LOGO

      JULY 31, 2023

 

  

2023 Annual Report

 

 

iShares Trust

·  iShares China Large-Cap ETF | FXI | NYSE Arca

·  iShares MSCI China A ETF | CNYA | Cboe BZX


The Markets in Review

Dear Shareholder,

Despite an uncertain economic landscape during the 12-month reporting period ended July 31, 2023, the resilience of the U.S. economy in the face of ever tighter financial conditions provided an encouraging backdrop for investors. While inflation was near multi-decade highs at the beginning of the period, it declined precipitously as commodity prices dropped. Labor shortages also moderated, although wages continued to grow and unemployment rates reached the lowest levels in decades. This robust labor market powered further growth in consumer spending, backstopping the economy.

Equity returns were solid, as the durability of consumer sentiment eased investors’ concerns about the economy’s trajectory. The U.S. economy resumed growth in the third quarter of 2022 and continued to expand thereafter. Most major classes of equities advanced, including large- and small-capitalization U.S. stocks and equities from developed and emerging markets.

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 also faced inflationary headwinds, 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”), acknowledging that inflation has been more persistent than expected, raised interest rates seven times during the 12-month period ended July 31, 2023. Furthermore, the Fed wound down its bond-buying programs and incrementally reduced its balance sheet by not replacing securities that reach maturity. However, the Fed declined to raise interest rates at its June 2023 meeting, the first time it paused its tightening in the current cycle, before again raising rates in July 2023.

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 a pause, 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. We believe investors should expect a period of higher volatility as markets adjust to the new economic reality and policymakers attempt to adapt.

While we favor an overweight position to 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 emerging market stocks in the near-term as growth trends for emerging markets appear brighter. We also believe that stocks with an A.I. tilt should benefit from an investment cycle that is set to support revenues and margins. We are neutral on credit overall amid tightening credit and financial conditions; however, there are selective opportunities in the near term. 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, 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 July 31, 2023
    6-Month   12-Month
     

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

  13.52%   13.02%
     

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

  4.51   7.91
     

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

  6.65   16.79
     

Emerging market equities
(MSCI Emerging Markets Index)

  3.26   8.35
     

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

  2.34   3.96
     

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

  (2.08)   (7.56)
     

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

  (1.02)   (3.37)
     

Tax-exempt municipal bonds
(Bloomberg Municipal Bond Index)

  0.20   0.93
     

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

  2.92   4.42
 
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  

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


Table of Contents

 

      Page  

The Markets in Review

     2  

Annual Report:

  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     9  

Disclosure of Expenses

     9  

Schedules of Investments

     10  

Financial Statements:

  

Statements of Assets and Liabilities

     21  

Statements of Operations

     22  

Statements of Changes in Net Assets

     23  

Financial Highlights

     24  

Notes to Financial Statements

     26  

Report of Independent Registered Public Accounting Firm

     34  

Important Tax Information

     35  

Board Review and Approval of Investment Advisory Contract

     36  

Supplemental Information

     41  

Trustee and Officer Information

     43  

General Information

     46  

Glossary of Terms Used in this Report

     47  

 

 

  3


Market Overview

 

iShares Trust

Global Market Overview

Global equity markets advanced during the 12 months ended July 31, 2023 (“reporting period”), supported by continued economic growth and moderating inflation. The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 12.91% in U.S. dollar terms for the reporting period. Despite concerns about the impact of higher interest rates and rising prices, the global economy continued to grow, albeit at a slower pace than during the initial post-pandemic recovery. Inflation began to subside in most regions of the world, and lower energy prices reduced pressure on consumers, leading consumer and business sentiment to improve. While the Russian invasion of Ukraine continued to disrupt trade in Europe and elsewhere, market adaptation lessened the economic impact of the ongoing war. The prices of oil, natural gas, and wheat all declined during the reporting period, easing pressure on the world’s economies.

