LOGO

  FEBRUARY 28, 2023

 

  

2023 Semi-Annual Report

(Unaudited)

 

iShares, Inc.

 

·  

iShares MSCI Russia ETF | ERUS |


Table of Contents

 

      Page  

Semi-Annual Report:

  

Fund Summary

     3  

About Fund Performance

     4  

Disclosure of Expenses

     4  

Schedule of Investments

     5  
Financial Statements   

Statement of Assets and Liabilities

     7  

Statement of Operations

     8  

Statements of Changes in Net Assets

     9  

Statement of Cash Flows

     10  

Financial Highlights

     11  

Notes to Financial Statements

     12  

Statement Regarding Liquidity Risk Management Program

     17  

General Information

     18  

Glossary of Terms Used in this Report

     19  

 

 

      


Fund Summary as of February 28, 2023    iShares® MSCI Russia ETF

 

Investment Objective

The iShares MSCI Russia ETF (the “Fund”) seeks to track the investment results of an index composed of Russian equities, as represented by the MSCI Russia 25/50 Index (the “Index”). Effective June 1, 2022, the index was discontinued by the index provider, MSCI, Inc. Due to the discontinuation of the Fund’s underlying index and ongoing restrictions relating to Russian securities, the Fund will be unable to meet its investment objective. The Fund is in the process of liquidating its assets and winding up its business pursuant to a plan of liquidation.

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

    (0.07 )%       (99.13 )%       (70.63 )%       (45.80 )%        (99.13 )%       (99.78 )%       (99.78 )% 

Fund Market(a)

    N/A        (81.42      (22.27      (12.32       (81.42      (67.86      (71.34

Index(b)

    N/A        (99.99      (91.92      (71.67             (99.99      (99.99      (99.99

 

  (a)

Effective March 4, 2022, the NYSE Arca, Inc. halted trading of the Fund and the Fund Market returns are as follows: 1 Year return, 5 Years return, and 10 Years return from September 1, 2021, September 1, 2017, and September 1, 2012, respectively through March 4, 2022. A6 Month Fund Market return is not shown as NYSE Arca, Inc. halted trading of the Fund prior to September 1, 2022.

 
  (b) 

Effective June 1, 2022, the Index was discontinued by the index provider, MSCI, Inc and the Index returns are as follows: 1 Year return, 5 Years return, and 10 Years return from September 1, 2021, September 1, 2017, and September 1, 2012, respectively through May 31, 2022. A6 Month Index return is not shown as MSCI, Inc discontinued the Index prior to September 1, 2022.

 

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
(09/01/22)
 
 
 
      

Ending
Account Value
(02/28/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a) 
           

Beginning
Account Value
(09/01/22)
 
 
 
      

Ending
Account Value
(02/28/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
  $ 1,000.00        $ 999.30        $ 0.00             $ 1,000.00        $ 1,024.80        $ 0.00          0.00

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (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. Effective March 3, 2022, BFA implemented a voluntary waiver of its investment advisory fee for the Fund, which was applied to management fees for the six months ended February 28, 2023.

 

Portfolio Information

 

TEN LARGEST HOLDINGS

 

Security   Percent of
Total Investments
 

BlackRock Cash Funds: Treasury, SL Agency Shares

    90.8

Inter RAO UES PJSC

    3.8  

Gazprom PJSC

    0.7  

Surgutneftegas PJSC

    0.6  

Surgutneftegas PJSC (Preferred)

    0.6  

Sberbank of Russia PJSC

    0.5  

VTB Bank PJSC

    0.2  

Alrosa PJSC

    0.2  

United Co. RUSAL International PJSC

    0.2  

Moscow Exchange MICEX-RTS PJSC

    0.1  

 

 

U N D    U M M A R Y

  3


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 the Fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at iShares.com. Performance results assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. The investment return and principal value of shares will vary with changes in market conditions. Shares may be worth more or less than their original cost when they are redeemed or sold in the market. Performance for certain funds may reflect a waiver of a portion of investment advisory fees. Without such a waiver, performance would have been lower.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. 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. The NYSE ARCA, Inc. halted trading of the Fund effective March 4, 2022, and delisted the Fund effective August 29, 2022 therefore, there is no longer a Market Price.

