a)

    1,053,709       2,267,310  

Etihad Etisalat Co.(a)

    1,717,430       12,272,427  

Jarir Marketing Co.

    844,170       36,778,887  

Saudi Airlines Catering Co.

    574,717       12,274,482  

Saudi Arabian Fertilizer Co.

    873,167       19,300,496  

Saudi Basic Industries Corp.

    1,110,022       26,045,391  

Saudi Electricity Co.

    1,828,079       7,759,873  

Saudi Telecom Co.

    2,182,277       55,859,588  

Savola Group (The)

    302,234       3,916,483  

Yanbu National Petrochemical Co.

    486,010       6,932,911  
   

 

 

 
      270,732,074  
South Korea — 6.6%  

BGF retail Co. Ltd.

    23,792       2,553,649  

CJ Logistics Corp.(a)

    51,613       6,582,515  

Coway Co. Ltd.(a)

    104,678       7,031,993  

GS Retail Co. Ltd.

    91,775       2,545,657  

Hanon Systems

    832,397       9,039,415  

Hyundai Glovis Co. Ltd.

    35,412       4,337,441  
Security   Shares     Value  
South Korea (continued)            

Hyundai Marine & Fire Insurance Co. Ltd.

    215,807     $ 4,014,929  

Hyundai Mobis Co. Ltd.(a)

    13,073       2,465,150  

Kangwon Land Inc.

    797,191       13,858,064  

Kia Motors Corp.

    249,766       8,925,471  

KMW Co. Ltd.(a)(b)

    62,234       4,002,591  

Korea Electric Power Corp.(a)

    246,048       4,246,135  

KT&G Corp.

    443,173       31,002,337  

LG Uplus Corp.

    393,950       3,963,046  

Lotte Shopping Co. Ltd.

    27,193       1,739,766  

NAVER Corp.

    98,263       26,677,176  

NCSoft Corp.

    35,151       24,412,472  

Netmarble Corp.(a)(c)

    64,932       9,101,084  

Pearl Abyss Corp.(a)(b)

    12,922       1,979,800  

S-1 Corp.

    236,729       17,377,531  

Samsung Biologics Co. Ltd.(a)(c)

    9,366       6,134,143  

Samsung Electronics Co. Ltd.

    517,541       23,526,571  

Samsung Fire & Marine Insurance Co. Ltd.

    98,382       15,487,359  

Samsung SDS Co. Ltd.

    29,222       3,874,455  

SK Hynix Inc.

    178,044       11,256,086  

SK Telecom Co. Ltd.

    172,187       35,947,787  
   

 

 

 
      282,082,623  
Taiwan — 16.4%            

Accton Technology Corp.

    589,000       4,697,306  

Advantech Co. Ltd.

    3,265,855       33,781,061  

Asustek Computer Inc.

    2,460,000       20,373,192  

AU Optronics Corp.(a)

    19,641,000       6,995,159  

Cathay Financial Holding Co. Ltd.

    4,059,034       5,512,755  

Chicony Electronics Co. Ltd.

    8,399,455       25,334,484  

China Development Financial Holding Corp.

    14,163,000       4,122,217  

Chunghwa Telecom Co. Ltd.

    15,567,000       57,564,184  

Compal Electronics Inc.

    30,801,000       19,420,224  

E.Sun Financial Holding Co. Ltd.

    22,226,335       20,604,138  

Far EasTone Telecommunications Co. Ltd.

    22,923,000       47,890,527  

First Financial Holding Co. Ltd.

    80,533,900       58,325,081  

Formosa Petrochemical Corp.

    3,005,000       8,398,003  

Formosa Plastics Corp.

    2,786,840       7,427,394  

Hua Nan Financial Holdings Co. Ltd.

    66,789,563       41,086,911  

Lite-On Technology Corp.

    9,397,752       14,861,397  

Mega Financial Holding Co. Ltd.

    14,668,000       14,622,259  

Pou Chen Corp.

    3,734,000       3,525,103  

Powertech Technology Inc.

    1,106,000       3,256,766  

President Chain Store Corp.

    3,019,000       27,780,788  

Quanta Computer Inc.

    3,212,000       8,429,153  

Standard Foods Corp.

    1,930,476       4,191,037  

Synnex Technology International Corp.

    13,714,000       20,425,057  

Taiwan Business Bank

    38,010,704       12,954,588  

Taiwan Cooperative Financial Holding Co. Ltd.

    88,546,599       60,506,767  

Taiwan High Speed Rail Corp.

    8,739,000       9,679,720  

Taiwan Mobile Co. Ltd.

    16,000,000       55,348,227  

Taiwan Semiconductor Manufacturing Co. Ltd.

    4,870,000       70,788,985  

Uni-President Enterprises Corp.

    3,487,000       7,914,871  

United Microelectronics Corp.

    5,911,000       4,270,852  

WPG Holdings Ltd.

    12,378,440       17,339,055  
   

 

 

 
      697,427,261  
Thailand — 6.0%            

Advanced Info Service PCL, NVDR

    4,096,000       24,084,440  

Airports of Thailand PCL, NVDR

    20,631,100       37,122,390  

Bangkok Dusit Medical Services PCL, NVDR

    42,755,200       28,574,445  

Bangkok Expressway & Metro PCL, NVDR

    79,064,200       22,990,795  
 

 

 

31  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Min Vol Factor  ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Thailand (continued)            

BTS Group Holdings PCL, NVDR(b)

    98,078,700     $ 32,774,311  

Bumrungrad Hospital PCL, NVDR

    3,133,400       11,125,093  

CP ALL PCL, NVDR(a)

    17,169,500       35,031,352  

Electricity Generating PCL, NVDR

    2,072,300       14,781,929  

Home Product Center PCL, NVDR

    29,669,700       14,204,467  

Intouch Holdings PCL, NVDR

    7,714,500       13,509,206  

Krung Thai Bank PCL, NVDR

    32,571,800       9,994,720  

Siam Cement PCL (The), NVDR

    525,600       5,978,389  

Thai Union Group PCL, NVDR

    8,854,900       4,011,699  
   

 

 

 
      254,183,236  
Turkey — 0.5%            

BIM Birlesik Magazalar AS

    2,223,239       20,498,270  
   

 

 

 
United Arab Emirates — 1.7%            

Dubai Islamic Bank PJSC

    4,236,900       4,729,262  

Emirates Telecommunications Group Co. PJSC

    7,835,535       35,325,663  

First Abu Dhabi Bank PJSC

    9,944,091       31,024,947  
   

 

 

 
      71,079,872  
   

 

 

 

Total Common Stocks — 99.7%
(Cost: $3,783,476,752)

 

    4,234,072,299  
   

 

 

 

Preferred Stocks

   
Brazil — 0.1%            

Telefonica Brasil SA, Preference Shares, NVS

    374,900       3,269,330  
   

 

 

 
Russia — 0.0%            

Surgutneftegas PJSC, Preference Shares, NVS

    3,762,000       1,884,539  
   

 

 

 

Total Preferred Stocks — 0.1%
(Cost: $6,594,743)

 

    5,153,869  
   

 

 

 
Security   Shares     Value  

Short-Term Investments

   
Money Market Funds — 1.4%            

BlackRock Cash Funds: Institutional,
SL Agency Shares,
0.37%(e)(f)(g)

    54,383,689     $ 54,438,073  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
0.07%(e)(f)

    7,040,000       7,040,000  
   

 

 

 
      61,478,073  
   

 

 

 

Total Short-Term Investments — 1.4%
(Cost: $61,446,291)

 

    61,478,073  
   

 

 

 

Total Investments in Securities — 101.2%
(Cost: $3,851,517,786)

 

    4,300,704,241  

Other Assets, Less Liabilities — (1.2)%

      (52,445,928
   

 

 

 

Net Assets — 100.0%

    $   4,248,258,313  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period-end.

(g) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
08/31/19
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
08/31/20
    Shares
Held at
08/31/20
    Income     Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 34,288,990     $ 20,157,567 (a)    $     $ (28,974   $ 20,490     $ 54,438,073       54,383,689     $ 764,334 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    16,273,000             (9,233,000 )(a)                  7,040,000       7,040,000       95,154        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (28,974   $ 20,490     $ 61,478,073       $ 859,488     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
      

Notional
Amount

(000)

       Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

                 

2-Year U.S. Treasury Note

     5          12/31/20        $ 1,105        $ 348  

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  32


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Min Vol Factor  ETF

 

Futures Contracts (continued)

 

Description    Number of
Contracts
       Expiration
Date
      

Notional
Amount

(000)

       Value/
Unrealized
Appreciation
(Depreciation)
 

MSCI Emerging Markets E-Mini Index

     95          09/18/20        $ 5,227        $ 146,799  
                 

 

 

 
                  $ 147,147  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Consolidated Statements of Assets and Liabilities were as follows:

 

      Equity
Contracts
     Interest
Rate
Contracts
     Total  

Assets — Derivative Financial Instruments

        

Futures contracts

        

Unrealized appreciation on futures contracts(a)

   $ 146,799      $ 348      $ 147,147  
  

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Consolidated Schedule of Investments. In the Consolidated Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Consolidated Statements of Operations was as follows:

 

      Equity
Contracts
     Interest
Rate
Contracts
     Total  

Net Realized Gain (Loss) from:

        

Futures contracts

   $ 3,342,633      $ 2,568      $ 3,345,201  
  

 

 

    

 

 

    

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:                     

Futures contracts

   $ 332,669      $ 348      $ 333,017  
  

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 7,764,533  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Consolidated Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Consolidated Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Consolidated Schedule of Investments above.

 

      Level 1        Level 2        Level 3        Total  

Investments

                 

Assets

                 

Common Stocks

   $ 4,234,072,270        $        $ 29        $ 4,234,072,299  

Preferred Stocks

     5,153,869                            5,153,869  

Money Market Funds

     61,478,073                            61,478,073  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 4,300,704,212        $         —        $         29        $ 4,300,704,241  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 147,147        $        $        $ 147,147  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

 

33  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Consolidated Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Min Vol Factor  ETF

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  34


Schedule of Investments

August 31, 2020

  

iShares® MSCI Emerging Markets Multifactor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Brazil — 3.3%            

Banco BTG Pactual SA

    196,800     $ 2,881,741  

BB Seguridade Participacoes SA

    602,700       2,898,198  

Cia. de Saneamento Basico do Estado de Sao Paulo

    73,800       642,365  

Hypera SA

    332,100       1,915,997  

IRB Brasil Resseguros S/A

    615,068       799,401  

JBS SA

    947,104       3,874,116  

Porto Seguro SA

    86,100       829,626  

Sul America SA

    246,078       1,936,902  

TIM Participacoes SA

    738,000       1,926,422  
   

 

 

 
      17,704,768  
Chile — 0.2%            

Cia. Cervecerias Unidas SA

    133,209       877,863  
   

 

 

 
China — 45.9%            

AK Medical Holdings Ltd.(a)

    246,000       629,113  

Alibaba Group Holding Ltd., ADR(b)

    119,802           34,386,768  

Angang Steel Co. Ltd., Class A

    211,800       83,184  

Anhui Conch Cement Co. Ltd., Class A

    61,539       547,271  

Anhui Conch Cement Co. Ltd., Class H

    1,063,000       7,708,315  

Apeloa Pharmaceutical Co. Ltd., Class A

    61,500       255,459  

BAIC Motor Corp. Ltd., Class H(a)

    1,476,000       706,562  

Bank of Chengdu Co. Ltd., Class A

    196,800       291,932  

Bank of Communications Co. Ltd., Class H

    3,075,000       1,606,904  

Beijing Capital International Airport Co. Ltd., Class H(b)

    1,722,000       1,217,597  

Beijing Enterprises Holdings Ltd.

    430,500       1,369,241  

Beijing Tiantan Biological Products Corp. Ltd., Class A

    71,181       439,922  

Bosideng International Holdings Ltd.

    2,706,000       775,123  

BYD Electronic International Co. Ltd.(c)

    553,500       2,346,080  

Centre Testing International Group Co. Ltd., Class A

    49,200       196,537  

Chacha Food Co. Ltd., Class A

    24,600       248,724  

Changjiang Securities Co. Ltd., Class A

    295,200       367,645  

Chengdu Xingrong Environment Co. Ltd., Class A

    194,399       149,862  

China Cinda Asset Management Co. Ltd., Class H

    7,626,000       1,456,292  

China CITIC Bank Corp. Ltd., Class H

    7,503,000       3,136,677  

China Communications Services Corp. Ltd., Class H

    2,214,000       1,454,070  

China Conch Venture Holdings Ltd.

    1,414,500       6,132,423  

China Everbright Ltd.

    828,000       1,275,630  

China Lesso Group Holdings Ltd.

    984,000       1,835,918  

China Longyuan Power Group Corp. Ltd., Class H

    2,706,000       1,707,366  

China Medical System Holdings Ltd.

    1,230,000       1,388,683  

China Minsheng Banking Corp. Ltd., Class H

    5,043,000       3,071,290  

China Mobile Ltd.

    1,783,500       12,461,246  

China Overseas Property Holdings Ltd.

    1,230,000       1,109,359  

China Power International Development Ltd.

    3,690,000       714,180  

China Reinsurance Group Corp., Class H

    5,043,000       540,079  

China Resources Cement Holdings Ltd.

    2,214,000       3,228,092  

China Resources Power Holdings Co. Ltd.

    1,722,000       2,044,141  

China Resources Sanjiu Medical & Pharmaceutical Co. Ltd., Class A

    49,200       204,726  

China Telecom Corp. Ltd., Class H

    11,316,000       3,708,656  

China Traditional Chinese Medicine Holdings Co. Ltd.(b)

    2,460,000       1,050,638  

China Unicom Hong Kong Ltd.

    5,412,000       3,833,717  

Chinese Universe Publishing and Media Group Co. Ltd., Class A

    73,800       142,339  

Chongqing Brewery Co. Ltd., Class A

    22,197       295,079  

Chongqing Rural Commercial Bank Co. Ltd., Class H

    1,968,000       802,421  

COSCO SHIPPING Ports Ltd.

    1,476,000       836,066  

Country Garden Services Holdings Co. Ltd.

    1,107,000       7,720,283  
Security   Shares     Value  
China (continued)            

CSPC Pharmaceutical Group Ltd.

    4,262,400     $   9,470,595  

Dali Foods Group Co. Ltd.(a)

    1,722,000       1,055,399  

Daqin Railway Co. Ltd., Class A

    774,928       749,001  

Dongfeng Motor Group Co. Ltd., Class H

    2,214,000       1,536,915  

Fujian Star-Net Communication Co. Ltd., Class A

    36,813       158,342  

Fujian Sunner Development Co. Ltd., Class A(b)

    61,500       241,361  

G-Bits Network Technology Xiamen Co. Ltd., Class A

    3,700       334,516  

GSX Techedu Inc., ADR(b)(c)

    64,862       5,539,215  

Guangzhou R&F Properties Co. Ltd., Class H

    836,400       1,064,096  

Guocheng Mining Co. Ltd., Class A(b)

    61,500       205,983  

Haitian International Holdings Ltd.

    615,000       1,488,668  

Hefei Meiya Optoelectronic Technology Inc., Class A

    36,900       314,362  

Heilongjiang Agriculture Co. Ltd., Class A

    98,400       289,634  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    147,670           1,369,082  

Hithink RoyalFlush Information Network Co. Ltd., Class A

    24,600       603,116  

Hua Hong Semiconductor Ltd.(a)(b)(c)

    369,000       1,333,136  

Hualan Biological Engineering Inc., Class A

    98,400       827,525  

Huaxin Cement Co. Ltd., Class A

    73,800       301,271  

Hubei Jumpcan Pharmaceutical Co. Ltd., Class A

    49,200       173,838  

Hunan Valin Steel Co. Ltd., Class A

    295,220       209,912  

Hundsun Technologies Inc., Class A

    24,680       401,559  

Inner Mongolia MengDian HuaNeng Thermal Power Corp. Ltd., Class A

    344,400       131,743  

Inner Mongolia Yitai Coal Co. Ltd., Class B

    959,400       671,580  

Jafron Biomedical Co. Ltd., Class A

    36,987       411,552  

Jiangsu Yuyue Medical Equipment & Supply Co. Ltd., Class A

    49,200       264,420  

Jiangxi Zhengbang Technology Co. Ltd., Class A

    135,300       490,894  

Jilin Aodong Pharmaceutical Group Co. Ltd., Class A

    86,100       218,231  

Joincare Pharmaceutical Group Industry Co. Ltd., Class A

    98,400       280,008  

Joyoung Co. Ltd., Class A

    36,900       237,590  

Kingboard Holdings Ltd.

