LOGO   SEPTEMBER 30, 2019

 

  

2019 Semi-Annual Report

(Unaudited)

 

iShares Trust

 

·  

iShares International Preferred Stock ETF  |  IPFF  |  Cboe BZX

·  

iShares Preferred and Income Securities ETF  |  PFF  |  NASDAQ

 

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.


Table of Contents

 

      Page  

Fund Summary

     3  

About Fund Performance

     5  

Shareholder Expenses

     5  

Schedules of Investments

     6  

Financial Statements

  

Statements of Assets and Liabilities

     16  

Statements of Operations

     17  

Statements of Changes in Net Assets

     18  

Financial Highlights

     19  

Notes to Financial Statements

     21  

Board Review and Approval of Investment Advisory Contract

     27  

Supplemental Information

     31  

General Information

     32  

Glossary of Terms Used in this Report

     33  

 

 

 

  


Fund Summary  as of September 30, 2019    iShares® International Preferred Stock ETF

 

Investment Objective

The iShares International Preferred Stock ETF (the “Fund”) seeks to track the investment results of an index composed of preferred stocks of non-U.S. developed markets, as represented by the S&P International Preferred Stock IndexTM (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  
     6 Months      1 Year      5 Years      Since
Inception
           1 Year      5 Years      Since
Inception
 

Fund NAV

    (1.33 )%       (12.07 )%       (4.45 )%       (1.87 )%        (12.07 )%       (20.36 )%       (13.85 )% 

Fund Market

    (0.47      (10.63      (4.53      (1.75       (10.63      (20.69      (12.99

Index

    (1.32      (12.13      (4.25      (1.53             (12.13      (19.52      (11.42

The inception date of the Fund was 11/15/11. The first day of secondary market trading was 11/17/11.

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 5 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(04/01/19)
 
 
 
      

Ending
Account Value
(09/30/19)
 
 
 
      

Expenses
Paid During
the Period 
 
 
(a) 
           

Beginning
Account Value
(04/01/19)
 
 
 
      

Ending
Account Value
(09/30/19)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $ 1,000.00        $ 986.70        $ 2.73             $ 1,000.00        $ 1,022.30        $ 2.78          0.55

 

  (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 (183 days) and divided by the number of days in the year (366 days). See “Shareholder Expenses” on page 5 for more information.

 

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Financials

    62.2

Energy

    24.0  

Real Estate

    4.6  

Utilities

    4.4  

Industrials

    3.7  

Communication Services

    1.1  

 

  (a)

Excludes money market funds.

 

ALLOCATION BY COUNTRY

 

Country    
Percent of
Total Investments
 
(a) 

Canada

    85.3

United Kingdom

    10.1  

Sweden

    2.9  

Singapore

    1.0  

Australia

    0.7  

 

 

FUND SUMMARY      3  


Fund Summary  as of September 30, 2019    iShares® Preferred and Income Securities ETF

 

Investment Objective

The iShares Preferred and Income Securities ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. dollar-denominated preferred and hybrid securities, as represented by the ICE Exchange-Listed Preferred & Hybrid Securities Transition 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 November 01, 2019, the fund will track “ICE Exchange-Listed Preferred & Hybrid Securities Index”.

Performance

 

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

Fund NAV

    5.53      6.84      4.80      6.75       6.84      26.44      92.10

Fund Market

    5.52        7.06        4.83        6.72         7.06        26.60        91.62  

Index

    6.27        8.11        5.62        7.61               8.11        31.47        108.23  

Index performance through January 31, 2019 reflects the performance of the S&P U.S. Preferred Stock IndexTM. Index performance beginning on February 1, 2019 reflects the performance of the ICE Exchange-Listed Preferred & Hybrid Securities Transition 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 5 for more information.

Expense Example

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(04/01/19)
 
 
 
      

Ending
Account Value
(09/30/19)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
           

Beginning
Account Value
(04/01/19)
 
 
 
      

Ending
Account Value
(09/30/19)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $ 1,000.00        $ 1,055.30        $ 2.36             $ 1,000.00        $ 1,022.70        $ 2.33          0.46

 

  (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 (183 days) and divided by the number of days in the year (366 days). See “Shareholder Expenses” on page 5 for more information.

 

Portfolio Information

 

ALLOCATION BY SECTOR

 

Sector    
Percent of
Total Investments
 
(a) 

Financials

    56.1

Utilities

    13.4  

Real Estate

    11.1  

Consumer Discretionary

    4.1  

Communication Services

    3.6  

Health Care

    3.0  

Industrials

    2.9  

Energy

    2.8  

Consumer Staples

    1.4  

Other (each representing less than 1%)

    1.6  

 

  (a)

Excludes money market funds.

 

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

Wells Fargo & Co., Series L, 7.50%

    1.6

Becton Dickinson and Co., Series A, 6.13

    1.6  

GMAC Capital Trust I, Series 2, 7.94

    1.6  

Citigroup Capital XIII, 8.64

    1.4  

Bank of America Corp., Series L, 7.25

    1.3  

Crown Castle International Corp., Series A, 6.88

    1.1  

Sempra Energy, Series A, 6.00

    1.1  

JPMorgan Chase & Co., Series DD, 5.75

    1.0  

JPMorgan Chase & Co., Series EE, 6.00

    0.9  

Southern Co. (The), Series 2019, 6.75

    0.9  

 

 

4    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


About Fund Performance

 

Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.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 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.

 

 

ABOUT FUND PERFORMANCE/SHAREHOLDER EXPENSES

     5  


Schedule of Investments  (unaudited)

September 30, 2019

  

iShares® International Preferred Stock ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Preferred Stocks

 

Australia — 0.7%  

Brookfield Infrastructure Partners LP,
Series 7, 5.00%(a)

    19,304     $     332,425  
   

 

 

 
Canada — 77.7%  

AltaGas Ltd., Series K, 5.00%(a)

    25,406       422,154  

Bank of Montreal

   

Series 27, 3.85%(a)

    42,338       568,237  

Series 29, 3.62%(a)

    33,872       434,912  

Series 31, 3.80%(a)

    19,303       245,953  

Series 38, 4.85%
(5 year Canadian Government Bond +
4.060%)(b)

    50,805       986,170  

Series 40, 4.50%(a)

    42,338       724,607  

Series 42, 4.40%
(5 year Canadian Government Bond +
3.170%)(b)

    33,870       555,376  

Series 44, 4.85%(a)

    33,870       519,818  

Bank of Nova Scotia (The)

   

Series 32, 2.06%
(5 year Canadian Government Bond +
1.340%)(b)

    17,954       326,399  

Series 34, 5.50%
(5 year Canadian Government Bond +
4.510%)(b)

    22,521       437,663  

Series 38, 4.85%(a)

    42,338       813,823  

Series 40, 4.85%
(5 year Canadian Government Bond +
2.430%)(b)

    25,407       395,881  

BCE Inc., Series AK, 2.95%
(5 year Canadian Government Bond +
1.880%)(b)

    48,151       479,328  

Brookfield Asset Management Inc.

   

Series 32, 5.06%
(5 year Canadian Government Bond +
2.900%)(b)

    24,920       358,931  

Series 44, 5.00%(a)

    15,998       309,085  

Series 46, 4.80%(a)

    25,181       484,601  

Series 48, 4.75%(a)

    19,305       358,542  

Brookfield Office Properties Inc.

   

Series EE, 5.10%(a)

    17,699       292,889  

Series GG, 4.85%(a)

    23,287       362,320  

Series T, 5.38%
(5 year Canadian Government Bond +
3.160%)(b)

    21,173       289,929  

Brookfield Renewable Partners LP, Series 15, 5.75%(a)

    14,823       280,002  

Canadian Imperial Bank of Commerce

   

Series 39, 3.71%(a)

    23,874       297,704  

Series 41, 3.75%(a)

    6,303       75,931  

Series 45, 4.40%(a)

    57,741       930,659  

Series 47, 4.50%(a)

    25,103       341,279  

Series 49, 5.20%(a)

    17,520       313,481  

Series 51, 5.15%
(5 year Canadian Government Bond +
3.620%)(b)

    11,214       205,562  

Emera Inc.

   

Series C, 4.72%
(5 year Canadian Government Bond +
2.650%)(b)

    16,085       219,893  

Series H, 4.90%(a)

    25,402       475,808  

Enbridge Inc.

   

Series 03, 4.00%(a)

    33,086       361,097  

Series 09, 4.40%
(5 year Canadian Government Bond +
2.660%)(b)

    15,159       175,176  

Series 11, 4.40%(a)

    27,574       319,683  

Series 13, 4.40%(a)

    19,294       224,417  

Series 15, 4.40%(a)

    15,159       176,779  

Series 17, 5.15%(a)

    41,343       794,697  

Series 19, 4.90%(a)

    27,561       483,983  

Series B, 3.42%
(5 year Canadian Government Bond +
2.400%)(b)

    25,087       265,460  
Security   Shares     Value  
Canada (continued)  

Series D, 4.46%
(5 year Canadian Government Bond + 2.370%)(b)

    24,815     $     281,699  

Series F, 4.69%
(5 year Canadian Government Bond + 2.510%)(b)

    27,574       331,763  

Series H, 4.38%
(5 year Canadian Government Bond + 2.120%)(b)

    19,294       213,633  

Series N, 5.09%
(5 year Canadian Government Bond + 2.650%)(b)

    24,814       319,358  

Series P, 4.38%
(5 year Canadian Government Bond + 2.500%)(b)

    22,050       260,636  

Series R, 4.07%(a)

    22,050       258,138  

Fairfax Financial Holdings Ltd.

   

Series K, 4.67%
(5 year Canadian Government Bond +
3.510%)(b)

    15,281       213,519  

Series M, 4.75%(a)

    14,798       225,770  

Fortis Inc./Canada, Series M, 4.10%(a)

    50,805       646,958  

Husky Energy Inc., Series 03, 4.50%(a)

    16,085       202,277  

Industrial Alliance Insurance & Financial Services Inc.,

   

Series G, 3.78%
(5 year Canadian Government Bond +
2.850%)(b)

    16,085       228,640  

Intact Financial Corp., Series 7, 4.90%(a)

    16,085       230,098  

Kinder Morgan Canada Ltd.