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. Effective June  1, 2022, the index was discontinued by the index provider, MSCI, Inc.

Disclosure of Expenses

Shareholders of the 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 example shown (which is based on a hypothetical investment of $1,000 invested at the beginning of the period and held through the end of the period) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other funds.

The expense example provides 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 example also provides 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 Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

The expenses shown in the expense example 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 example is useful in comparing ongoing expenses only and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

 

 

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Schedule of Investments (unaudited)

February 28, 2023

  

iShares® MSCI Russia ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Banks — 0.8%            

Sberbank of Russia PJSC(a)(b)

    18,835,860     $ 2,510  

TCS Group Holding PLC, GDR(a)(b)

    289,152       38  

VTB Bank PJSC(a)(b)

    8,307,845,016       1,107  
   

 

 

 
      3,655  
Capital Markets — 0.1%            

Moscow Exchange MICEX-RTS PJSC(a)(b)

    4,737,800       631  
   

 

 

 
Chemicals — 0.0%            

PhosAgro PJSC(a)(b)

    148,802       20  

PhosAgro PJSC, New(a)(b)

    2,875       29  

PhosAgro PJSC, GDR(a)(b)

    2        
   

 

 

 
      49  
Electric Utilities — 3.8%            

Inter RAO UES PJSC(a)(b)

    136,938,300       18,246  
   

 

 

 
Food & Staples Retailing — 0.0%            

Magnit PJSC, GDR(a)(b)

    1        

Magnit PJSC(a)(b)

    198,139       26  

X5 Retail Group NV, GDR(a)(b)

    374,475       50  
   

 

 

 
      76  
Interactive Media & Services — 0.0%            

VK Co. Ltd.(a)(b)

    393,252       53  

Yandex NV(a)(b)

    361,376       48  
   

 

 

 
      101  
Internet & Direct Marketing Retail — 0.0%            

Ozon Holdings PLC, ADR(a)(b)

    106,824       14  
   

 

 

 
Metals & Mining — 0.5%            

Alrosa PJSC(a)(b)

    7,486,250       998  

MMC Norilsk Nickel PJSC(a)(b)

    96,437       13  

Novolipetsk Steel PJSC(a)(b)

    4,388,590       585  

Polymetal International PLC(a)(b)

    834,056       111  

Polyus PJSC(a)(b)

    89,129       12  

Severstal PAO(a)(b)

    604,068       80  

United Co. RUSAL International PJSC(a)(b)

    5,811,330       774  
   

 

 

 
      2,573  
Oil, Gas & Consumable Fuels — 1.5%            

Gazprom PJSC(a)(b)

    24,553,290       3,271  
Security   Shares     Value  
Oil, Gas & Consumable Fuels (continued)            

LUKOIL PJSC(a)(b)

    856,438     $ 114  

Novatek PJSC(a)(b)

    1,250,860       167  

Rosneft Oil Co. PJSC(a)(b)

    2,566,222       342  

Surgutneftegas PJSC(a)(b)

    21,799,946       2,905  

Tatneft PJSC(a)(b)

    3,516,781       469  
   

 

 

 
      7,268  
Wireless Telecommunication Services — 0.1%  

Mobile TeleSystems PJSC(a)(b)

    2,776,444       370  
   

 

 

 

Total Common Stocks — 6.8%
(Cost: $453,537,815)

      32,983  
   

 

 

 

Preferred Stocks

 

Oil, Gas & Consumable Fuels — 0.6%  

Surgutneftegas PJSC, Preference Shares, NVS(a)(b)

    21,745,700       2,898  
   

 

 

 

Total Preferred Stocks — 0.6%
(Cost: $11,913,761)

      2,898  
   

 

 

 

Total Long-Term Investments — 7.4%
(Cost: $465,451,576)

      35,881  
   

 

 

 

Short-Term Securities

 

Money Market Funds — 90.8%  

BlackRock Cash Funds: Treasury, SL Agency Shares, 4.41%(c)(d)

    440,000       440,000  
   

 

 

 

Total Short-Term Securities — 90.8%
(Cost: $440,000)

 

    440,000  
   

 

 

 

Total Investments — 98.2%
(Cost: $465,891,576)

 

    475,881  

Other Assets Less Liabilities — 1.8%

 

    8,799  
   

 

 

 

Net Assets — 100.0%

    $ 484,680  
   

 

 

 

 

(a)

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

(b)

Non-income producing security.