    582,000       1,873,628  

Kingboard Laminates Holdings Ltd.

    922,500       1,162,923  

Kingdee International Software Group Co.
Ltd.(b)(c)

    1,968,000       5,017,668  

Lee & Man Paper Manufacturing Ltd.

    1,107,000       662,759  

Legend Holdings Corp., Class H(a)

    369,000       543,729  

Li Ning Co. Ltd.

    1,845,000       7,808,365  

Luye Pharma Group Ltd.(a)

    1,537,500       833,210  

New Hope Liuhe Co. Ltd., Class A

    123,000       682,420  

Nine Dragons Paper Holdings Ltd.

    1,476,000       1,637,852  

Noah Holdings Ltd.(b)(c)

    28,905       809,340  

Northeast Securities Co. Ltd., Class A

    123,000       192,514  

PICC Property & Casualty Co. Ltd., Class H

    5,905,000       4,563,905  

Shandong Buchang Pharmaceuticals Co. Ltd., Class A

    61,500       249,263  

Shandong Hualu Hengsheng Chemical Co. Ltd., Class A

    85,950       337,317  

Shandong Sun Paper Industry JSC Ltd., Class A

    135,300       275,770  

Shandong Weigao Group Medical Polymer Co. Ltd., Class H

    1,968,000       4,596,143  

Shanghai Industrial Holdings Ltd.

    429,000       644,318  

Shanghai Pharmaceuticals Holding Co. Ltd., Class H

    664,200       1,184,396  

Shanxi Taigang Stainless Steel Co. Ltd., Class A

    344,400       184,038  

Shenzhen Expressway Co. Ltd., Class H

    492,000       445,648  

Shenzhen International Holdings Ltd.

    861,000       1,382,017  

Shenzhen Investment Ltd.

    2,460,000       834,797  

Shijiazhuang Yiling Pharmaceutical Co. Ltd., Class A

    61,500       256,626  

Shimao Group Holdings Ltd.

    1,045,500       4,708,031  

Sinolink Securities Co. Ltd., Class A

    159,900       363,263  

Sinopec Engineering Group Co. Ltd., Class H

    1,291,500       573,248  

Sinotruk Hong Kong Ltd.

    615,000       1,598,969  
 

 

 

35  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Multifactor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
China (continued)            

SSY Group Ltd.

    1,230,000     $ 784,011  

Sun Art Retail Group Ltd.

    2,029,500       2,644,846  

Tangshan Jidong Cement Co. Ltd., Class A

    73,800       193,089  

Tencent Holdings Ltd.

    325,800       22,301,104  

Tianjin Chase Sun Pharmaceutical Co. Ltd., Class A

    147,600       122,189  

Tingyi Cayman Islands Holding Corp.

    1,722,000       3,235,075  

Topchoice Medical Corp., Class A(b)

    12,300       406,381  

Uni-President China Holdings Ltd.

    1,107,000       1,008,422  

Vinda International Holdings Ltd.

    369,000       1,261,718  

Vipshop Holdings Ltd., ADR(b)(c)

    381,546       6,299,324  

Weifu High-Technology Group Co. Ltd., Class A

    36,900       134,257  

Wens Foodstuffs Group Co. Ltd., Class A

    324,720       1,170,085  

Wharf Holdings Ltd. (The)

    738,000       1,439,786  

Wuhan Guide Infrared Co. Ltd., Class A

    79,643       446,172  

Wuhu Sanqi Interactive Entertainment Network Technology Group Co. Ltd., Class A

    110,700       736,852  

Yuexiu Property Co. Ltd.

    5,658,000       1,080,475  

Yum China Holdings Inc.(b)(c)

    221,031       12,755,699  

Zhejiang Expressway Co. Ltd., Class H

    1,230,000       830,036  

Zhejiang Semir Garment Co. Ltd., Class A

    98,400       110,480  

Zhejiang Wolwo Bio-Pharmaceutical Co. Ltd., Class A

    24,600       214,639  

Zhongsheng Group Holdings Ltd.

    499,500       3,119,398  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class H(b)

    1,147,000       1,148,458  
   

 

 

 
        248,713,807  
Czech Republic — 0.2%            

Moneta Money Bank AS(a)

    447,597       1,130,663  
   

 

 

 
Hungary — 0.5%            

Richter Gedeon Nyrt

    120,294       2,946,953  
   

 

 

 
India — 7.2%            

Bharti Infratel Ltd.

    291,633       786,655  

Colgate-Palmolive India Ltd.

    54,981       1,018,278  

Divi’s Laboratories Ltd.

    68,634       2,911,799  

Dr. Reddy’s Laboratories Ltd.

    98,892       5,729,643  

HDFC Asset Management Co. Ltd.(a)

    37,023       1,212,631  

Hindustan Petroleum Corp. Ltd.

    530,745       1,453,271  

Indraprastha Gas Ltd.(b)

    180,318       966,293  

Infosys Ltd.

    1,176,618       14,843,698  

Petronet LNG Ltd.

    555,837       1,814,970  

REC Ltd.

    590,523       851,598  

Tech Mahindra Ltd.

    400,611       4,032,915  

Wipro Ltd.

    987,690       3,640,394  
   

 

 

 
      39,262,145  
Indonesia — 0.8%            

Adaro Energy Tbk PT

    12,546,000       934,758  

Gudang Garam Tbk PT(b)

    418,200       1,364,086  

Indofood Sukses Makmur Tbk PT

    3,788,400       1,983,625  
   

 

 

 
      4,282,469  
Malaysia — 0.3%            

AMMB Holdings Bhd

    1,402,200       982,937  

Carlsberg Brewery Malaysia Bhd

    135,300       708,738  
   

 

 

 
      1,691,675  
Mexico — 0.1%            

Megacable Holdings SAB de CV, CPO

    258,300       743,412  
   

 

 

 
Philippines — 0.8%            

Globe Telecom Inc.

    28,905       1,244,790  

Megaworld Corp.(b)

    9,594,600       575,854  
Security   Shares     Value  
Philippines (continued)            

PLDT Inc.

    74,415     $ 2,269,976  
   

 

 

 
      4,090,620  
Qatar — 2.5%            

Barwa Real Estate Co.

    1,720,893       1,598,357  

Commercial Bank PSQC (The)

    1,781,040       2,014,551  

Masraf Al Rayan QSC

    2,818,791       3,200,642  

Ooredoo QPSC

    730,251       1,312,563  

Qatar Electricity & Water Co. QSC

    472,689       2,213,819  

Qatar Fuel QSC

    323,327       1,619,937  

Qatar International Islamic Bank QSC

    668,382       1,557,890  
   

 

 

 
      13,517,759  
Russia — 0.6%            

Inter RAO UES PJSC

    31,119,000       2,184,655  

Magnitogorsk Iron & Steel Works PJSC

    1,943,400       985,203  
   

 

 

 
      3,169,858  
Saudi Arabia — 3.0%            

Abdullah Al Othaim Markets Co.

    38,007       1,264,721  

Advanced Petrochemical Co.

    89,790       1,319,156  

Arab National Bank

    519,798       2,877,257  

Bank Al-Jazira

    194,709       678,025  

Bupa Arabia for Cooperative Insurance Co.(b)

    53,628       1,773,086  

Co for Cooperative Insurance (The)(b)

    51,660       1,088,173  

Dar Al Arkan Real Estate Development Co.(b)

    244,647       529,026  

Jarir Marketing Co.

    27,183       1,184,312  

Riyad Bank

    567,276       2,901,080  

Saudi Airlines Catering Co.

    36,285       774,955  

Saudi Cement Co.

    64,698       971,216  

Saudi Industrial Investment Group

    192,495       1,124,036  
   

 

 

 
          16,485,043  
South Africa — 8.1%            

AngloGold Ashanti Ltd.

    360,144       10,515,684  

Aspen Pharmacare Holdings Ltd.(b)

    334,806       2,685,167  

Exxaro Resources Ltd.

    220,047       1,781,808  

Gold Fields Ltd.

    764,691       9,888,341  

Impala Platinum Holdings Ltd.

    690,768       6,375,881  

Kumba Iron Ore Ltd.

    55,596       1,742,579  

Life Healthcare Group Holdings Ltd.

    1,190,271       1,162,080  

Momentum Metropolitan Holdings

    850,053       760,676  

Mr. Price Group Ltd.

    224,721       1,537,116  

Old Mutual Ltd.

    4,060,230       2,681,855  

Rand Merchant Investment Holdings Ltd.

    643,536       1,142,249  

Reinet Investments SCA

    127,674       2,435,123  

Tiger Brands Ltd.

    140,097       1,425,923  
   

 

 

 
      44,134,482  
South Korea — 7.1%            

BNK Financial Group Inc.

    243,663       1,042,014  

Coway Co. Ltd.(b)

    41,205       2,768,044  

Daelim Industrial Co. Ltd.

    24,231       1,772,602  

DB Insurance Co. Ltd.

    42,435       1,559,296  

E-MART Inc.

    16,728       1,689,839  

Hana Financial Group Inc.

    120,048       2,849,864  

Hankook Tire & Technology Co. Ltd.

    64,329       1,597,530  

Hyundai Department Store Co. Ltd.

    226       10,217  

Hyundai Marine & Fire Insurance Co. Ltd.

    54,489       1,013,728  

Kia Motors Corp.

    227,427       8,127,179  

LG Innotek Co. Ltd.

    12,177       1,486,375  

LG Uplus Corp.

    188,682       1,898,097  

Posco International Corp.

    43,911       502,727  

S-1 Corp.

    14,391       1,056,398  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  36


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Multifactor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
South Korea (continued)            

Samsung Electronics Co. Ltd.

    186,591     $ 8,482,123  

SK Telecom Co. Ltd.

    11,316       2,362,461  
   

 

 

 
          38,218,494  
Taiwan — 15.4%            

Accton Technology Corp.

    431,000       3,437,248  

Asia Cement Corp.

    1,845,000       2,672,409  

Asustek Computer Inc.

    615,000       5,093,298  

Chicony Electronics Co. Ltd.

    492,169       1,484,483  

Compal Electronics Inc.

    3,567,000       2,249,016  

Formosa Taffeta Co. Ltd.

    615,000       663,386  

Foxconn Technology Co. Ltd.

    861,000       1,531,762  

Inventec Corp.

    2,214,000       1,716,630  

Lite-On Technology Corp.

    1,845,718       2,918,778  

Micro-Star International Co. Ltd.

    615,000       2,840,090  

Nien Made Enterprise Co. Ltd.

    69,000       794,847  

Novatek Microelectronics Corp.

    517,000       4,228,823  

Pegatron Corp.

    1,722,000       3,668,013  

Phison Electronics Corp.

    123,000       1,161,188  

Pou Chen Corp.

    1,968,000       1,857,901  

Powertech Technology Inc.

    660,000       1,943,459  

Realtek Semiconductor Corp.

    410,000       5,309,885  

Ruentex Development Co. Ltd.

    738,000       1,086,570  

Standard Foods Corp.

    369,000       801,094  

Synnex Technology International Corp.

    1,107,000       1,648,719  

Taiwan Business Bank

    3,745,459       1,276,506  

Taiwan Semiconductor Manufacturing Co. Ltd.

    1,177,000       17,108,549  

United Microelectronics Corp.

    9,594,000       6,931,916  

Win Semiconductors Corp.

    300,000       2,924,186  

Winbond Electronics Corp.

    2,583,000       1,069,593  

Wistron Corp.

    2,583,063       2,808,299  

WPG Holdings Ltd.

    1,353,160       1,895,434  

Zhen Ding Technology Holding Ltd.

    492,000       2,062,471  
   

 

 

 
      83,184,553  
Thailand — 0.2%            

Krung Thai Bank PCL, NVDR

    3,087,300       947,344  
   

 

 

 
United Arab Emirates — 0.8%            

Aldar Properties PJSC

    3,300,459       1,824,029  

Emaar Properties PJSC(b)

    3,080,043       2,414,964  
   

 

 

 
      4,238,993  
   

 

 

 

Total Common Stocks — 97.0%
(Cost: $466,668,206)

      525,340,901  
   

 

 

 
Security   Shares     Value  

Preferred Stocks

   
Brazil — 2.0%            

Cia. Paranaense de Energia, Preference Shares, NVS

    86,100     $ 969,624  

Itausa SA, Preference Shares, NVS

    3,825,338       6,575,573  

Telefonica Brasil SA, Preference Shares, NVS

    381,300       3,325,141  
   

 

 

 
      10,870,338  
Chile — 0.1%            

Embotelladora Andina SA, Class B, Preference Shares

    314,142       670,757  
   

 

 

 
Russia — 0.6%            

Surgutneftegas PJSC, Preference Shares, NVS

    6,014,700       3,013,008  
   

 

 

 

Total Preferred Stocks — 2.7%
(Cost: $19,842,181)

      14,554,103  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 1.6%            

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(d)(e)(f)

    7,379,288       7,386,667  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(d)(e)

    1,110,000       1,110,000  
   

 

 

 
      8,496,667  
   

 

 

 

Total Short-Term Investments — 1.6%
(Cost: $8,494,578)

      8,496,667  
   

 

 

 

Total Investments in Securities — 101.3%
(Cost: $495,004,965)

      548,391,671  

Other Assets, Less Liabilities — (1.3)%

      (6,783,932
   

 

 

 

Net Assets — 100.0%

    $   541,607,739  
   

 

 

 

 

(a) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(b) 

Non-income producing security.

(c) 

All or a portion of this security is on loan.

(d)

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period-end.

(f) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

 

 

37  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Multifactor ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
08/31/19
     Purchases
at Cost
     Proceeds
from Sales
     Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
08/31/20
     Shares
Held at
08/31/20
     Income      Capital Gain
Distributions from
Underlying Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares

   $ 3,213,781      $ 4,174,049 (a)     $      $ (3,093    $ 1,930      $ 7,386,667        7,379,288      $ 75,016 (b)     $  

BlackRock Cash Funds: Treasury, SL Agency Shares

     300,000        810,000 (a)                            1,110,000        1,110,000        7,393         
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 
            $ (3,093    $ 1,930      $ 8,496,667         $ 82,409      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

 

 
Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

 

 

Long Contracts

                 

MSCI Emerging Markets E-Mini Index

     18          09/18/20        $ 990        $ 71,675  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
     Equity
Contracts
 

 

 

Assets — Derivative Financial Instruments

  

Futures contracts

  

Unrealized appreciation on futures contracts(a)

   $ 71,675  
  

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 497,411  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 140,472  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 2,500,560        

 

 

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  38


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Emerging Markets Multifactor ETF

 

Fair Value Measurements (continued)

 

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Investments

                 

Assets

                 

Common Stocks

   $ 525,340,901        $        $        $ 525,340,901  

Preferred Stocks

     14,554,103                            14,554,103  

Money Market Funds

     8,496,667                            8,496,667  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 548,391,671        $             —        $             —        $ 548,391,671  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Assets

                 

Futures Contracts

   $ 71,675        $        $        $ 71,675  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

39  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  

August 31, 2020

  

iShares® MSCI Global Min Vol Factor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Australia — 0.4%

 

Newcrest Mining Ltd.

    218,367     $ 5,161,325  

Woolworths Group Ltd.

    673,369       19,854,857  
   

 

 

 
      25,016,182  
Belgium — 0.5%            

Colruyt SA

    135,490       8,588,085  

Proximus SADP

    370,326       7,347,571  

Telenet Group Holding NV

    98,088       3,821,907  

UCB SA

    84,858       10,099,884  
   

 

 

 
      29,857,447  
Canada — 5.8%  

Agnico Eagle Mines Ltd.

    579,964       47,867,784  

Barrick Gold Corp.

    2,378,245       70,528,713  

BCE Inc.

    375,747       16,166,681  

CGI Inc.(a)

    212,151       14,917,898  

Empire Co. Ltd., Class A, NVS

    351,041       9,146,814  

Fairfax Financial Holdings Ltd.

    20,197       6,232,788  

Franco-Nevada Corp.

    450,874       67,882,845  

Intact Financial Corp.

    327,252       35,089,894  

Kirkland Lake Gold Ltd.

    88,257       4,707,672  

Loblaw Companies Ltd.

    179,840       9,304,282  

Metro Inc.

    138,509       6,263,441  

Rogers Communications Inc., Class B, NVS

    138,322       5,760,276  

Shaw Communications Inc., Class B, NVS

    277,396       5,192,592  

TELUS Corp.

    975,658       17,986,343  

Thomson Reuters Corp.