The U.S. Federal Reserve (“Fed”) tightened monetary policy rapidly, raising short-term interest rates seven times during the reporting period. The pace of tightening decelerated as the Fed twice lowered the increment of increase before pausing entirely in June 2023, the first time it declined to take action since the tightening cycle began. However, the Fed then raised interest rates again at its July 2023 meeting and stated that it would continue to monitor economic data. The Fed also continued to decrease the size of its balance sheet by reducing the store of U.S. Treasuries it had accumulated to stabilize markets in the early phases of the coronavirus pandemic.

Despite the tightening financial conditions, the U.S. economy demonstrated continued strength, and U.S. equities advanced. The economy returned to growth in the third quarter of 2022 and showed robust, if slightly slower, growth thereafter. Consumers powered the economy and increased their spending in both nominal and inflation-adjusted terms. Spending was helped by a strong labor market, as unemployment remained very low in historic terms, and the total number of employed persons reached an all-time high. Tightness in the labor market drove higher wages, although wage growth slowed as the reporting period continued.

European stocks outpaced their counterparts in most other regions of the globe, advancing strongly for the reporting period despite modest economic growth. European stocks benefited from a solid recovery following the early phases of the war in Ukraine. While the conflict disrupted critical natural gas supplies, new sources were secured and prices declined, while a warm winter helped moderate consumption. The European Central Bank (“ECB”) responded to the highest inflation since the introduction of the euro by raising interest rates eight times and beginning to reduce the size of its debt holdings.

Stocks in the Asia-Pacific region gained, albeit at a slower pace than other regions of the world. Japan returned to growth in the fourth quarter of 2022 and first quarter of 2023, as strong business investment and exports helped boost the economy and support Japanese equities. However, Chinese stocks were negatively impacted by slowing economic growth. While investors were initially optimistic following China’s lifting of several pandemic-related lockdowns in December 2022, subsequent performance disappointed, and tensions with the U.S. increased. Emerging market stocks advanced, as the improving global economic environment reassured investors. The declining value of the U.S. dollar relative to many other currencies and the slowing pace of the Fed’s interest rate increases also supported emerging market stocks.

 

 

4  

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


Fund Summary as of July 31, 2023      iShares® China Large-Cap ETF

 

Investment Objective

The iShares China Large-Cap ETF (the “Fund”) seeks to track the investment results of an index composed of large-capitalization Chinese equities that trade on the Hong Kong Stock Exchange, as represented by the FTSE China 50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

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

Fund NAV

     2.71      (4.72 )%      1.06       2.71      (21.49 )%       11.13

Fund Market

     2.80        (4.91     1.13         2.80        (22.26      11.87  

Index

     2.25        (4.14     1.75               2.25        (19.05      18.92  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

 

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
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a) 
           

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a) 
      

Annualized
Expense
Ratio
 
 
 
      $  1,000.00          $  961.90          $  3.60               $  1,000.00          $  1,021.10          $  3.71          0.74

 

 

  (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.

 

 

 

F U N D  S U M M A R Y

    5  


Fund Summary as of July 31, 2023  (continued)    iShares® China Large-Cap ETF

 

Portfolio Management Commentary

Large-capitalization Chinese stocks advanced modestly for the reporting period. Media and entertainment companies in the communication services sector contributed the most to the Index’s return, as the Chinese government’s easing stance on regulation of internet firms toward the end of 2022 buoyed investor sentiment. In this environment, a leading social media and gaming company received government approval to release several new video games, bolstering the company’s growth prospects. Further, investor enthusiasm for initiatives related to artificial intelligence drove a rally in the stock of China’s largest search engine provider after the company announced the development of a new chatbot.

In the financials sector, the insurance industry contributed to the Index’s performance as China’s reopening allowed insurance agents to once again meet face-to-face with customers, the country’s economic recovery drove demand higher, and investment returns improved. Insurance companies also benefited from increased demand for financial products with more predictable income streams following a late 2022 bond selloff that led to declines for some wealth management products sold by banks.