(c)

Affiliate of the Fund.

(d)

Annualized 7-day yield as of period end.

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the six months ended February 28, 2023 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer   

Value at

08/31/22

     Purchases
at Cost
     Proceeds
from Sale
     Net Realized
Gain (Loss)
    

Change in

Unrealized
Appreciation
(Depreciation)

     Value at
02/28/23
    

Shares

Held at
02/28/23

     Income      Capital
Gain
Distributions
from
Underlying
Funds
 

BlackRock Cash Funds: Treasury, SL Agency Shares

   $ 430,000      $ 10,000      $      $               —     

$

                —

 

   $ 440,000      $ 440,000      $ 7,888      $               —  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

 

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

  5


Schedule of Investments (unaudited) (continued)

February 28, 2023

  

iShares® MSCI Russia ETF

 

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

   $        $        $ 32,983        $ 32,983  

Preferred Stocks

                       2,898          2,898  

Short-Term Securities

                 

Money Market Funds

     440,000                            440,000  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 440,000        $        $ 35,881        $ 475,881  
  

 

 

      

 

 

      

 

 

      

 

 

 

A reconciliation of Level 3 financial instruments is presented when the Fund had a significant amount of Level 3 investments and derivative financial instruments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

      Common
Stocks
   Preferred
Stocks
   Total

Assets:

              

Opening balance, as of August 31, 2022

     $ 40,573      $ 3,565      $ 44,138

Transfers into Level 3

                    

Transfers out of Level 3

                    

Accrued discounts/premiums

                    

Net realized gain (loss)

                    

Net change in unrealized appreciation (depreciation)(a)(b)

       (7,590 )        (667 )        (8,257 )

Purchases

                    

Sales

                    
    

 

 

      

 

 

      

 

 

 

Closing balance, as of February 28, 2023

     $ 32,983      $ 2,898      $ 35,881
    

 

 

      

 

 

      

 

 

 

Net change in unrealized appreciation (depreciation) on investment still held at February 28, 2023

     $ (7,590 )      $ (667 )      $ (8,257 )
    

 

 

      

 

 

      

 

 

 

 

  (a)

Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations.

 
  (b)

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at February 28, 2023 is generally due to investments no longer held or categorized as Level 3 at period end.

 

See notes to financial statements.

 

 

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Statement of Assets and Liabilities (unaudited)

February 28, 2023

 

     iShares
MSCI Russia
ETF
 

ASSETS

 

Investments, at value — unaffiliated(a)

  $ 35,881  

Investments, at value — affiliated(b)

    440,000  

Cash

    6,914  

Foreign currency, at value(c)

    283  

Receivables:

 

Dividends — affiliated

    1,602  
 

 

 

 

Total assets

    484,680  
 

 

 

 

NET ASSETS

  $ 484,680  
 

 

 

 

NET ASSETS CONSIST OF

 

Paid-in capital

  $ 615,262,124  

Accumulated loss

    (614,777,444
 

 

 

 

NET ASSETS

  $ 484,680  
 

 

 

 

NET ASSET VALUE

 

Shares outstanding

    13,750,000  
 

 

 

 

Net asset value

  $ 0.04  
 

 

 

 

Shares authorized

    1 billion  
 

 

 

 

Par value

  $ 0.001  
 

 

 

 

(a) Investments, at cost — unaffiliated

  $ 465,451,576  

(b) Investments, at cost — affiliated

  $ 440,000  

(c)  Foreign currency, at cost

  $ 272  

See notes to financial statements.

