LOGO

  OCTOBER 31, 2023

 

    

  

2023 Semi-Annual Report

(Unaudited)

 

 

iShares, Inc.

 

·  

iShares Asia/Pacific Dividend ETF | DVYA | NYSE Arca

 

·  

iShares Emerging Markets Dividend ETF | DVYE | NYSE Arca

 

 

 

 

 


The Markets in Review

Dear Shareholder,

The combination of continued economic growth and cooling inflation provided a supportive backdrop for investors during the 12-month reporting period ended October 31, 2023. Significantly tighter monetary policy helped to rein in inflation, as the annual increase in the Consumer Price Index declined to its long-term average of approximately 3% in October 2023. Meanwhile, real economic growth proved more resilient than many investors anticipated. A moderating labor market also helped ease inflationary pressure, although wages continued to grow and unemployment rates touched the lowest levels in decades before rising slightly. This robust labor market powered further growth in consumer spending, backstopping the economy. On October 7, 2023, Hamas launched a horrific attack on Israel. The ensuing war will have a significant humanitarian impact and could lead to heightened economic and market volatility. We see geopolitics as a structural market risk going forward. See our geopolitical risk dashboard at blackrock.com for more details.

Equity returns were solid during the period, as the durability of consumer spending mitigated investors’ concerns about the economy’s trajectory. The U.S. economy continued to show strength, and growth further accelerated in the third quarter of 2023. However, equity returns were uneven, as the performance of a few notable technology companies supported gains among large-capitalization U.S. stocks, while small-capitalization U.S. stocks declined overall. Meanwhile, international developed market equities advanced, and emerging market equities posted solid gains.

The 10-year U.S. Treasury yield rose during the reporting period, driving its price down, as investors reacted to elevated inflation and attempted to anticipate future interest rate changes. The corporate bond market benefited from improving economic sentiment, although high-yield corporate bond prices fared significantly better than investment-grade bonds as demand from yield-seeking investors remained strong.

The U.S. Federal Reserve (the “Fed”), attempting to manage persistent inflation, raised interest rates six times during the 12-month period, but slowed and then paused its tightening later in the period. The Fed also wound down its bond-buying programs and incrementally reduced its balance sheet by not replacing securities that reach maturity.

Supply constraints appear to have become an embedded feature of the new macroeconomic environment, making it difficult for developed economies to increase production without sparking higher inflation. Geopolitical fragmentation and an aging population risk further exacerbating these constraints, keeping the labor market tight and wage growth high. Although the Fed has decelerated the pace of interest rate hikes and recently opted for several pauses, we believe that the new economic regime means that the Fed will need to maintain high rates for an extended period to keep inflation under control. Furthermore, ongoing structural changes may mean that the Fed will be hesitant to cut interest rates in the event of faltering economic activity lest inflation accelerate again.

While we favor an overweight position in developed market equities in the long term, we prefer an underweight stance in the near term. Expectations for corporate earnings remain elevated, which seems inconsistent with macroeconomic constraints. Nevertheless, we are overweight on Japanese stocks in the near term as shareholder-friendly policies generate increased investor interest. We also believe that stocks with an AI tilt should benefit from an investment cycle that is set to support revenues and margins. In credit, there are selective opportunities in the near term despite tightening credit and financial conditions. For fixed income investing with a six- to twelve-month horizon, we see the most attractive investments in short-term U.S. Treasuries, U.S. inflation-linked bonds, euro area government bonds and gilts, U.S. mortgage-backed securities, and hard-currency emerging market bonds.

Overall, our view is that investors need to think globally, position themselves to be prepared for a decarbonizing economy, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit iShares.com for further insight about investing in today’s markets.

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of October 31, 2023

 

 

 
    

 

6-Month

 

   

 

12-Month

 

 
   

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

    1.39     10.14
   

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

    (5.29     (8.56
   

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

    (7.88     14.40  
   

Emerging market equities
(MSCI Emerging Markets
Index)

    (4.78     10.80  
   

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

    2.63       4.77  
   

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

    (9.70     (3.25
   

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

    (6.13     0.36  
   

Tax-exempt municipal bonds
(Bloomberg Municipal Bond
Index)

    (4.65     2.64  
   

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

    0.02       6.23  
Past performance is not an indication of future results.
Index performance is shown for illustrative purposes only.
You cannot invest directly in an index.

 

 

 

2  

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


Table of Contents

 

      Page  

The Markets in Review

     2  

Semi-Annual Report:

  

Fund Summary

     4  

About Fund Performance

     6  

Disclosure of Expenses

     6  

Schedules of Investments

     7  

Financial Statements

  

Statements of Assets and Liabilities

     14  

Statements of Operations

     15  

Statements of Changes in Net Assets

     16  

Financial Highlights

     17  

Notes to Financial Statements

     19  

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 October 31, 2023

 

   iShares® Asia/Pacific Dividend ETF

 

Investment Objective

The iShares Asia/Pacific Dividend ETF (the “Fund”) seeks to track the investment results of an index composed of relatively high dividend paying equities in Asia/Pacific developed markets, as represented by the Dow Jones Asia/Pacific Select Dividend 50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

          Average Annual Total Returns           Cumulative Total Returns  
     6-Month
Total Returns
    1 Year     5 Years     10 Years            1 Year     5 Years     10 Years  

Fund NAV

    (5.15 )%      16.56     (0.06 )%      (0.59 )%        16.56     (0.30 )%      (5.73 )% 

Fund Market

    (5.30     17.05       (0.01     (0.56       17.05       (0.06     (5.44

Index

    (5.06     16.26       0.11       (0.39             16.26       0.55       (3.80

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

 

Actual           Hypothetical 5% Return           
Beginning
Account Value
(05/01/23)
     Ending
Account Value
(10/31/23)
    

Expenses
Paid During

the Period(a)

           Beginning
Account Value
(05/01/23)
       Ending
Account Value
(10/31/23)
      

Expenses
Paid During

the Period(a)

       Annualized
Expense
Ratio
 
  $        1,000.00        $        948.50        $        2.40               $        1,000.00          $        1,022.70          $        2.49          0.49

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

Portfolio Information

 

SECTOR ALLOCATION

 

Sector  

Percent of

Total Investments(a)

 

Industrials

    21.8

Financials

    18.8  

Consumer Discretionary

    13.6  

Materials

    13.0  

Real Estate

    12.1  

Communication Services

    5.0  

Energy

    4.8  

Information Technology

    4.0  

Utilities

    3.6  

Consumer Staples

    3.3  
GEOGRAPHIC ALLOCATION

 

Country/Geographic Region  

Percent of

Total Investments(a)

 

Australia

    37.9

Japan

    28.7  

Hong Kong

    25.3  

Singapore

    6.1  

New Zealand

    2.0  
  (a) 

Excludes money market funds.    