On the downside, internet and direct marketing stocks in the consumer discretionary sector detracted from the Index’s return. The reopening of China’s economy dented the profit margins of a major provider of food delivery services, as the end of anti-COVID-19 lockdowns led to reduced demand. In addition, the company lost market share to newer competitors in the space, including one backed by another of China’s largest technology firms.

China’s healthcare sector also detracted from the Index’s return. Life sciences tools and services stocks were pressured by a U.S. executive order introducing a national biotechnology and biomanufacturing initiative. Given the program’s stated goal of reducing American reliance on China, stocks of Chinese companies engaged in contract drug research declined.

Portfolio Information

 

SECTOR ALLOCATION

 

   

Sector

   

Percent of

Total Investments

 

(a) 

Consumer Discretionary

    36.4

Financials

    25.9  

Communication Services

    20.0  

Energy

    4.2  

Consumer Staples

    3.0  

Real Estate

    2.7  

Health Care

    2.5  

Information Technology

    2.5  

Industrials

    1.4  

Materials

    1.4  
TEN LARGEST HOLDINGS

 

   

Security

   
Percent of
Total Investments
 
(a) 

Alibaba Group Holding Ltd.

    10.1

Meituan, Class B

    9.9  

Tencent Holdings Ltd.

    9.1  

China Construction Bank Corp., Class H

    5.4  

JD.com Inc., Class A

    4.8  

Ping An Insurance Group Co. of China Ltd., Class H

    4.4  

Baidu Inc.

    4.4  

NetEase Inc.

    4.1  

Industrial & Commercial Bank of China Ltd., Class H

    3.7  

BYD Co. Ltd., Class H

    3.7  
  (a) 

Excludes money market funds.

 

 

 

6  

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


Fund Summary as of July 31, 2023    iShares® MSCI China A ETF

 

Investment Objective

The iShares MSCI China A ETF (the “Fund”) seeks to track the investment results of an index composed of domestic Chinese equities that trade on the Shanghai or Shenzhen Stock Exchange, as represented by the MSCI China A Inclusion Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns            Cumulative Total Returns  
     1 Year     5 Years    

Since

Inception

            1 Year     5 Years    

Since

Inception

 

Fund NAV

    (9.55 )%      4.88     5.48        (9.55 )%      26.90     46.35

Fund Market

    (9.49     4.36       5.44          (9.49     23.77       45.88  

Index

    (9.28     5.12       4.70                (9.28     28.36       38.73  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSETVALUE)

 

LOGO

The inception date of the Fund was June 13, 2016. The first day of secondary market trading was June 15, 2016.

Index performance through April 25, 2018 reflects the performance of the MSCI China A International Index. Index performance beginning on April 26, 2018 reflects the performance of the MSCI China A Inclusion Index.

Past performance is not an indication of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. See “About Fund Performance” for more information.

Expense Example

 

    Actual           Hypothetical 5% Return           
 

 

 

     

 

 

      

   

Beginning

Account Value

(02/01/23)

 

 

 

      

Ending

Account Value

(07/31/23)

 

 

 

      

Expenses

Paid During

the Period

 

 

(a) 

           

Beginning

Account Value

(02/01/23)

 

 

 

      

Ending

Account Value

(07/31/23)

 

 

 

      

Expenses

Paid During

the Period

 

 

(a) 

      

Annualized

Expense

Ratio

 

 

 

      $  1,000.00          $  907.60          $  1.14               $  1,000.00          $  1,023.60          $  1.20          0.24

 

  (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.

 

 

 

F U N D  S U M M A R Y

    7  


Fund Summary as of July 31, 2023 (continued)    iShares® MSCI China A ETF

 

Portfolio Management Commentary

Domestic Chinese equities declined during the reporting period, negatively impacted by slowing economic growth. While investors were initially optimistic following China’s lifting of several anti-COVID-19 lockdowns in December 2022, subsequent performance disappointed.

The industrials sector detracted the most from the Index’s return, led by stocks of companies in the electrical equipment industry involved in electric vehicle (“EV”) batteries and renewable energy. Battery makers endured production declines as a heat wave early in the reporting period slowed hydropower plants to a standstill, forcing temporary closures of factories. A reduction in EV car deliveries in China amid a weakening economy and supply-chain complications further weighed on the industry.