 

 

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

  7


 

Statements of Operations (unaudited)

Six Months Ended February 28, 2023

 

     iShares
MSCI
Russia
ETF
 

INVESTMENT INCOME

 

Dividends — affiliated

  $ 7,888  

Interest — unaffiliated

    64  
 

 

 

 

Total investment income

    7,952  
 

 

 

 

EXPENSES

 

Investment advisory

    1,427  
 

 

 

 

Total expenses

    1,427  

Less:

 

Investment advisory fees waived

    (1,427
 

 

 

 

Total expenses after fees waived

     
 

 

 

 

Net investment income

    7,952  
 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

 

Net change in unrealized appreciation (depreciation) on:

 

Investments — unaffiliated

    (8,257

Foreign currency translations

    14  
 

 

 

 
    (8,243
 

 

 

 

Net realized and unrealized loss

    (8,243
 

 

 

 

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ (291
 

 

 

 

See notes to financial statements.

 

 

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Statements of Changes in Net Assets

 

     iShares
MSCI Russia ETF
 
  Six
Months
Ended
02/28/23
(unaudited)
   

Year Ended

08/31/22

 

INCREASE (DECREASE) IN NET ASSETS

   

OPERATIONS

   

Net investment income

  $ 7,952     $ 11,545,224  

Net realized loss

          (1,223,228

Net change in unrealized appreciation (depreciation)

    (8,243     (606,314,168
 

 

 

   

 

 

 

Net decrease in net assets resulting from operations

    (291     (595,992,172
 

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

   

From net investment income

          (22,039,990

Liquidating distribution

          (450,000
 

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

          (22,489,990
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Net increase in net assets derived from capital share transactions

          32,469,779  
 

 

 

   

 

 

 

NET ASSETS

   

Total decrease in net assets

    (291     (586,012,383

Beginning of period

    484,971       586,497,354  
 

 

 

   

 

 

 

End of period

  $ 484,680     $ 484,971  
 

 

 

   

 

 

 

 

(a) 

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

See notes to financial statements.

 

 

I N A N C I A L    T A T E M E N T  S

  9


 

Statement of Cash Flows (unaudited)

Six Months Ended February 28, 2023

 

     iShares
MSCI Russia ETF

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

 

Net decrease in net assets resulting from operations

  $ (291

Adjustments to reconcile net decrease in net assets resulting from operations to net cash used for operating activities:

 

Net purchases of short-term securities

    (10,000

Net change in unrealized (appreciation) depreciation on investments

    8,257  

(Increase) decrease in assets:

 

Receivables:

 

Dividends — affiliated

    (456
 

 

 

 

Net cash used for operating activities

    (2,490
 

 

 

 

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES

 

Net cash provided by financing activities

     
 

 

 

 

CASH AND FOREIGN CURRENCY

 

Net decrease in restricted and unrestricted cash and foreign currency

  $ (2,490

Restricted and unrestricted cash and foreign currency at beginning of period

    9,687  
 

 

 

 

Restricted and unrestricted cash and foreign currency at end of period

  $ 7,197  
 

 

 

 
RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AND FOREIGN CURRENCY ATTHE END OF PERIOD TO THE STATEMENT OF ASSETS AND LIABILITIES  

Cash

  $ 6,914  

Foreign currency, at value

    283  
 

 

 

 
  $ 7,197  
 

 

 

 

See notes to financial statements.

 

 

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Financial Highlights

(For a share outstanding throughout each period)

 

          iShares MSCI Russia ETF  
   

Six Months Ended

02/28/23

(unaudited)

     

 

   

Year Ended

08/31/22

     Year Ended
08/31/21
     Year Ended
08/31/20
     Year Ended
08/31/19
     Year Ended
08/31/18
 

 

 

Net asset value, beginning of period

                                 $ 0.04        $ 45.29       $ 34.87       $ 37.81       $ 32.47       $ 32.13  

Net investment income(a)

        0.00 (b)        0.86        2.05        1.87        2.33        1.21  

Net realized and unrealized gain (loss)

        (0.00 )(b)        (44.38 )(c)       10.24 (c)       (1.99 )(c)       5.04 (c)       0.22 (c) 
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

        (0.00 )(b)        (43.52      12.29        (0.12      7.37        1.43  
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(d)

                                  

From net investment income

                (1.70      (1.87      (2.82      (2.03      (1.09

Liquidating distribution

                (0.03                            
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

                (1.73      (1.87      (2.82      (2.03      (1.09
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

       $ 0.04        $ 0.04       $ 45.29       $ 34.87       $ 37.81       $ 32.47  
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return(e)