    174,646       13,365,020  

Waste Connections Inc.(b)

    141,452       14,149,444  
   

 

 

 
          344,562,487  
Chile — 0.1%  

Banco de Chile

    94,113,950       7,886,413  
   

 

 

 
China — 2.8%  

Agricultural Bank of China Ltd., Class A

    10,933,899       5,124,405  

Agricultural Bank of China Ltd., Class H

    7,575,000       2,531,467  

Alibaba Group Holding Ltd., ADR(a)

    24,805       7,119,779  

Alibaba Pictures Group Ltd.(a)

    29,450,000       4,179,919  

Bank of Communications Co. Ltd., Class A

    5,173,500       3,572,802  

Bank of Communications Co. Ltd.,
Class H(b)

    6,835,000       3,571,770  

China Huishan Dairy Holdings Co. Ltd.(a)(c)

    2,093,055       3  

China Minsheng Banking Corp. Ltd., Class A

    3,524,499       2,855,970  

China Mobile Ltd.

    3,590,000       25,083,192  

China Telecom Corp. Ltd., Class H

    32,104,000       10,521,623  

China Tourism Group Duty Free Corp. Ltd., Class A

    286,200       8,691,531  

China Unicom Hong Kong Ltd.

    4,294,000       3,041,755  

China United Network Communications Ltd., Class A

    3,787,947       2,870,348  

CRRC Corp. Ltd., Class A

    3,586,497       3,068,537  

Guangdong Investment Ltd.

    4,253,147       6,640,269  

Industrial & Commercial Bank of China Ltd., Class A

    5,778,051       4,184,334  

Jiangsu Expressway Co. Ltd., Class H

    2,990,000       2,993,800  

Lenovo Group Ltd.

    4,834,000       3,230,921  

Postal Savings Bank of China Co. Ltd., Class H(d)

    24,292,000       11,503,215  

SF Holding Co. Ltd., Class A

    431,500       5,361,344  

Shenzhen International Holdings Ltd.

    2,151,500       3,453,438  

Xiaomi Corp., Class B(a)(d)

    8,276,400       25,095,695  

ZTE Corp., Class A

    564,900       3,216,618  

ZTO Express Cayman Inc., ADR

    488,800       16,389,464  
   

 

 

 
      164,302,199  
Denmark — 0.8%  

Carlsberg AS, Class B

    44,475       6,263,290  
Security   Shares     Value  
Denmark (continued)            

Coloplast A/S, Class B

    117,876     $ 20,044,781  

Novo Nordisk A/S, Class B

    193,959       12,873,681  

Tryg A/S

    296,677       9,127,203  
   

 

 

 
      48,308,955  
Finland — 0.6%  

Elisa OYJ

    347,960       20,511,685  

Nokia OYJ

    2,943,870       14,338,144  
   

 

 

 
      34,849,829  
France — 0.8%  

Eurazeo SE(a)

    59,158       3,128,567  

Hermes International

    27,471       23,635,136  

Orange SA

    1,806,703       20,159,587  
   

 

 

 
      46,923,290  
Germany — 1.1%  

Deutsche Telekom AG, Registered

    3,217,239       56,752,965  

Telefonica Deutschland Holding AG

    2,191,294       6,069,493  
   

 

 

 
      62,822,458  
Hong Kong — 2.6%  

BeiGene Ltd., ADR(a)

    43,531       10,515,784  

CLP Holdings Ltd.

    1,921,254       18,877,505  

Dairy Farm International Holdings Ltd.

    577,500       2,413,950  

Hang Seng Bank Ltd.(b)

    1,387,500       21,823,610  

HK Electric Investments & HK Electric Investments Ltd.

    6,513,500       6,631,035  

HKT Trust & HKT Ltd.

    9,262,000       13,241,416  

Hong Kong & China Gas Co. Ltd.(b)

    12,234,886       17,807,335  

Jardine Matheson Holdings Ltd.

    228,800       9,609,600  

Jardine Strategic Holdings Ltd.

    189,100       3,793,346  

Link REIT

    1,749,900       13,931,192  

MTR Corp. Ltd.(b)

    3,544,000       18,451,307  

PCCW Ltd.

    10,432,000       6,541,747  

Power Assets Holdings Ltd.

    1,310,500       7,507,751  
   

 

 

 
          151,145,578  
Hungary — 0.1%  

OTP Bank Nyrt(a)

    136,270       4,610,295  
   

 

 

 
India — 2.6%  

Asian Paints Ltd.

    368,316       9,502,685  

Avenue Supermarts Ltd.(a)(d)

    158,113       4,835,810  

Bajaj Auto Ltd.

    82,349       3,319,356  

Bajaj Finserv Ltd.

    92,999       7,821,164  

Bharat Petroleum Corp. Ltd.

    819,812       4,541,919  

Coal India Ltd.

    3,018,297       5,509,061  

Dabur India Ltd.

    1,045,617       6,741,838  

Dr. Reddy’s Laboratories Ltd.

    78,715       4,560,620  

Eicher Motors Ltd.

    231,260       6,572,644  

HCL Technologies Ltd.

    1,150,898       10,857,366  

Hero MotoCorp Ltd.

    98,916       4,039,622  

Hindustan Petroleum Corp. Ltd.

    1,486,858       4,071,273  

Hindustan Unilever Ltd.

    206,248       5,932,809  

Housing Development Finance Corp. Ltd.

    194,165       4,834,110  

Indian Oil Corp. Ltd.

    3,879,319       4,521,898  

Infosys Ltd.

    664,064       8,377,541  

InterGlobe Aviation Ltd.(a)(d)

    223,465       3,640,499  

ITC Ltd.

    1,210,174       3,141,857  

Larsen & Toubro Ltd.

    259,480       3,331,123  

Maruti Suzuki India Ltd.

    87,563       8,136,760  

Petronet LNG Ltd.

    1,460,966       4,770,481  

Pidilite Industries Ltd.

    298,269       5,684,363  

Sun Pharmaceutical Industries Ltd.

    527,201       3,726,201  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  40


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Min Vol Factor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
India (continued)            

Tata Consultancy Services Ltd.

    301,335     $ 9,240,749  

Tech Mahindra Ltd.

    468,589       4,717,243  

United Spirits Ltd.(a)

    364,916       2,710,068  

Wipro Ltd.

    430,096       1,585,233  

Wipro Ltd., ADR

    1,425,832       6,131,078  
   

 

 

 
      152,855,371  
Indonesia — 0.6%            

Bank Central Asia Tbk PT

    13,639,500       29,386,391  

Kalbe Farma Tbk PT

    31,394,300       3,406,214  
   

 

 

 
      32,792,605  
Ireland — 0.5%            

Kerry Group PLC, Class A

    204,560       26,910,800  
   

 

 

 
Israel — 0.5%            

Azrieli Group Ltd.

    61,631       3,328,175  

Bank Hapoalim BM

    552,466       3,352,624  

Bank Leumi Le-Israel BM

    788,421       4,045,899  

Check Point Software Technologies Ltd.(a)(b)

    30,423       3,841,208  

Mizrahi Tefahot Bank Ltd.

    329,600       6,727,213  

Nice Ltd.(a)

    26,383       6,045,243  
   

 

 

 
      27,340,362  
Italy — 0.3%            

Assicurazioni Generali SpA

    943,902       14,680,825  

Intesa Sanpaolo SpA(a)

    2,284,300       4,931,644  
   

 

 

 
          19,612,469  
Japan — 11.5%            

ABC-Mart Inc.

    81,200       4,272,677  

Ajinomoto Co. Inc.

    274,700       5,118,650  

ANA Holdings Inc.(a)

    280,000       6,990,429  

Canon Inc.

    1,254,400       21,670,619  

Chugai Pharmaceutical Co. Ltd.

    637,700       28,389,662  

Daiwa House REIT Investment Corp.

    4,401       11,495,846  

East Japan Railway Co.

    89,800       5,840,451  

FUJIFILM Holdings Corp.

    222,600       10,592,103  

Hamamatsu Photonics KK

    200,600       9,136,668  

Hankyu Hanshin Holdings Inc.

    79,400       2,579,405  

Japan Airlines Co. Ltd.

    275,900       5,500,048  

Japan Post Bank Co. Ltd.

    989,700       7,960,904  

Japan Post Holdings Co. Ltd.

    3,432,500       25,367,064  

Japan Tobacco Inc.

    144,900       2,708,890  

KDDI Corp.

    693,100       20,117,514  

Keikyu Corp.

    175,700       2,621,127  

Keio Corp.

    151,600       9,163,619  

Keyence Corp.

    67,400       27,762,101  

Kintetsu Group Holdings Co. Ltd.

    214,400       9,421,510  

Kirin Holdings Co. Ltd.

    142,400       2,799,793  

Kyushu Railway Co.

    367,200       8,095,748  

Lawson Inc.

    123,200       6,076,062  

McDonald’s Holdings Co. Japan Ltd.

    162,000       7,943,797  

MEIJI Holdings Co. Ltd.

    124,200       10,025,480  

Mizuho Financial Group Inc.

    12,312,000       16,695,418  

Nagoya Railroad Co. Ltd.

    421,400       11,758,429  

NEC Corp.

    553,200       29,161,092  

Nippon Building Fund Inc.

    3,109       18,734,037  

Nippon Prologis REIT Inc.

    4,336       14,188,241  

Nippon Telegraph & Telephone Corp.

    1,346,900       30,628,972  

Nissan Motor Co. Ltd.

    766,000       3,116,875  

Nissin Foods Holdings Co. Ltd.

    39,000       3,898,345  

Nitori Holdings Co. Ltd.

    91,800       19,200,566  
Security   Shares     Value  
Japan (continued)            

Nomura Research Institute Ltd.

    168,690     $ 4,484,295  

NTT Data Corp.

    831,400       9,502,162  

NTT DOCOMO Inc.

    2,855,700       79,683,307  

Ono Pharmaceutical Co. Ltd.

    149,200       4,500,833  

Oracle Corp. Japan

    71,000       8,328,917  

Oriental Land Co. Ltd.

    220,200       29,880,504  

Pan Pacific International Holdings Corp.

    554,900       13,034,616  

Secom Co. Ltd.

    357,900       33,834,198  

Seibu Holdings Inc.

    220,700       2,426,670  

Seven & i Holdings Co. Ltd.

    83,900       2,716,099  

Shimamura Co. Ltd.

    52,400       4,323,636  

Shionogi & Co. Ltd.

    57,729       3,202,600  

Softbank Corp.

    598,000       7,852,468  

Suntory Beverage & Food Ltd.

    327,600       12,635,051  

Takeda Pharmaceutical Co. Ltd.

    141,800       5,293,849  

Tobu Railway Co. Ltd.

    441,500       13,780,612  

Toho Co. Ltd.

    191,700       7,285,124  

Toyo Suisan Kaisha Ltd.

    209,300       11,881,616  

USS Co. Ltd.

    168,000       2,837,361  

West Japan Railway Co.

    225,200       11,830,725  

Yamada Denki Co. Ltd.

    1,544,100       8,285,095  

Yamazaki Baking Co. Ltd.

    243,400       3,961,605  
   

 

 

 
          680,593,485  
Malaysia — 0.6%            

Hong Leong Bank Bhd

    1,534,500       5,157,364  

IHH Healthcare Bhd

    2,366,500       3,045,118  

Malayan Banking Bhd

    3,572,700       6,286,854  

Maxis Bhd(b)

    3,791,200       4,550,714  

Petronas Chemicals Group Bhd

    2,033,600       2,665,576  

Petronas Dagangan Bhd

    586,800       2,901,952  

Public Bank Bhd

    2,643,160       10,419,082  
   

 

 

 
      35,026,660  
Netherlands — 0.6%            

Koninklijke Ahold Delhaize NV

    737,028       22,230,144  

Koninklijke KPN NV

    2,053,602       5,395,846  

Unilever NV

    173,272       10,052,472  
   

 

 

 
      37,678,462  
New Zealand — 0.2%            

Fisher & Paykel Healthcare Corp. Ltd.

    222,601       5,544,303  

Spark New Zealand Ltd.

    2,540,054       8,292,252  
   

 

 

 
      13,836,555  
Norway — 0.2%            

Telenor ASA

    868,970       14,229,158  
   

 

 

 
Peru — 0.0%            

Credicorp Ltd.

    20,553       2,681,755  
   

 

 

 
Philippines — 0.2%            

BDO Unibank Inc.

    3,216,229       5,704,768  

PLDT Inc.

    164,535       5,019,022  
   

 

 

 
      10,723,790  
Qatar — 0.3%            

Qatar Islamic Bank SAQ

    868,491       3,783,759  

Qatar National Bank QPSC

    2,920,233       14,312,919  
   

 

 

 
      18,096,678  
Russia — 0.5%            

Polymetal International PLC

    520,629       13,902,999  

Polyus PJSC

    65,892       16,005,379  
   

 

 

 
      29,908,378  
 

 

 

41  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Min Vol Factor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Saudi Arabia — 0.9%  

Alinma Bank(a)

    2,417,120     $ 9,989,564  

Arab National Bank

    538,539       2,980,994  

Bank AlBilad

    464,412       2,974,357  

Bank Al-Jazira

    978,361       3,406,896  

Jarir Marketing Co.

    144,105       6,278,382  

Saudi Arabian Fertilizer Co.

    369,122       8,159,078  

Saudi Basic Industries Corp.

    147,897       3,470,233  

Saudi Telecom Co.

    550,271       14,085,247  

Yanbu National Petrochemical Co.

    225,108       3,211,156  
   

 

 

 
      54,555,907  
Singapore — 0.7%  

CapitaLand Commercial Trust

    3,504,900       4,330,856  

CapitaLand Mall Trust

    5,854,400       8,439,706  

Oversea-Chinese Banking Corp. Ltd.(b)

    618,100       3,941,547  

Singapore Airlines Ltd.(b)

    1,339,600       3,596,308  

Singapore Exchange Ltd.

    500,400       3,168,906  

Singapore Telecommunications Ltd.(b)

    12,324,500           20,849,036  
   

 

 

 
      44,326,359  
South Korea — 0.3%  

Hyundai Marine & Fire Insurance Co. Ltd.

    133,395       2,481,715  

S-1 Corp.

    42,680       3,133,005  

SK Telecom Co. Ltd.

    49,683       10,372,408  
   

 

 

 
      15,987,128  
Sweden — 0.3%  

Telefonaktiebolaget LM Ericsson, Class B

    1,082,049       12,576,932  

Telia Co. AB

    836,043       3,228,841  
   

 

 

 
      15,805,773  
Switzerland — 5.0%  

Chocoladefabriken Lindt & Spruengli AG, Registered

    242       21,446,610  

Givaudan SA, Registered

    3,232       13,603,509  

Kuehne & Nagel International AG,
Registered(a)

    75,453       14,668,274  

Nestle SA, Registered

    656,567       79,156,992  

Novartis AG, Registered

    335,811       29,103,993  

Partners Group Holding AG

    9,270       9,448,616  

Roche Holding AG, NVS

    125,787       44,101,234  

Sonova Holding AG, Registered(a)

    37,348       8,755,803  

Swiss Prime Site AG, Registered

    100,093       9,042,774  

Swisscom AG, Registered

    63,363       35,184,075  

Zurich Insurance Group AG

    90,755       33,663,357  
   

 

 

 
      298,175,237  
Taiwan — 4.2%  

Advantech Co. Ltd.

    941,482       9,738,418  

Asustek Computer Inc.

    1,637,000       13,557,282  

AU Optronics Corp.(a)

    15,000,000       5,342,263  

Chang Hwa Commercial Bank Ltd.

    12,863,481       8,000,904  

Chicony Electronics Co. Ltd.

    1,451,020       4,376,575  

China Development Financial Holding Corp.

    31,071,000       9,043,380  

China Steel Corp.

    10,357,000       7,024,327  

Chunghwa Telecom Co. Ltd.

    9,299,000       34,386,160  

Compal Electronics Inc.

    10,449,000       6,588,160  

CTBC Financial Holding Co. Ltd.

    4,570,000       2,951,502  

E.Sun Financial Holding Co. Ltd.

    10,864,490       10,071,541  

Far EasTone Telecommunications Co. Ltd.

    3,900,000       8,147,845  

First Financial Holding Co. Ltd.

    25,078,034       18,162,269  

Formosa Petrochemical Corp.

    1,012,000       2,828,213  

Hua Nan Financial Holdings Co. Ltd.

    20,407,074       12,553,812  

Inventec Corp.

    4,045,000       3,136,300  

Lite-On Technology Corp.

    5,207,000       8,234,235  

Mega Financial Holding Co. Ltd.