In the materials sector, chemicals industry stocks detracted from the Index’s performance as anti-COVID-19 lockdowns in Shanghai and other urban areas dampened output. Reduced demand for exports of chemicals to markets like Europe and the U.S. amid economic uncertainty further weighed on Chinese chemicals companies. Additionally, firms that specialize in the mining and processing of lithium were pressured as the price of the metal dropped significantly in response to softening domestic EV demand.

In the consumer staples sector, the packaged foods and meats industry weighed on the Index’s return as a major supplier of flavorings drew scrutiny for its use of additives in products sold domestically. Also within the industry, the profits of pork producers were dampened by the confluence of decreasing pork prices, an oversupply of the meat, and lower consumer demand.

On the upside, the insurance industry in the financials sector contributed to the Index’s performance. Demand for new insurance policies rose, China’s reopening allowed agents to once again meet face-to-face with customers to sell policies, and investment returns within the industry improved.

Portfolio Information

 

SECTOR ALLOCATION

 

   

Sector

   

Percent of

Total Investments

 

(a) 

Financials

    18.7

Industrials

    15.6  

Consumer Staples

    15.0  

Information Technology

    14.9  

Materials

    11.5  

Health Care

    8.2  

Consumer Discretionary

    6.2  

Utilities

    3.6  

Energy

    2.9  

Real Estate

    1.9  

Communication Services

    1.5  
TEN LARGEST HOLDINGS

 

   

Security

   

Percent of

Total Investments

 

(a) 

Kweichow Moutai Co. Ltd., Class A

    5.8

Contemporary Amperex Technology Co. Ltd., Class A

    2.5  

China Merchants Bank Co. Ltd., Class A

    1.8  

Wuliangye Yibin Co. Ltd., Class A

    1.7  

Ping An Insurance Group Co. of China Ltd., Class A

    1.4  

China Yangtze Power Co. Ltd., Class A

    1.2  

BYD Co. Ltd., Class A

    1.2  

Shenzhen Mindray Bio-Medical Electronics Co. Ltd., Class A

    0.9  

Luzhou Laojiao Co. Ltd., Class A

    0.9  

Industrial Bank Co. Ltd., Class A

    0.8  
  (a) 

Excludes money market funds.

 

 

 

8  

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


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. Since shares of a fund may not trade in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

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

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.

 

 

A B O U T  F U N D  P E R F O R M A N C E / D I S C L O S U R E  O F  E X P E N S E S

    9  


Schedule of Investments

July 31, 2023

  

iShares® China Large-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Automobiles — 6.3%            

BYD Co. Ltd., Class H

    5,717,000     $ 203,628,219  

Great Wall Motor Co. Ltd., Class H(a)

    13,759,000       18,826,502  

Li Auto Inc.(b)

    6,262,700       134,441,509  
   

 

 

 
      356,896,230  
Banks — 16.8%  

Agricultural Bank of China Ltd., Class H

    181,959,000       66,186,679  

Bank of China Ltd., Class H

    446,774,000       165,707,502  

Bank of Communications Co. Ltd., Class H

    43,088,200       26,030,888  

China CITIC Bank Corp. Ltd., Class H

    55,128,000       26,659,597  

China Construction Bank Corp., Class H

    510,765,320       297,703,898  

China Everbright Bank Co. Ltd., Class H

    18,256,000       5,438,640  

China Merchants Bank Co. Ltd., Class H

    22,400,938       111,393,813  

China Minsheng Banking Corp. Ltd., Class H

    37,837,100       14,422,175  

Industrial & Commercial Bank of China Ltd., Class H

    424,227,995       207,162,178  

Postal Savings Bank of China Co. Ltd., Class H(c)

    55,421,000       34,166,898  
   

 

 

 
      954,872,268  
Beverages — 2.1%  

China Resources Beer Holdings Co. Ltd.