 

 

 

4  

2 0 2 3    H A R E S    E M I - A N N U A  L    E P O R T    T O    H A R E H O L D E R  S


Fund Summary as of October 31, 2023

 

   iShares® Emerging Markets Dividend ETF

 

Investment Objective

The iShares Emerging Markets Dividend ETF (the “Fund”) seeks to track the investment results of an index composed of relatively high dividend paying equities in emerging markets, as represented by the Dow Jones Emerging Markets Select Dividend 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-Month
Total Returns
    1 Year     5 Years     10 Years          1 Year     5 Years     10 Years  

Fund NAV

    (0.56 )%      13.19     (2.11 )%      (1.89 )%        13.19     (10.11 )%      (17.37 )% 

Fund Market

    (0.28     12.66       (2.07     (1.80       12.66       (9.95     (16.63

Index

    (1.14     12.70       (2.23     (1.95         12.70       (10.67     (17.86

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

 

Actual

          

Hypothetical 5% Return

        

Beginning

Account Value
(05/01/23)

       Ending
Account Value
(10/31/23)
      

Expenses
Paid During

the Period(a)

            Beginning
Account Value
(05/01/23)
     Ending
Account Value
(10/31/23)
    

Expenses
Paid During

the Period(a)

     Annualized
Expense
Ratio
 
  $        1,000.00          $        994.40          $        2.46                $        1,000.00        $        1,022.70        $        2.49        0.49

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

Portfolio Information

 

SECTOR ALLOCATION

 

Sector  

Percent of

Total Investments(a)

 

Materials

    20.5

Energy

    17.2  

Financials

    15.8  

Information Technology

    13.2  

Utilities

    11.7  

Industrials

    9.2  

Real Estate

    5.0  

Consumer Discretionary

    3.7  

Health Care

    1.7  

Communication Services

    1.5  

Consumer Staples

    0.5  

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region  

Percent of

Total Investments(a)

 

Brazil

    23.2

China

    21.1  

Taiwan

    16.2  

India

    9.6  

South Africa

    7.0  

Indonesia

    5.7  

Thailand

    4.7  

Chile

    3.4  

Poland

    1.8  

Singapore

    1.7  
  (a) 

Excludes money market funds.

 

 

 

U N D    U M M A R Y

  5


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.

 

 

6  

2 0 2 3    H A R E S    E M I - A N N U A  L    E P O R T    T O    H A R E H O L D E R  S


Schedule of Investments (unaudited)

October 31, 2023

 

  

iShares® Asia/Pacific Dividend ETF

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  

Common Stocks

                                                      
Australia — 37.6%             

Ampol Ltd.

    38,920      $ 789,210  

Australia & New Zealand Banking Group Ltd.

    43,896        692,195  

Bank of Queensland Ltd.

    162,297        527,408  

Bendigo & Adelaide Bank Ltd.

    109,466        606,485  

BHP Group Ltd.

    32,444        918,408  

CSR Ltd.

    240,786        860,374  

Elders Ltd.

    120,720        455,537  

Fortescue Metals Group Ltd.

    74,682        1,062,412  

Harvey Norman Holdings Ltd.

    376,573        880,227  

JB Hi-Fi Ltd.

    34,803        1,000,410  

Magellan Financial Group Ltd.

    283,102        1,174,840  

Nick Scali Ltd.(a)

    146,151        1,002,470  

Perpetual Ltd.

    44,152        539,779  

Rio Tinto Ltd.

    8,823        659,061  

South32 Ltd.

    253,673        542,703  

Super Retail Group Ltd.

    82,843        697,066  

Viva Energy Group Ltd.(b)

    534,178        961,905  

Westpac Banking Corp.

    45,455        596,905  
    

 

 

 
       13,967,395  

Hong Kong — 25.1%

    

BOC Hong Kong Holdings Ltd.

    147,500        390,069  

CK Hutchison Holdings Ltd.

    112,500        569,507  

CK Infrastructure Holdings Ltd.

    134,000        621,095  

Henderson Land Development Co. Ltd.

    220,000        575,621  

Hongkong Land Holdings Ltd.

    129,600        411,055  

Hysan Development Co. Ltd.

    235,000        432,578  

Kerry Properties Ltd.

    328,000        551,954  

New World Development Co. Ltd.(a)

    388,250        712,562  

PCCW Ltd.

    2,284,000        1,117,875  

Power Assets Holdings Ltd.

    148,000        707,562  

Sino Land Co. Ltd.(a)

    534,000        533,107  

Sun Hung Kai Properties Ltd.

    41,000        421,017  

Swire Pacific Ltd., Class A

    62,000        396,046  

Swire Properties Ltd.

    203,800        394,599  

VTech Holdings Ltd.

    254,700        1,482,054  
    

 

 

 
       9,316,701  

Japan — 28.5%

    

Haseko Corp.

    52,400        644,879  

Iino Kaiun Kaisha Ltd.

    82,000        588,161  

JAFCO Group Co. Ltd.

    49,300        531,001  

Kumagai Gumi Co. Ltd.

    26,400        661,614  

Mitsubishi HC Capital Inc.

    96,800        638,128  

Mitsui OSK Lines Ltd.

    72,100        1,861,427  

MS&AD Insurance Group Holdings Inc.

    16,300        597,240  

Nippon Yusen KK

    66,200        1,619,732  

Nishimatsu Construction Co. Ltd.

    27,300        657,300  

Niterra Co. Ltd.

    35,100        785,636  

Sojitz Corp.

    28,980        601,781  

Sumitomo Corp.

    32,800        644,771  
Security   Shares      Value  

Japan (continued)

 

Yamato Kogyo Co. Ltd.

    15,800      $ 756,990  
    

 

 

 
       10,588,660  

New Zealand — 2.0%

    

Spark New Zealand Ltd.

    250,107        726,090  
    

 

 

 

Singapore — 6.0%

    

Golden Agri-Resources Ltd.(a)

    3,917,200        772,482  

Keppel Corp. Ltd.

    178,500        810,273  

Keppel REIT

    35,700        20,729  

Oversea-Chinese Banking Corp. Ltd.