    23,336,000       23,263,228  
Security   Shares     Value  
Taiwan (continued)            

Nan Ya Plastics Corp.

    1,281,000     $ 2,684,986  

Quanta Computer Inc.

    4,896,000       12,848,423  

Synnex Technology International Corp.

    3,249,250       4,839,297  

Taishin Financial Holding Co. Ltd.

    11,281,084       5,094,299  

Taiwan Cooperative Financial Holding Co. Ltd.

    22,798,252       15,578,786  

Taiwan Mobile Co. Ltd.

    4,002,000       13,843,975  

WPG Holdings Ltd.

    3,696,760       5,178,223  
   

 

 

 
      247,474,403  
Thailand — 0.7%  

Advanced Info Service PCL, NVDR

    826,300       4,858,636  

Airports of Thailand PCL, NVDR(b)

    6,479,500       11,658,832  

Bangkok Dusit Medical Services PCL, NVDR

    9,111,700       6,089,593  

Bangkok Expressway & Metro PCL, NVDR

    15,614,700       4,540,543  

BTS Group Holdings PCL, NVDR(b)

    13,740,800       4,591,672  

Bumrungrad Hospital PCL, NVDR

    845,700       3,002,646  

CP ALL PCL, NVDR(a)

    1,293,000       2,638,140  

Home Product Center PCL, NVDR

    9,309,300       4,456,858  
   

 

 

 
      41,836,920  
United Arab Emirates — 0.2%  

Emirates Telecommunications Group Co. PJSC

    2,066,128       9,314,915  

First Abu Dhabi Bank PJSC

    900,681       2,810,069  
   

 

 

 
      12,124,984  
United Kingdom — 0.4%  

Admiral Group PLC

    114,597       4,046,203  

AstraZeneca PLC

    41,992       4,689,180  

GlaxoSmithKline PLC

    797,080       15,709,921  
   

 

 

 
          24,445,304  
United States — 52.5%  

Accenture PLC, Class A

    47,741       11,454,498  

Alleghany Corp.

    31,904       17,692,682  

Allstate Corp. (The)

    271,448       25,244,664  

Altria Group Inc.

    230,914       10,100,178  

Ameren Corp.

    80,335       6,355,302  

American Electric Power Co. Inc.

    228,467       18,010,054  

American Tower Corp.

    68,112       16,970,105  

American Water Works Co. Inc.

    118,475       16,745,257  

Amphenol Corp., Class A

    124,557       13,676,359  

Anthem Inc.

    27,358       7,701,824  

Aon PLC, Class A

    102,968       20,592,570  

Arthur J Gallagher & Co.

    74,567       7,851,905  

AT&T Inc.

    776,570       23,149,552  

Automatic Data Processing Inc.

    117,842       16,390,644  

AutoZone Inc.(a)

    16,290       19,487,890  

Baxter International Inc.

    196,757       17,131,632  

Berkshire Hathaway Inc., Class B(a)

    115,461       25,175,116  

Black Knight Inc.(a)

    333,896       28,080,654  

Booz Allen Hamilton Holding Corp.

    161,444       14,216,759  

Bristol-Myers Squibb Co.

    121,388       7,550,334  

Broadridge Financial Solutions Inc.

    147,553       20,273,782  

Brown & Brown Inc.

    272,623       12,649,707  

Campbell Soup Co.

    188,511       9,917,564  

Cboe Global Markets Inc.

    98,636       9,053,798  

CH Robinson Worldwide Inc.

    319,471       31,403,999  

Chubb Ltd.

    184,937       23,117,125  

Church & Dwight Co. Inc.

    258,148       24,738,323  

Cincinnati Financial Corp.

    156,019       12,389,469  

Cisco Systems Inc.

    843,331       35,605,435  

Citrix Systems Inc.(b)

    244,220       35,460,744  

Clorox Co. (The)

    166,680       37,252,980  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  42


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Min Vol Factor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States (continued)            

CME Group Inc.

    92,989     $        16,353,975  

CMS Energy Corp.

    160,087       9,683,663  

Coca-Cola Co. (The)

    947,795       46,944,286  

Cognizant Technology Solutions Corp., Class A

    53,063       3,547,792  

Colgate-Palmolive Co.

    208,444       16,521,271  

Comcast Corp., Class A

    359,292       16,099,875  

Consolidated Edison Inc.

    732,399       52,249,345  

Cooper Companies Inc. (The)(b)

    13,995       4,399,748  

Costco Wholesale Corp.

    32,272       11,219,684  

Crown Castle International Corp.

    174,986       28,566,464  

Danaher Corp.

    91,140       18,817,676  

Dollar General Corp.

    241,952       48,845,270  

Dominion Energy Inc.

    409,992       32,159,772  

Duke Energy Corp.

    484,640       38,935,978  

Duke Realty Corp.

    266,484       10,272,958  

Ecolab Inc.

    36,416       7,176,865  

Eli Lilly & Co.

    293,320       43,525,755  

Entergy Corp.

    123,199       12,213,949  

Equity Residential

    255,155       14,403,500  

Erie Indemnity Co., Class A, NVS

    20,994       4,480,959  

Everest Re Group Ltd.

    67,883       14,939,691  

Evergy Inc.

    285,768       15,208,573  

Eversource Energy

    114,297       9,796,396  

Extra Space Storage Inc.

    157,140       16,743,267  

F5 Networks Inc.(a)(b)

    46,765       6,188,412  

Fidelity National Information Services Inc.

    205,693       31,028,789  

Fiserv Inc.(a)(b)

    263,388       26,228,177  

General Mills Inc.

    163,300       10,443,035  

Genuine Parts Co.

    56,247       5,311,967  

Gilead Sciences Inc.

    901,677       60,186,940  

Henry Schein Inc.(a)

    55,826       3,709,079  

Hershey Co. (The)

    241,374       35,877,831  

Home Depot Inc. (The)

    77,258       22,021,620  

Hormel Foods Corp.

    688,907       35,120,479  

Humana Inc.

    19,612       8,142,314  

Intel Corp.

    57,133       2,910,926  

Intercontinental Exchange Inc.

    83,896       8,912,272  

International Business Machines Corp.

    106,559       13,139,790  

Intuit Inc.

    25,637       8,854,763  

Jack Henry & Associates Inc.

    182,303       30,156,562  

JM Smucker Co. (The)

    102,185       12,280,593  

Johnson & Johnson

    369,110       56,625,165  

Juniper Networks Inc.

    138,185       3,454,625  

Kellogg Co.

    358,749       25,438,892  

Keysight Technologies Inc.(a)

    459,429       45,262,945  

Kimberly-Clark Corp.

    152,425       24,046,568  

L3Harris Technologies Inc.

    104,465       18,881,004  

Liberty Broadband Corp., Class C, NVS(a)(b)

    261,934       36,694,334  

Lockheed Martin Corp.

    44,114       17,215,930  

Markel Corp.(a)

    26,112       28,379,305  

Marsh & McLennan Companies Inc.

    265,397       30,496,769  

Mastercard Inc., Class A(b)

    51,576       18,474,007  

McCormick & Co. Inc./MD, NVS

    150,320       30,995,984  

McDonald’s Corp.

    291,191       62,175,102  

Medtronic PLC

    250,545       26,926,071  

Merck & Co. Inc.

    836,730       71,347,967  

Microsoft Corp.

    47,296       10,666,667  

Mondelez International Inc., Class A

    110,505       6,455,702  

Motorola Solutions Inc.

    257,106       39,787,153  

Newmont Corp.

    1,210,949       81,472,649  
Security   Shares     Value  
United States (continued)            

NextEra Energy Inc.

    225,651     $ 62,994,990  

Oracle Corp.

    103,986       5,950,079  

O’Reilly Automotive Inc.(a)

    30,592       14,244,553  

Palo Alto Networks Inc.(a)

    21,129       5,438,816  

Paychex Inc.

    455,999       34,870,244  

PepsiCo Inc.

    434,850       60,905,091  

Pfizer Inc.

    548,294       20,720,030  

Philip Morris International Inc.

    39,873       3,181,467  

Procter & Gamble Co. (The)

    325,848       45,074,554  

Progressive Corp. (The)(b)

    207,573       19,727,738  

Public Storage

    172,869       36,717,376  

Regeneron Pharmaceuticals Inc.(a)

    132,718       82,275,870  

RenaissanceRe Holdings Ltd.

    108,003       19,844,471  

Republic Services Inc.

    546,383       50,660,632  

Ross Stores Inc.

    138,608       12,624,417  

Southern Co. (The)

    762,546       39,789,650  

Starbucks Corp.

    307,985       26,015,493  

Stryker Corp.

    27,216       5,393,123  

Target Corp.

    84,497       12,776,791  

TJX Companies Inc. (The)

    432,887       23,717,879  

TransUnion

    34,799       3,017,769  

Travelers Companies Inc. (The)

    170,007       19,727,612  

Tyler Technologies Inc.(a)(b)

    96,377       33,279,942  

UnitedHealth Group Inc.

    37,452       11,705,623  

Universal Health Services Inc., Class B

    37,237       4,109,103  

VeriSign Inc.(a)

    47,874       10,283,335  

Verizon Communications Inc.

    1,500,436       88,930,842  

Visa Inc., Class A(b)

    290,545       61,592,635  

Walmart Inc.

    410,348       56,976,820  

Walt Disney Co. (The)

    66,397       8,755,772  

Waste Management Inc.

    585,272       66,721,008  

WEC Energy Group Inc.

    501,549       47,185,730  

Western Union Co. (The)

    999,031       23,567,141  

WR Berkley Corp.

    344,142       21,354,011  

Xcel Energy Inc.

    699,577       48,603,112  
   

 

 

 
        3,112,591,724  
   

 

 

 

Total Common Stocks — 99.4%
(Cost: $5,057,989,287)

      5,889,895,400  
   

 

 

 

Warrants

   

Thailand — 0.0%

   

BTS Group Holdings PCL
(Expires 02/16/21)(a)

    1       0 (e) 
   

 

 

 

Total Warrants — 0.0%
(Cost: $0)

      0 (e) 
   

 

 

 

Short-Term Investments

   

Money Market Funds — 2.0%

   

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.37%(f)(g)(h)

    105,421,740       105,527,162  
 

 

 

43  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Min Vol Factor ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Money Market Funds (continued)            

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.07%(f)(g)

    13,570,000     $ 13,570,000  
   

 

 

 
      119,097,162  
   

 

 

 

Total Short-Term Investments — 2.0%
(Cost: $118,974,360)

 

    119,097,162  
   

 

 

 

Total Investments in Securities — 101.4%
(Cost: $5,176,963,647)

 

    6,008,992,562  

Other Assets, Less Liabilities — (1.4)%

 

    (84,174,829
   

 

 

 

Net Assets — 100.0%

    $   5,924,817,733  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

 

(c) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(d) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(e) 

Rounds to less than $1.

(f) 

Affiliate of the Fund.

(g) 

Annualized 7-day yield as of period-end.

(h) 

All or a portion of this security was purchased with cash collateral received from loaned securities.

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2020, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer  

Value at

08/31/19

   

Purchases

at Cost

   

Proceeds

from Sales

   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

08/31/20

   

Shares

Held at

08/31/20

    Income    

Capital Gain

Distributions from

Underlying Funds

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 25,427,517     $ 80,007,329 (a)    $     $ (23,404   $ 115,720     $ 105,527,162       105,421,740     $ 498,352 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    10,157,000       3,413,000 (a)                        13,570,000       13,570,000       109,940        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (23,404   $ 115,720     $ 119,097,162       $ 608,292     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Futures Contracts

 

Description   

Number of

Contracts

    

Expiration

Date

    

Notional

Amount
(000)

    

Value/

Unrealized

Appreciation

(Depreciation)

 

Long Contracts

           

2-Year U.S. Treasury Note

     15        12/31/20      $ 3,314      $ 1,040  

MSCI EAFE E-Mini Index

     75        09/18/20        7,125        299,726  

MSCI Emerging Markets E-Mini Index

     65        09/18/20        3,576        275,843  

S&P 500 E-Mini Index

     81        09/18/20        14,171        1,487,497  
           

 

 

 
            $ 2,064,106  
           

 

 

 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  44


Schedule of Investments  (continued)

August 31, 2020

  

iShares® MSCI Global Min Vol Factor ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

As of August 31, 2020, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

 

 
    

Equity

Contracts

    

Interest

Rate

Contracts

    

Total

 

 

 

Assets — Derivative Financial Instruments

        

Futures contracts

        

Unrealized appreciation on futures contracts(a)

   $ 2,063,066      $ 1,040      $ 2,064,106  
  

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the year ended August 31, 2020, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
    

Equity

Contracts

    

Interest

Rate

Contracts

    

Total

 

 

 

Net Realized Gain (Loss) from:

        

Futures contracts

   $ 1,701,837      $ (721    $ 1,701,116  
  

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

        

Futures contracts

   $ 2,395,035      $ 1,040      $ 2,396,075  
  

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 24,605,283  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Fair Value Measurements

Various inputs are used in determining the fair value of financial instruments. For description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of August 31, 2020. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.

 

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 5,889,895,397      $      $ 3      $ 5,889,895,400  

Warrants

     0 (a)                     0 (a) 

Money Market Funds

     119,097,162                      119,097,162  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 6,008,992,559      $      $ 3      $ 6,008,992,562  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(b)

           

Assets

           

Futures Contracts

   $ 2,064,106      $                 —      $                 —      $ 2,064,106  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Rounds to less than $1.

 
  (b) 

Shown at the unrealized appreciation (depreciation) on the contracts.

 

See notes to financial statements.

 

 

45  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


 

Statements of Assets and Liabilities

August 31, 2020

 

   

iShares

ESG Aware MSCI

EM ETF

    

iShares

MSCI

Emerging

Markets ex

China ETF

      

iShares

MSCI Emerging

Markets Min Vol

Factor ETF

(Consolidated)

    

iShares

MSCI

Emerging

Markets

Multifactor

ETF

 

 

 

ASSETS

            

Investments in securities, at value (including securities on loan)(a):

            

Unaffiliated(b)

  $ 3,638,492,187      $ 63,071,341        $ 4,239,226,168      $ 539,895,004  

Affiliated(c)

    20,628,651        10,399,973          61,478,073        8,496,667  

Cash

    13,032,667        8,265          1,013,975        193,467  

Foreign currency, at value(d)

    26,324,403        88,376          7,540,731        1,111,486  

Cash pledged:

            

Futures contracts

    937,000                 952,000        201,000  

Receivables:

            

Investments sold

    139,061,545        1,054,844          699,925        761,638  

Securities lending income — Affiliated

    17,647                 129,780        7,918  

Capital shares sold

    48,810,038                         

Dividends

    3,654,645        80,069          9,377,742        1,100,693  

Tax reclaims

    13,307                 40,596        768  
 

 

 

    

 

 

      

 

 

    

 

 

 

Total assets

    3,890,972,090        74,702,868          4,320,458,990        551,768,641  
 

 

 

    

 

 

      

 

 

    

 

 

 

LIABILITIES

            

Collateral on securities loaned, at value

    16,676,159                 54,408,578        7,386,997  

Deferred foreign capital gain tax

    3,882,401                 9,370,177        791,432  

Payables:

            

Investments purchased

    209,793,002        1,087,247          7,373,010        1,729,966  

Variation margin on futures contracts

    197,140                 199,689        42,983  

Bank borrowings

    5,192,727                         

Investment advisory fees

    750,552        9,811          849,223        207,830  

Foreign taxes

    18        18                 1,694  
 

 

 

    

 

 

      

 

 

    

 

 

 

Total liabilities

    236,491,999        1,097,076          72,200,677        10,160,902  
 

 

 

    

 

 

      

 

 

    

 

 

 

NET ASSETS

  $ 3,654,480,091      $ 73,605,792        $ 4,248,258,313      $ 541,607,739  
 

 

 

    

 

 

      

 

 

    

 

 

 

NET ASSETS CONSIST OF:

            

Paid-in capital

  $ 3,381,733,354      $ 71,811,148        $ 4,744,615,625      $ 560,615,402  

Accumulated earnings (loss)

    272,746,737        1,794,644          (496,357,312      (19,007,663
 

 

 

    

 

 

      

 

 

    

 

 

 

NET ASSETS

  $ 3,654,480,091      $ 73,605,792        $ 4,248,258,313      $ 541,607,739  
 

 

 

    

 

 

      

 

 

    

 

 

 

Shares outstanding

    101,700,000        1,600,000          75,900,000        12,300,000  
 

 

 

    

 

 

      

 

 

    

 

 

 