                     

Based on net asset value

        (0.07 )%(f)        (99.85 )%       36.07      (1.28 )%       23.64      4.37
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets(g)

                     

Total expenses

        0.59 %(h)        0.58      0.57      0.59      0.59      0.59
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived(i)

        0.00 %(h)        0.50      0.57      0.59      0.59      0.59
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

        3.30 %(h)        4.01      5.26      4.97      6.60      3.50
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

                     

Net assets, end of period (000)

       $ 485        $   485       $ 586,497       $ 467,203       $ 627,581       $ 478,860  
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(j)

        0       7      25      30      18      32
     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average shares outstanding.

(b) 

Rounds to less than $0.01.

(c)

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

(d)

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

(e) 

Where applicable, assumes the reinvestment of distributions.

(f) 

Not annualized.

(g)

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

(h)

Annualized.

(i)

Effective March 3, 2022, BFA implemented a voluntary waiver of its investment advisory fee for the Fund which was applied to management fees starting with February 1, 2022 for the year ended August 31, 2022 and six months ended February 28, 2023.

(j)

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 

  11


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 fund (the “Fund”):

 

   
iShares ETF   

Diversification  

Classification  

 

MSCI Russia

     Non-diversified    

 

2.

PLAN OF LIQUIDATION

Russia launched a large-scale invasion of Ukraine on February 24, 2022, creating circumstances that have significantly impacted the Fund’s operations. The United States, and many other countries, imposed economic sanctions on certain Russian individuals and Russian corporate and banking entities, including banning Russia from global payment systems that facilitate cross-border payments. In response, the Russian government imposed capital controls to restrict movements of capital from entering and exiting the country and has closed trading sessions for local Russian equities to non-residents. In addition, trading of depository receipts for Russian-based companies halted on primary trading platforms subsequent to Russia’s invasion.

The consequences of Russia’s invasion and unprecedented market and policy responses of various governments and regulators precipitated the absence of a functioning or orderly market to facilitate the liquidation and repatriation of securities for any Russian-based company held by the Fund. As a result, the fair value of Russian securities and currency experienced significant declines.

Additionally, since February 24, 2022, the following events occurred: (i) the Fund suspended new creations of its shares; (ii) NYSE Arca, Inc. announced a trading halt of the Fund; (iii) BFA wrote down the value of all Russian equity securities to a nominal investment value; (iv) BFA implemented a voluntary waiver of its investment advisory fee for the Fund; (v) Russia signed into law a requirement of Russian issuers to terminate deposit agreements related to their depository receipt program, with holders receiving local shares of most Russian issuers in place of the depository receipts; (vi) the Fund was removed as a borrower from the line of credit facility as the trading halt by NYSE Arca, Inc. resulted in technical default under the Syndicated Credit Agreement; (vii) the Fund’s underlying index, the MSCI Russia 25/50 Index, was discontinued by the index provider, (viii) the Fund suspended redemptions pursuant to an order of the SEC; (ix) NYSE Arca, Inc. delisted the Fund.

On June 15, 2022, the Board unanimously voted to close and liquidate the Fund, contingent on receiving any necessary relief from the SEC, due to the discontinuation of the MSCI Russia 25/50 Index and ongoing restrictions relating to Russian securities. On August 3, 2022, the SEC granted exemptive relief to the Fund permitting the Fund to suspend the right of redemption with respect to shares of the Fund.

BlackRock expects that the Fund will remain in existence until at least December 31, 2023, to allow the Fund to sell the securities and depositary receipts, if conditions permit. The Fund may be terminated at the discretion of the Fund’s Board upon the recommendation of BFA on or after December 31, 2023. If the Fund’s Russian securities and depositary receipts have not been sold or are unable to be converted as of the date the Fund is terminated, the Fund’s remaining portfolio assets will be permanently written off, in each case as determined by BFA and approved by the Board. The Fund may be terminated sooner if all of the Russian securities and depositary receipts have been sold before that date (or they cease to represent valid interests in their issuers). While the Fund is in the process of liquidating its portfolio, the Fund will hold cash and securities that may not be consistent with the Fund’s investment objective and prior investment strategies. As a result of the delisting by NYSE Arca, Inc. the Fund is no longer considered an exchange-traded fund.