   

Series 1, 5.25%(a)

    25,404       454,739  

Series 3, 5.20%(a)

    16,087       279,457  

Manulife Financial Corp.

   

Series 17, 3.90%(a)

    22,440       280,500  

Series 21, 5.60%(a)

    35,991       699,161  

Series 23, 4.85%(a)

    40,221       733,942  

Series 25, 4.70%
(5 year Canadian Government Bond +
2.550%)(b)

    21,175       292,676  

National Bank of Canada

   

Series 30, 4.03%(a)

    21,525       282,231  

Series 32, 3.90%(a)

    18,303       221,875  

Series 34, 5.60%(a)

    24,735       483,304  

Series 36, 5.40%
(5 year Canadian Government Bond +
4.660%)(b)

    32,870       640,518  

Series 40, 4.60%(a)

    18,309       264,817  

Series 42, 4.95%(a)

    18,308       277,939  

Pembina Pipeline Corp.

   

Series 01, 4.91%
(5 year Canadian Government Bond +
2.470%)(b)

    16,085       197,418  

Series 05, 4.57%
(5 year Canadian Government Bond +
3.000%)(b)

    16,085       212,604  

Series 13, 5.75%(a)

    16,087       312,141  

Royal Bank of Canada

   

Series AZ, 3.70%(a)

    42,338       558,005  

Series BB, 3.90%(a)

    42,338       565,999  

Series BD, 3.60%(a)

    50,805       738,668  

Series BK, 5.50%(a)(c)

    61,390       1,206,471  

Series BM, 5.50%
(5 year Canadian Government Bond +
4.800%)(b)

    48,257       952,748  

Series BO, 4.80%(a)

    29,636       449,017  

Sun Life Financial Inc., Series 04, 4.45%

    19,307       304,916  

TC Energy Corp.

   

Series 13, 5.50%(a)

    42,338       830,771  

Series 15, 4.90%(a)

    84,677       1,620,631  

Series 5, 2.26%(a)

    20,451       178,406  

Series 7, 3.90%(a)

    50,805       616,644  

Series 9, 4.25%(a)

    38,106       452,725  

 

 

6    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

September 30, 2019

  

iShares® International Preferred Stock ETF

(Percentages shown are based on Net Assets)

 

Security

  Shares     Value  
Canada (continued)  

Toronto-Dominion Bank (The)

   

Series 01, 3.90%(a)

    24,340     $ 324,472  

Series 03, 3.68%(a)

    24,333       322,541  

Series 05, 3.75%(a)

    24,339       318,944  

Series 07, 3.60%(a)

    17,030       254,935  

Series 09, 3.70%
(5 year Canadian Government Bond + 2.870%)(b)

    9,731       146,626  

Series 12, 5.50%(a)

    34,059       671,405  

Series 14, 4.85%(a)

    48,656       940,781  

Series 16, 4.50%
(5 year Canadian Government Bond + 3.010%)(b)

    17,036       274,069  

Series 18, 4.70%
(5 year Canadian Government Bond + 2.700%)(b)

    17,026       263,234  

Series 20, 4.75%(a)

    19,467       294,799  

Series 22, 5.20%(a)

    17,024       314,121  

Series 24, 5.10%
(5 year Canadian Government Bond + 3.560%)(b)

    21,878       410,295  

Westcoast Energy Inc., Series 12, 5.20%
(5 year Canadian Government Bond + 4.520%)(b)

    19,303       372,793  
   

 

 

 
      37,738,056  
Singapore — 0.9%  

City Developments Ltd., Preference Shares,
NVS(d)

    530,729       424,461  
   

 

 

 
Sweden — 2.6%  

Klovern AB, Preference Shares

    34,727       1,276,812  
   

 

 

 
United Kingdom — 9.2%  

Aviva PLC

   

8.38%

    211,123       366,835  

8.75%

    211,122       383,744  

Balfour Beatty PLC, 9.68%(d)

    237,101       308,250  

Doric Nimrod Air Three Ltd., Preference Shares, NVS

    464,616       496,684  

Doric Nimrod Air Two Ltd., Preference Shares, NVS

    364,828       818,231  

Ecclesiastical Insurance Group PLC, 8.63%

    224,805       430,777  

General Accident PLC

   

7.88%

    232,233       369,173  
Security   Shares     Value  
United Kingdom (continued)  

8.88%

    295,668     $ 524,666  

Raven Property Group Ltd., 12.00%

    210,536       339,871  

RSA Insurance Group PLC, 7.38%

    263,958       411,473  
   

 

 

 
      4,449,704  
   

 

 

 

Total Preferred Stocks — 91.1%
(Cost: $50,259,064)

 

    44,221,458  
   

 

 

 
Short-Term Investments  
Money Market Funds — 0.3%  

BlackRock Cash Funds: Institutional,
SL Agency Shares,
2.11%(e)(f)

    125,937       126,000  

BlackRock Cash Funds: Treasury,
SL Agency Shares,
1.85%(e)(f)

    40,000       40,000  
   

 

 

 
      166,000  
   

 

 

 

Total Short-Term Investments — 0.3%
(Cost: $166,000)

 

    166,000  
   

 

 

 

Total Investments in Securities — 91.4%
(Cost: $50,425,064)

 

    44,387,458  

Other Assets, Less Liabilities — 8.6%

 

    4,157,130  
   

 

 

 

Net Assets — 100.0%

 

  $     48,544,588  
   

 

 

 

 

(a) 

Security is issued at a fixed coupon rate, which converts to a variable rate at a specified date.

(b) 

Variable or floating rate security. Rate shown is the rate in effect as of period-end.

(c) 

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

(d) 

Convertible preferred stock.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period-end.

Affiliates

Investments in issuers considered to be affiliates of the Fund during the six months ended September 30, 2019, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:

 

Affiliated Issuer     

Shares
Held at
03/31/19
 
 
 
     Net Activity       

Shares
Held at
09/30/19
 
 
 
    
Value at
09/30/19
 
 
     Income       

Net Realized

Gain (Loss)

 

(a) 

    


Change in
Unrealized
Appreciation
(Depreciation)
 
 
 
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

            125,937        125,937      $ 126,000      $  52 (b)     $ (1)      $  —  

BlackRock Cash Funds: Treasury,
SL Agency Shares

     75,146        (35,146      40,000        40,000        479                
           

 

 

    

 

 

    

 

 

    

 

 

 
            $ 166,000      $  531      $ (1)      $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes realized capital gain distributions from an affiliated fund, if any.

 
  (b) 

Includes securities lending income earned from the reinvestment of cash collateral from loaned securities (excluding collateral investment fees), net of fees and other payments to and from borrowers of securities, and less fees paid to BTC as securities lending agent.

 

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.

 

 

SCHEDULE OF INVESTMENTS      7  


Schedule of Investments  (unaudited) (continued)

September 30, 2019

  

iShares® International Preferred Stock ETF

 

Fair Value Measurements (continued)

The following table summarizes the value of the Fund’s investments according to the fair value hierarchy as of September 30, 2019. 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

                 

Preferred Stocks

   $ 44,221,458        $        $  —        $ 44,221,458  

Money Market Funds

     166,000                            166,000  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 44,387,458        $  —        $        $ 44,387,458  
  

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

8    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited)

September 30, 2019

  

iShares® Preferred and Income Securities ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Preferred Stocks

   

Automobiles — 0.4%

 

Ford Motor Co., 6.20%

    2,376,580     $ 64,001,299  
   

 

 

 
Banks — 28.5%            

Associated Banc-Corp, Series E, 5.88%(a)

    347,642       9,142,985  

Banc of California Inc.

   

Series D, 7.38%

    336,304       8,918,782  

Series E, 7.00%(a)

    365,585       9,874,451  

Banco Santander SA, Series 6, 4.00%
(3 mo. LIBOR US + 0.520%)(b)

    666,569       15,517,726  

Bank of America Corp.

   

Series 4, 4.00% (3 mo. LIBOR US + 0.750%)(a)(b)

    585,270       13,314,893  

Series 5, 4.00% (3 mo. LIBOR US + 0.500%)(a)(b)

    1,115,524       24,954,272  

Series CC, 6.20%(a)

    2,577,463       66,627,419  

Series E, 4.00% (3 mo. LIBOR US + 0.350%)(a)(b)

    725,350       17,502,696  

Series EE, 6.00%(a)

    2,108,799       54,554,630  

Series GG, 6.00%(a)

    3,163,246       85,660,702  

Series H, 3.00% (3 mo. LIBOR US + 0.650%)(a)(b)

    818,226       16,446,343  

Series HH, 5.88%(a)

    2,001,024       55,108,201  

Series K, 6.45%(c)

    2,083,320       54,582,984  

Series KK, Series KK5.38%

    2,559,204       68,049,234  

Series L, Series L7.25%(d)

    141,030       211,433,586  

Series LL, Series LL5.00%

    2,398,958       61,557,262  

Series Y, 6.50%(a)

    2,577,463       64,874,744  

BB&T Corp.
5.63%(a)

    1,598,385       42,836,718  

Series F, 5.20%(a)

    1,546,829       39,165,710  

Series G, 5.20%(a)

    1,718,684       43,482,705  

BOK Financial Corp., 5.38%

    248,994       6,401,636  

Citigroup Inc.

   

Series J, 7.13%(a)(c)

    3,259,955       92,582,722  

Series K, 6.88%(c)

    5,130,086           144,155,417  

Series S, 6.30%(a)

    3,551,604       93,336,153  

Citizens Financial Group Inc., Series D, 6.35%(c)

    877,384       24,698,360  

Commerce Bancshares Inc/MO, Series B, 6.00%(a)

    438,692       11,375,284  

Cullen/Frost Bankers Inc., 5.38%

    438,692       11,370,897  

Deutsche Bank Contingent Capital Trust II, 6.55%(a)

    2,945,312       73,986,237  

Deutsche Bank Contingent Capital Trust V, 8.05%(a)

    5,099,089       131,556,496  

Fifth Third Bancorp.