Net asset value

  $ 35.93      $ 46.00        $ 55.97      $ 44.03  
 

 

 

    

 

 

      

 

 

    

 

 

 

Shares authorized

    600 million        50 million          500 million        525 million  
 

 

 

    

 

 

      

 

 

    

 

 

 

Par value

  $ 0.001      $ 0.001        $ 0.001      $ 0.001  
 

 

 

    

 

 

      

 

 

    

 

 

 

(a) Securities loaned, at value

  $ 16,061,457      $        $ 51,067,826      $ 7,444,520  

(b) Investments, at cost — Unaffiliated

  $ 3,196,469,098      $ 60,214,513        $ 3,790,071,495      $ 486,510,387  

(c) Investments, at cost — Affiliated

  $ 20,616,633      $ 9,651,904        $ 61,446,291      $ 8,494,578  

(d) Foreign currency, at cost

  $ 26,325,335      $ 88,934        $ 7,507,238      $ 1,104,460  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  46


 

Statements of Assets and Liabilities  (continued)

August 31, 2020

 

    iShares
MSCI Global Min
Vol Factor ETF
 

 

 

ASSETS

 

Investments in securities, at value (including securities on loan)(a):

 

Unaffiliated(b)

  $ 5,889,895,400  

Affiliated(c)

    119,097,162  

Cash

    5,068  

Foreign currency, at value(d)

    4,092,497  

Cash pledged:

 

Futures contracts

    1,994,000  

Receivables:

 

Securities lending income — Affiliated

    39,996  

Dividends

    11,847,624  

Tax reclaims

    4,397,599  
 

 

 

 

Total assets

    6,031,369,346  
 

 

 

 

LIABILITIES

 

Collateral on securities loaned, at value

    105,400,760  

Payables:

 

Variation margin on futures contracts

    156,487  

Investment advisory fees

    994,366  
 

 

 

 

Total liabilities

    106,551,613  
 

 

 

 

NET ASSETS

  $ 5,924,817,733  
 

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

  $ 5,424,531,661  

Accumulated earnings

    500,286,072  
 

 

 

 

NET ASSETS

  $ 5,924,817,733  
 

 

 

 

Shares outstanding

    63,600,000  
 

 

 

 

Net asset value

  $ 93.16  
 

 

 

 

Shares authorized

    500 million  
 

 

 

 

Par value

  $ 0.001  
 

 

 

 

(a) Securities loaned, at value

  $ 101,612,588  

(b) Investments, at cost — Unaffiliated

  $ 5,057,989,287  

(c) Investments, at cost — Affiliated

  $ 118,974,360  

(d) Foreign currency, at cost

  $ 4,024,481  

See notes to financial statements.

 

 

47  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


 

Statements of Operations

Year Ended August 31, 2020

 

   

iShares

ESG Aware

MSCI EM

ETF

    

iShares

MSCI

Emerging

Markets ex

China ETF

    

iShares

MSCI

Emerging

Markets Min

Vol Factor

ETF

(Consolidated)

    

iShares

MSCI

Emerging

Markets

Multifactor

ETF

 

 

 

INVESTMENT INCOME

          

Dividends — Unaffiliated

  $ 59,438,761      $ 1,056,983      $ 152,427,712      $ 16,171,909  

Dividends — Affiliated

    20,408        20,759        95,154        7,393  

Non-cash dividends — Unaffiliated

    6,965,467        337,693                

Interest — Unaffiliated

    1,588               4,652        911  

Securities lending income — Affiliated — net

    315,587               764,334        75,016  

Foreign taxes withheld

    (6,911,226      (149,450      (16,168,681      (1,724,105

Other foreign taxes

    (13,120      (50      (63,659       
 

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income

    59,817,465        1,265,935        137,059,512        14,531,124  
 

 

 

    

 

 

    

 

 

    

 

 

 

EXPENSES

          

Investment advisory fees

    4,984,228        133,790        33,670,285        2,070,774  

Commitment fees

    9,050               28,840        1,568  

Miscellaneous

    264        264        264        264  

Mauritius income taxes

                  251,670         

Interest expense

    6,985               17,034        7,462  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

    5,000,527        134,054        33,968,093        2,080,068  

Less:

       

Investment advisory fees waived

           (74,549      (21,891,681       
 

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived

    5,000,527        59,505        12,076,412        2,080,068  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    54,816,938        1,206,430        124,983,100        12,451,056  
 

 

 

    

 

 

    

 

 

    

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — Unaffiliated(a)

    (159,150,447      (1,630,476      (237,463,027      (29,064,260

Investments — Affiliated

    (12,034      (25,632      (28,974      (3,093

In-kind redemptions — Unaffiliated

    49,253,026        (47,161      36,412,595        924,038  

In-kind redemptions — Affiliated

           (72,243              

Futures contracts

    3,099,320               3,345,201        497,411  

Foreign currency transactions

    (1,399,166      (19,107      (963,269      (214,857
 

 

 

    

 

 

    

 

 

    

 

 

 

Net realized loss

    (108,209,301      (1,794,619      (198,697,474      (27,860,761
 

 

 

    

 

 

    

 

 

    

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — Unaffiliated(b)

    455,572,331        3,636,014        20,961,403        73,556,154  

Investments — Affiliated

    10,313        994,352        20,490        1,930  

Futures contracts

    208,615               333,017        140,472  

Foreign currency translations

    (50,875      (1,152      128,153        6,450  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net change in unrealized appreciation (depreciation)

    455,740,384        4,629,214        21,443,063        73,705,006  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net realized and unrealized gain (loss)

    347,531,083        2,834,595        (177,254,411      45,844,245  
 

 

 

    

 

 

    

 

 

    

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ 402,348,021      $ 4,041,025      $ (52,271,311    $ 58,295,301  
 

 

 

    

 

 

    

 

 

    

 

 

 

(a) Net of foreign capital gain tax of

  $      $      $ 98,006      $ 7,266  

(b) Net of deferred foreign capital gain tax of

  $ 3,815,567      $      $ (1,597,792    $ 791,432  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  48


 

Statements of Operations  (continued)

Year Ended August 31, 2020

 

   

iShares

MSCI Global

Min Vol

Factor ETF

 

 

 

INVESTMENT INCOME

 

Dividends — Unaffiliated

  $ 149,902,287  

Dividends — Affiliated

    109,940  

Securities lending income — Affiliated — net

    498,352  

Foreign taxes withheld

    (9,643,781

Other foreign taxes

    (8,970
 

 

 

 

Total investment income

    140,857,828  
 

 

 

 

EXPENSES

 

Investment advisory fees

    17,683,512  

Commitment fees

    10,143  

Miscellaneous

    264  

Interest expense

    10,256  
 

 

 

 

Total expenses

    17,704,175  

Less:

 

Investment advisory fees waived

    (6,584,070
 

 

 

 

Total expenses after fees waived

    11,120,105  
 

 

 

 

Net investment income

    129,737,723  
 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

 

Net realized gain (loss) from:

 

Investments — Unaffiliated

    (202,242,581

Investments — Affiliated

    (23,404

In-kind redemptions — Unaffiliated

    155,834,979  

Futures contracts

    1,701,116  

Foreign currency transactions

    (20,779
 

 

 

 

Net realized loss

    (44,750,669
 

 

 

 

Net change in unrealized appreciation (depreciation) on:

 

Investments — Unaffiliated

    78,383,576  

Investments — Affiliated

    115,720  

Futures contracts

    2,396,075  

Foreign currency translations

    508,319  
 

 

 

 

Net change in unrealized appreciation (depreciation)

    81,403,690  
 

 

 

 

Net realized and unrealized gain

    36,653,021  
 

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 166,390,744  
 

 

 

 

See notes to financial statements.

 

 

49  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


 

Statements of Changes in Net Assets

 

    iShares
ESG Aware MSCI EM ETF
       iShares
  MSCI Emerging Markets ex China ETF  
    

Year Ended

08/31/20

      

Year Ended

08/31/19

 

        

  

Year Ended

08/31/20

         

Year Ended

08/31/19

INCREASE (DECREASE) IN NET ASSETS

                               

OPERATIONS

                               

Net investment income

    $ 54,816,938         $ 13,880,674          $ 1,206,430            $ 538,662

Net realized loss

      (108,209,301 )           (21,353,323 )            (1,794,619 )              (406,140 )

Net change in unrealized appreciation (depreciation)

      455,740,384           (6,895,209 )            4,629,214              (947,735 )
   

 

 

         

 

 

          

 

 

            

 

 

 

Net increase (decrease) in net assets resulting from operations

      402,348,021                      (14,367,858 )            4,041,025              (815,213 )
   

 

 

         

 

 

          

 

 

            

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

                               

Decrease in net assets resulting from distributions to shareholders

      (36,825,677 )           (10,952,741 )            (1,107,668 )              (321,357 )
   

 

 

         

 

 

          

 

 

            

 

 

 

CAPITAL SHARE TRANSACTIONS

                               

Net increase in net assets derived from capital share transactions

      2,616,414,670           368,110,977            42,923,974              18,966,426
   

 

 

         

 

 

          

 

 

            

 

 

 

NET ASSETS

                               

Total increase in net assets

      2,981,937,014           342,790,378            45,857,331              17,829,856

Beginning of year

      672,543,077           329,752,699            27,748,461              9,918,605
   

 

 

         

 

 

          

 

 

            

 

 

 

End of year

    $ 3,654,480,091         $ 672,543,077          $ 73,605,792            $ 27,748,461
   

 

 

         

 

 

          

 

 

            

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  50


 

Statements of Changes in Net Assets  (continued)

 

   

iShares
MSCI Emerging Markets Min Vol Factor ETF

(Consolidated)

       iShares
  MSCI Emerging Markets Multifactor ETF  
    

Year Ended

08/31/20

      

Year Ended

08/31/19

       

Year Ended

08/31/20

         

Year Ended

08/31/19

INCREASE (DECREASE) IN NET ASSETS

                               

OPERATIONS

                                                     

Net investment income

    $ 124,983,100         $ 142,041,168          $ 12,451,056            $ 11,186,154

Net realized loss

      (198,697,474 )           (100,762,003 )            (27,860,761 )              (36,746,895 )

Net change in unrealized appreciation (depreciation)

      21,443,063           (100,503,198 )            73,705,006              (4,230,105 )
   

 

 

         

 

 

          

 

 

            

 

 

 

Net increase (decrease) in net assets resulting from operations

      (52,271,311 )           (59,224,033 )            58,295,301              (29,790,846 )
   

 

 

         

 

 

          

 

 

            

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

                               

Decrease in net assets resulting from distributions to shareholders

      (130,476,146 )           (130,514,441 )            (12,464,595 )              (9,249,430 )
   

 

 

         

 

 

          

 

 

            

 

 

 

CAPITAL SHARE TRANSACTIONS

                               

Net increase (decrease) in net assets derived from capital share transactions

      (986,258,750 )           940,306,068            84,202,522              159,543,885
   

 

 

         

 

 

          

 

 

            

 

 

 

NET ASSETS

                               

Total increase (decrease) in net assets

      (1,169,006,207 )           750,567,594            130,033,228              120,503,609

Beginning of year

      5,417,264,520           4,666,696,926            411,574,511              291,070,902
   

 

 

         

 

 

          

 

 

            

 

 

 

End of year

    $ 4,248,258,313         $ 5,417,264,520          $ 541,607,739            $ 411,574,511
   

 

 

         

 

 

          

 

 

            

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

51  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


 

Statements of Changes in Net Assets  (continued)

 

    iShares
MSCI Global Min Vol Factor ETF
 
 

 

 

 
   

Year Ended

08/31/20

      

Year Ended

08/31/19

 

 

 

INCREASE (DECREASE) IN NET ASSETS

      

OPERATIONS

      

Net investment income

  $ 129,737,723        $ 98,989,651  

Net realized gain (loss)

    (44,750,669        52,580,087  

Net change in unrealized appreciation (depreciation)

    81,403,690          301,773,485  
 

 

 

      

 

 

 

Net increase in net assets resulting from operations

    166,390,744          453,343,223  
 

 

 

      

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

      

Decrease in net assets resulting from distributions to shareholders

    (142,389,395        (93,156,234
 

 

 

      

 

 

 

CAPITAL SHARE TRANSACTIONS

      

Net increase in net assets derived from capital share transactions

    625,095,917          1,573,133,776  
 

 

 

      

 

 

 

NET ASSETS

      

Total increase in net assets

    649,097,266          1,933,320,765  

Beginning of year

    5,275,720,467          3,342,399,702  
 

 

 

      

 

 

 

End of year

  $ 5,924,817,733        $ 5,275,720,467  
 

 

 

      

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T  S

  52


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares ESG Aware MSCI EM ETF  
   
Year Ended
08/31/20
 
 
    
Year Ended
08/31/19
 
 
    
Year Ended
08/31/18
 
(a) 
    
Year Ended
08/31/17
 
(a) 
    

Period From
06/28/16

to 08/31/16

 
(a)(b)  

 

 

 

Net asset value, beginning of period

  $ 32.03      $ 33.65      $ 34.58      $ 28.23      $ 25.19  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(c)

    0.89        0.91        0.94        0.85        0.16  

Net realized and unrealized gain (loss)(d)

    3.89        (1.85      (1.17      5.81        2.88  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    4.78        (0.94      (0.23      6.66        3.04  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(e)

             

From net investment income

    (0.88      (0.68      (0.70      (0.31       
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.88      (0.68      (0.70      (0.31       
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 35.93      $ 32.03      $ 33.65      $ 34.58      $ 28.23  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return

             

Based on net asset value

    15.11      (2.76 )%       (0.72 )%       23.75      12.09 %(f) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets

             

Total expenses

    0.25      0.25      0.25      0.42      0.45 %(g) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    2.75      2.76      2.63      2.73      3.26 %(g) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

             

Net assets, end of period (000)

  $ 3,654,480      $ 672,543      $ 329,753      $ 96,812      $ 5,645  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(h)

    46      34      45      29      9 %(f) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Per share amounts reflect a two-for-one stock split effective after the close of trading on May 24, 2018.

(b) 

Commencement of operations.

(c) 

Based on average shares outstanding.

(d) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(e) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(f) 

Not annualized.

(g) 

Annualized.

(h) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

53  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Emerging Markets ex China ETF  
   
Year Ended
08/31/20
 
 
    
Year Ended
08/31/19
 
 
    
Year Ended
08/31/18
 
 
    

Period From
07/18/17

to 08/31/17

 
(a)  

 

 

 

Net asset value, beginning of period

  $ 46.25      $ 49.59      $ 51.14      $ 50.22  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(b)

    1.46        1.62        1.10        0.13  

Net realized and unrealized gain (loss)(c)

    (0.05      (3.83      (1.80      0.79  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    1.41        (2.21      (0.70      0.92  
 

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(d)

          

From net investment income

    (1.66      (1.13      (0.85       
 

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (1.66      (1.13      (0.85       
 

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 46.00      $ 46.25      $ 49.59      $ 51.14  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total Return

          

Based on net asset value

    2.87      (4.42 )%       (1.41 )%       1.83 %(e) 
 

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets

          

Total expenses(f)

    0.36      0.49      0.49      0.49 %(g) 
 

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived(f)

    0.16      0.26      0.41      0.41 %(g) 
 

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    3.24      3.38      2.09      2.07 %(g) 
 

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

          

Net assets, end of period (000)

  $ 73,606      $ 27,748      $ 9,919      $ 10,227  
 

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(h)(i)

    18      10      9      0 %(e)(j) 
 

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Commencement of operations.

(b) 

Based on average shares outstanding.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Not annualized.

(f) 

The Fund indirectly bears its proportionate share of fees and expenses incurred by the underlying fund in which the Fund is invested. This ratio does not include these indirect fees and expenses.

(g) 

Annualized.

(h) 

Portfolio turnover rate excludes in-kind transactions.

(i) 

Portfolio turnover rate excludes the portfolio activity of the underlying fund in which the Fund is invested. See the underlying fund’s financial highlights for its respective portfolio turnover rates.

(j) 

Rounds to less than 1%.

See notes to financial statements.

