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iShares, Inc.

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Market Overview

iShares, Inc.

Global Market Overview

Global equity markets declined in U.S. dollar terms during the 12 months ended August 31, 2022 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned -15.88% in U.S. dollar terms for the reporting period.

For the first third of the reporting period, economic recovery supported stocks in most regions of the world. The global economy continued to rebound from the impact of restrictions imposed at the beginning of the coronavirus pandemic, as mitigation and adaptation allowed most economic activity to continue. However, substantial challenges emerged at the beginning of 2022 which negatively affected stock prices. Inflation rose significantly in many countries, reducing consumers’ purchasing power and leading many central banks to tighten monetary policy. Russia’s invasion of Ukraine presented a further challenge to the global economy, disrupting important commodities markets.

The U.S. economy grew briskly over the final half of 2021, powered primarily by consumer spending. Record-high personal savings rates allowed consumers to spend at an elevated level, releasing pent-up demand for goods and services. Growth subsequently stalled in the first half of 2022, and the economy contracted amid lower inventories and faltering business investment. Despite the economic downturn, unemployment declined substantially, falling to 3.7% in August 2022 while the number of long-term unemployed dropped below the pre-pandemic level. Although high inflation negatively impacted consumer sentiment, which declined significantly, consumer spending continued to grow.

Rising inflation led to a shift in policy from the U.S. Federal Reserve (“the Fed”). As the reporting period began, the Fed was using accommodative monetary policy to stimulate the economy. Short-term interest rates were kept at near-zero levels, and the Fed used bond-buying programs to stabilize debt markets. However, rising prices led the Fed to tighten monetary policy during the reporting period in an attempt to prevent runaway inflation. The Fed slowed and then ended its bond-buying activities, finally reversing course as it began to reduce its balance sheet in June 2022. In March 2022, the Fed began to raise short-term interest rates, followed by three more increases for a total increase of 225 basis points, the most rapid rise in decades. Interest rates rose significantly in response, leading to higher borrowing costs for businesses. In that environment, the U.S. dollar significantly appreciated relative to most foreign currencies.

Stocks declined in Europe in U.S. dollar terms as economic growth stalled and the euro declined sharply relative to the U.S. dollar. Significantly higher inflation and Russia’s invasion of Ukraine negatively impacted equities. Russia is an important trading partner with many European countries, and new sanctions imposed limits on certain types of trade with Russia. Investors became concerned that the sharp rise in energy prices during the reporting period would constrain economic growth, as Europe relies on imported energy for much of its industrial and heating needs. The European Central Bank (“ECB”) responded to elevated inflation by raising interest rates in July 2022, the first such increase in over a decade.

Despite relatively low inflation by global standards, Asia-Pacific stocks declined significantly in U.S. dollar terms. Chinese stocks faced significant headwinds amid regulatory interventions by the Chinese government and strict lockdowns following COVID-19 outbreaks. Japanese stocks also declined amid an economic contraction in the first quarter of 2022 and a sharp decline in the Japanese yen relative to the U.S. dollar. Emerging market stocks declined substantially, as higher interest rates and a strengthening U.S. dollar raised the cost of borrowing in many emerging economies.

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Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Past performance is not an indication 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” for more information.

Expense Example

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Portfolio Management Commentary

Austrian stocks declined substantially for the reporting period amid high inflation and disruption to Europe’s energy supplies. While Austria’s economy rebounded from a late 2021 contraction to grow in the first half of 2022, the war in Ukraine sent Austrian stocks sharply lower. Austria’s reliance on Russian natural gas led the government to institute measures to conserve gas and build its reserves, including allowing a utilities company to convert a gas power plant to run on coal. High inflation also pressured Austrian stocks, as prices grew at the fastest rate in 47 years. In response, the government delayed implementation of a carbon emission tax and passed an aid measure providing rebates to taxpayers. The declining value of the euro relative to the U.S. dollar also significantly diminished the value of Austrian stocks in U.S. dollar terms.