On August 17, 2022, the Fund made an initial liquidating distribution to shareholders of available cash, less a reserve estimated to meet the Fund’s expected transaction costs associated with the liquidation.

 

3.

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. The 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 Fund is 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. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized daily on an accrual basis. Certain Russian securities held by the Fund declared dividends during the period, however there is no assurance these dividends can be collected by the Fund due to restrictions imposed by the Russian government. As a result, the Fund has not accrued any investment income associated with these Russian securities.

 

 

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


Notes to Financial Statements (unaudited) (continued)

 

Foreign Currency Translation: The 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.

The 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 Statement 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. The 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.

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 Fund. Because such gains or losses are not taxable to the Fund 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 Fund’s tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

Distributions: Dividends and distributions paid by the 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 Fund.

The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

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

 

4.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: The 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 the Fund has approved the designation of BlackRock Fund Advisors (“BFA”), the Fund’s investment adviser, as the valuation designee for the Fund. The 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 the 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.

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 Fund uses 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, war 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 the 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.

During the period, the Valuation Committee determined that the local Russian equities and Russian exposed ADR and GDR securities did not have a market for which the Fund could transact and deemed them illiquid. As of February 28, 2023, the securities are being fair valued at a nominal value using a discount of 99% or higher due to illiquidity and uncertainty measures.

 

 

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

  13


Notes to Financial Statements (unaudited) (continued)

 

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 the 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.

 

5.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

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

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

 

   
Aggregate Average Daily Net Assets    Investment Advisory Fees   

First $2 billion

   0.7400%

Over $2 billion, up to and including $4 billion

   0.6900   

Over $4 billion, up to and including $8 billion

   0.6400   

Over $8 billion, up to and including $16 billion

   0.5700   

Over $16 billion, up to and including $24 billion

   0.5100   

Over $24 billion, up to and including $32 billion

   0.4800   

Over $32 billion, up to and including $40 billion

   0.4500   

Over $40 billion

   0.4275   

Expense Waivers: Effective March 3, 2022, BFA implemented a voluntary waiver of its investment advisory fee for the Fund, which was applied to management fees for the six months ended February 28, 2023.

This amount is included in investment advisory fees waived in the Statement of Operations. For the six months ended February 28, 2023, the amounts waived in investment advisory fees pursuant to this arrangement were as follows:

 

   
iShares ETF    Amounts Waived    

MSCI Russia

   $ 1,427    

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

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

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

 

6.

PURCHASES AND SALES

There were no purchases and sales transactions for the six months ended February 28, 2023.

There were no in-kind transactions for the six months ended February 28, 2023.

 

 

14  

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Notes to Financial Statements (unaudited) (continued)

 

7.

INCOME TAX INFORMATION

The Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the 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 Fund as of February 28, 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 Fund’s financial statements.

As of August 31, 2022, the Fund had non-expiring capital loss carryforwards of $122,219,861 available to offset future realized capital gains.

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 February 28, 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)
 

MSCI Russia

  $ 492,363,246      $      $ (491,887,365   $ (491,887,365

 

8.

PRINCIPAL RISKS

In the normal course of business, the 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 Fund and its investments. The 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 the 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.

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.

The price the Fund could receive upon the sale of any particular portfolio investment may differ from the 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.

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

The Fund invests a significant portion of its 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.

 

 

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

  15


Notes to Financial Statements (unaudited) (continued)

 

The Fund invests a significant portion of its assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries as well as acts of war in the region. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Fund’s investments.

Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. The United Kingdom has withdrawn from the European Union, and one or more other countries may withdraw from the European Union and/or abandon the Euro, the common currency of the European Union. These events and actions have adversely affected, and may in the future adversely affect, the value and exchange rate of the Euro and may continue to significantly affect the economies of every country in Europe, including countries that do not use the Euro and non-European Union member states. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching. In addition, Russia launched a large-scale invasion of Ukraine on February 24, 2022. The extent and duration of the military action, resulting sanctions and resulting future market disruptions in the region are impossible to predict, but have been, and may continue to be significant and have a severe adverse effect on the region, including significant negative impacts on the economy and the markets for certain securities and commodities, such as oil and natural gas, as well as other sectors.