   

Series A, Series A6.00%

    584,789       16,245,438  

Series I, 6.63%(a)(c)

    1,546,465       43,301,020  

First Horizon National Corp., Series A, 6.20%

    292,476       7,586,827  

First Republic Bank/CA

   

Series D, 5.50%(a)

    555,673       13,952,949  

Series F, 5.70%(a)

    292,464       7,726,899  

Series G, 5.50%(a)

    515,037       13,215,849  

Series H, 5.13%(a)

    686,538       17,856,853  

Series I, 5.50%(a)

    1,031,219       27,481,986  

FNB Corp/PA, 7.25%(a)(c)

    316,604       9,513,950  

GMAC Capital Trust I, Series 2, 7.94%
(3 mo. LIBOR US + 5.785%)(b)

    9,818,952       257,354,732  

Hancock Whitney Corp., 5.95%(a)

    248,994       6,384,206  

HSBC Holdings PLC, Series A, 6.20%(a)

    4,804,539       126,407,421  

Huntington Bancshares Inc./OH

   

Series C, 5.88%

    292,477       7,738,941  

Series D, 6.25%(a)

    2,062,443       54,242,251  

IBERIABANK Corp., Series D, 6.10%(c)

    292,477       7,896,879  

ING Groep NV, 6.13%(a)

    2,577,172       66,542,581  

JPMorgan Chase &Co.

   

Series AA, 6.10%(a)

    4,890,625       126,765,000  
Security   Shares     Value  
Banks (continued)            

Series BB, 6.15%(a)

    3,946,817     $ 102,498,838  

Series DD, 5.75%

    5,821,539       159,801,246  

Series EE, 6.00%

    5,401,925       152,010,170  

Series P, 5.45%(a)

    3,088,093       78,530,205  

Series Y, 6.13%(a)

    4,907,785           125,590,218  

KeyCorp

   

Series E, 6.13%(a)(c)

    1,718,684       49,412,165  

Series F, 5.65%

    1,460,902       39,020,692  

Series G, 5.63%

    1,316,076       35,494,570  

People’s United Financial Inc., Series A, 5.63%(a)(c)

    859,377       23,641,461  

PNC Financial Services Group Inc. (The)

   

Series P, 6.13%(a)(c)

    5,156,094       141,380,098  

Series Q, 5.38%(a)

    1,649,941       42,700,473  

Popular Capital Trust I, 6.70%

    300,639       7,777,531  

Popular Capital Trust II, 6.13%

    215,818       5,529,257  

Regions Financial Corp.

   

Series A, 6.38%(a)

    1,718,682       44,290,435  

Series B, 6.38%(a)(c)

    1,718,682       47,796,546  

Series C, 5.70%(c)

    1,462,292       41,368,241  

Sterling Bancorp/DE, Series A, 6.50%

    394,818       10,916,718  

SunTrust Banks Inc., 4.00%
(3 mo. LIBOR US + 0.530%)(a)(b)

    593,794       14,304,497  

Synovus Financial Corp.

   

Series D, 6.30%(a)(c)

    715,935       19,416,157  

Series E, Series E5.88%(c)

    1,023,600       27,309,648  

TCF Financial Corp., Series C*, Series C*5.70%(a)

    511,801       13,419,422  

Texas Capital Bancshares Inc.
6.50%

    184,230       4,810,245  

Series A, 6.50%(a)

    438,692       11,599,016  

U.S. Bancorp

   

Series B, 3.50% (3 mo. LIBOR US + 0.600%)(a)(b)

    3,437,414       72,666,932  

Series F, 6.50%(a)(c)

    3,781,169       103,414,972  

Series H, 5.15%(a)

    1,718,684       43,138,968  

Series K, 5.50%

    1,976,513       53,227,495  

Valley National Bancorp

   

Series A, 6.25%(a)(c)

    336,303       10,102,542  

Series B, 5.50%(a)(c)

    292,418       7,553,157  

Webster Financial Corp., Series F, 5.25%(a)

    515,617       13,385,417  

Wells Fargo &Co.
5.20%(a)

    1,719,565       42,920,342  

5.63%(a)

    1,582,022       42,461,471  

Series L, 7.50%(d)

    175,700       267,501,493  

Series O, 5.13%(a)

    1,554,193       38,466,277  

Series P, 5.25%(a)

    1,432,979       35,623,858  

Series Q, 5.85%(a)(c)

    3,955,032       104,491,945  

Series R, 6.63%(a)(c)

    1,925,926       53,752,595  

Series T, 6.00%(a)

    1,834,247       46,278,052  

Series V, 6.00%(a)

    2,292,785       59,039,214  

Series W, 5.70%(a)

    2,292,785       58,764,080  

Series X, 5.50%(a)

    2,636,688       67,235,544  

Western Alliance Bancorp, 6.25%

    290,603       7,645,765  

Wintrust Financial Corp., Series D, 6.50%(a)(c)

    365,585       10,777,446  

Zions Bancorp N.A.

   

Series G, 6.30%(c)

    478,634       13,205,512  

Series H, 5.75%(a)

    369,137       9,597,562  
   

 

 

 
      4,723,151,515  
Capital Markets — 10.0%            

Affiliated Managers Group Inc., 5.88%

    496,049       12,996,484  

Apollo Global Management Inc.

   

Series A, Series A6.38%

    981,825       26,224,546  

 

 

SCHEDULE OF INVESTMENTS      9  


Schedule of Investments  (unaudited) (continued)

September 30, 2019

  

iShares® Preferred and Income Securities ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Capital Markets (continued)  

Series B, Series B6.38%(a)

    1,031,218     $ 27,585,081  

Ares Management Corp., Series A,
7.00%(a)

    1,065,590       28,792,242  

B. Riley Financial Inc.
6.75%

    11,118       285,510  

6.88%

    166,110       4,332,149  

7.38%

    166,110       4,365,371  

Bank of New York Mellon Corp. (The), 5.20%(a)

    1,994,847       51,147,877  

Brightsphere Investment Group Inc., 5.13%

    207,278       5,152,931  

Capitala Finance Corp., 5.75%(d)

    88,147       2,151,668  

Carlyle Group LP (The), Series A, 5.88%

    1,374,976       34,814,392  

Charles Schwab Corp. (The)

   

Series C, 6.00%(a)

    2,062,439       54,407,141  

Series D, 5.95%(a)

    2,578,049       69,401,079  

Cowen Inc.
7.35%

    199,224       5,165,878  

7.75%

    166,017       4,367,907  

Goldman Sachs Group Inc. (The)

   

Series A, 3.75% (3 mo. LIBOR US + 0.750%)(a)(b)

    2,573,711       53,790,560  

Series C, 4.00% (3 mo. LIBOR US + 0.750%)(a)(b)

    686,697       15,313,343  

Series D, 4.00% (3 mo. LIBOR US + 0.670%)(a)(b)

    2,573,711       56,724,590  

Series J, 5.50%(a)(c)

    3,431,630       91,864,735  

Series K, 6.38%(a)(c)

    2,402,147       66,779,687  

Series N, 6.30%(a)

    2,316,363       61,499,438  

KKR &Co. Inc.

   

Series A, 6.75%(a)

    1,185,889       31,686,954  

Series B, 6.50%

    532,204       14,369,508  

Ladenburg Thalmann Financial Services Inc., Series A, 8.00%(a)

    1,461,958       36,183,460  

Legg Mason Inc.
5.45%

    1,584,404       41,099,440  

6.38%

    792,177       22,054,208  

Morgan Stanley

   

Series A, 4.00% (3 mo. LIBOR US + 0.700%)(a)(b)

    3,774,993       82,521,347  

Series E, 7.13%(a)(c)

    2,959,923       84,949,790  

Series F, 6.88%(a)(c)

    2,917,030       81,735,181  

Series G, 6.63%(a)

    1,715,876       43,686,203  

Series I, 6.38%(a)(c)

    3,431,796       95,884,380  

Series K, 5.85%(a)(c)

    3,431,796       93,688,031  

MVC Capital Inc., 6.25%

    336,304       8,542,122  

Northern Trust Corp., Series C, 5.85%(a)

    1,374,976       34,786,893  

Oaktree Capital Group LLC

   

Series A, 6.63%(a)

    618,035       16,575,699  

Series B, 6.55%(a)

    807,809       21,568,500  

Prospect Capital Corp., 6.25%

    361,344       9,142,003  

State Street Corp.

   

Series C, 5.25%(a)

    1,718,684       43,328,024  

Series D, 5.90%(a)(c)

    2,578,049       70,973,689  

Series E, 6.00%(a)

    2,578,049       65,198,859  

Series G, 5.35%(a)(c)

    1,718,684       45,991,984  

Stifel Financial Corp.
5.20%

    373,523       9,797,508  

Series A, 6.25%(a)

    438,692       12,125,447  

Series B, 6.25%

    467,925       12,867,938  

Virtus Investment Partners Inc., Series D, 7.25%(d)

    84,098       8,098,637  
   

 

 

 
          1,664,018,414  
Chemicals — 0.5%  

EI du Pont de Nemours &Co., Series B, 4.50%(a)

    122,309       14,138,921  

International Flavors & Fragrances Inc., 6.00%(a)(d)

    1,301,806       61,236,954  
   

 

 

 
      75,375,875  
Security   Shares     Value  
Commercial Services & Supplies — 0.2%  

Pitney Bowes Inc., 6.70%(a)

    1,571,413     $     33,235,385  
   

 

 

 
Consumer Finance — 2.8%  

Capital One Financial Corp.