 

 

I N A N C I A L   H I G H L I G H T  S

  54


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Emerging Markets Min Vol Factor ETF
(Consolidated)
 
    Year Ended
08/31/20
     Year Ended
08/31/19
    Year Ended
08/31/18
     Year Ended
08/31/17
     Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 56.84      $ 59.22     $ 58.01      $ 53.40      $ 50.98  
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Net investment income(a)

    1.42        1.57       1.49        1.28        1.57  

Net realized and unrealized gain (loss)(b)

    (0.82      (2.46     1.23        4.48        2.13  
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.60        (0.89     2.72        5.76        3.70  
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Distributions(c)

            

From net investment income

    (1.47      (1.49     (1.51      (1.15      (1.28
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total distributions

    (1.47      (1.49     (1.51      (1.15      (1.28
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 55.97      $ 56.84     $ 59.22      $ 58.01      $ 53.40  
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total Return

            

Based on net asset value

    1.07      (1.44 )%(d)      4.70      11.11      7.48
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets

            

Total expenses

    0.70      0.68     0.67      0.69      0.71
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total expenses after fees waived

    0.25      0.25     0.25      0.25      0.25
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Net investment income

    2.59      2.71     2.47      2.40      3.12
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Supplemental Data

            

Net assets, end of year (000)

  $ 4,248,258      $ 5,417,265     $ 4,666,697      $ 4,037,428      $ 4,379,041  
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(e)

    23      24     22      23      23
 

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Includes payment received from an affiliate, which had no impact on the Fund’s total return.

(e) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

55  

2 0 2 0   H A R E S    A N N U A L   R E P O R T   T O   S H A R E H O  L D E R S


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Emerging Markets Multifactor ETF  
   
Year Ended
08/31/20
 
 
    
Year Ended
08/31/19
 
 
    
Year Ended
08/31/18
 
 
   
Year Ended
08/31/17
 
 
   

Period From
12/08/15

to 08/31/16

 
(a)  

 

 

 

Net asset value, beginning of period

  $ 40.35      $ 44.78      $ 46.04     $ 37.46     $ 33.82  
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net investment income(b)

    1.11        1.47        1.39       0.91       1.27  

Net realized and unrealized gain (loss)(c)

    3.73        (4.72      (1.63     8.53       2.50  
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    4.84        (3.25      (0.24     9.44       3.77  
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Distributions(d)

           

From net investment income

    (1.16      (1.18      (1.02     (0.86     (0.13
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total distributions

    (1.16      (1.18      (1.02     (0.86     (0.13
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net asset value, end of period

  $ 44.03      $ 40.35      $ 44.78     $ 46.04     $ 37.46  
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total Return

           

Based on net asset value

    12.17      (7.16 )%       (0.65 )%      25.80     11.16 %(e) 
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

           

Total expenses

    0.45      0.45      0.45 %(f)      0.50 %(f)      0.65 %(f)(g) 
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total expenses after fees waived

    0.45      0.45      0.42 %(f)      0.42 %(f)      0.49 %(f)(g) 
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net investment income

    2.71      3.55      2.87     2.24     4.91 %(g) 
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Supplemental Data

           

Net assets, end of period (000)

  $ 541,608      $ 411,575      $ 291,071     $ 82,873     $ 29,969  
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(h)

    45      53      39 %(i)      36 %(i)      11 %(e)(i) 
 

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

(a) 

Commencement of operations.

(b) 

Based on average shares outstanding.

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(e) 

Not annualized.

(f) 

The Fund indirectly bears its proportionate share of fees and expenses incurred by the underlying fund in which the Fund is invested. This ratio does not include these indirect fees and expenses.

(g) 

Annualized.

(h) 

Portfolio turnover rate excludes in-kind transactions.

(i) 

Portfolio turnover rate excludes the portfolio activity of the underlying fund in which the Fund is invested. See the underlying fund’s financial highlights for its respective portfolio turnover rates.

See notes to financial statements.

 

 

I N A N C I A L   H I G H L I G H T  S

  56


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI Global Min Vol Factor ETF  
    Year Ended
08/31/20
     Year Ended
08/31/19
     Year Ended
08/31/18
     Year Ended
08/31/17
     Year Ended
08/31/16
 

 

 

Net asset value, beginning of year

  $ 93.54      $ 87.04      $ 81.13      $ 75.82      $ 67.59  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    2.13        2.16        1.82        1.84        1.79  

Net realized and unrealized gain (loss)(b)

    (0.18      6.36        5.85        5.40        8.07  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase from investment operations

    1.95        8.52        7.67        7.24        9.86  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(c)

             

From net investment income

    (2.33      (2.02      (1.76      (1.93      (1.63
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (2.33      (2.02      (1.76      (1.93      (1.63
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 93.16      $ 93.54      $ 87.04      $ 81.13      $ 75.82  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return

             

Based on net asset value

    2.13      9.99      9.56      9.75      14.76
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets

             

Total expenses

    0.32      0.32      0.31      0.32      0.32
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived

    0.20      0.20      0.20      0.20      0.20
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    2.33      2.45      2.17      2.40      2.49
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

             

Net assets, end of year (000)

  $ 5,924,818      $ 5,275,720      $ 3,342,400      $ 3,675,374      $ 3,267,688  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(d)

    22      21      23      24      24
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

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Notes to Financial Statements

 

1.    ORGANIZATION

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 is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):

 

iShares ETF   Diversification    
Classification    

ESG Aware MSCI EM(a)

  Diversified    

MSCI Emerging Markets ex China(b)

  Diversified    

MSCI Emerging Markets Min Vol Factor(c)

  Diversified    

MSCI Emerging Markets Multifactor(d)

  Diversified    

MSCI Global Min Vol Factor(e)

  Diversified    

 

  (a) 

Formerly the iShares ESG MSCI EM ETF.

 
  (b) 

The Fund’s classification changed from non-diversified to diversified during the reporting period.

 
  (c) 

Formerly the iShares Edge MSCI Min Vol Emerging Markets ETF.

 
  (d) 

Formerly the iShares Edge MSCI Multifactor Emerging Markets ETF.

 
  (e) 

Formerly the iShares Edge MSCI Min Vol Global ETF.

 

Basis of Consolidation: The accompanying consolidated financial statements for the iShares MSCI Emerging Markets Min Vol Factor ETF includes the accounts of its subsidiary in the Republic of Mauritius, which is a wholly-owned subsidiary (the “Subsidiary”) of the Fund that invests in Indian securities. Through this investment structure, the Fund expects to obtain certain benefits under a current tax treaty between Mauritius and India. Intercompany accounts and transactions, if any, have been eliminated.

2.    SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by each Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Investment Transactions and Income Recognition: Investment transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities are reflected in tax reclaims receivable. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be re-designated as a return of capital or capital gain. Non-cash dividends, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is accrued daily.

Foreign CurrencyTranslation: 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 non-U.S. currencies are translated to U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments. Such fluctuations are reflected by the Funds as a component of net realized and unrealized gain (loss) from investments for financial reporting purposes. Each Fund reports realized currency gain (loss) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its statement of operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of August 31, 2020, if any, are disclosed in the statement of assets and liabilities.

The iShares MSCI Emerging Markets Min Vol Factor ETF conducts its investment activities in India through its Subsidiary and expects to obtain benefits under the Double Tax Avoidance Agreement (“DTAA”) between India and Mauritius. In order to be eligible to claim benefits under the DTAA, the Subsidiary must have commercial substance, on an annual basis, to satisfy certain tests and conditions, including the establishment and maintenance of valid tax residence in Mauritius, have the place of effective management outside of India, and related requirements. The Fund has obtained a current tax residence certificate issued by the Mauritian Revenue Authorities.

Based upon current interpretation and practice of the current tax laws in India and Mauritius and the DTAA, the Subsidiary is subject to tax in Mauritius on its net income at the rate of 15%. However, the Subsidiary is entitled to a tax credit equivalent to the higher of the actual foreign tax incurred or 80% of the Mauritius tax on its foreign source

 

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Notes to Financial Statements  (continued)

 

income, thus reducing its maximum effective tax rate to 3% up to June 30, 2021. After June 30, 2021, under the new tax regime and subject to meeting the necessary substance requirements as required under the Financial Services Act 2007 (as amended by the Finance Act 2018) and such guidelines issued by the FSC, the Subsidiary is entitled to either (a) a foreign tax credit equivalent to the actual foreign tax suffered on its foreign income against the Subsidiary’s tax liability computed at 15% on such income, or (b) a partial exemption of 80% of some of the income derived, including interest income or foreign source dividends. Taxes on income, if any, are paid by the Subsidiary and are disclosed in its consolidated statement of operations. Any dividends paid by the Subsidiary to its Fund are not subject to tax in Mauritius. The Subsidiary is currently exempt from tax in Mauritius on any gains from the sale of securities.

The DTAA provides that capital gains will be taxable in India with respect to the sale of shares acquired on or after April 1, 2017. Capital gains arising from shares acquired before April 1, 2017, regardless of when they are sold, will continue to be exempt from taxation under the amended DTAA, assuming requirements for eligibility under the DTAA are satisfied. There can be no assurance, however, that the DTAA will remain in effect during the Subsidiary’s existence or that it will continue to enjoy its benefits on the shares acquired prior to April 1, 2017.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

3.    INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the Fund’s listing exchange is not 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. A fund determines the fair value of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

   

Exchange-traded funds and closed-end funds traded on a recognized securities exchange are valued at that day’s last traded price or official closing price, as applicable, on the exchange where the fund is primarily traded. Funds traded on a recognized exchange for which there were no sales on that day may be valued at the last traded price.

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

   

Futures contracts are valued based on that day’s last reported settlement price on the exchange where the contract is traded.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and the cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV 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.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

 

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Notes to Financial Statements  (continued)

 

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

4.    SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its 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 an approved 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 market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of August 31, 2020, any securities on loan were collateralized by cash and/or U.S. government obligations. Cash collateral received was invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates and is disclosed in the schedules of investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan for each Fund, if any, are also disclosed in its schedule of investments. The market value of any securities on loan as of August 31, 2020 and the value of the related cash collateral are disclosed in the statements of assets and liabilities.

Securities lending transactions are entered into by a fund under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the fund can reinvest cash collateral received in connection with loaned securities.

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of August 31, 2020:

 

 

 

iShares ETF and Counterparty

    
Market Value of
Securities on Loan
 
 
    
Cash Collateral
Received
 
(a) 
   
Non-Cash Collateral
Received
 
 
     Net Amount  

 

 

ESG Aware MSCI EM

          

Barclays Bank PLC

   $ 393,560      $ 393,560     $      $  

BNP Paribas Prime Brokerage International Ltd.

     2,224        2,224               

Citigroup Global Markets Inc.

     3,756,173        3,756,173               

HSBC Bank PLC

     394,192        394,192               

Jefferies LLC

     4,036,548        4,030,787              (5,761 )(b) 

JPMorgan Securities LLC

     3,963,067        3,963,067               

Macquarie Bank Limited

     1,981,135        1,981,135               

Morgan Stanley & Co. International PLC

     1,513,746        1,513,746               

State Street Bank & Trust Company

     20,812        20,812               
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 16,061,457      $ 16,055,696     $      $ (5,761
  

 

 

    

 

 

   

 

 

    

 

 

 

 

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Notes to Financial Statements  (continued)

 

 

 

iShares ETF and Counterparty

    
Market Value of
Securities on Loan
 
 
    
Cash Collateral
Received
 
(a) 
   
Non-Cash Collateral
Received
 
 
     Net Amount  

 

 

MSCI Emerging Markets Min Vol Factor

          

Barclays Bank PLC

   $ 8,778,467      $ 8,778,467     $      $  

BofA Securities, Inc.

     16,464,952        16,464,952               

Citigroup Global Markets Inc.

     2,204,708        2,204,708               

Credit Suisse Securities (USA) LLC

     1,357,809        1,357,809               

JPMorgan Securities LLC

     11,237,293        11,237,293               

Macquarie Bank Limited

     6,330,653        6,330,653               

Morgan Stanley & Co. International PLC

     106,914        106,914               

Morgan Stanley & Co. LLC

     4,587,030        4,587,030               
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 51,067,826      $ 51,067,826     $      $  
  

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Emerging Markets Multifactor

          

HSBC Bank PLC

   $ 3,450,299      $ 3,381,688     $      $ (68,611 )(b) 

Jefferies LLC

     145,180        141,519              (3,661 )(b) 

JPMorgan Securities LLC

     1,292,565        1,292,565               

Morgan Stanley & Co. LLC

     152,595        152,595               

TD Prime Services LLC

     2,100,242        2,047,276              (52,966 )(b) 

Wells Fargo Bank, National Association

     303,639        303,639               
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 7,444,520      $ 7,319,282     $      $ (125,238
  

 

 

    

 

 

   

 

 

    

 

 

 

MSCI Global Min Vol Factor

          

BNP Paribas Prime Brokerage International Ltd.

   $ 3,124,639      $ 3,124,639     $      $  

BofA Securities, Inc.

     60,103,684        60,103,684               

Citigroup Global Markets Inc.

     4,818,812        4,818,812               

Credit Suisse Securities (USA) LLC

     2,283,467        2,283,467               

Goldman Sachs & Co.

     3,036,038        3,036,038               

HSBC Bank PLC

     3,395,792        3,395,792               

JPMorgan Securities LLC

     4,693,238        4,430,035              (263,203 )(b) 

Morgan Stanley & Co. International PLC

     1,818,329        1,818,329               

Morgan Stanley & Co. LLC

     17,415,437        17,415,437               

SG Americas Securities LLC

     370,656        370,656               

Wells Fargo Bank, National Association

     552,496        551,861              (635 )(b) 
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 101,612,588      $ 101,348,750     $      $ (263,838
  

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 
  (b) 

Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

5.    DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Each Fund’s use of futures contracts is generally limited to cash equitization. This involves the use of available cash to invest in index futures contracts in order to gain exposure to the equity markets represented in or by the Fund’s underlying index and is intended to allow the Fund to better track its underlying index. Futures contracts are standardized, exchange-traded agreements to buy or sell a specific quantity of an underlying instrument at a set price on a future date. Depending on the terms of a contract, a futures contract is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date.

Upon entering into a futures contract, a fund is required to pledge to the executing broker which holds segregated from its own assets, an amount of cash, U.S. government securities or other high-quality debt and equity securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Securities deposited as initial margin, if any, are designated in the schedule of investments and cash deposited, if any, is shown as cash pledged for futures contracts in the statement of assets and liabilities.

Pursuant to the contract, a fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation or depreciation and, if any, shown as variation margin receivable or payable on futures contracts in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional

 

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Notes to Financial Statements  (continued)

 

amount of the contract at the time it was opened and the notional amount at the time it was closed. Losses may arise if the notional value of a futures contract decreases due to an unfavorable change in the market rates or values of the underlying instrument during the term of the contract or if the counterparty does not perform under the contract. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and the assets underlying such contracts.

6.    INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Company, BFA manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock. Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except (i) interest and taxes; (ii) brokerage commissions and other expenses connected with the execution of portfolio transactions; (iii) distribution fees; (iv) the advisory fee payable to BFA; and (v) litigation expenses and any extraordinary expenses (in each case as determined by a majority of the independent directors).

For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on the average daily net assets of each Fund as follows:

 

iShares ETF   Investment Advisory Fee  

ESG Aware MSCI EM

    0.25

MSCI Emerging Markets ex China

    0.25  

MSCI Emerging Markets Multifactor

    0.45  

Prior to March 27, 2020, for its investment advisory services to the iShares MSCI Emerging Markets ex China ETF, BFA was entitled to an annual investment advisory fee of 0.49%, accrued daily and paid monthly by the Fund, based on the average daily net assets of the Fund.

For its investment advisory services to the iShares MSCI Emerging Markets Min Vol Factor ETF, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $14 billion

    0.75

Over $14 billion, up to and including $28 billion

    0.68  

Over $28 billion, up to and including $42 billion

    0.61  

Over $42 billion, up to and including $56 billion

    0.54  

Over $56 billion, up to and including $70 billion

    0.47  

Over $70 billion, up to and including $84 billion

    0.41  

Over $84 billion

    0.35  

For its investment advisory services to the iShares MSCI Global Min Vol Factor ETF, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

Aggregate Average Daily Net Assets   Investment Advisory Fee  

First $30 billion

    0.350

Over $30 billion, up to and including $60 billion

    0.320  

Over $60 billion, up to and including $90 billion

    0.280  

Over $90 billion, up to and including $120 billion

    0.252  

Over $120 billion, up to and including $150 billion

    0.227  

Over $150 billion

    0.204  

The Subsidiary has entered into a separate contract with BFA under which BFA provides investment advisory services to the Subsidiary but does not receive separate compensation from the Subsidiary for providing it with such services. The Subsidiary has also entered into separate arrangements that provide for the provision of other services to the Subsidiary (including administrative, custody, transfer agency and other services), and BFA pays the costs and expenses related to the provision of those services.

Expense Waivers: A fund may incur its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses”). The total of the investment advisory fee and any other fund expenses are a fund’s total annual operating expenses.