    9,312,000       59,996,009  

Nongfu Spring Co. Ltd., Class H(a)(c)

    10,328,400       60,219,042  
   

 

 

 
       120,215,051  
Capital Markets — 0.9%  

China International Capital Corp. Ltd., Class H(c)

    8,745,200       19,354,315  

CITIC Securities Co. Ltd., Class H

    13,288,700       28,622,954  

CSC Financial Co. Ltd., Class H(c)

    5,320,000       6,298,109  
   

 

 

 
      54,275,378  
Construction & Engineering — 0.3%  

China Railway Group Ltd., Class H

    24,002,000       15,780,374  
   

 

 

 
Construction Materials — 0.4%  

Anhui Conch Cement Co. Ltd., Class H

    7,002,500       21,139,809  
   

 

 

 
Entertainment — 4.0%  

NetEase Inc.

    10,469,500       228,029,090  
   

 

 

 
Consumer Staples Distribution & Retail — 0.8%  

JD Health International Inc.(b)(c)

    6,100,100       44,593,524  
   

 

 

 
Hotels, Restaurants & Leisure — 12.3%  

Meituan, Class B(b)(c)

    28,971,620       553,071,573  

Yum China Holdings Inc.

    2,391,800       147,287,696  
   

 

 

 
      700,359,269  
Household Durables — 0.8%  

Haier Smart Home Co. Ltd., Class H

    13,706,200       45,072,695  
   

 

 

 
Industrial Conglomerates — 0.6%  

CITIC Ltd.

    29,028,000       32,767,516  
   

 

 

 
Insurance — 7.6%  

China Life Insurance Co. Ltd., Class H

    44,048,000       77,331,110  

China Pacific Insurance Group Co. Ltd., Class H

    15,261,000       41,142,436  

People’s Insurance Co. Group of China Ltd. (The), Class H

    48,492,000       18,668,876  

PICC Property & Casualty Co. Ltd., Class H

    39,856,000       46,748,029  

Ping An Insurance Group Co. of China Ltd., Class H

    33,862,500       246,747,122  
   

 

 

 
      430,637,573  
Interactive Media & Services — 15.5%  

Baidu Inc.(b)

    12,470,800       243,813,953  

Kuaishou Technology(b)(c)

    15,480,100       135,863,333  
Security   Shares     Value  
Interactive Media & Services (continued)  

Tencent Holdings Ltd.

    10,959,200     $ 503,697,114  
   

 

 

 
      883,374,400  
Life Sciences Tools & Services — 2.5%  

WuXi AppTec Co. Ltd., Class H(c)

    2,040,452       19,409,621  

Wuxi Biologics Cayman Inc.(b)(c)

    21,038,000       121,405,999  
   

 

 

 
      140,815,620  
Machinery — 0.2%  

CRRC Corp. Ltd., Class H

    23,746,000       13,105,613  
   

 

 

 
Marine Transportation — 0.3%  

COSCO SHIPPING Holdings Co. Ltd., Class H

    18,108,100       19,165,834  
   

 

 

 
Metals & Mining — 1.0%  

Zijin Mining Group Co. Ltd., Class H

    33,970,000       58,670,422  
   

 

 

 
Broadline Retail — 14.5%            

Alibaba Group Holding Ltd.(b)

    43,889,100       560,875,364  

JD.com Inc., Class A

    12,932,750       267,754,168  
   

 

 

 
      828,629,532  
Oil, Gas & Consumable Fuels — 4.1%  

China Petroleum & Chemical Corp., Class H

    146,690,600       82,152,021  

China Shenhua Energy Co. Ltd., Class H

    19,993,000       59,926,842  

PetroChina Co. Ltd., Class H

    123,170,000       90,312,738  
   

 

 

 
      232,391,601  
Real Estate Management & Development — 2.6%  

China Overseas Land & Investment Ltd.

    22,670,500       53,778,252  

China Resources Land Ltd.