   

Series B, 6.00%(a)

    3,007,731       76,155,749  

Series C, 6.25%(a)

    1,718,684       43,499,892  

Series D, 6.70%(a)

    1,718,684       43,517,079  

Series F, 6.20%

    1,718,684       44,582,663  

Series G, 5.20%(a)

    2,062,439       52,200,331  

Series H, 6.00%(a)

    1,718,684       45,665,434  

Series I, Series I5.00%

    4,385,945       109,517,047  

Navient Corp., 6.00%(a)

    1,107,302       25,789,063  

SLM Corp., Series B, 3.82%

   

(3 mo. LIBOR US + 1.700%)(b)

    292,477       16,460,605  
   

 

 

 
      457,387,863  
Diversified Financial Services — 1.7%  

Allied Capital Corp., 6.88%(a)

    845,844       22,880,080  

Citigroup Capital XIII, 8.64%

   

(3 mo. LIBOR US + 6.370%)(b)

    8,269,008       226,818,890  

Compass Diversified Holdings

   

Series A, 7.25%(a)

    348,136       8,122,013  

Series B, 7.88%(a)(c)

    348,247       8,545,981  

Voya Financial Inc., Series B, 5.35%(c)

    877,384       24,084,191  
   

 

 

 
      290,451,155  
Diversified Telecommunication Services — 3.3%  

AT&T Inc.
5.35%

    4,190,771       115,371,926  

5.63%

    2,614,287       73,069,322  

GCI Liberty Inc., Series A, 7.00%

    645,695       16,936,580  

Qwest Corp.
6.13%(a)

    2,853,288       70,105,286  

6.50%

    3,097,524       78,739,060  

6.63%

    1,299,223       33,831,767  

6.75%

    2,091,400       53,498,012  

6.88%

    1,584,403       40,069,552  

7.00%

    744,655       20,008,880  

Telephone & Data Systems Inc.
5.88%(a)

    435,649       10,573,201  

6.63%

    193,006       5,257,483  

6.88%(a)

    502,664       12,631,946  

7.00%(a)

    670,250       16,843,382  
   

 

 

 
          546,936,397  
Electric Utilities — 9.7%  

Alabama Power Co., Series A, 5.00%(a)

    859,377       22,782,084  

American Electric Power Co. Inc., 6.13%(d)

    1,275,463       70,252,502  

CMS Energy Corp.
5.63%

    633,770       17,156,154  

5.88%

    1,996,357       56,397,085  

5.88%

    887,271       25,083,151  

Dominion Energy Inc., Series A, 5.25%

    2,535,036       67,508,009  

DTE Energy Co.
5.25%

    633,770       16,211,837  

Series B, 5.38%

    950,622       24,925,309  

Series E, 5.25%(a)

    1,255,380       34,937,225  

Series F, 6.00%(a)

    887,269       24,781,423  

Duke Energy Corp.
5.13%(a)

    1,840,843       47,567,383  

5.63%

    1,584,403       43,507,706  

Series A, 5.75%

    2,924,583       80,806,228  

 

 

10    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

September 30, 2019

  

iShares® Preferred and Income Securities ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Electric Utilities (continued)  

Entergy Arkansas LLC
4.75%

    396,113     $ 10,096,920  

4.88%

    1,299,223       34,728,231  

4.90%(a)

    627,041       17,243,628  

Entergy Louisiana LLC
4.70%(a)

    316,861       8,105,304  

4.88%

    855,578       22,638,594  

5.25%

    633,770       16,370,279  

Entergy Mississippi LLC, 4.90%

    823,906       22,533,829  

Entergy Texas Inc., 5.63%

    427,794       12,059,513  

Georgia Power Co., Series 2017, 5.00%

    855,588       23,169,323  

Interstate Power & Light Co., Series D, 5.10%(a)

    584,907       15,055,506  

National Rural Utilities Cooperative Finance Corp., Series US, 5.50%(a)

    792,177       21,729,415  

NextEra Energy Capital Holdings Inc.
5.00%(a)

    1,687,642       42,933,613  

Series I, 5.13%(a)

    1,840,843       46,720,595  

Series K, 5.25%

    1,806,220       49,418,179  

Series N, 5.65%

    2,178,573       60,019,686  

NextEra Energy Inc., 4.87%(d)

    2,376,112           119,138,256  

Pacific Gas & Electric Co., Series A, 6.00%

    299,418       8,060,333  

PPL Capital Funding Inc., Series B, 5.90%(a)

    1,687,245       43,817,753  

SCE Trust II, 5.10%(a)

    1,500,935       35,647,206  

SCE Trust III, Series H, 5.75%(a)(c)

    871,429       21,498,154  

SCE Trust IV, Series J, 5.38%(a)(c)

    1,029,885       24,562,757  

SCE Trust V, Series K, 5.45%(a)(c)

    950,633       23,261,990  

SCE Trust VI, 5.00%(a)

    1,505,199       35,628,060  

Sempra Energy, 5.75%

    2,400,390       64,354,456  

Southern Co. (The)
5.25%

    2,535,036       67,837,563  

6.25%

    3,168,807       84,733,899  

Series 2019, Series 20196.75%(d)

    2,733,091       146,247,700  
   

 

 

 
      1,609,526,838  
Energy Equipment & Services — .00%  

Nabors Industries Ltd., 6.00%(a)(d)

    512,032       8,233,475  
   

 

 

 
Equity Real Estate Investment Trusts (REITs) — 11.3%  

Alexandria Real Estate Equities Inc., Series D, 7.00%(d)

    168,152       6,527,661  

American Finance Trust, 7.50%

    400,000       10,272,000  

American Homes 4 Rent

   

Series D, 6.50%(a)(e)

    785,988       21,300,275  

Series E, 6.35%(e)

    672,654       17,885,870  

Series F, 5.88%(a)(e)

    555,551       14,738,768  

Series G, 5.88%(e)

    336,236       8,873,268  

Series H, 6.25%(e)

    395,321       10,290,206  

Ashford Hospitality Trust Inc.

   

Series F, 7.37%(a)(e)

    350,944       7,720,768  

Series G, 7.37%(e)

    567,450       12,120,732  

Series I, 7.50%(a)

    465,117       9,790,713  

Bluerock Residential Growth REIT Inc., Series A, 8.25%(a)(e)

    418,339       11,094,350  

Boston Properties Inc., Series B, 5.25%(a)(e)

    687,474       17,269,347  

Braemar Hotels & Resorts Inc., Series b, 5.50%(a)(d)

    363,088       7,574,016  

Brookfield Property REIT Inc., Series A, 6.37%(a)(e)

    859,375       21,535,937  

CBL & Associates Properties Inc.

   

Series D, 7.37%(a)(e)

    1,599,297       13,769,947  

Series E, 6.62%(a)(e)

    627,711       5,373,206  

Cedar Realty Trust Inc., Series C,
6.50%(a)(e)

    438,419       9,671,523  

City Office REIT Inc., Series A, 6.63%

    327,501       8,636,201  
Security   Shares     Value  
Equity Real Estate Investment Trusts (REITs) (continued)  

Colony Capital Inc.

   

Series B, 8.25%(a)(e)

    547,193     $ 13,822,095  

Series E, 8.75%(a)

    859,365       21,733,341  

Series H, 7.12%(a)(e)

    988,255       22,690,335  

Series I, 7.15%(a)(e)

    1,185,888       27,227,988  

Series J, 7.12%(a)(e)

    1,082,774       25,087,874  

CorEnergy Infrastructure Trust Inc., Series A, 7.37%(a)(e)

    379,137       9,914,433  

Crown Castle International Corp., Series A, 6.88%(d)

    146,185           184,510,321  

Digital Realty Trust Inc.

   

Series C, 6.62%(a)(e)

    691,621       18,417,867  

Series G, 5.88%(a)(e)

    859,365       21,638,811  

Series I, 6.35%(a)(e)

    859,365       22,231,773  

Series J, 5.25%(a)(e)

    712,638       18,464,451  

Series K, 5.85%(a)(e)

    614,139       16,587,894  

EPR Properties

   

Series C, 5.75%(a)(d)(e)

    394,385       13,136,964  

Series E, 9.00%(a)(d)(e)

    252,061       9,779,967  

Series G, 5.75%(a)(e)

    515,488       13,376,914  

Equity Commonwealth, Series D, 6.50%(a)(d)(e)

    359,392       10,080,946  

Farmland Partners Inc., Series B, 6.00%(e)(f)

    518,448       12,468,674  

Federal Realty Investment Trust, Series C, 5.00%(a)

    522,913       13,208,782  

Global Net Lease Inc., Series A, 7.25%

    435,533       11,149,645  

Hersha Hospitality Trust

   

Series D, 6.50%(a)(e)

    664,597       16,448,776  

Series E, 6.50%(a)(e)

    292,572       7,431,329  

iStar Inc.

   

Series D, 8.00%(e)

    292,477       7,645,349  

Series I, 7.50%(e)

    365,585       9,424,781  

Kimco Realty Corp.

   

Series J, 5.50%(a)(e)

    798,410       20,135,900  

Series L, 5.13%(a)(e)

    798,410       20,750,676  

Series M, 5.25%(a)(e)

    908,979       23,497,107  

Lexington Realty Trust, Series C, 6.50%(a)(d)(e)

    141,510       8,135,410  

MFA Financial Inc., 8.00%(a)

    292,477       7,750,641  

Monmouth Real Estate Investment Corp., Series C, 6.13%(a)(e)

    1,090,195       27,309,385  

National Retail Properties Inc.

   

Series E, 5.70%(a)(e)

    988,255       24,765,670  

Series F, 5.20%(a)(e)

    1,185,886       30,631,435  

National Storage Affiliates Trust, Series A, 6.00%(e)

    609,348       16,202,563  

Office Properties Income Trust, 5.88%(a)

    982,313       26,011,648  

Pebblebrook Hotel Trust

   

Series C, 6.50%(e)

    365,594       9,446,949  

Series D, 6.38%(a)(e)

    365,585       9,801,334  

Series E, 6.38%(a)(e)

    402,706       10,128,056  

Series F, 6.30%(a)(e)

    518,235       13,142,440  

Pennsylvania REIT

   

Series C, 7.20%(a)(e)

    615,571       11,825,119  

Series D, 6.87%(a)(e)

    433,119       8,774,991  

PS Business Parks Inc.

   

Series U, 5.75%(e)

    672,519       17,270,288  

Series V, 5.70%(a)(e)

    321,710       8,284,032  

Series W, 5.20%(a)(e)

    652,075       16,575,746  

Series X, 5.25%(a)

    814,200       21,389,034  

Series Y, 5.20%(a)(e)

    714,027       18,664,666  

Public Storage

   

Series A, 5.88%(a)(e)

    678,115       17,169,872  

Series B, 5.40%(a)(e)

    1,031,218       26,584,800  

Series C, 5.13%(a)(e)

    716,960       18,676,808  

 

 

SCHEDULE OF INVESTMENTS      11  


Schedule of Investments  (unaudited) (continued)

September 30, 2019

  

iShares® Preferred and Income Securities ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Equity Real Estate Investment Trusts (REITs) (continued)  

Series D, 4.95%(a)(e)

    1,117,147     $ 28,688,335  

Series E, 4.90%(a)(e)

    1,203,074       30,979,155  

Series F, 5.15%(a)

    962,477       24,976,278  

Series G, 5.05%(a)(e)

    1,031,218       26,780,731  

Series H, 5.60%(a)

    833,511       23,438,329  

Series I, Series I4.88%

    804,115       21,116,060  

Series U, 5.63%(a)(e)

    988,255       24,726,140  

Series V, 5.38%(a)(e)

    1,701,497       42,894,739  

Series W, 5.20%(a)(e)

    1,718,682       43,104,545  

Series X, 5.20%(a)(e)

    773,438       19,436,497  

QTS Realty Trust Inc.