For each of the iShares MSCI Emerging Markets Min Vol Factor and iShares MSCI Global Min Vol Factor ETFs, BFA has contractually agreed to waive a portion of its investment advisory fee for each Fund through December 31, 2023 in order to limit each Fund’s total annual operating expenses after fee waiver to 0.25% and 0.20%, respectively, of average daily net assets.

For each of the iShares MSCI Emerging Markets ex China and iShares MSCI Emerging Markets Multifactor ETFs, BFA has contractually agreed to waive a portion of its investment advisory fee for each Fund through December 31, 2021 and December 31, 2022, respectively, in an amount equal to the acquired fund fees and expenses, if any, attributable to each Fund’s investments in other iShares funds.

For the year ended August 31, 2020, BFA has voluntarily waived a portion of its investment advisory fee for the iShares MSCI Emerging Markets ex China ETF in the amount of $42,398.

 

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Notes to Financial Statements  (continued)

 

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its statement of operations. For the year ended August 31, 2020, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF   Fees Paid
to BTC
 

ESG Aware MSCI EM

  $ 74,045  

MSCI Emerging Markets Min Vol Factor

    182,619  

MSCI Emerging Markets Multifactor

    18,525  

MSCI Global Min Vol Factor

    134,574  

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the year ended August 31, 2020, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

iShares ETF   Purchases      Sales      Net Realized
Gain (Loss)
 

ESG Aware MSCI EM

  $ 8,799,933      $ 5,450,915      $ 1,175,313  

MSCI Emerging Markets ex China

    21,226        78,596        (5,461

MSCI Emerging Markets Min Vol Factor

    82,209,708        59,648,494        4,670,904  

MSCI Emerging Markets Multifactor

    12,634,861        7,366,991        (2,683,521

MSCI Global Min Vol Factor

    192,987,657        124,201,786        (17,478,737

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the statement of operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

7.    PURCHASES AND SALES

For the year ended August 31, 2020, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

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Notes to Financial Statements  (continued)

 

iShares ETF   Purchases      Sales  

ESG Aware MSCI EM

  $ 2,842,572,857      $ 923,529,826  

MSCI Emerging Markets ex China

    33,690,616        6,891,972  

MSCI Emerging Markets Min Vol Factor

     1,117,444,563        1,747,560,563  

MSCI Emerging Markets Multifactor

    274,413,948        202,143,592  

MSCI Global Min Vol Factor

    1,607,101,757         1,220,289,617  

For the year ended August 31, 2020, purchases and sales related to in-kind transactions were as follows:

 

iShares ETF   In-kind
Purchases
    

In-kind

Sales

 

ESG Aware MSCI EM

  $ 891,913,924      $ 193,424,618  

MSCI Emerging Markets ex China

    17,740,373        1,613,368  

MSCI Emerging Markets Min Vol Factor

    5,614,503        351,895,860  

MSCI Emerging Markets Multifactor

    18,866,178        6,332,542  

MSCI Global Min Vol Factor

     704,566,636         480,876,037  

8.    INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes is required.

Management has analyzed tax laws and regulations and their application to the Funds as of August 31, 2020, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2020, the following permanent differences attributable to realized gains (losses) from in-kind redemptions, were reclassified to the following accounts:

 

iShares ETF   Paid-in Capital     Accumulated
Earnings (Loss)
 

ESG Aware MSCI EM

  $ 47,905,923     $ (47,905,923

MSCI Emerging Markets ex China

    (125,711     125,711  

MSCI Emerging Markets Min Vol Factor

    31,553,380       (31,553,380

MSCI Emerging Markets Multifactor

    678,293       (678,293

MSCI Global Min Vol Factor

    152,399,194       (152,399,194

The tax character of distributions paid was as follows:

 

iShares ETF   Year Ended
08/31/20
     Year Ended
08/31/19
 

ESG Aware MSCI EM

    

Ordinary income

  $ 36,825,677      $ 10,952,741  
 

 

 

    

 

 

 

MSCI Emerging Markets ex China

    

Ordinary income

  $ 1,107,668      $ 321,357  
 

 

 

    

 

 

 

MSCI Emerging Markets Min Vol Factor

    

Ordinary income

  $ 130,476,146      $ 130,514,441  
 

 

 

    

 

 

 

MSCI Emerging Markets Multifactor

    

Ordinary income

  $ 12,464,595      $ 9,249,430  
 

 

 

    

 

 

 

MSCI Global Min Vol Factor

    

Ordinary income

  $ 142,389,395      $ 93,156,234  
 

 

 

    

 

 

 

 

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Notes to Financial Statements  (continued)

 

As of August 31, 2020, the tax components of accumulated net earnings (losses) were as follows:

 

iShares ETF    
Undistributed
Ordinary Income
 
 
    

Non-expiring
Capital Loss
Carryforwards
 
 
(a) 
   
Net Unrealized
Gains (Losses)
 
(b) 
    Total  

ESG Aware MSCI EM

  $ 27,022,607      $ (118,176,694   $ 363,900,824     $ 272,746,737  

MSCI Emerging Markets ex China

    562,062        (1,902,762     3,135,344       1,794,644  

MSCI Emerging Markets Min Vol Factor

    51,719,001        (939,409,730     391,333,417       (496,357,312

MSCI Emerging Markets Multifactor

    4,978,718        (68,592,107     44,605,726       (19,007,663

MSCI Global Min Vol Factor

    13,045,587        (308,064,673     795,305,158       500,286,072  

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the timing and recognition of partnership income and the characterization of corporate actions.

 

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of August 31, 2020, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

iShares ETF   Tax Cost      Gross Unrealized
Appreciation
     Gross Unrealized
Depreciation
    Net Unrealized
Appreciation
(Depreciation)
 

ESG Aware MSCI EM

  $ 3,291,270,539      $ 523,366,403      $ (155,525,137   $ 367,841,266  

MSCI Emerging Markets ex China

    70,334,464        6,843,702        (3,707,020     3,136,682  

MSCI Emerging Markets Min Vol Factor

    3,900,025,106        815,147,727        (414,468,592     400,679,135  

MSCI Emerging Markets Multifactor

    502,984,844        96,945,088        (51,538,091     45,406,997  

MSCI Global Min Vol Factor

     5,214,134,666        1,032,990,293        (238,132,397     794,857,896  

9.    LINE OF CREDIT

The Funds, along with certain other iShares funds (“Participating Funds”), are parties to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on July 15, 2021. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1, including the Funds, and $200 million with respect to Tier 2. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Credit Agreement.

The iShares MSCI Emerging Markets ex China ETF did not borrow under the credit agreement during the year ended August 31, 2020.

For the year ended August 31, 2020, the maximum amount borrowed, the average daily borrowing and the weighted average interest rate, if any, under the credit agreement were as follows:

 

iShares ETF   Maximum
Amount
Borrowed
     Average
Borrowing
     Weighted
Average
Interest Rates
 

ESG Aware MSCI EM

  $   18,600,000      $ 435,712        1.58

MSCI Emerging Markets Min Vol Factor

    33,720,000        932,451        1.80  

MSCI Emerging Markets Multifactor

    12,771,000        308,287        2.30  

MSCI Global Min Vol Factor

    18,166,000        408,667        2.44  

10.  PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events

 

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Notes to Financial Statements  (continued)

 

such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: Investments in the securities of issuers domiciled in countries with emerging capital markets involve certain additional risks that do not generally apply to investments in securities of issuers in more developed capital markets, such as (i) low or nonexistent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities; (ii) uncertain national policies and social, political and economic instability, increasing the potential for expropriation of assets, confiscatory taxation, high rates of inflation or unfavorable diplomatic developments; and (iii) possible fluctuations in exchange rates, differing legal systems and the existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to such investments.

An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honor its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the statement of assets and liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its schedule of investments.

Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the schedule of investments.

 

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Notes to Financial Statements  (continued)

 

Investments in Chinese securities, including certain Hong Kong-listed securities, involves risks specific to China. China may be subject to considerable degrees of economic, political and social instability and demonstrates significantly higher volatility from time to time in comparison to developed markets. Chinese markets generally continue to experience inefficiency, volatility and pricing anomalies resulting from governmental influence, a lack of publicly available information and/or political and social instability. Internal social unrest or confrontations with other neighboring countries may disrupt economic development in China and result in a greater risk of currency fluctuations, currency non-convertibility, interest rate fluctuations and higher rates of inflation. Incidents involving China’s or the region’s security may cause uncertainty in Chinese markets and may adversely affect the Chinese economy and a fund’s investments. Reduction in spending on Chinese products and services, institution of tariffs or other trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy.

Certain Funds invest a significant portion of their assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Funds’ investments.

LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”) by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Funds may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.

11.  CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
    Year Ended
08/31/20
    Year Ended
08/31/19
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

ESG Aware MSCI EM

       

Shares sold

    93,500,000     $ 3,029,376,010       11,200,000     $ 368,110,977  

Shares redeemed

    (12,800,000     (412,961,340            
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    80,700,000     $ 2,616,414,670       11,200,000     $ 368,110,977  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Emerging Markets ex China

       

Shares sold

    1,100,000     $ 47,047,530       400,000     $ 18,966,426  

Shares redeemed

    (100,000     (4,123,556            
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    1,000,000     $ 42,923,974       400,000     $ 18,966,426  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Emerging Markets Min Vol Factor

       

Shares sold

    400,000     $ 28,787,517       19,800,000     $ 1,132,727,160  

Shares redeemed

    (19,800,000     (1,015,046,267     (3,300,000     (192,421,092
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (19,400,000   $ (986,258,750     16,500,000     $ 940,306,068  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Emerging Markets Multifactor

       

Shares sold

    2,400,000     $ 97,057,223       5,100,000     $ 215,590,994  

Shares redeemed

    (300,000     (12,854,701     (1,400,000     (56,047,109
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    2,100,000     $ 84,202,522       3,700,000     $ 159,543,885  
 

 

 

   

 

 

   

 

 

   

 

 

 

MSCI Global Min Vol Factor

       

Shares sold

    12,600,000     $ 1,142,022,589       20,500,000     $ 1,789,740,435  

Shares redeemed

    (5,400,000     (516,926,672     (2,500,000     (216,606,659
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

    7,200,000     $ 625,095,917       18,000,000     $ 1,573,133,776  
 

 

 

   

 

 

   

 

 

   

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the statement of assets and liabilities.

 

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Notes to Financial Statements   (continued)

 

12.  LEGAL PROCEEDINGS

On June 16, 2016, investors in certain iShares funds (iShares Core S&P Small-Cap ETF, iShares Russell 1000 Growth ETF, iShares Core S&P 500 ETF, iShares Russell Mid-Cap Growth ETF, iShares Russell Mid-Cap ETF, iShares Russell Mid-Cap Value ETF, iShares Select Dividend ETF, iShares Morningstar Mid-Cap ETF, iShares Morningstar Large-Cap ETF, iShares U.S. Aerospace & Defense ETF and iShares Preferred and Income Securities ETF) filed a class action lawsuit against iShares Trust, BlackRock, Inc. and certain of its advisory affiliates, and certain directors/trustees and officers of the Funds (collectively, “Defendants”) in California State Court. The lawsuit alleges the Defendants violated federal securities laws by failing to adequately disclose in the prospectuses issued by the funds noted above the risks of using stop-loss orders in the event of a ‘flash crash’, such as the one that occurred on May 6, 2010. On September 18, 2017, the court issued a Statement of Decision holding that the Plaintiffs lack standing to assert their claims. On October 11, 2017, the court entered final judgment dismissing all of the Plaintiffs’ claims with prejudice. In an opinion dated January 23, 2020, the California Court of Appeal affirmed the dismissal of Plaintiffs’ claims. On March 3, 2020, plaintiffs filed a petition for review by the California Supreme Court. On May 27, 2020, the California Supreme Court denied Plaintiff’s petition for review. The case is now closed.

13.  SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

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  68


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of iShares, Inc. and

Shareholders of iShares ESG Aware MSCI EM ETF,

iShares MSCI Emerging Markets ex China ETF,

iShares MSCI Emerging Markets Min Vol Factor ETF,

iShares MSCI Emerging Markets Multifactor ETF and iShares MSCI Global Min Vol Factor ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of iShares ESG Aware MSCI EM ETF, iShares MSCI Emerging Markets ex China ETF, iShares MSCI Emerging Markets Min Vol Factor ETF, iShares MSCI Emerging Markets Multifactor ETF and iShares MSCI Global Min Vol Factor ETF (five of the funds constituting iShares, Inc., hereafter collectively referred to as the “Funds”) as of August 31, 2020, the related statements of operations for the year ended August 31, 2020, the statements of changes in net assets for each of the two years in the period ended August 31, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2020 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 21, 2020

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

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Important Tax Information (unaudited)   

 

For corporate shareholders, the percentage of ordinary income distributions paid during the fiscal year ended August 31, 2020 that qualified for the dividends-received deduction were as follows:

 

iShares ETF   Dividends-Received
Deduction
 

MSCI Emerging Markets ex China

    0.10

MSCI Emerging Markets Min Vol Factor

    0.15

MSCI Emerging Markets Multifactor

    0.40

MSCI Global Min Vol Factor

    46.92

The following maximum amounts are hereby designated as qualified dividend income for individuals for the fiscal year ended August 31, 2020:

 

iShares ETF   Qualified Dividend
Income
 

ESG Aware MSCI EM

  $ 34,127,488    

MSCI Emerging Markets ex China

    533,517  

MSCI Emerging Markets Min Vol Factor

    74,461,106  

MSCI Emerging Markets Multifactor

    7,419,812  

MSCI Global Min Vol Factor

    110,352,181  

The following maximum amounts are hereby designated as qualified business income for individuals for the fiscal year ended August 31, 2020:

 

iShares ETF   Qualified Business
Income
 

MSCI Global Min Vol Factor

  $ 3,267,859    

For the fiscal year ended August 31, 2020, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders:

 

iShares ETF   Foreign Source
Income Earned
     Foreign
Taxes Paid
 

ESG Aware MSCI EM

  $ 66,391,597      $ 6,468,613    

MSCI Emerging Markets ex China

    1,461,971        141,445  

MSCI Emerging Markets Min Vol Factor

    152,212,670        17,008,459  

MSCI Emerging Markets Multifactor

    16,115,727        1,572,047  

 

 

M P O R T A N T  T A X   I N F O  R M A T I O N

  70


Board Review and Approval of Investment Advisory Contract  

 

iShares ESG Aware MSCI EM ETF, iShares MSCI Emerging Markets ex China ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Emerging Markets Min Vol Factor ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue,

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Emerging Markets Multifactor ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”),

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

iShares MSCI Global Min Vol Factor ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members), is required annually to consider and approve the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on April 17, 2020 and May 19, 2020, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 8-10, 2020, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Contract for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Contract for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Contract are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of another fund in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that overall fund expenses (net of waivers and reimbursements) for the Fund were lower than the median of the overall fund expenses (net of waivers and reimbursements ) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2019, to that of relevant comparison fund(s) for the same periods.

The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about recent and proposed enhancements to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Contract for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided at the June 8-10, 2020 meeting and throughout the year.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Contract), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the profits realized by BFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BFA and/or its affiliates, if any, were within a reasonable range in light of the factors and other information considered.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability, including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate. The Board also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, such as payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services and BlackRock’s profile in the investment community. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates (including associated commissions) are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Contract for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Contract does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Contract for the coming year.

 

 

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Supplemental Information (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

August 31, 2020

 

     Total Cumulative Distributions
for the Fiscal Year
           % Breakdown of the Total Cumulative
Distributions for the Fiscal Year
 
iShares ETF   Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
           Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
 

ESG Aware MSCI EM

  $   0.882674     $     $     $   0.882674         100             100

MSCI Emerging Markets ex China

    1.655326                   1.655326         100                   100  

MSCI Emerging Markets Min Vol Factor(a)

    1.463636             0.004183       1.467819         100             0 (b)      100  

MSCI Emerging Markets Multifactor

    1.159873                   1.159873         100                   100  

MSCI Global Min Vol Factor(a)

    2.323896             0.009094       2.332990               100             0 (b)      100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 

 

  (b) 

Rounds to less than 1%.

 

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive (the “Directive”) imposes detailed and prescriptive obligations on fund managers established in the European Union (the “EU”). These do not currently apply to managers established outside of the EU, such as BFA (the “Company”). Rather, non-EU managers are only required to comply with certain disclosure, reporting and transparency obligations of the Directive if such managers market a fund to EU investors.