    69,100        640,634  
    

 

 

 
       2,244,118  
    

 

 

 

Total Common Stocks — 99.2%
(Cost: $44,197,346)

       36,842,964  
    

 

 

 

Warrants

    

Australia — 0.0%

    

Magellan Financial Group Ltd. (Issued/Exercisable 04/14/22, 1 Share for 1 Warrant, Expires 04/16/27, Strike Price AUD 35.00)(c)

    1         
    

 

 

 

Total Warrants — 0.0%
(Cost: $—)

        
    

 

 

 

Total Long-Term Investments — 99.2%
(Cost: $44,197,346)

       36,842,964  
    

 

 

 

Short-Term Securities

    

Money Market Funds — 4.4%

    

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.54%(d)(e)(f)

    1,623,255        1,623,905  

BlackRock Cash Funds: Treasury, SL Agency Shares, 5.33%(d)(e)

    10,000        10,000  
    

 

 

 

Total Short-Term Securities — 4.4%
(Cost: $1,633,867)

       1,633,905  
    

 

 

 

Total Investments — 103.6%
(Cost: $45,831,213)

       38,476,869  

Liabilities in Excess of Other Assets — (3.6)%

       (1,324,730
    

 

 

 

Net Assets — 100.0%

     $   37,152,139  
    

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

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

(c) 

Non-income producing security.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

(f) 

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

 

 

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

  7


Schedule of Investments (unaudited) (continued)

October 31, 2023

 

   iShares® Asia/Pacific Dividend ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the six months ended October 31, 2023 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
04/30/23
     Purchases
at Cost
    Proceeds
from Sale
     Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
10/31/23
     Shares
Held at
10/31/23
     Income     Capital
Gain
Distributions
from
Underlying
Funds
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $      $ 1,623,852 (a)    $      $ 15      $ 38      $ 1,623,905        1,623,255      $ 751 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    10,000        0 (a)                            10,000        10,000        1,079        
         

 

 

    

 

 

    

 

 

       

 

 

   

 

 

 
          $ 15      $ 38      $ 1,633,905         $ 1,830     $  
         

 

 

    

 

 

    

 

 

       

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

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

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Long Contracts

          

MSCI Singapore Index

    8        11/29/23      $ 159      $ (964

Mini TOPIX Index

    9        12/07/23        136        (3,442
          

 

 

 
           $ (4,406
          

 

 

 

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:

 

     Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Liabilities — Derivative Financial Instruments

                   

Futures contracts

                   

Unrealized depreciation on futures contracts(a)

  $      $      $ 4,406      $      $      $      $ 4,406  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

For the period ended October 31, 2023, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

     Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
    Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Net Realized Gain (Loss) from

                  

Futures contracts

  $      $      $ 25,203     $      $      $      $ 25,203  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                  

Futures contracts

  $      $      $ (12,753   $      $      $      $ (12,753
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

       

Average notional value of contracts — long

  $ 234,232  

 

 

 

8  

2 0 2 3    H A R E S    E M I - A N N U A  L    E P O R T    T O    H A R E H O L D E R  S


Schedule of Investments (unaudited) (continued)

October 31, 2023

 

  

iShares® Asia/Pacific Dividend ETF

 

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

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.

 

     Level 1      Level 2      Level 3      Total  

Assets

          

Investments

          

Long-Term Investments

          

Common Stocks

  $ 772,482      $ 36,070,482      $                 —      $ 36,842,964  

Warrants

                          

Short-Term Securities

          

Money Market Funds

    1,633,905                      1,633,905  
 

 

 

    

 

 

    

 

 

    

 

 

 
  $   2,406,387      $ 36,070,482      $      $ 38,476,869  
 

 

 

    

 

 

    

 

 

    

 

 

 

Derivative Financial Instruments(a)

          

Liabilities

          

Equity Contracts

  $      $ (4,406    $      $ (4,406
 

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Derivative financial instruments are futures contracts. Futures contracts are valued at the unrealized appreciation (depreciation) on the instrument.

 

See notes to financial statements.

 

 

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

  9


Schedule of Investments (unaudited)

October 31, 2023

 

  

iShares® Emerging Markets Dividend ETF

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  

Common Stocks

                                                   
Brazil — 12.9%             

Auren Energia SA

    2,421,938      $ 6,446,652  

Banco Santander Brasil SA

    833,389        4,449,810  

BB Seguridade Participacoes SA

    867,285        5,291,355  

Cia de Saneamento de Minas Gerais Copasa MG

    3,504,236        11,078,995  

Cia. Siderurgica Nacional SA

    2,394,831        5,585,999  

CPFL Energia SA

    1,506,021        9,988,861  

Energisa SA

    774,120        7,156,589  

Grendene SA

    6,222,190        7,651,625  

Telefonica Brasil SA

    488,288        4,381,445  

Transmissora Alianca de Energia Eletrica SA

    1,472,865        9,871,197  

Vale SA

    366,224        5,012,041  
    

 

 

 
           76,914,569  
Chile — 3.4%             

CAP SA

    1,177,927        6,442,211  

Colbun SA

    29,816,947        4,328,954  

Empresas CMPC SA

    5,256,432        9,396,973  
    

 

 

 
           20,168,138  
China — 21.0%             

Agricultural Bank of China Ltd., Class H

    13,872,000        5,123,712  

Bank of China Ltd., Class H

    13,309,000        4,649,300  

BBMG Corp., Class H

    46,000,000        4,532,692  

China Cinda Asset Management Co. Ltd., Class H

    44,486,000        4,325,948  

China Construction Bank Corp., Class H

    7,814,000        4,419,269  

China Hongqiao Group Ltd.(a)

    6,104,500        5,715,115  

China Jinmao Holdings Group Ltd.

    16,700,000        2,048,368  

China Merchants Port Holdings Co. Ltd.

    3,256,000        4,144,672  

China Minsheng Banking Corp. Ltd., Class H

    14,936,000        4,965,633  

China National Building Material Co. Ltd., Class H

    6,910,000        3,289,128  

China Petroleum & Chemical Corp., Class H

    12,990,000        6,643,576  

China Shenhua Energy Co. Ltd., Class H

    2,384,500        7,308,422  

Chongqing Rural Commercial Bank Co. Ltd., Class H

    17,367,000        6,574,818  

Huadian Power International Corp. Ltd., Class H(a)

    12,742,000        5,116,244  

Industrial & Commercial Bank of China Ltd., Class H

    9,330,000        4,471,351  

Kingboard Laminates Holdings Ltd.

    5,789,000        5,428,874  

Lonking Holdings Ltd.

    46,604,000        7,199,418  

Midea Real Estate Holding Ltd.(b)

    6,565,000        4,491,178  

Orient Overseas International Ltd.

    500,500        6,311,200  

PICC Property & Casualty Co. Ltd., Class H

    4,052,000        4,627,202  

Poly Property Group Co. Ltd.

    16,246,000        3,343,679  

Shenzhen Investment Ltd.

    24,592,000        3,614,676  

Sinopec Engineering Group Co. Ltd., Class H

    10,149,500        5,072,344  

West China Cement Ltd.

    47,388,000        4,304,819  

Yankuang Energy Group Co. Ltd., Class H

    2,275,000        3,951,123  

Zhejiang Expressway Co. Ltd., Class H

    4,792,000        3,607,107  
    

 

 

 
           125,279,868  
Czech Republic — 0.5%             

CEZ AS

    71,372        3,053,948  
    

 

 

 
Greece — 1.4%             

Star Bulk Carriers Corp.