   

Series A, 7.12%(a)(e)

    367,811       9,750,670  

Series B, 6.50%(a)(d)

    271,750       33,014,907  

RLJ Lodging Trust, Series A, 1.95%(a)(d)

    1,106,777       29,871,911  

Saul Centers Inc.

   

Series C, 6.87%(e)

    307,066       7,695,074  

Series E, Series E6.00%

    292,419       7,550,259  

Senior Housing Properties Trust
5.63%(a)

    1,288,264       30,982,749  

6.25%

    792,177       20,485,697  

SITE Centers Corp.

   

Series A, 6.37%(a)(e)

    54,029       1,456,622  

Series J, 6.50%(e)

    723,715       18,273,804  

Series K, 6.25%(e)

    437,642       11,453,091  

SL Green Realty Corp., Series I, 6.50%(e)

    672,520       17,478,795  

Spirit Realty Capital Inc., Series A, 6.00%(a)

    617,359       16,156,285  

Summit Hotel Properties Inc., Series E, 6.25%(a)

    467,925       12,521,673  

Sunstone Hotel Investors Inc., Series E, 6.95%(a)(e)

    336,304       9,278,627  

Taubman Centers Inc., Series K, 6.25%(e)

    497,159       12,841,617  

UMH Properties Inc., Series C, 6.75%(e)

    712,738       18,623,844  

Urstadt Biddle Properties Inc., Series H, 6.25%(e)

    335,703       9,147,907  

VEREIT Inc., Series F, 6.70%(a)(e)

    3,393,304       86,020,256  

Vornado Realty Trust

   

Series K, 5.70%(a)(e)

    1,031,219       26,069,216  

Series L, 5.40%(a)(e)

    1,030,976       25,784,710  

Series M, 5.25%(a)(e)

    1,097,974       28,382,628  

Washington Prime Group Inc., Series H, 7.50%(a)(e)

    292,419       6,427,370  
   

 

 

 
      1,879,257,189  
Food Products — 1.3%  

CHS Inc.
8.00%(a)

    1,054,597       29,602,538  

Series 1, 7.88%(a)

    1,844,069       50,250,880  

Series 2, 7.10%(a)(c)

    1,443,717       38,417,309  

Series 3, 6.75%(a)(c)

    1,692,904       44,557,233  

Series 4, 7.50%(a)

    1,778,879       48,563,397  
   

 

 

 
          211,391,357  
Gas Utilities — 0.5%  

Entergy New Orleans LLC, 5.50%

    348,590       9,586,225  

South Jersey Industries Inc.
5.63%

    344,203       8,914,858  

7.25%(d)

    238,352       12,315,648  

Southern Co. (The), 5.25%

    1,425,949       38,343,768  

Spire Inc., Series A, 5.90%

    731,121       20,690,724  
   

 

 

 
      89,851,223  
Health Care Equipment & Supplies — 2.4%  

Becton Dickinson and Co., Series A,
6.13%(a)(d)

    4,253,765       263,350,591  

Danaher Corp., Series A, 4.75%(d)

    120,629       137,523,092  
   

 

 

 
      400,873,683  
Security   Shares     Value  
Health Care Technology — 0.1%  

Change Healthcare Inc., 6.00%(a)(d)

    236,351     $ 11,278,670  
   

 

 

 
Household Products — 0.1%  

Energizer Holdings Inc., Series A, 7.50%(d)

    185,297       17,543,920  
   

 

 

 
Independent Power and Renewable Electricity Producers — 0.2%  

Algonquin Power & Utilities Corp.
6.88%(c)

    474,887       13,125,877  

Series 19-A, 6.20%(c)

    602,437       16,518,822  
   

 

 

 
      29,644,699  
Industrial Conglomerates — 0.1%  

Hillman Group Capital Trust, 11.60%

    174,612       6,034,591  

Steel Partners Holdings LP, Series A, 6.00%(a)

    709,309       15,016,071  
   

 

 

 
      21,050,662  
Insurance — 10.6%  

Aegon NV
6.38%(a)

    3,681,638       96,201,201  

Series 1, 4.00% (3 mo. LIBOR US + 0.875%)(a)(b)

    936,348       22,631,531  

Allstate Corp. (The)
5.10%(a)(c)

    1,840,843       48,874,382  

Series A, 5.63%(a)

    988,255       25,467,331  

Series D, 6.63%(a)

    394,819       10,119,211  

Series E, 6.63%

    2,569,456       64,133,622  

Series F, 6.25%(a)

    859,365       21,449,750  

Series G, 5.63%(a)

    1,976,512       53,939,012  

Series H, Series H5.10%

    3,363,223       88,318,236  

American Financial Group Inc./OH
5.88%

    253,111       6,760,595  

6.00%

    303,761       7,903,861  

6.25%(a)

    303,761       7,697,304  

American International Group Inc., Series A, 5.85%

    1,462,292       39,891,326  

Arch Capital Group Ltd.

   

Series E, 5.25%(a)

    1,546,828       39,227,558  

Series F, 5.45%(a)

    1,134,330       29,254,371  

Argo Group U.S. Inc., 6.50%(a)

    237,761       6,091,437  

Aspen Insurance Holdings Ltd.
5.63%(a)

    859,365       22,446,614  

5.63%

    731,121       18,753,254  

5.95%(a)(c)

    945,292       26,704,499  

Assurant Inc., Series D, 6.50%(a)(d)

    247,076       30,889,441  

Assured Guaranty Municipal Holdings Inc.
5.60%

    165,953       4,200,270  

6.25%

    380,697       9,917,157  

6.88%

    165,953       4,525,538  

Athene Holding Ltd.

   

Series A, 6.35%(c)

    2,522,419       70,980,871  

Series B, Series B5.63%

    1,008,756           26,399,145  

Axis Capital Holdings Ltd.

   

Series D, 5.50%(a)

    802,248       20,320,942  

Series E, 5.50%(a)

    1,890,583       48,701,418  

Brighthouse Financial Inc.
6.25%

    1,188,290       32,915,633  

Series A, 6.60%

    1,242,921       34,329,478  

Enstar Group Ltd.

   

Series D, 7.00%(c)

    1,374,975       37,289,322  

Series E, 7.00%

    391,858       10,462,609  

Global Indemnity Ltd., 7.88%

    380,177       10,371,229  

Globe Life Inc., 6.13%

    497,806       13,366,091  

Hanover Insurance Group Inc. (The), 6.35%

    390,969       9,957,980  

 

 

12    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

September 30, 2019

  

iShares® Preferred and Income Securities ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Insurance (continued)

   

Hartford Financial Services Group Inc. (The)
7.88%(a)(c)

    2,208,982     $     64,413,915  

Series G, 6.00%

    1,185,886       32,813,466  

Maiden Holdings Ltd.
6.63%

    181,678       3,242,952  

Series A, 8.25%

    388,483       2,692,187  

Series C, 7.13%

    424,534       2,992,965  

Series D, 6.70%

    385,965       2,670,878  

Maiden Holdings North America Ltd., 7.75%

    252,676       5,533,604  

MetLife Inc.

   

Series A, 4.00% (3 mo. LIBOR US + 1.000%)(a)(b)

    2,062,437       50,735,950  

Series E, 5.63%(a)

    2,767,133       75,847,116  

National General Holdings Corp.
7.63%

    292,477       7,753,565  

Series B, 7.50%(a)

    567,032       13,948,987  

Series C, 7.50%(a)

    687,474       16,856,862  

PartnerRe Ltd.

   

Series G, 6.50%

    468,935       12,492,428  

Series H, 7.25%(a)

    1,010,050       27,382,455  

Series I, 5.88%(a)

    535,225       13,953,316  

Prudential Financial Inc.
5.63%

    1,790,380       49,772,564  

5.70%(a)

    2,613,990       66,865,864  

5.75%(a)

    2,116,961       54,575,255  

Prudential PLC
6.50%(a)

    1,103,287       29,700,486  

6.75%(a)

    919,399       24,364,073  

Reinsurance Group of America Inc.
5.75%(c)

    1,267,542       35,871,439  

6.20%(a)(c)

    1,501,281       41,420,343  

RenaissanceRe Holdings Ltd.

   

Series C, 6.08%

    365,585       9,636,821  

Series E, 5.38%(a)

    945,292       23,811,905  

Series F, 5.75%

    859,163       22,974,019  

Unum Group, 6.25%

    950,632       26,275,468  

WR Berkley Corp.
5.63%(a)

    791,446       19,849,466  

5.70%

    318,499       8,265,049  

5.75%

    499,257       12,865,853  

5.90%

    189,351       4,877,682  
   

 

 

 
      1,764,949,152  
Internet & Direct Marketing Retail — 0.5%  

eBay Inc., 6.00%

    2,376,580       65,189,589  

QVC Inc., 6.38%

    712,974       18,900,941  
   

 

 

 
      84,090,530  
Leisure Products — 0.1%  

Brunswick Corp/DE
6.38%

    380,373       10,045,651  

6.50%

    305,950       8,144,389  

6.63%

    207,442       5,551,148  
   

 

 

 
      23,741,188  
Life Sciences Tools & Services — 0.5%  

Avantor Inc., Series A, 6.25%(a)(d)

    1,509,140       81,025,727  
   

 

 

 
Machinery — 2.0%  

Colfax Corp., 5.75%(d)

    364,432       47,572,953  

Fortive Corp., Series A, 5.00%(d)

    120,297       108,523,533  

Rexnord Corp., Series A, 5.75%(a)(d)

    691,783       37,909,708  
Security   Shares     Value  
Machinery (continued)  

Stanley Black & Decker Inc.
5.38%(a)(d)

    644,500     $ 64,759,360  

5.75%(a)

    2,761,216       70,604,293  
   

 

 

 
          329,369,847  
Marine — 0.5%  

Seaspan Corp.