    16,289,333       76,009,720  

China Vanke Co. Ltd., Class H

    13,032,200       18,471,194  
   

 

 

 
      148,259,166  
Specialty Retail — 0.2%  

China Tourism Group Duty Free Corp.
Ltd.(c)

    642,600       10,322,845  
   

 

 

 
Technology Hardware, Storage & Peripherals — 2.4%  

Xiaomi Corp., Class B(b)(c)

    86,711,000       137,946,884  
   

 

 

 
Textiles, Apparel & Luxury Goods — 1.5%        

ANTA Sports Products Ltd.

    7,413,800       87,860,298  
   

 

 

 

Total Long-Term Investments — 97.7%
(Cost: $5,922,528,041)

      5,565,180,992  
   

 

 

 
Short-Term Securities            
Money Market Funds — 0.4%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.42%(d)(e)(f)

    12,271,954       12,275,636  

BlackRock Cash Funds: Treasury, SL Agency Shares, 5.22%(d)(e)

    8,890,000       8,890,000  
   

 

 

 

Total Short-Term Securities — 0.4%
(Cost: $21,162,585)

      21,165,636  
   

 

 

 

Total Investments — 98.1%
(Cost: $5,943,690,626)

      5,586,346,628  

Other Assets Less Liabilities — 1.9%

      106,444,719  
   

 

 

 

Net Assets — 100.0%

    $  5,692,791,347  
   

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

Non-income producing security.

(c)

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

 

 

10  

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


Schedule of Investments  (continued)

July 31, 2023

  

iShares® China Large-Cap ETF

 

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

(f) 

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

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended July 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
07/31/22
 
 
   

Purchases

at Cost

 

 

   
Proceeds
from Sale
 
 
   

Net Realized

Gain (Loss)

 

 

   

Change in

Unrealized

Appreciation

(Depreciation)

 

 

 

 

   
Value at
07/31/23
 
 
   

Shares
Held at
07/31/23
 
 
 
    Income      

Capital

Gain

Distributions

from

Underlying

Funds

 

 

 

 

 

 

   


 

 

 

 

 

 

 

   
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 53,497,119     $     $ (41,228,881 )(a)    $ 5,682     $ 1,716     $ 12,275,636       12,271,954     $ 350,872 (b)    $    
 

BlackRock Cash Funds: Treasury, SL Agency Shares

    2,890,000       6,000,000 (a)                        8,890,000       8,890,000       192,234       2    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
          $ 5,682     $ 1,716     $ 21,165,636       $ 543,106     $ 2    
         

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (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

           

FTSE China A50

     4,636        08/30/23      $ 126,215      $ 7,134,202  
           

 

 

 

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  

 

 

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Unrealized appreciation on futures contracts(a)

   $      $      $ 7,134,202      $      $      $      $ 7,134,202  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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 July 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

   $      $      $ (9,275,558    $      $      $      $ (9,275,558
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                    

Futures contracts

   $      $      $ 18,431,138      $      $      $      $ 18,431,138  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

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

    11  


Schedule of Investments  (continued)

July 31, 2023

  

iShares® China Large-Cap ETF

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 37,875,307   

 

 

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

   $      $ 5,565,180,992      $      $ 5,565,180,992  

Short-Term Securities

           

Money Market Funds

     21,165,636                      21,165,636  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $  21,165,636      $ 5,565,180,992      $      $ 5,586,346,628  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative Financial Instruments(a)

           

Assets

           

Equity Contracts

   $      $ 7,134,202      $      $ 7,134,202  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

See notes to financial statements.

 

 

12  

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


Schedule of Investments 

July 31, 2023

  

iShares® MSCI China A ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 0.5%            

AECC Aero-Engine Control Co. Ltd., Class A

    63,398     $ 205,837  

AECC Aviation Power Co. Ltd., Class A

    148,198       839,424  

AVICOPTER PLC, Class A

    42,299       240,926  

Kuang-Chi Technologies Co. Ltd., Class A

    127,340       267,513  
   

 

 

 
      1,553,700  
Air Freight & Logistics — 0.8%            

SF Holding Co. Ltd., Class A

    274,815       1,915,624  

YTO Express Group Co. Ltd., Class A

    189,900       418,224  

Yunda Holding Co. Ltd., Class A

    169,200       246,227  
   

 

 

 
      2,580,075  
Passenger Airlines — 1.0%            

Air China Ltd., Class A(a)

    443,100       580,434  

China Eastern Airlines Corp. Ltd., Class A(a)

    699,900       479,496  

China Southern Airlines Co. Ltd., Class A(a)

    657,324       644,161  

Hainan Airlines Holding Co. Ltd.