    449,806        8,397,878  
    

 

 

 
Hong Kong — 1.0%             

SITC International Holdings Co. Ltd.

    3,722,000        5,733,385  
    

 

 

 
India — 9.5%             

Coal India Ltd.

    2,734,527        10,322,109  

Hindustan Zinc Ltd.

    2,202,847        7,822,157  

Indian Oil Corp. Ltd.

    7,935,265        8,548,162  

Oil India Ltd.

    1,678,454        6,031,749  
Security   Shares      Value  

India (continued)

                                        

REC Ltd.

    4,733,329      $ 16,360,764  

Vedanta Ltd.

    2,992,891        7,788,481  
    

 

 

 
           56,873,422  
Indonesia — 5.7%             

Adaro Energy Indonesia Tbk PT

    48,128,400        7,765,476  

Bukit Asam Tbk PT

    41,584,600        6,492,276  

Hanjaya Mandala Sampoerna Tbk PT

    48,443,000        2,775,142  

Indo Tambangraya Megah Tbk PT

    4,235,300        7,072,165  

United Tractors Tbk PT

    6,080,200        9,621,965  
    

 

 

 
           33,727,024  
Malaysia — 0.8%             

Malayan Banking Bhd

    2,385,100        4,516,321  
    

 

 

 
Philippines — 0.7%             

PLDT Inc.

    200,465        4,283,548  
    

 

 

 
Poland — 1.8%             

Grupa Kety SA(a)

    63,310        10,679,353  
    

 

 

 
Qatar — 0.6%             

Barwa Real Estate Co.

    5,521,333        3,836,581  
    

 

 

 
Russia — 0.0%             

Federal Grid Co. Unified Energy System PJSC(c)(d)

    4,402,974,828        473  

LUKOIL PJSC(c)

    124,880        13  

Magnit PJSC(c)

    163,377        18  

Magnitogorsk Iron & Steel Works PJSC(c)(d)

    14,721,471        1,583  

MMC Norilsk Nickel PJSC(c)(d)

    23,712        3  

Mobile TeleSystems PJSC(c)

    2,744,644        295  

Moscow Exchange MICEX-RTS PJSC(c)

    2,788,700        300  

Novolipetsk Steel PJSC(c)(d)

    3,457,900        372  

PhosAgro PJSC(c)(d)

    180,278        19  

PhosAgro PJSC, New(c)

    3,484        35  

Rostelecom PJSC(c)(d)

    4,681,247        503  

Sberbank of Russia PJSC(c)

    2,500,255        269  

Severstal PAO(c)(d)

    695,941        75  

Tatneft PJSC(c)

    1,165,907        125  

Unipro PJSC(c)(d)

    299,242,000        32,167  
    

 

 

 
       36,250  
Singapore — 1.7%             

Riverstone Holdings Ltd./Singapore

    23,173,000        9,995,168  
    

 

 

 
South Africa — 7.0%             

African Rainbow Minerals Ltd.

    647,056        5,331,984  

Anglo American Platinum Ltd.

    145,306        4,854,903  

Coronation Fund Managers Ltd.

    4,985,355        8,080,889  

Exxaro Resources Ltd.

    904,380        9,077,177  

Kumba Iron Ore Ltd.

    250,333        6,632,834  

Truworths International Ltd.

    1,918,587        7,772,143  
    

 

 

 
           41,749,930  
Taiwan — 16.1%             

Asustek Computer Inc.

    1,114,000        11,680,432  

Huaku Development Co. Ltd.

    1,914,000        5,406,616  

Inventec Corp.

    4,130,475        5,174,510  

Merry Electronics Co. Ltd.

    1,269,146        3,479,208  

Novatek Microelectronics Corp.

    628,000        8,844,167  

Radiant Opto-Electronics Corp.

    1,492,000        5,718,809  

Simplo Technology Co. Ltd.

    939,600        9,680,386  

Sitronix Technology Corp.

    1,278,000        11,297,048  

Supreme Electronics Co. Ltd.

    5,519,685        9,481,710  

Systex Corp.

    1,521,000        4,711,559  

T3EX Global Holdings Corp.

    4,459,000        10,052,641  

United Integrated Services Co. Ltd.

    532,000        3,949,743  

 

 

 

10  

2 0 2 3    H A R E S    E M I - A N N U A  L    E P O R T    T O    H A R E H O L D E R  S


Schedule of Investments (unaudited) (continued)

October 31, 2023

 

  

iShares® Emerging Markets Dividend ETF

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  
Taiwan (continued)             

WPG Holdings Ltd.

    2,995,280      $ 6,628,038  
    

 

 

 
           96,104,867  
Thailand — 4.7%             

Banpu PCL, NVDR

    24,564,600        5,192,535  

Kiatnakin Phatra Bank PCL, NVDR(a)

    1,789,300        2,453,185  

Land & Houses PCL, NVDR

    15,194,300        3,191,798  

Quality Houses PCL, NVDR

    58,624,900        3,653,986  

Sri Trang Agro-Industry PCL, NVDR

    8,232,500        3,298,710  

Thanachart Capital PCL, NVDR

    4,077,700        5,560,527  

Tisco Financial Group PCL, NVDR

    1,802,900        4,827,550  
    

 

 

 
           28,178,291  
United Arab Emirates — 0.6%             

Dubai Islamic Bank PJSC

    2,310,404        3,396,731  
    

 

 

 

Total Common Stocks — 89.4%
(Cost: $695,075,489)

         532,925,272  
    

 

 

 

Preferred Stocks

    
Brazil — 10.3%             

Bradespar SA, Preference Shares, NVS

    1,484,170        6,576,359  

Cia. de Transmissao de Energia Eletrica Paulista, Preference Shares, NVS

    792,572        3,331,105  

Cia. Energetica de Minas Gerais, Preference Shares, NVS

    3,812,077        8,876,637  

Gerdau SA, Preference Shares, NVS

    1,650,688        7,127,580  

Metalurgica Gerdau SA, Preference Shares, NVS

    2,774,238        5,684,113  

Petroleo Brasileiro SA, Preference Shares, NVS

    2,093,995        14,428,599  

Unipar Carbocloro SA, Class B, Preference Shares, NVS

    660,906        9,322,881  

Usinas Siderurgicas de Minas Gerais SA Usiminas, Class A, Preference Shares, NVS

    4,483,789        5,878,484  
    

 

 

 
           61,225,758  
Security   Shares      Value  
Russia — 0.0%             

Transneft PJSC, Preference Shares, NVS(c)

    5,767      $  
    

 

 

 

Total Preferred Stocks — 10.3%
(Cost: $79,475,046)

       61,225,758  
    

 

 

 

Total Long-Term Investments — 99.7%
(Cost: $774,550,535)

       594,151,030  
    

 

 

 

Short-Term Securities

    
Money Market Funds — 1.6%             

BlackRock Cash Funds: Institutional, SL Agency
Shares, 5.54%(e)(f)(g)

    9,719,480        9,723,367  
    

 

 

 

Total Short-Term Securities — 1.6%
(Cost: $9,717,827)

       9,723,367  
    

 

 

 

Total Investments — 101.3%
(Cost: $784,268,362)

       603,874,397  

Liabilities in Excess of Other Assets — (1.3)%

       (7,520,358
    

 

 

 

Net Assets — 100.0%

     $   596,354,039  
    

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

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

(c) 

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

(d) 

Non-income producing security.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period end.