The financials sector was the largest detractor from the Index’s return, particularly the banking industry. The E.U. and other countries instituted economic sanctions on Russia in response to its invasion of Ukraine. These sanctions negatively impacted banks with exposure to Russian-related businesses, and Austrian banks were among the most affected in Europe.

The materials sector also detracted from the Index’s performance, driven primarily by weakness in the steel industry. Steel production is highly energy intensive, and the disruption of Europe’s fuel supplies due to sanctions on Russia forced steelmakers to secure alternative sources of power. In addition, the economic slowdown and China’s renewed COVID-19 lockdowns pressured steel prices amid a sharp decline in European business confidence. The construction materials industry also declined, as rising interest rates and increased costs weighed on European homebuilding and construction activity.

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Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Past performance is not an indication 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” for more information.

Expense Example

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Portfolio Management Commentary

Belgian stocks declined substantially for the reporting period amid high inflation and disruption to Europe’s energy supplies. While Belgium’s economy continued to grow in the first half of 2022, albeit at a slower pace than 2021, consumer confidence fell substantially amid the country’s highest inflation in 46 years. The Belgian wage system triggered automatic wage increases for many public and private sector employees as prices rose, further exacerbating inflationary pressure. While Belgium has less reliance on Russian natural gas than other European countries, its economy is highly integrated into the European market, and concerns about a wider European economic downturn weighed on Belgian stocks. The declining value of the euro relative to the U.S. dollar also significantly diminished the value of Belgian stocks in U.S. dollar terms.

The financials sector detracted the most from the Index’s return, led by the banking industry. While the industry had relatively little direct exposure to Russia and Ukraine, the war still created a challenging environment by increasing inflation and stifling economic growth in areas where the industry operates. Amid this heightened geopolitical environment, banks increased their reserves, adding to expenses. Stocks in the diversified financial services industry also retreated, pressured by the rising cost of capital and a decline in net asset value of investments.

The consumer staples sector further detracted from the Index’s performance amid weakness in the beverages industry. A large beverage maker was slow to raise prices in some international markets, even as costs rose due to inflation. Meanwhile, shifting consumer tastes in the large U.S. beverage market pressured sales volumes. The materials sector also declined, as customers’ production difficulties weighed on demand for cathode materials in the chemicals industry.

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Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

Past performance is not an indication 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” for more information.

Expense Example

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Portfolio Management Commentary

French stocks declined sharply during the reporting period. Russia’s invasion of Ukraine disrupted supply chains across the Eurozone and contributed to high inflation as commodities and energy prices soared. Many nations, including France, imposed sanctions against Russia, and some French companies suspended business operations in the country or stopped buying Russian commodities and products. Rising inflation, which led the ECB to increase interest rates in July 2022 for the first time in 11 years, weakened business confidence and the economic outlook. The declining value of the euro relative to the U.S. dollar also diminished the value of French stocks in U.S. dollar terms.

The industrials sector detracted the most from the Index’s return. Coronavirus-related lockdowns in China disrupted production at a French electrical equipment company with Chinese operations and limited the supply of critical parts. The aerospace and defense industry was also negatively impacted by shortages in the supply of key parts, including engines and microchips.

Consumer discretionary companies further detracted from the Index’s performance, as China’s lockdowns shuttered stores and led to declining sales of luxury brand products in the apparel, accessories, and luxury goods industry. The economic downturn in the U.S., where growth turned negative in the first two quarters of 2022, also weighed on sales of French luxury goods.

The consumer staples sector also weighed on the Index’s return. The personal products industry faced headwinds, as increased marketing costs diminished profit margins and online sales slowed.

Healthcare stocks also detracted from the Index’s performance. The stock of a large pharmaceuticals company retreated after it suspended testing of a new drug following disappointing trial performance. On the upside, stocks in the energy sector contributed to the Index’s performance as soaring oil and gas prices boosted profits.

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Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Past performance is not an indication 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” for more information.