   

Series D, 7.95%(a)

    625,532       15,963,577  

Series E, 8.25%

    465,404       11,877,110  

Series G, 8.20%(a)

    670,380       17,134,913  

Series H, 7.88%(a)

    804,481       20,626,893  

Series I, 8.00%(a)(c)

    515,612       13,173,886  
   

 

 

 
      78,776,379  
Mortgage Real Estate Investment — 3.8%  

AG Mortgage Investment Trust Inc.

   

Series B, 8.00%

    336,304       8,599,293  

Series C, Series C8.00%(c)

    336,236       8,658,077  

AGNC Investment Corp.

   

Series B, 7.75%(a)

    626,728       15,975,297  

Series C, 7.00%(a)(c)(e)

    1,116,883       28,804,413  

Series D, 6.88%(c)(e)

    687,296       17,436,700  

Annaly Capital Management Inc.

   

Series D, 7.50%(a)(e)

    1,581,197       40,399,583  

Series F, 6.95%(a)(c)(e)

    2,474,933       63,729,525  

Series G, 6.50%(a)(c)(e)

    1,460,900       36,580,936  

Series I, Series I6.75%(c)

    1,345,310       34,749,357  

ARMOUR Residential REIT Inc., Series B, 7.87%(a)(e)

    607,707       15,223,060  

Capstead Mortgage Corp., Series E,
7.50%(a)(e)

    887,431       22,283,392  

Chimera Investment Corp.

   

Series A, 8.00%(a)(e)

    517,365       13,725,693  

Series B, 8.00%(a)(c)(e)

    1,117,145       29,190,999  

Series C, 7.75%(a)(c)(e)

    893,736       22,504,273  

Series D, 8.00%(c)(e)

    698,669       18,123,474  

Great Ajax Corp., 7.25%(d)

    179,272       4,786,562  

Invesco Mortgage Capital Inc.

   

Series A, 7.75%(e)

    409,459       10,736,015  

Series B, 7.75%(a)(c)(e)

    453,284       12,723,682  

Series C, 7.50%(a)(c)(e)

    988,267       25,457,758  

MFA Financial Inc., Series B, 7.50%(a)(e)

    687,472       17,317,420  

New Residential Investment Corp.

   

Series A, Series A7.50%(c)(e)

    454,052       11,946,108  

Series B, Series B7.13%(c)(e)

    826,166       20,918,523  

New York Mortgage Trust Inc., Series D, 8.00%(a)(c)(e)

    480,668       11,973,440  

PennyMac Mortgage Investment Trust

   

Series A, 8.12%(a)(c)(e)(g)

    335,517       8,988,500  

Series B, 8.00%(a)(c)(e)(g)

    669,587       17,596,746  

Ready Capital Corp., 7.00%(a)

    190,871       5,176,422  

Two Harbors Investment Corp.

   

Series A, 8.12%(a)(c)(e)

    420,319       11,979,092  

Series B, 7.63%(a)(c)

    988,255       26,149,227  

Series C, 7.25%(a)(c)(e)

    1,014,033       26,283,735  

Series E, 7.50%(a)(e)

    712,950       18,201,614  

Wells Fargo Real Estate Investment Corp., Series A, 6.38%(a)(e)

    631,439       16,051,179  
   

 

 

 
      622,270,095  
Multiline Retail — 0.1%  

Dillard’s Capital Trust I, 7.50%(a)

    446,835       11,680,267  
   

 

 

 
Multi-Utilities — 3.4%  

CenterPoint Energy Inc., Series B, 7.00%(d)

    1,680,040       87,798,890  

 

 

SCHEDULE OF INVESTMENTS      13  


Schedule of Investments  (unaudited) (continued)

September 30, 2019

  

iShares® Preferred and Income Securities ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Multi-Utilities (continued)  

Dominion Energy Inc., Series A, 7.25%(d)

    1,109,086     $     117,285,845  

DTE Energy Co., 6.50%(d)

    1,069,486       62,040,883  

Just Energy Group Inc., Series A, 8.50%(a)(c)

    433,878       8,013,727  

NiSource Inc., Series B, 6.50%(c)

    1,718,682       47,710,612  

Sempra Energy

   

Series A, 6.00%(d)

    1,482,361       175,215,070  

Series B, 6.75%(a)(d)

    494,104       58,136,277  
   

 

 

 
      556,201,304  
Oil, Gas & Consumable Fuels — 2.7%  

Chesapeake Energy Corp., 4.50%(a)(d)

    187,113       8,034,632  

DCP Midstream LP

   

Series B, 7.88%(c)

    554,314       13,336,795  

Series C, 7.95%(c)

    378,477       9,147,789  

El Paso Energy Capital Trust I, 4.75%(d)

    345,859       18,147,222  

Enbridge Inc., Series B, 6.38%(c)

    1,901,266       53,045,321  

Energy Transfer Operating LP

   

Series C, 7.38%(a)(c)

    1,546,829       37,959,184  

Series D, 7.63%(c)

    1,529,643       37,782,182  

Series E, 7.60%(c)

    2,339,628       59,286,173  

GasLog Ltd., Series A, 8.75%

    336,304       9,002,858  

Golar LNG Partners LP, Series A, 8.75%(a)

    474,383       11,916,501  

Hoegh LNG Partners LP, Series A, 8.75%

    525,127       14,209,937  

NGL Energy Partners LP, Series B,
9.00%(a)(c)

    721,844       17,612,994  

NuStar Energy LP

   

Series A, 8.50%(c)

    807,958       19,318,276  

Series B, 7.63%(a)(c)

    1,323,419       27,924,141  

Series C, 9.00%(a)(c)

    615,534       14,945,166  

NuStar Logistics LP, 9.04%

   

(3 mo. LIBOR US + 6.734%)(a)(b)

    1,510,838       39,115,596  

Targa Resources Partners LP, Series A, 9.00%(c)

    365,585       10,057,243  

Teekay LNG Partners LP
9.00%(a)

    429,693       11,038,813  

Series B, 8.50%(c)

    574,129       14,336,001  

Teekay Offshore Partners LP

   

Series A, 7.25%

    434,253       7,490,864  

Series B, 8.50%

    436,707       6,917,439  

Series E, 8.88%(c)

    423,909       6,994,498  
   

 

 

 
      447,619,625  
Real Estate Management & Development — 0.2%  

Brookfield Property Partners LP

   

Series A, 6.50%

    538,103       14,114,442  

Series A2, Series A26.38%

    731,121       18,979,901  
   

 

 

 
      33,094,343  
Road & Rail — 0.1%  

GATX Corp., 5.63%

    475,316       13,056,930  
   

 

 

 
Software — 0.2%  

Tennessee Valley Authority

   

Series A, 3.36% (30 Year CMT +
0.840%)(b)

    518,314       13,014,864  

Series D, 3.55% (30 Year CMT +
0.940%)(a)(b)

    610,819       15,557,560  
   

 

 

 
      28,572,424  
Specialty Retail — 0.1%  

TravelCenters of America Inc.
8.00%

    199,151       4,998,690  

8.00%

    290,280       7,460,196  
Security   Shares     Value  
Specialty Retail (continued)  

8.25%

    383,224     $ 9,576,768  
   

 

 

 
      22,035,654  
Thrifts & Mortgage Finance — 0.4%  

Federal Agricultural Mortgage Corp., Series D, 5.70%(a)

    292,477       7,826,685  

Merchants Bancorp./IN, Series H, 6.00%(c)

    365,583       9,717,196  

New York Community Bancorp Inc., Series A, 6.38%(a)(c)

    1,770,286       49,302,465  

New York Community Capital Trust V, 6.00%(d)

    120,409       6,020,450  
   

 

 

 
      72,866,796  
Trading Companies & Distributors — 0.2%  

Air Lease Corp., Series A, 6.15%(a)(c)

    731,121       20,127,761  

Triton International Ltd/Bermuda, 8.00%

    420,403       10,993,539  
   

 

 

 
      31,121,300  
Water Utilities — 0.2%  

Aqua America Inc., 6.00%(d)

    593,846       35,987,068  
   

 

 

 
Wireless Telecommunication Services — 0.3%  

U.S. Cellular Corp., 6.95%(a)

    764,054       19,361,128  

United States Cellular Corp.
7.25%(a)

    456,487       11,909,746  

7.25%

    497,976       13,241,182  
   

 

 

 
      44,512,056  
   

 

 

 

Total Preferred Stocks — 99.0%
(Cost: $16,183,021,377)

      16,414,180,304  
   

 

 

 

Short-Term Investments

   
Money Market Funds — 4.8%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 2.11%(g)(h)(i)

    148,772,642       148,847,029  

BlackRock Cash Funds: Treasury, SL Agency Shares, 1.85%(g)(h)

    641,772,000       641,772,000  
   

 

 

 
      790,619,029  
   

 

 

 

Total Short-Term Investments — 4.8%
(Cost: $790,596,027)

 

    790,619,029  
   

 

 

 

Total Investments in Securities — 103.8%
(Cost: $16,973,617,404)

 

    17,204,799,333  

Other Assets, Less Liabilities — (3.8)%

 

    (632,553,556
   

 

 

 

Net Assets — 100.0%

    $   16,572,245,777  
   

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

Variable or floating rate security. Rate shown is the rate in effect as of period-end.

(c) 

Security is issued at a fixed coupon rate, which converts to a variable rate at a specified date.

(d) 

Convertible preferred stock.

(e) 

Non-income producing security.

(f) 

Step coupon security. Coupon rate will either increase (step-up bond) or decrease (step-down bond) at regular intervals until maturity. Interest rate shown reflects the rate currently in effect.

(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.