(g) 

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

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the six months ended October 31, 2023 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   Value at
04/30/23
     Purchases
at Cost
     Proceeds
from Sale
    Net Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
    Value at
10/31/23
     Shares
Held at
10/31/23
     Income    

Capital

Gain
Distributions
from
Underlying
Funds

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 11,594,244      $      $ (1,872,468 )(a)    $ 2,139      $ (548   $ 9,723,367        9,719,480      $ 84,752 (b)    $  

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

    1,270,000               (1,270,000 )(a)                                 36,640        
         

 

 

    

 

 

   

 

 

       

 

 

   

 

 

 
          $ 2,139      $ (548   $ 9,723,367         $ 121,392     $  
         

 

 

    

 

 

   

 

 

       

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

  (b) 

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

  (c) 

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

 

 

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

  11


Schedule of Investments (unaudited) (continued)

October 31, 2023

 

  

iShares® Emerging Markets Dividend ETF

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Long Contracts

          

MSCI Emerging Markets Index

    37        12/15/23      $ 1,701      $ (76,826
          

 

 

 

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:

 

     Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Liabilities — Derivative Financial Instruments

                   

Futures contracts

                   

Unrealized depreciation on futures contracts(a)

  $      $      $ 76,826      $      $      $      $ 76,826  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

For the period ended October 31, 2023, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

     Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
    Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Net Realized Gain (Loss) from

                  

Futures contracts

  $      $      $ (223,019   $      $      $      $ (223,019
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                  

Futures contracts

  $      $      $ (60,653   $      $      $      $ (60,653
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

       

Average notional value of contracts — long

  $ 6,780,698  

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

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.

 

     Level 1      Level 2      Level 3      Total  

Assets

          

Investments

          

Long-Term Investments

          

Common Stocks

  $ 146,249,755      $ 386,639,267      $          36,250      $ 532,925,272  

Preferred Stocks

    61,225,758                      61,225,758  

Short-Term Securities

          

Money Market Funds

    9,723,367                      9,723,367  
 

 

 

    

 

 

    

 

 

    

 

 

 
  $ 217,198,880      $ 386,639,267      $ 36,250      $ 603,874,397  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

12  

2 0 2 3    H A R E S    E M I - A N N U A  L    E P O R T    T O    H A R E H O L D E R  S


Schedule of Investments (unaudited) (continued)

October 31, 2023

 

  

iShares® Emerging Markets Dividend ETF

 

Fair Value Hierarchy as of Period End (continued)

 

     Level 1      Level 2      Level 3      Total  

Derivative Financial Instruments(a)

          

Liabilities

          

Equity Contracts

  $         (76,826    $                  —      $                  —      $         (76,826
 

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Derivative financial instruments are futures contracts. Futures contracts are valued at the unrealized appreciation (depreciation) on the instrument.

 

See notes to financial statements.

 

 

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

  13


Statements of Assets and Liabilities (unaudited)

October 31, 2023

 

     

iShares

Asia/Pacific
Dividend ETF

   

iShares

Emerging Markets

Dividend ETF

 

ASSETS

    

Investments, at value — unaffiliated(a)(b)

   $ 36,842,964     $ 594,151,030  

Investments, at value — affiliated(c)

     1,633,905       9,723,367  

Cash

     4,657       526,814  

Cash pledged for futures contracts

           70,000  

Foreign currency collateral pledged for futures contracts(d)

     14,167        

Foreign currency, at value(e)

     23,119       849,551  

Receivables:

    

Investments sold

           5,177,047  

Securities lending income — affiliated

     632       18,975  

Dividends — unaffiliated

     269,706       2,655,125  

Dividends — affiliated

     131       7,988  

Tax reclaims

           37,406  

Variation margin on futures contracts

     2,286        
  

 

 

   

 

 

 

Total assets

     38,791,567       613,217,303  
  

 

 

   

 

 

 

LIABILITIES

    

Collateral on securities loaned, at value

     1,623,863       9,709,062  

Payables:

    

Investments purchased

     4       5,318,882  

Deferred foreign capital gain tax

           1,568,751  

Investment advisory fees

     15,561       248,251  

Variation margin on futures contracts

           18,318  
  

 

 

   

 

 

 

Total liabilities

     1,639,428       16,863,264  
  

 

 

   

 

 

 
Commitments and contingent liabilities             

NET ASSETS

   $ 37,152,139     $ 596,354,039  
  

 

 

   

 

 

 

NET ASSETS CONSIST OF

    

Paid-in capital

   $ 63,114,066     $ 1,080,546,688  

Accumulated loss

     (25,961,927     (484,192,649
  

 

 

   

 

 

 

NET ASSETS

   $ 37,152,139     $ 596,354,039  
  

 

 

   

 

 

 

NET ASSET VALUE

    

Shares outstanding

     1,200,000       25,400,000  
  

 

 

   

 

 

 

Net asset value

   $ 30.96     $ 23.48  
  

 

 

   

 

 

 

Shares authorized

     500 million       500 million  
  

 

 

   

 

 

 

Par value

   $ 0.001     $ 0.001  
  

 

 

   

 

 

 

(a) Investments, at cost — unaffiliated

   $ 44,197,346     $ 774,550,535  

(b) Securities loaned, at value

   $ 1,542,338     $ 6,285,959  

(c)  Investments, at cost — affiliated

   $ 1,633,867     $ 9,717,827  

(d) Foreign currency collateral pledged, at cost

   $ 14,318     $  

(e) Foreign currency, at cost

   $ 23,218     $ 849,170  

See notes to financial statements.