    2,467,000       577,001  

Juneyao Airlines Co. Ltd., Class A(a)

    126,600       322,858  

Spring Airlines Co. Ltd., Class A(a)

    62,800       538,280  
   

 

 

 
       3,142,230  
Automobile Components — 1.3%            

Bethel Automotive Safety Systems Co. Ltd.

    21,100       267,559  

Changzhou Xingyu Automotive Lighting Systems Co. Ltd., Class A

    21,197       424,795  

Fuyao Glass Industry Group Co. Ltd., Class A

    105,500       560,010  

Huayu Automotive Systems Co. Ltd., Class A

    169,600       468,925  

Huizhou Desay Sv Automotive Co. Ltd., Class A

    36,000       784,888  

Ningbo Joyson Electronic Corp., Class A

    84,800       226,159  

Ningbo Tuopu Group Co. Ltd., Class A

    66,805       687,734  

Sailun Group Co. Ltd., Class A

    168,800       265,941  

Shandong Linglong Tyre Co. Ltd., Class A

    84,800       286,049  

Shenzhen Kedali Industry Co. Ltd., Class A

    18,600       331,184  
   

 

 

 
      4,303,244  
Automobiles — 2.3%            

AIMA Technology Group Co. Ltd.

    41,900       200,241  

BYD Co. Ltd., Class A

    102,573       3,915,246  

Chongqing Changan Automobile Co. Ltd., Class A

    466,838       1,049,962  

Great Wall Motor Co. Ltd., Class A

    147,789       612,897  

Guangzhou Automobile Group Co. Ltd., Class A

    274,300       449,992  

SAIC Motor Corp. Ltd., Class A

    443,506       962,698  

Seres Group Co. Ltd., NVS

    83,700       531,454  
   

 

 

 
      7,722,490  
Banks — 9.8%            

Agricultural Bank of China Ltd., Class A

    4,879,100       2,472,162  

Bank of Beijing Co. Ltd., Class A

    1,251,900       818,222  

Bank of Changsha Co. Ltd., Class A

    232,100       267,268  

Bank of Chengdu Co. Ltd., Class A

    211,077       418,318  

Bank of China Ltd., Class A

    2,012,100       1,101,346  

Bank of Communications Co. Ltd., Class A

    2,260,102       1,841,917  

Bank of Hangzhou Co. Ltd., Class A

    338,088       580,799  

Bank of Jiangsu Co. Ltd., Class A

    841,100       850,750  

Bank of Nanjing Co. Ltd., Class A

    592,080       710,703  

Bank of Ningbo Co. Ltd., Class A

    383,921       1,566,916  

Bank of Shanghai Co. Ltd., Class A

    838,669       724,224  

Bank of Suzhou Co. Ltd.

    211,000       210,937  

China Construction Bank Corp., Class A

    564,400       486,913  

China Everbright Bank Co. Ltd., Class A

    2,679,700       1,170,726  

China Merchants Bank Co. Ltd., Class A

    1,169,602       5,836,811  

China Minsheng Banking Corp. Ltd., Class A

    2,046,780       1,151,304  
Security   Shares     Value  
Banks (continued)            

China Zheshang Bank Co. Ltd., Class A

    1,285,700     $ 500,550  

Chongqing Rural Commercial Bank Co. Ltd., Class A

    573,830       315,740  

Huaxia Bank Co. Ltd., Class A

    767,860       623,460  

Industrial & Commercial Bank of China Ltd., Class A

    3,631,800       2,425,119  

Industrial Bank Co. Ltd., Class A

    1,187,147       2,771,140  

Ping An Bank Co. Ltd., Class A

    1,118,356       1,931,340  

Postal Savings Bank of China Co. Ltd., Class A

    1,669,700       1,214,390  

Shanghai Pudong Development Bank Co. Ltd., Class A

    1,697,120       1,807,255  

Shanghai Rural Commercial Bank Co. Ltd.