The Fund invests a significant portion of its assets in securities of issuers located in Russia or with significant exposure to Russian issuers or countries. Russia launched a large-scale invasion of Ukraine on February 24, 2022. Governments in the U.S. and many other countries have imposed economic sanctions on certain Russian individuals and Russian corporate and banking entities. Jurisdictions have instituted broader sanctions on Russia, including banning Russia from global payments systems that facilitate cross-border payments. The extent and duration of the military action, resulting sanctions and resulting future market disruptions, including declines in Russia’s stock markets and the value of the ruble against the U.S. dollar, are impossible to predict, but have been, and may continue to be, significant. Any such disruptions caused by the Russian military action or any response to such activity from the international community may negatively impact Russia’s economy and Russian issuers of securities in which the Fund invests.

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

 

9.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by the 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 the Fund are not redeemable.

Transactions in capital shares were as follows:

 

       
    Six Months Ended
02/28/23
           

Year Ended

08/31/22

 
iShares ETF   Shares      Amount              Shares      Amount  

MSCI Russia

             

Shares sold

         $           800,000      $ 32,469,779  
 

 

 

    

 

 

       

 

 

    

 

 

 

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

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

 

10.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Fund 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.

 

 

16  

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Statement Regarding Liquidity Risk Management Program (unaudited)

 

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), iShares, Inc. (the “Company”) has adopted and implemented a liquidity risk management program (the “Program”) for iShares MSCI Russia ETF (the “Fund”), a series of the Company, which is reasonably designed to assess and manage the Fund’s liquidity risk.

The Board of Directors (the “Board”) of the Company, on behalf of the Fund, met on December 9, 2022 (the “Meeting”) to review the Program. The Board previously appointed BlackRock Fund Advisors (“BlackRock”), the investment adviser to the Fund, as the program administrator for the Fund’s Program. BlackRock also previously delegated oversight of the Program to the 40 Act Liquidity Risk Management Committee (the “Committee”). At the Meeting, the Committee, on behalf of BlackRock, provided the Board with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation, including the management of the Fund’s Highly Liquid Investment Minimum (“HLIM”) where applicable, and any material changes to the Program (the “Report”). The Report covered the period from October 1, 2021 through September 30, 2022 (the “Program Reporting Period”). As part of its review of the Program with respect to the Fund, the Board was provided information on the current status of the Fund’s liquidation, including the significant holdings of cash and cash equivalents pending liquidation.

The Report described the Program’s liquidity classification methodology for categorizing the Fund’s investments (including derivative transactions) into one of four liquidity buckets. It also referenced the methodology used by BlackRock to establish the Fund’s HLIM and noted that the Committee reviews and ratifies the HLIM assigned to the Fund no less frequently than annually. The Report also discussed notable events affecting liquidity over the Program Reporting Period, including extended market holidays, the imposition of capital controls in certain non-U.S. countries, Russian sanctions and the closure of the Russian securities market.

There were no material changes to the Program during the Program Reporting Period other than the enhancement of certain model components in the Program’s classification methodology. The Report provided to the Board stated that the Committee concluded that based on the operation of the functions, as described in the Report, the Program is operating as intended and is effective in implementing the requirements of the Liquidity Rule.

 

 

T A T E M E N T    E G A R D I N G     I Q U I D I T Y    I S K    A N A G E M E  N T    R O G R A M

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General Information

 

Electronic Delivery

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

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

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

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents and Rule 30e-3 notices can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at sec.gov. Additionally, the Fund makes its portfolio holdings for the first and third quarters of each fiscal year available at iShares.com/fundreports.

Availability of Proxy Voting Policies and Proxy Voting Records

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

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

 

 

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Glossary of Terms Used in this Report

 

Portfolio Abbreviation

ADR    American Depositary Receipt
GDR    Global Depositary Receipt
NVS    Non-Voting Shares
PJSC    Public Joint Stock Company

 

 

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Want to know more?

iShares.com    |    1-800-474-2737

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

Investing involves risk, including possible loss of principal.

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

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

©2023 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-SAR-821-0223

 

 

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