 

 

14  

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Statements of Operations (unaudited)

Six Months Ended October 31, 2023

 

     

iShares

Asia/Pacific
Dividend ETF

   

iShares

Emerging

Markets
Dividend ETF

 

INVESTMENT INCOME

    

Dividends — unaffiliated

   $ 1,532,366     $ 39,118,164  

Dividends — affiliated

     1,079       36,640  

Interest — unaffiliated

     141       12,587  

Securities lending income — affiliated — net

     751       84,752  

Foreign taxes withheld

     (31,346     (4,013,302
  

 

 

   

 

 

 

Total investment income

     1,502,991       35,238,841  
  

 

 

   

 

 

 

EXPENSES

    

Investment advisory

     96,011       1,534,629  

Commitment costs

           5,457  
  

 

 

   

 

 

 

Total expenses

     96,011       1,540,086  

Less:

    

Investment advisory fees waived

     (18      
  

 

 

   

 

 

 

Total expenses after fees waived

     95,993       1,540,086  
  

 

 

   

 

 

 

Net investment income

     1,406,998       33,698,755  
  

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

    

Net realized gain (loss) from:

    

Investments — unaffiliated(a)

     (318,403     (30,701,567

Investments — affiliated

     15       2,139  

Foreign currency transactions

     (30,332     16,498  

Futures contracts

     25,203       (223,019

In-kind redemptions — unaffiliated(b)

           614,121  
  

 

 

   

 

 

 
     (323,517     (30,291,828
  

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

    

Investments — unaffiliated(c)

     (3,096,875     (6,889,835

Investments — affiliated

     38       (548

Foreign currency translations

     7,764       (124,249

Futures contracts

     (12,753     (60,653
  

 

 

   

 

 

 
     (3,101,826     (7,075,285
  

 

 

   

 

 

 

Net realized and unrealized loss

     (3,425,343     (37,367,113
  

 

 

   

 

 

 

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ (2,018,345   $  (3,668,358
  

 

 

   

 

 

 

(a) Net of foreign capital gain tax and capital gain tax refund, if applicable of

   $     $ (2,942

(b) See Note 2 of the Notes to Financial Statements.

    

(c)  Net of increase in deferred foreign capital gain tax of

   $     $ (668,009

See notes to financial statements.

 

 

I N A N C I A L    T A T E M E N  T S

  15


Statements of Changes in Net Assets

 

    iShares
Asia/Pacific Dividend ETF
           iShares
Emerging Markets Dividend ETF
 
    

Six Months
Ended

10/31/23
(unaudited)

       Year Ended
04/30/23
            Six Months
Ended
10/31/23
(unaudited)
     Year Ended
04/30/23
 

INCREASE (DECREASE) IN NET ASSETS

              

OPERATIONS

              

Net investment income

  $ 1,406,998        $ 2,610,502        $ 33,698,755      $ 52,596,376  

Net realized loss

    (323,517        (1,800,447        (30,291,828      (124,265,317

Net change in unrealized appreciation (depreciation)

    (3,101,826        (510,521        (7,075,285      6,950,867  
 

 

 

      

 

 

      

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

    (2,018,345        299,534          (3,668,358      (64,718,074
 

 

 

      

 

 

      

 

 

    

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

              

Decrease in net assets resulting from distributions to shareholders

    (1,598,671        (2,768,458        (39,429,432 )(b)       (50,903,755
 

 

 

      

 

 

      

 

 

    

 

 

 

CAPITAL SHARE TRANSACTIONS

              

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

    1,614,898          1,777,022          (6,267,058      82,351,730  
 

 

 

      

 

 

      

 

 

    

 

 

 

NET ASSETS

              

Total decrease in net assets

    (2,002,118        (691,902        (49,364,848      (33,270,099

Beginning of period

    39,154,257          39,846,159          645,718,887        678,988,986  
 

 

 

      

 

 

      

 

 

    

 

 

 

End of period

  $ 37,152,139        $ 39,154,257        $ 596,354,039      $ 645,718,887  
 

 

 

      

 

 

      

 

 

    

 

 

 

 

(a) 

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

(b) 

A portion of the distributions from net investment income may be deemed a return of capital or net realized gain at fiscal year-end.

See notes to financial statements.

 

 

16  

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Financial Highlights

(For a share outstanding throughout each period)

 

    iShares Asia/Pacific Dividend ETF  
   

Six Months Ended

10/31/23

(unaudited

 

 

 

 

Year Ended

04/30/23

 

 

  

 

Year Ended

04/30/22

 

 

  

 

Year Ended

04/30/21

 

 

  

 

Year Ended

04/30/20

 

 

  

 

Year Ended

04/30/19

 

 

             

Net asset value, beginning of period

  $ 34.05     $ 36.22      $ 40.93      $ 32.05      $ 43.76      $ 46.83  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    1.18       2.43        2.09        1.80        2.05        2.49  

Net realized and unrealized gain (loss)(b)

    (2.91     (2.01      (4.91      8.51        (11.57      (2.96
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    (1.73     0.42        (2.82      10.31        (9.52      (0.47
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions from net investment income(c)

    (1.36     (2.59      (1.89      (1.43      (2.19      (2.60
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 30.96     $ 34.05      $ 36.22      $ 40.93      $ 32.05      $ 43.76  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return(d)

               

Based on net asset value

    (5.15 )%(e)      1.63      (7.02 )%       32.93      (22.50 )%       (0.83 )% 
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets(f)

               

Total expenses

    0.49 %(g)      0.49      0.49      0.49      0.49      0.49
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived

    0.49 %(g)      0.49      0.49      0.49      0.49      0.49
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    7.18 %(g)      7.22      5.38      4.89      4.99      5.65
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

               

Net assets, end of period (000)

  $ 37,152     $ 39,154      $ 39,846      $ 45,027      $ 24,038      $ 32,823  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(h)

    4     45      57      130      5      46
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Based on average shares outstanding.

(b) 

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

(c) 

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

(d) 

Where applicable, assumes the reinvestment of distributions.

(e) 

Not annualized.

(f) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(g) 

Annualized.

(h) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

I N A N C I A L    I G H L I G H  T S

  17


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares Emerging Markets Dividend ETF  
   

Six Months Ended

10/31/23

(unaudited)

   

Year Ended

04/30/23

    

Year Ended

04/30/22

   

Year Ended

04/30/21

   

Year Ended

04/30/20

    

Year Ended

04/30/19

 
             

Net asset value, beginning of period

  $ 25.17     $ 30.59      $ 39.62     $ 30.97     $ 40.67      $ 41.91  
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Net investment income(a)

    1.33       2.23        2.66       1.94       2.25        2.31  

Net realized and unrealized gain (loss)(b)

    (1.46     (5.42      (8.93     8.62       (9.42      (1.33
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Net increase (decrease) from investment operations

    (0.13     (3.19      (6.27     10.56       (7.17      0.98  
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Distributions from net investment income(c)

    (1.56 )(d)       (2.23      (2.76     (1.91     (2.53      (2.22
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Net asset value, end of period

  $ 23.48     $ 25.17      $ 30.59     $ 39.62     $ 30.97      $ 40.67  
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total Return(e)

             

Based on net asset value

    (0.56 )%(f)      (10.01 )%       (17.19 )%(g)      35.51     (18.44 )%       2.68
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Ratios to Average Net Assets(h)

             

Total expenses

    0.49 %(i)       0.49      0.49     0.49     0.49      0.49
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    N/A       N/A        0.49     0.49     N/A        N/A  
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Net investment income

    10.76 %(i)       8.78      7.03 %(j)       5.62 %(j)       6.00      5.79
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Supplemental Data

             

Net assets, end of period (000)

  $ 596,354     $ 645,719      $ 678,989     $ 841,985     $ 585,284      $ 571,435  
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Portfolio turnover rate(k)

    12     55      66     107     15      69
 

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

(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) 

A portion of the distributions from net investment income may be deemed a return of capital or net realized gain at fiscal year-end.