 

 

14    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

September 30, 2019

  

iShares® Preferred and Income Securities ETF

 

Affiliates

Investments in issuers considered to be affiliates of the Fund during the six months ended September 30, 2019, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:

 

 

 
Affiliated Issuer    

Shares
Held at
03/31/19

 
 
   
Shares
Purchased

 
   
Shares
Sold

 
   

Shares
Held at
09/30/19

 
 
   
Value at
09/30/19

 
    Income      


Net

Realized
Gain (Loss)

 


(a) 

   


Change in
Unrealized
Appreciation
(Depreciation)



 

BlackRock Cash Funds: Institutional, SL Agency Shares

    44,046,900       104,725,742 (b)             148,772,642     $ 148,847,029     $ 2,864,953 (c)     $ 12,006     $ 10,349  

BlackRock Cash Funds: Treasury, SL Agency Shares

    270,452,652       371,319,348 (b)             641,772,000       641,772,000       2,457,570              

iShares 0-5 Year High Yield Corporate Bond ETF

    208,480             (208,480                 85,329       (318,920     195,672  

iShares Core U.S. Aggregate Bond ETF

    155,000             (155,000                 80,947       11,882       146,599  

PennyMac Mortgage Investment Trust

               

Series A, 8.13%

    106,808       228,709             335,517       8,988,500       204,231             234,749  

Series B, 8.00%

    765,656       44,809       (140,878     669,587       17,596,746       764,075       25,288       708,443  
         

 

 

   

 

 

   

 

 

   

 

 

 
          $ 817,204,275     $ 6,457,105     $ (269,744   $ 1,295,812  
         

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a) 

Includes realized capital gain distributions from an affiliated fund, if any.

 
  (b) 

Net of purchases and sales.

 
  (c) 

Includes securities lending income earned from the reinvestment of cash collateral from loaned securities (excluding collateral investment fees), net of fees and other payments to and from borrowers of securities, and less fees paid to BTC as securities lending agent.

 

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 September 30, 2019. 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

                 

Preferred Stocks

   $ 16,414,180,304        $        $        $ 16,414,180,304  

Money Market Funds

     790,619,029                            790,619,029  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 17,204,799,333        $        $        $ 17,204,799,333  
  

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

SCHEDULE OF INVESTMENTS      15  


 

Statements of Assets and Liabilities  (unaudited)

September 30, 2019

 

     iShares
International
Preferred
Stock ETF
    iShares
Preferred and
Income Securities
ETF
 

ASSETS

   

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

   

Unaffiliated(b)

  $ 44,221,458     $ 16,387,595,058  

Affiliated(c)

    . 166,000       817,204,275  

Cash

    563       1,134,576  

Foreign currency, at value(d)

    125,132        

Receivables:

   

Investments sold

    1,076,566       632,519,188  

Securities lending income — Affiliated

    27       600,206  

Capital shares sold

    2,987,286       726,618  

Dividends

    . 112,746       54,431,643  
 

 

 

   

 

 

 

Total assets

    48,689,778       17,894,211,564  
 

 

 

   

 

 

 

LIABILITIES

   

Collateral on securities loaned, at value

    126,000       148,795,933  

Payables:

   

Investments purchased

          1,166,913,555  

Investment advisory fees

    19,190       6,256,299  
 

 

 

   

 

 

 

Total liabilities

    145,190       1,321,965,787  
 

 

 

   

 

 

 

NET ASSETS

  $ 48,544,588     $ 16,572,245,777  
 

 

 

   

 

 

 

NET ASSETS CONSIST OF:

   

Paid-in capital

  $ 70,765,010     $ 17,788,215,419  

Accumulated loss

    (22,220,422     (1,215,969,642
 

 

 

   

 

 

 

NET ASSETS

  $ 48,544,588     $ 16,572,245,777  
 

 

 

   

 

 

 

Shares outstanding

    3,250,000       442,450,000  
 

 

 

   

 

 

 

Net asset value

  $ 14.94     $ 37.46  
 

 

 

   

 

 

 

Shares authorized

    Unlimited       Unlimited  
 

 

 

   

 

 

 

Par value

    None       None  
 

 

 

   

 

 

 

(a) Securities loaned, at value

  $     $ 144,843,487  

(b) Investments, at cost — Unaffiliated

  $ 50,259,064     $ 16,157,283,495  

(c)  Investments, at cost — Affiliated

  $ 166,000     $ 816,333,909  

(d) Foreign currency, at cost

  $ 125,117     $  

See notes to financial statements.

 

 

16    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Statements of Operations  (unaudited)

Six Months Ended September 30, 2019

 

     iShares
International
Preferred
Stock ETF
    iShares
Preferred
and Income
Securities
ETF
 

INVESTMENT INCOME

   

Dividends — Unaffiliated

  $ 1,254,168     $ 464,226,814  

Dividends — Affiliated

    479       3,592,152  

Securities lending income — Affiliated — net

    52       2,864,953  

Foreign taxes withheld

    (161,080     (203,458
 

 

 

   

 

 

 

Total investment income

    1,093,619       470,480,461  
 

 

 

   

 

 

 

EXPENSES

   

Investment advisory fees

    119,534       35,957,485  
 

 

 

   

 

 

 

Total expenses

    119,534       35,957,485  
 

 

 

   

 

 

 

Net investment income

    974,085       434,522,976  
 

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

   

Net realized gain (loss) from:

   

Investments — Unaffiliated

    (1,810,826     (144,417,943

Investments — Affiliated

    (1     (274,879

In-kind redemptions — Unaffiliated

    (49,806     9,088,708  

In-kind redemptions — Affiliated

          5,135  

Foreign currency transactions

    (5,960      
 

 

 

   

 

 

 

Net realized loss

    (1,866,593     (135,598,979
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

   

Investments — Unaffiliated

    248,135       530,198,965  

Investments — Affiliated

          1,295,812  

Foreign currency translations

    (335      
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    247,800       531,494,777  
 

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    (1,618,793     395,895,798  
 

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (644,708   $ 830,418,774  
 

 

 

   

 

 

 

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      17  


 

Statements of Changes in Net Assets

 

    iShares
International Preferred Stock ETF
    iShares
Preferred and Income Securities ETF
 
     Six Months Ended
09/30/19
(unaudited)
    Year Ended
03/31/19
    Six Months Ended
09/30/19
(unaudited)
    Year Ended
03/31/19
 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 974,085     $ 2,530,164     $ 434,522,976     $ 888,368,160  

Net realized loss

    (1,866,593     (588,211     (135,598,979     (585,178,871

Net change in unrealized appreciation (depreciation)

    247,800       (8,975,523     531,494,777       59,967,895  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (644,708     (7,033,570     830,418,774       363,157,184  
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (1,047,389     (2,866,985     (418,376,669     (915,531,642
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

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

    6,034,290       (38,625,233     1,789,482,759       (1,699,783,885
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    4,342,193       (48,525,788     2,201,524,864       (2,252,158,343

Beginning of period

    44,202,395       92,728,183       14,370,720,913       16,622,879,256  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of period

  $ 48,544,588     $ 44,202,395     $ 16,572,245,777     $ 14,370,720,913  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

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

See notes to financial statements.

 

 

18    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Financial Highlights

(For a share outstanding throughout each period)

 

 

    iShares International Preferred Stock ETF  
    Six Months Ended
09/30/19
(unaudited)
                                         
    Year Ended
03/31/19
     Year Ended
03/31/18
     Year Ended
03/31/17
     Year Ended
03/31/16
     Year Ended
03/31/15
 
               

Net asset value, beginning of period

  $ 15.51       $ 18.18      $ 17.10      $ 15.97      $ 20.32      $ 23.87  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.34         0.68        0.69        0.74        0.83        0.89  

Net realized and unrealized gain (loss)(b)

    (0.55       (2.60      1.03        1.17        (4.20      (3.54
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    (0.21       (1.92      1.72        1.91        (3.37      (2.65
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(c)

                 

From net investment income

    (0.36       (0.75      (0.64      (0.78      (0.98      (0.90
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.36       (0.75      (0.64      (0.78      (0.98      (0.90
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 14.94       $ 15.51      $ 18.18      $ 17.10      $ 15.97      $ 20.32  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return

                 

Based on net asset value

    (1.33 )%(d)        (10.89 )%       10.16      12.35      (16.73 )%       (11.52 )% 
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets

                 

Total expenses

    0.55 %(e)        0.55      0.55      0.55      0.55      0.55
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    4.48 %(e)        3.96      3.78      4.55      4.56      3.88
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

                 

Net assets, end of period (000)

  $ 48,545       $ 44,202      $ 92,728      $ 62,419      $ 24,756      $ 34,546  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(f)

    22 %(d)         34      15      40      32      47
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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) 

Not annualized.

(e) 

Annualized.

(f) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

FINANCIAL HIGHLIGHTS      19  


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares Preferred and Income Securities ETF  
   

Six Months Ended

09/30/19
(unaudited)

                                       
          Year Ended
03/31/19
    Year Ended
03/31/18
    Year Ended
03/31/17
     Year Ended
03/31/16
     Year Ended
03/31/15
 
               

Net asset value, beginning of period

  $ 36.47       $ 37.54     $ 38.73     $ 38.93      $ 40.07      $ 39.03  
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net investment income(a)

    1.03         2.10       2.14       2.17        2.24        2.35  

Net realized and unrealized gain (loss)(b)

    0.97         (1.02     (1.22     (0.18      (1.13      1.12  
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net increase from investment operations

    2.00         1.08       0.92       1.99        1.11        3.47  
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Distributions(c)

               

From net investment income

    (1.01       (2.15     (2.11     (2.19      (2.25      (2.43
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total distributions

    (1.01       (2.15     (2.11     (2.19      (2.25      (2.43
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 37.46       $ 36.47     $ 37.54     $ 38.73      $ 38.93      $ 40.07  
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Return

               

Based on net asset value

    5.53 %(d)         3.01     2.41     5.26      2.92      9.19
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets

               

Total expenses

    0.46 %(e)         0.46 %(f)       0.47 %(f)       0.47      0.47      0.47
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net investment income

    5.60 %(e)         5.73     5.55     5.59      5.74      5.94
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Supplemental Data

               

Net assets, end of period (000)

  $ 16,572,246       $ 14,370,721     $ 16,622,879     $ 17,272,398      $ 14,559,042      $ 13,078,776  
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(g)

    28 %(d)         28     22     23      15      13
 

 

 

     

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

(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) 

Not annualized.

(e) 

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) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

20    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited)

 

1.

ORGANIZATION

iShares Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust is organized as a Delaware statutory trust 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    

International Preferred Stock

  Non-diversified    

Preferred and Income Securities

  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 September 30, 2019, 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 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

 

 

NOTES TO FINANCIAL STATEMENTS      21  


Notes to Financial Statements  (unaudited) (continued)

 

Board of Trustees of the Trust (the “Board”). 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 last traded price or 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 net asset value (“NAV”).