The Company has registered the iShares MSCI Emerging Markets Min Vol Factor ETF ( the “Fund”) to be marketed to EU investors in the United Kingdom, the Netherlands, Finland, Sweden, and Luxembourg.

Report on Remuneration

The Company is required under the Directive to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Fund.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area.As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well defined pay-for-performance philosophy, and compensation programmes which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

 

 

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Supplemental Information (unaudited) (continued)

 

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Company to its staff which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2019 was USD 463.03 thousand. This figure is comprised of fixed remuneration of USD 214.07 thousand and variable remuneration of USD 248.96 thousand. There were a total of 448 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company, which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2019, to its senior management was USD 59.04 thousand, and to members of its staff whose actions have a material impact on the risk profile of the Fund was USD 6.94 thousand.

 

 

U P P L E M E N T A L  N F O R M A T I O N

  80


Director and Officer Information

 

The Board of Directors has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Director serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Directors who are not “interested persons” (as defined in the 1940 Act) of the Company are referred to as independent directors (“Independent Directors”).

The registered investment companies advised by BFAor its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the BlackRock Fund Complex referred to as the Exchange-Traded Fund Complex. Each Director also serves as a Trustee of iShares Trust and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 368 funds as of August 31, 2020. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, the address of each Director and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Park is c/o BlackRock, Inc., ParkAvenue Plaza, 55 East 52nd Street, New York, NY 10055. The Board has designated Cecilia H. Herbert as its Independent Board Chair. Additional information about the Funds’ Directors and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Directors
       
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Robert S.

Kapito(a) (63)

   Director (since 2009).    President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Trustee of iShares Trust (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(50)

   Director (since 2019).    Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Trustee of iShares Trust (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

 

(a) Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates

(b) Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Company due to his affiliations with BlackRock, Inc. and its affiliates

 

Independent Directors
       
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

Cecilia H.

Herbert (71)

   Director (since 2005); Independent Board Chair (since 2016).    Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School.    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares Trust and iShares U.S. ETF Trust (since 2016); Trustee of Thrivent Church Loan and Income Fund (since 2019).

Jane D.

Carlin (64)

   Director (since 2015); Risk Committee Chair (since 2016).    Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Trustee of iShares Trust (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L.

Fagnani (65)

   Director (since 2017); Audit Committee Chair (since 2019).    Partner, KPMG LLP (2002-2016).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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Director and Officer Information  (continued)

 

Independent Directors (continued)
       
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

   Other Directorships Held by Director

John E.

Kerrigan (65)

   Director (since 2005); Nominating and Governance and Equity Plus Committee Chairs (since 2019).    Chief Investment Officer, Santa Clara University (since 2002).    Trustee of iShares Trust (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E.

Lawton (61)

   Director (since 2017); 15(c) Committee Chair (since 2017).    Senior Managing Director of New York Life Insurance Company (2010-2015).    Trustee of iShares Trust (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

John E.

Martinez (59)

   Director (since 2003); Securities Lending Committee Chair (since 2019).    Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).    Trustee of iShares Trust (since 2003); Trustee of iShares U.S. ETF Trust (since 2011); Director of Cloudera Foundation (since 2017); and Director of Reading Partners (2012-2016).

Madhav V.

Rajan (56)

   Director (since 2011); Fixed Income Plus Committee Chair (since 2019).    Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Trustee of iShares Trust (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).
Officers
     
  Name (Age)    Position(s)   

Principal Occupation(s)

During the Past 5 Years

Armando

Senra (49)

   President (since 2019).    Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006).

Trent

Walker (46)

   Treasurer and Chief Financial Officer (since 2020).    Managing Director, BlackRock, Inc. (since September 2019); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Charles

Park (53)

   Chief Compliance Officer (since 2006).    Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006).

Deepa

Damre (45)

   Secretary (since 2019).    Managing Director, BlackRock, Inc. (since 2014); Director, BlackRock, Inc. (2009-2013).

Scott

Radell (51)

   Executive Vice President (since 2012).    Managing Director, BlackRock, Inc. (since 2009); Head of Portfolio Solutions, BlackRock, Inc. (since 2009).

Alan

Mason (59)

   Executive Vice President (since 2016).    Managing Director, BlackRock, Inc. (since 2009).

Marybeth

Leithead (57)

   Executive Vice President (since 2019).    Managing Director, BlackRock, Inc. (since 2017); Chief Operating Officer of Americas iShares (since 2017); Portfolio Manager, Municipal Institutional & Wealth Management (2009-2016).

 

 

I R E C T O R   A N D   O F  F   I  C  E  R   I N F O R M A T I O N

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General Information

 

Electronic Delivery

Shareholders can sign up for email notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The iShares Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information on Form N-Q. The iShares Funds’ Forms N-Q are available on the SEC’s website at sec.gov. The iShares Funds also disclose their complete schedule of portfolio holdings on a daily basis on the iShares website at iShares.com.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

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Glossary of Terms Used in this Report

 

Portfolio Abbreviations - Equity
ADR    American Depositary Receipt
CPO    Certificates of Participation (Ordinary)
GDR    Global Depositary Receipt
JSC    Joint Stock Company
NVDR    Non-Voting Depositary Receipt
NVS    Non-Voting Shares
PJSC    Public Joint Stock Company

 

 

L O S S A R Y   O F   T E R M S    U S E D   I N   T H I S   R E P O R T

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Want to know more?

iShares.com     |     1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.

©2020 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-816-0820

 

 

LOGO

   LOGO


Item 2.

Code of Ethics.

The registrant has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, the code of ethics was amended to clarify an inconsistency in to whom persons covered by the code should report suspected violations of the code. The amendment clarifies that such reporting should be made to BlackRock’s General Counsel, and retains the alternative option of anonymous reporting following “whistleblower” policies. Other non-material changes were also made in connection with this amendment. During the period covered by this report, there have been no waivers granted under the code of ethics. The registrant undertakes to provide a copy of the code of ethics to any person upon request, without charge, by calling 1-800-474-2737.

 

Item 3.

Audit Committee Financial Expert.

The registrant’s Board of Directors has determined that the registrant has more than one audit committee financial expert, as that term is defined under Item 3(b) and 3(c), serving on its audit committee. The audit committee financial experts serving on the registrant’s audit committee are Richard L. Fagnani, John E. Kerrigan, and Madhav V. Rajan, all of whom are independent, as that term is defined under Item 3(a)(2).

 

Item 4.

Principal Accountant Fees and Services.

The principal accountant fees disclosed in items 4(a), 4(b), 4(c), 4(d) and 4(g) are for the forty-eight series of the registrant for which the fiscal year-end is August 31, 2020 (the “Funds”), and whose annual financial statements are reported in Item 1.

 

  (a)

Audit Fees – The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Funds’ annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $755,600 for the fiscal year ended August 31, 2019 and $755,600 for the fiscal year ended August 31, 2020.

 

  (b)

Audit-Related Fees – There were no fees billed for the fiscal years ended August 31, 2019 and August 31, 2020 for assurance and related services by the principal accountant that were reasonably related to the performance of the audit of the Fund’s financial statements and are not reported under (a) of this Item.

 

  (c)

Tax Fees – The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning for the Funds were $181,488 for the fiscal year ended August 31, 2019 and $181,488 for the fiscal year ended August 31, 2020. These services related to the review of the Funds’ tax returns and excise tax calculations.

 

  (d)

All Other Fees – There were no other fees billed in each of the fiscal years ended August 31, 2019 and August 31, 2020 for products and services provided by the principal accountant, other than the services reported in (a) through (c) of this Item.

 

  (e)

(1) The registrant’s audit committee charter, as amended, provides that the audit committee is responsible for the approval, prior to appointment, of the engagement of the principal accountant to annually audit and provide their opinion on the registrant’s financial statements. The audit committee must also approve, prior to appointment, the engagement of the principal accountant to provide non-audit services to the registrant or to any entity controlling, controlled by or under common control with the registrant’s investment adviser (“Adviser Affiliate”) that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant.

(2) There were no services described in (b) through (d) above that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

 

  (f)

None of the hours expended on the principal accountant’s engagement to audit the Funds’ financial statements for the fiscal year ended August 31, 2020 were attributable to work performed by persons other than the principal accountant’s full-time, permanent employees.

 

  (g)

The aggregate non-audit fees billed by the registrant’s principal accountant for services rendered to the Funds, and rendered to the registrant’s investment adviser, and any Adviser Affiliate that provides ongoing services to the registrant for the last two fiscal years were $181,488 for the fiscal year ended August 31, 2019 and $181,488 for the fiscal year ended August 31, 2020.

 

  (h)

The registrant’s audit committee has considered whether the provision of non-audit services rendered to the registrant’s investment adviser and any Adviser Affiliate that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, if any, is compatible with maintaining the principal accountant’s independence, and has determined that the provision of these services, if any, does not compromise the principal accountant’s independence.

 

Item 5.

Audit Committee of Listed Registrants

(a) The registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act of 1934 and has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act of 1934. The registrant’s audit committee members are Richard L. Fagnani, John E. Kerrigan, and Madhav V. Rajan.

(b) Not applicable.


Item 6.

Investments.

(a) Schedules of investments are included as part of the reports to shareholders filed under Item 1 of this Form.

(b) Not applicable.

 

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to the registrant.

 

Item 8.

Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to the registrant.

 

Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to the registrant.

 

Item 10.

Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Directors.

 

Item 11.

Controls and Procedures.

(a) The President (the registrant’s Principal Executive Officer) and Treasurer and Chief Financial Officer (the registrant’s Principal Financial Officer) have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective as of a date within 90 days of the filing date of this report, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the Investment Company Act of 1940 and Rules 13a-15(b) or 15d-15(b) under the Exchange Act of 1934.

(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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12.

Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable to the registrant.

 

Item 13.

Exhibits.

(a) (1) Code of Ethics is not filed as an exhibit; please refer to Item 2.

(a) (2) Section 302 Certifications are attached.

(a) (3) Not applicable.

(a)  (4) Not applicable.

(b) Section 906 Certifications are attached.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

iShares, Inc.

 

  By: /s/ Armando Senra                                                             
  Armando Senra, President (Principal Executive Officer)
  Date:        November 06, 2020

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/ Armando Senra                                                             
  Armando Senra, President (Principal Executive Officer)
  Date:        November 06, 2020
  By: /s/ Trent Walker                                                                                                
  Trent Walker, Treasurer and Chief Financial Officer (Principal Financial Officer)
  Date:        November 06, 2020
N-CSR Exhibit for Item 13(a)(2): SECTION 302 CERTIFICATIONS    EX-99.CERT

I, Armando Senra, certify that:

 

1.

I have reviewed this report on Form N-CSR of iShares, Inc. for the following forty-eight series: iShares Core MSCI Emerging Markets ETF, iShares Currency Hedged MSCI Emerging Markets ETF, iShares ESG Aware MSCI EM ETF (Formerly, iShares ESG MSCI EM ETF), iShares MSCI Australia ETF, iShares MSCI Austria ETF, iShares MSCI Belgium ETF, iShares MSCI Brazil ETF, iShares MSCI BRIC ETF, iShares MSCI Canada ETF, iShares MSCI Chile ETF, iShares MSCI Colombia ETF, iShares MSCI Emerging Markets Asia ETF, iShares MSCI Emerging Markets ETF, iShares MSCI Emerging Markets ex China ETF, iShares MSCI Emerging Markets Min Vol Factor ETF (Formerly, iShares Edge MSCI Min Vol Emerging Markets ETF), iShares MSCI Emerging Markets Multifactor ETF (Formerly, iShares Edge MSCI Multifactor Emerging Markets ETF), iShares MSCI Emerging Markets Small-Cap ETF, iShares MSCI Eurozone ETF, iShares MSCI France ETF, iShares MSCI Frontier 100 ETF, iShares MSCI Germany ETF, iShares MSCI Global Agriculture Producers ETF, iShares MSCI Global Energy Producers ETF, iShares MSCI Global Gold Miners ETF, iShares MSCI Global Metals & Mining Producers ETF, iShares MSCI Global Min Vol Factor ETF (Formerly, iShares Edge MSCI Min Vol Global ETF), iShares MSCI Global Silver and Metals Miners ETF (Formerly, iShares MSCI Global Silver Miners ETF), iShares MSCI Hong Kong ETF, iShares MSCI Israel ETF, iShares MSCI Italy ETF, iShares MSCI Japan ETF, iShares MSCI Japan Small-Cap ETF, iShares MSCI Malaysia ETF, iShares MSCI Mexico ETF, iShares MSCI Netherlands ETF, iShares MSCI Pacific ex Japan ETF, iShares MSCI Russia ETF, iShares MSCI Singapore ETF, iShares MSCI South Africa ETF, iShares MSCI South Korea ETF, iShares MSCI Spain ETF, iShares MSCI Sweden ETF, iShares MSCI Switzerland ETF, iShares MSCI Taiwan ETF, iShares MSCI Thailand ETF, iShares MSCI Turkey ETF, iShares MSCI USA Equal Weighted ETF and iShares MSCI World ETF;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  (a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

  (d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.

The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  (b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:     November 06, 2020           /s/ Armando Senra   

President

(Principal Executive Officer)

 

Armando Senra

[Signature]

   [Title]


N-CSR Exhibit for Item 13(a)(2): SECTION 302 CERTIFICATIONS    EX-99.CERT

I, Trent Walker, certify that:

 

1.

I have reviewed this report on Form N-CSR of iShares, Inc. for the following forty-eight series: iShares Core MSCI Emerging Markets ETF, iShares Currency Hedged MSCI Emerging Markets ETF, iShares ESG Aware MSCI EM ETF (Formerly, iShares ESG MSCI EM ETF), iShares MSCI Australia ETF, iShares MSCI Austria ETF, iShares MSCI Belgium ETF, iShares MSCI Brazil ETF, iShares MSCI BRIC ETF, iShares MSCI Canada ETF, iShares MSCI Chile ETF, iShares MSCI Colombia ETF, iShares MSCI Emerging Markets Asia ETF, iShares MSCI Emerging Markets ETF, iShares MSCI Emerging Markets ex China ETF, iShares MSCI Emerging Markets Min Vol Factor ETF (Formerly, iShares Edge MSCI Min Vol Emerging Markets ETF), iShares MSCI Emerging Markets Multifactor ETF (Formerly, iShares Edge MSCI Multifactor Emerging Markets ETF), iShares MSCI Emerging Markets Small-Cap ETF, iShares MSCI Eurozone ETF, iShares MSCI France ETF, iShares MSCI Frontier 100 ETF, iShares MSCI Germany ETF, iShares MSCI Global Agriculture Producers ETF, iShares MSCI Global Energy Producers ETF, iShares MSCI Global Gold Miners ETF, iShares MSCI Global Metals & Mining Producers ETF, iShares MSCI Global Min Vol Factor ETF (Formerly, iShares Edge MSCI Min Vol Global ETF), iShares MSCI Global Silver and Metals Miners ETF (Formerly, iShares MSCI Global Silver Miners ETF), iShares MSCI Hong Kong ETF, iShares MSCI Israel ETF, iShares MSCI Italy ETF, iShares MSCI Japan ETF, iShares MSCI Japan Small-Cap ETF, iShares MSCI Malaysia ETF, iShares MSCI Mexico ETF, iShares MSCI Netherlands ETF, iShares MSCI Pacific ex Japan ETF, iShares MSCI Russia ETF, iShares MSCI Singapore ETF, iShares MSCI South Africa ETF, iShares MSCI South Korea ETF, iShares MSCI Spain ETF, iShares MSCI Sweden ETF, iShares MSCI Switzerland ETF, iShares MSCI Taiwan ETF, iShares MSCI Thailand ETF, iShares MSCI Turkey ETF, iShares MSCI USA Equal Weighted ETF and iShares MSCI World ETF;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  (a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

  (d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.

The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  (b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:     November 06, 2020           /s/ Trent Walker    Treasurer and Chief Financial Officer (Principal Financial Officer)
 

Trent Walker

[Signature]

   [Title]

Ex.99.906 CERT

N-CSR Exhibit for Item 13(b): CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002    

Armando Senra, President (Principal Executive Officer), and Trent Walker, Treasurer and Chief Financial Officer (Principal Financial Officer), of iShares, Inc. (the “Registrant”), each certify, to his knowledge, that:

1. The Registrant’s periodic report on Form N-CSR for the period ended August 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

Date:     November 06, 2020           /s/ Armando Senra   

President

(Principal Executive Officer)

 

Armando Senra

[Signature]

   [Title]

 

Date:     November 06, 2020           /s/ Trent Walker   

Treasurer and Chief Financial Officer

(Principal Financial Officer)

 

Trent Walker

[Signature]

   [Title]