(e) 

Where applicable, assumes the reinvestment of distributions.

(f) 

Not annualized.

(g) 

Includes payment received from an affiliate, which impacted the Fund’s total return. Excluding the payment from an affiliate, the Fund’s total return would have been -17.17%.

(h) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(i) 

Annualized.

(j) 

Reflects positive effect of foreign withholding tax claims, net of the associated professional fees, which resulted in the following increases for the years ended April 30, 2022 and April 30, 2021, respectively :

 

Ratio of net investment income to average net assets by 0.01% and 0.02%, respectively.

(k) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

18  

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Notes to Financial Statements (unaudited)

 

1.

ORGANIZATION

iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation and is authorized to have multiple series or portfolios.

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

 

   
iShares ETF   

Diversification

Classification

Asia/Pacific Dividend

   Diversified

Emerging Markets Dividend(a)

   Diversified

 

  (a) 

The Fund intends to be diversified in approximately the same proportion as its underlying index is diversified. The Fund may become non-diversified, as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of its underlying index. Shareholder approval will not be sought if the Fund crosses from diversified to non-diversified status due solely to a change in its relative market capitalization or index weighting of one or more constituents of its underlying index.

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure 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. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are executed. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recorded on the ex-dividend date. Non-cash dividends, if any, are recorded on the ex-dividend date at fair value. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Funds are informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest.

Foreign Currency Translation: Each Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statements of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. Each Fund reports realized currency gains (losses) 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 Statements 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 October 31, 2023, if any, are disclosed in the Statements of Assets and Liabilities.

The Funds file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. The Funds may record a reclaim receivable based on collectability, which includes factors such as the jurisdiction’s applicable laws, payment history and market convention. The Statements of Operations includes tax reclaims recorded as well as professional and other fees, if any, associated with recovery of foreign withholding taxes.

Collateralization: If required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments.

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

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

 

 

 

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

  19


Notes to Financial Statements  (unaudited) (continued)

 

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. 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. The Board of Directors of the Company (the “Board”) of each Fund has approved the designation of BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, as the valuation designee for each Fund. Each Fund determines the fair values of its financial instruments using various independent dealers or pricing services under BFA’s policies. If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with BFA’s policies and procedures as reflecting fair value. BFA has formed a committee (the “Valuation Committee”) to develop pricing policies and procedures and to oversee the pricing function for all financial instruments, with assistance from other BlackRock pricing committees.

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

 

   

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

 

   

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

 

   

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

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the New York Stock Exchange (“NYSE”). Each business day, the Funds use current market factors supplied by independent pricing services to value certain foreign instruments (“Systematic Fair Value Price”). The Systematic Fair Value Price is designed to value such foreign securities at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

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

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV and the prices used by the fund’s underlying index, which in turn could result in a difference between the fund’s performance and the performance of the fund’s underlying index.

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

 

   

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

 

   

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

 

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the 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 judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds that may not have a secondary market and/or may have a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

4.

SECURITIES AND OTHER INVESTMENTS

Warrants: Warrants entitle a fund to purchase a specified number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date of the warrants, if any. If the price of the underlying stock does not rise above the strike price before the warrant expires, the warrant generally expires without any value and a fund will lose any amount it paid for the warrant. Thus, investments in warrants may involve more risk than investments in common stock. Warrants may trade in the same markets as their underlying stock; however, the price of the warrant does not necessarily move with the price of the underlying stock.

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 period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested in money market funds managed by BFA, or its affiliates is disclosed in the Schedule 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, if any, are also disclosed in each Fund’s Schedule of Investments. The market value of any securities on loan and the value of any related cash collateral are disclosed in the Statements of Assets and Liabilities.

Securities lending transactions are entered into by the Funds 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 Funds, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left 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 Funds can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the securities on loan by counterparty which are subject to offset under an MSLA:

 

         
iShares ETF and Counterparty   Securities Loaned
at Value
    

Cash Collateral

Received(a)

    

Non-Cash Collateral

Received, at Fair Value(a)

    Net Amount  

Asia/Pacific Dividend

         

BofA Securities, Inc.

  $ 803,973      $ (803,973    $     $  

J.P. Morgan Securities LLC

    505,154        (505,154             

Jefferies LLC

    233,211        (233,211             
 

 

 

    

 

 

    

 

 

   

 

 

 
  $ 1,542,338      $ (1,542,338    $     $  
 

 

 

    

 

 

    

 

 

   

 

 

 

Emerging Markets Dividend

         

Barclays Capital, Inc.

  $ 164,524      $ (164,524    $     $  

BofA Securities, Inc.

    3,586,632        (3,586,632             

Goldman Sachs & Co. LLC

    2,395,306        (2,395,306             

Morgan Stanley

    139,497        (139,497             
 

 

 

    

 

 

    

 

 

   

 

 

 
  $ 6,285,959      $ (6,285,959    $     $  
 

 

 

    

 

 

    

 

 

   

 

 

 

 

  (a) 

Collateral received, if any, 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 Statements of Assets and Liabilities.

 

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk) and changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

Futures contracts are exchange-traded agreements between the Funds and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statements of Assets and Liabilities.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, are shown as cash pledged for futures contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest rates, foreign currency exchange rates or underlying assets.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

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

For its investment advisory services to each of the following Funds, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on the average daily net assets of each Fund as follows:

 

   
iShares ETF   Investment Advisory Fees  

Asia/Pacific Dividend

    0.49

Emerging Markets Dividend

    0.49  

Expense Waivers: A fund may incur its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses”). The total of the investment advisory fee and acquired fund fees and expenses, if any, is a fund’s total annual operating expenses. Total expenses as shown in the Statements of Operations does not include acquired fund fees and expenses.

For the iShares Asia/Pacific Dividend ETF, BFA has contractually agreed to waive a portion of its investment advisory fee through August 31, 2025 in an amount equal to the acquired fund fees and expenses, if any, attributable to the Fund’s investments in other iShares funds.