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of an 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 policies 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 used under these approaches take into consideration inputs that include but are not limited to (i) attributes specific to the investment; (ii) the principal market for the investment; (iii) the customary participants in the principal market for the investment; (iv) data assumptions by market participants for the investment, if reasonably available; (v) quoted prices for similar investments in active markets; and (vi) other inputs, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or default rates.

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 for identical assets or liabilities;

 

   

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, 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 considered to be active, inputs other than quoted prices that are observable for the asset or liability (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. The fair value hierarchy for each Fund’s investments is included in its schedule of investments. 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 September 30, 2019, 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 September 30, 2019 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.

 

 

22    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

The following table is a summary of the securities lending agreements by counterparty which are subject to offset under an MSLA as of September 30, 2019:

 

iShares ETF and Counterparty    
Market Value of
Securities on Loan
 
 
    
Cash Collateral
Received
 
(a)  
   
Non-Cash Collateral
Received
 
 
     Net Amount  

Preferred and Income Securities

         

Barclays Capital Inc.

  $ 10,937,868      $ 10,937,868     $      $  

BMO Capital Markets

    21,184        21,184               

BofA Securities, Inc.

    57,927        57,927               

Citigroup Global Markets Inc.

    2,816,872        2,816,872               

Credit Suisse Securities (USA) LLC

    168,300        168,300               

Deutsche Bank Securities Inc.

    1,342,176        1,342,176               

Goldman Sachs & Co.

    861,309        861,309               

Jefferies LLC

    19,190,022        19,190,022               

JPMorgan Securities LLC

    15,505,519        15,505,519               

Mizuho Securities Usa Inc.

    1,908,800        1,908,800               

Morgan Stanley & Co. LLC

    5,501,474        5,501,474               

National Financial Services LLC

    9,301,649        9,301,649               

Nomura Securities International Inc.

    2,930,580        2,930,580               

UBS AG

    1,230,820        1,230,820               

UBS Securities LLC

    34,646,498        34,646,498               

Wells Fargo Securities LLC

    38,422,489        38,422,489               
 

 

 

    

 

 

   

 

 

    

 

 

 
  $ 144,843,487      $ 144,843,487     $      $  
 

 

 

    

 

 

   

 

 

    

 

 

 

 

  (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.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees: Pursuant to an Investment Advisory Agreement with the Trust, 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 trustees).

For its investment advisory services to the iShares International Preferred Stock ETF, BFA is entitled to an annual investment advisory fee of 0.55%, 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 Preferred and Income Securities 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

   0.4800%

Over $46 billion, up to and including $81 billion

   0.4560   

Over $81 billion, up to and including $111 billion

   0.4332   

Over $111 billion, up to and including $141 billion

   0.4116   

Over $141 billion

   0.3910   

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.

Sub-Adviser: BFA has entered into a sub-advisory agreement with BlackRock International Limited (the “Sub-Adviser”), an affiliate of BFA, under which BFA pays the Sub-Adviser for services it provides to the iShares International Preferred Stock ETF.

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 in a money

 

 

NOTES TO FINANCIAL STATEMENTS      23  


Notes to Financial Statements  (unaudited) (continued)

 

market fund 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 “collateral investment fees”). Securities lending income is equal to the total of income earned from the reinvestment of cash collateral (excluding collateral investment fees), net of fees and other payments to and from borrowers of securities. 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, the iShares Preferred and Income Securities ETF (the “Group 1 Fund”), retains 73.5% 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, the iShares International Preferred Stock ETF (the “Group 2 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 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) The 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.

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 six months ended September 30, 2019, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF   Fees Paid
to BTC
 

International Preferred Stock

  $ 14  

Preferred and Income Securities

    1,055,982  

Officers and Trustees: Certain officers and/or trustees of the Trust are officers and/or trustees of BlackRock or its affiliates.

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.

 

6.

PURCHASES AND SALES

For the six months ended September 30, 2019, purchases and sales of investments, excluding in-kind transactions and short-term investments, were as follows:

 

iShares ETF   Purchases      Sales  

International Preferred Stock

  $ 9,401,649      $ 10,213,463  

Preferred and Income Securities

    4,712,483,581        4,244,670,391  

For the six months ended September 30, 2019, in-kind transactions were as follows:

 

iShares ETF   In-kind
Purchases
     In-kind
Sales
 

International Preferred Stock

  $ 5,190,692      $ 2,216,790  

Preferred and Income Securities

    1,558,627,634        181,367,276  

 

7.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Trust’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 September 30, 2019, 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.

 

 

24    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

As of March 31, 2019, the Funds had non-expiring capital loss carryforwards available to offset future realized capital gains as follows:

 

iShares ETF   Non-Expiring  

International Preferred Stock

  $ 14,077,618  

Preferred and Income Securities

    1,319,199,976  

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 September 30, 2019, 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)
 

International Preferred Stock

  $ 50,730,739      $ 81,189      $ (6,424,470   $ (6,343,281

Preferred and Income Securities

    16,993,918,764        442,567,199        (231,686,630     210,880,569  

 

8.

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. 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: Market risk arises mainly from uncertainty about future values of financial instruments influenced by price, currency and interest rate movements. It represents the potential loss a fund may suffer through holding market positions in the face of market movements. A fund is exposed to market risk by its investment in equity, fixed income and/or financial derivative instruments or by its investment in underlying funds. The fair value of securities held by a fund may decline due to general market conditions, economic trends or events that are not specifically related to the issuers of the securities including local, regional or global political, social or economic instability or to factors that affect a particular industry or group of industries. The extent of a fund’s exposure to market risk is the market value of the investments held as shown in the fund’s schedule of investments.

Investing in the securities of non-U.S. issuers involves certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: differences in accounting, auditing and financial reporting standards; more substantial governmental involvement in the economy; higher inflation rates, greater social, economic and political uncertainties; possible nationalization or expropriation of assets; less availability of public information about issuers; imposition of withholding or other taxes; higher transaction and custody costs and delays in settlement procedures; and lower level of regulation of the securities markets and issuers. Non-U.S. securities may be less liquid, more difficult to value, and have greater price volatility due to exchange rate fluctuations. These and other risks are heightened for investments in issuers from countries with less developed capital markets.

Credit Risk: Credit risk is the risk that an issuer or guarantor of debt instruments or the counterparty to a financial transaction, including derivatives contracts, repurchase agreements or loans of portfolio securities, is unable or unwilling to make timely interest and/or principal payments or to otherwise honor its obligations. BFA and its affiliates manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose a fund to issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of a fund’s exposure to credit and counterparty risks with respect to those financial assets is approximated by their value recorded in its statement of assets and liabilities.

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.

When a fund concentrates its investments in issuers located in a single country or a limited number of countries, 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.

When a fund concentrates its investments in securities within a single or limited number of market sectors, 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.

 

 

NOTES TO FINANCIAL STATEMENTS      25  


Notes to Financial Statements  (unaudited) (continued)

 

9.

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:

 

     Six Months Ended
09/30/19
     Year Ended
03/31/19
 
iShares ETF   Shares     Amount      Shares     Amount  

International Preferred Stock

        

Shares sold

    550,000     $ 8,263,394            $  

Shares redeemed

    (150,000     (2,229,104      (2,250,000     (38,625,233
 

 

 

   

 

 

    

 

 

   

 

 

 

Net increase(decrease)

    400,000     $ 6,034,290        (2,250,000   $ (38,625,233
 

 

 

   

 

 

    

 

 

   

 

 

 

Preferred and Income Securities

        

Shares sold

    54,850,000     $ 2,027,372,663        37,950,000     $ 1,412,076,230  

Shares redeemed

    (6,450,000     (237,889,904      (86,650,000     (3,111,860,115
 

 

 

   

 

 

    

 

 

   

 

 

 

Net increase(decrease)

    48,400,000     $ 1,789,482,759        (48,700,000   $ (1,699,783,885
 

 

 

   

 

 

    

 

 

   

 

 

 

The consideration for the purchase of Creation Units of a fund in the Trust generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Trust 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 Trust’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.

 

10.

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. Plaintiffs have appealed the court’s decision. The appeal was fully briefed on January 18, 2019, and a hearing on Plaintiffs’ appeal has been scheduled for November 19, 2019.

 

11.

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.

 

 

26    2019 ISHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS


Board Review and Approval of Investment Advisory Contract

 

iShares International Preferred Stock ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees (the “Board”), including a majority of Trustees who are not “interested persons” of the Trust (as that term is defined in the 1940 Act) (the “Independent Trustees”), is required annually to consider and approve the Investment Advisory Contract between the Trust and BFA (the “Advisory Contract”), and the Sub-Advisory Agreement between BFA and BlackRock International Limited (“BIL”) (the “Sub-Advisory Agreement”), on behalf of the Fund. The Board’s consideration entails a year-long process whereby the Board and its committees (composed solely of Independent Trustees) 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 Trustees requested, and BFA provided, such information as the Independent Trustees, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. At meetings on May 6, 2019 and May 17, 2019, a committee composed of all of the Independent Trustees (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 their independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 17-19, 2019, the Board, including the Independent Trustees, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Trustees, 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 Trustees. 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 Trustees were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the Advisory Contract for the Fund, the Board, including the Independent Trustees, 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) economies of scale; (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, no one of which was controlling, and conclusions that formed the basis for the Board, including the Independent Trustees, to approve 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 further 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 investment advisory fee rate and overall expenses (net of any waivers and reimbursements) for the Fund were higher than the median of the investment advisory fee rates and overall expenses (net of any waivers and reimbursements) of the funds in its Peer Group, excluding iShares funds. The Board also noted that BFA pays BIL for its sub-advisory services, and that there are no additional fees imposed on the Fund in respect of the services provided under the Sub-Advisory Agreement.

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-, three-, five-, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2018, 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 by BFA: 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 to 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 provided at the June 17-19, 2019 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.

 

 

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT

     27  


Board Review and Approval of Investment Advisory Contract  (continued)

 

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 during their meetings. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers by the Adviser, 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 the sources of direct and ancillary revenue with management, 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, noting that such costs have increased over the past year. 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 informatio