Expense Example

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Portfolio Management Commentary

Stocks in the Netherlands declined sharply during the reporting period. Russia’s invasion of Ukraine disrupted supply chains across the Eurozone and contributed to record-high inflation as commodities and energy prices soared. Many nations, including the Netherlands, imposed sanctions against Russia while some Dutch companies stopped business operations in Russia. Rising inflation, which led the ECB to raise interest rates in July 2022 for the first time in 11 years, weakened business confidence and the economic outlook. The declining value of the euro relative to the U.S. dollar also diminished the value of Dutch stocks in U.S. dollar terms.

The information technology sector detracted the most from the Index’s return. A global supply shortage of microprocessors slowed production for semiconductor equipment manufacturers, while the weakening global economy diminished the sales outlook for many products that use microprocessors, such as personal computers and cell phones. In addition, the U.S. pressured the Netherlands to block chip manufacturers from selling some high-tech equipment to China, citing their use in military applications.

Consumer discretionary stocks also detracted from the Index’s performance. The Chinese assets of a Dutch internet and direct marketing retail company declined when investors became concerned about new Chinese restrictions on technology companies. The stock of a grocery and food delivery company in the industry also fell as consumers increasingly returned to shopping in grocery stores or eating out in restaurants.

In the industrials sector, the capital goods industry also weighed on the Index’s return, as rising costs for raw materials reduced profit margins. Geopolitical disruptions, including the war in Ukraine and coronavirus-related lockdowns in China, negatively impacted supply chains and sales, leading to longer wait times for products to get to market and larger inventory costs.

Portfolio Information

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Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Past performance is not an indication 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” for more information.

Expense Example

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Portfolio Management Commentary

Stocks in Sweden declined sharply during the reporting period. Russia’s invasion of Ukraine disrupted supply chains across Europe and contributed to record high inflation as commodities and oil prices soared. Many nations, including Sweden, imposed sanctions against Russia while some Swedish companies halted Russian business operations. Rising inflation led the Swedish central bank to raise interest rates into positive territory for the first time since 2014. The declining value of the Swedish krona relative to the U.S. dollar also diminished the value of Swedish stocks in U.S. dollar terms.

The industrials sector detracted the most from the Index’s performance, led by the machinery industry. Coronavirus-related restrictions and lockdowns in many major cities across China disrupted the supply chain of key products and services and also slowed business operations across Sweden. A global shortage of microprocessors interfered with production and increased costs for truck manufacturers, while shipping bottlenecks impaired deliveries of products and parts. The stock prices of several major companies in the industrials sector dropped sharply following the invasion of Ukraine and their subsequent decision to end business operations in Russia.

The financials sector also detracted from the Index’s performance. The stock prices of investment holding companies with controlling stakes in many businesses fell, following the decline in the broader stock market. Online companies faced headwinds as consumers returned to shopping in stores and investors shifted away from growth-oriented businesses, weakening the performance of the multi-sector holdings industry.

Information technology stocks also weighed on the Index’ return. The electronic equipment, instruments, and components industry faced pressure as the war in Ukraine and the coronavirus-related lockdowns in China disrupted supplies and increased costs.

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About Fund Performance

Past performance is not an indication of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time and may continue to affect adversely the value and liquidity of each Fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. Beginning August 10, 2020, the price used to calculate market return (“Market Price”) is the closing price. Prior to August 10, 2020, Market Price was determined using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

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

Disclosure of Expenses

Shareholders of each Fund may incur the following charges: (1) transactional expenses, including brokerage commissions on purchases and sales of fund shares and (2) ongoing expenses, including management fees and other fund expenses. The expense examples shown (which are based on a hypothetical investment of $1,000 invested at the beginning of the period and held through the end of the period) are intended to assist shareholders both in calculating expenses based on an investment in each Fund and in comparing these expenses with similar costs of investing in other funds.

The expense examples provide information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

The expense examples also provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Funds and other funds, compare the 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing expenses only and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

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Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2022 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

For the period ended August 31, 2022, the effect of derivative financial instruments in the Statements of Operations was as follows:

Average Quarterly Balances of Outstanding Derivative Financial Instruments

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

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Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a 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 Fund’s financial instruments categorized in the fair value hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.

See notes to financial statements.

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