For the iShares Emerging Markets Dividend ETF, BFA has contractually agreed to waive a portion of its investment advisory fee for the Fund through August 31, 2027 in an amount equal to the acquired fund fees and expenses, if any, attributable to the Fund’s investments in other iShares funds.

These amounts are included in investment advisory fees waived in the Statements of Operations. For the six months ended October 31, 2023, the amounts waived in investment advisory fees pursuant to these arrangements were as follows:

 

   
iShares ETF   Amounts Waived  

Asia/Pacific Dividend

  $ 18  

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, including any custodial costs. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

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

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

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

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

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its Statements of Operations. For the six months ended October 31, 2023, the Funds paid BTC the following amounts for securities lending agent services:

 

   
iShares ETF   Amounts  

Asia/Pacific Dividend

  $ 182  

Emerging Markets Dividend

    19,225  

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

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

For the six months ended October 31, 2023, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

       
iShares ETF   Purchases      Sales     

Net Realized

Gain (Loss)

 
       

Asia/Pacific Dividend

  $      $ 92,782      $ (137,527

Emerging Markets Dividend

    124,092        131,127        (5,573

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 Statements of Operations.

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

 

7.

PURCHASES AND SALES

For the six months ended October 31, 2023, purchases and sales of investments, excluding short-term securities and in-kind transactions, were as follows:

 

     
iShares ETF   Purchases      Sales  

Asia/Pacific Dividend

  $ 1,880,577      $ 1,382,571  

Emerging Markets Dividend

    73,671,922        76,470,830  

For the six months ended October 31, 2023, in-kind transactions were as follows:

 

     
iShares ETF  

In-kind

Purchases

    

In-kind

Sales

 
     

Asia/Pacific Dividend

  $   1,138,250      $  

Emerging Markets Dividend

    1,148,819        5,118,212  

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is each Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

Management has analyzed tax laws and regulations and their application to the Funds as of October 31, 2023, 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.

As of April 30, 2023, the Funds had non-expiring capital loss carryforwards available to offset future realized capital gains and qualified late-year losses as follows:

 

   
iShares ETF  

Non-Expiring

Capital Loss

Carryforwards

 
   

Asia/Pacific Dividend

  $ (18,139,246

Emerging Markets Dividend

    (255,089,023

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

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 October 31, 2023, 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)

 

Asia/Pacific Dividend

  $ 46,285,867      $ 1,305,224      $  (9,118,628)     $  (7,813,404)  

Emerging Markets Dividend

    802,112,464        65,543,791        (263,858,684     (198,314,893

 

9.

LINE OF CREDIT

The iShares Emerging Markets Dividend ETF, along with certain other iShares funds (“Participating Funds”), is a party to a $800 million credit agreement (“Syndicated Credit Agreement”) with a group of lenders, which expires on October 16, 2024. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Syndicated Credit Agreement. The Syndicated Credit Agreement has the following terms: a commitment fee of 0.15% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 0.10% and 1.00% per annum or (b) the U.S. Federal Funds rate plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Syndicated Credit Agreement.

During the six months ended October 31, 2023, the Fund did not borrow under the Syndicated Credit Agreement.

 

10.

PRINCIPAL RISKS

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

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

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: Investments in the securities of issuers domiciled in countries with emerging capital markets involve certain additional risks that do not generally apply to investments in securities of issuers in more developed capital markets, such as (i) low or nonexistent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities; (ii) uncertain national policies and social, political and economic instability, increasing the potential for expropriation of assets, confiscatory taxation, high rates of inflation or unfavorable diplomatic developments; (iii) lack of publicly available or reliable information about issuers as a result of not being subject to the same degree of regulatory requirements and accounting, auditing and financial reporting standards; and (iv) possible fluctuations in exchange rates, differing legal systems and the existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to such investments.

Infectious Illness Risk: An outbreak of an infectious illness, such as the COVID-19 pandemic, may adversely impact the economies of many nations and the global economy, and may impact individual issuers and capital markets in ways that cannot be foreseen. An infectious illness outbreak may result in, among other things, closed international borders, prolonged quarantines, supply chain disruptions, market volatility or disruptions and other significant economic, social and political impacts.

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

 

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore each Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by each Fund, and each Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. Each Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third-party service providers.

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

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

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

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

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

Certain Funds invest a significant portion of their assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Funds’ investments.

Significant Shareholder Redemption Risk: Certain shareholders may own or manage a substantial amount of fund shares and/or hold their fund investments for a limited period of time. Large redemptions of fund shares by these shareholders may force a fund to sell portfolio securities, which may negatively impact the fund’s NAV, increase the fund’s brokerage costs, and/or accelerate the realization of taxable income/gains and cause the fund to make additional taxable distributions to shareholders.

 

11.

CAPITAL SHARE TRANSACTIONS

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

Transactions in capital shares were as follows:

 

     Six Months Ended
10/31/23
     Year Ended
04/30/23
 
iShares ETF       Shares              Amount      Shares     Amount  

Asia/Pacific Dividend

         

Shares sold

    50,000      $ 1,614,898        250,000     $ 8,388,921  

Shares redeemed

                  (200,000     (6,611,899
 

 

 

    

 

 

    

 

 

   

 

 

 
    50,000      $ 1,614,898        50,000     $ 1,777,022  
 

 

 

    

 

 

    

 

 

   

 

 

 

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

iShares ETF   Six Months Ended
10/31/23
    Year Ended
04/30/23
 
  Shares     Amount     Shares     Amount  

Emerging Markets Dividend

       

Shares sold

    200,000     $ 4,998,521       4,900,000     $  122,487,270  

Shares redeemed

    (450,000     (11,265,579     (1,450,000     (40,135,540
 

 

 

   

 

 

   

 

 

   

 

 

 
    (250,000   $ (6,267,058     3,450,000     $  82,351,730  
 

 

 

   

 

 

   

 

 

   

 

 

 

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

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

 

12.

SUBSEQUENT EVENTS

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

 

 

 

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Board Review and Approval of Investment Advisory Contract

 

iShares Asia/Pacific Dividend ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Board Members”), is required annually to consider the approval of the Investment Advisory Agreement between the Company and BFA (the “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 Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Agreement. At meetings on May 2, 2023 and May 15, 2023, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide. At a meeting held on June 7-8, 2023, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Agreement for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Agreement for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Agreement 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 other fund(s) in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs, objectively selected by Broadridge as comprising the Fund’s applicable expense peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the investment advisory fee rate and overall expenses (net of any waivers and reimbursements) for the Fund were within range of 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.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2022, to that of such 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 Agreement for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about ongoing enhancements and initiatives with respect 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 Agreement for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund, including related programs implemented pursuant to regulatory requirements. 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 May 2, 2023 meeting and throughout the year, and matters related to BFA’s portfolio compliance program and other compliance programs and services.

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 Agreement supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Agreement), and other sources of revenue and expense to BFA