    569,700       470,508  
   

 

 

 
      32,268,818  
Beverages — 11.1%            

Anhui Gujing Distillery Co. Ltd., Class A

    24,199       921,577  

Anhui Kouzi Distillery Co. Ltd., Class A

    29,800       254,441  

Anhui Yingjia Distillery Co. Ltd., Class A

    42,200       412,959  

Beijing Yanjing Brewery Co. Ltd., Class A

    147,700       233,739  

Chongqing Brewery Co. Ltd., Class A

    29,095       370,315  

Hebei Hengshui Laobaigan Liquor Co. Ltd.

    41,900       166,435  

Jiangsu King’s Luck Brewery JSC Ltd., Class A

    80,140       686,599  

Jiangsu Yanghe Brewery Joint-Stock Co. Ltd., Class A

    87,800       1,802,938  

JiuGui Liquor Co. Ltd., Class A

    21,100       311,208  

Kweichow Moutai Co. Ltd., Class A

    71,789       18,946,857  

Luzhou Laojiao Co. Ltd., Class A

    83,100       2,808,956  

Shanghai Bairun Investment Holding Group Co. Ltd., Class A(a)

    66,488       344,472  

Shanxi Xinghuacun Fen Wine Factory Co. Ltd., Class A

    68,801       2,303,419  

Shede Spirits Co. Ltd.

    21,000       455,172  

Sichuan Swellfun Co. Ltd., Class A

    32,100       339,151  

Tsingtao Brewery Co. Ltd., Class A

    47,800       660,971  

Wuliangye Yibin Co. Ltd., Class A

    219,714       5,580,539  
   

 

 

 
       36,599,748  
Biotechnology — 1.4%            

Beijing Tiantan Biological Products Corp. Ltd., Class A

    83,700       293,002  

Beijing Wantai Biological Pharmacy Enterprise Co. Ltd., Class A

    53,637       520,727  

BGI Genomics Co. Ltd., Class A

    26,700       224,516  

Bloomage Biotechnology Corp. Ltd.

    26,330       359,697  

Chongqing Zhifei Biological Products Co. Ltd., Class A

    138,900       908,319  

Daan Gene Co. Ltd., Class A

    84,444       119,735  

Hualan Biological Engineering Inc., Class A

    106,748       344,250  

Imeik Technology Development Co. Ltd., Class A

    12,800       853,621  

Shanghai Junshi Biosciences Co. Ltd., Class A(a)

    42,868       244,530  

Shanghai RAAS Blood Products Co. Ltd., Class A

    358,700       358,224  

Shenzhen Kangtai Biological Products Co. Ltd., Class A(a)

    54,156       222,187  

Walvax Biotechnology Co. Ltd., Class A

    84,498       321,207  
   

 

 

 
      4,770,015  
Building Products — 0.3%            

Beijing New Building Materials PLC, Class A

    84,800       336,390  

Guangdong Kinlong Hardware Products Co. Ltd., Class A

    21,120       191,188  

Zhejiang Weixing New Building Materials Co. Ltd., Class A

    84,404       256,336  

Zhuzhou Kibing Group Co. Ltd., Class A

    152,800       196,035  
   

 

 

 
      979,949  
Capital Markets — 6.2%            

BOC International China Co. Ltd., Class A

    147,700       234,830  

Caitong Securities Co. Ltd., Class A

    253,251       295,949  

Changjiang Securities Co. Ltd., Class A

    338,000       315,746  

China Galaxy Securities Co. Ltd., Class A

    253,600       483,099  

 

 

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

    13  


Schedule of Investments (continued)

July 31, 2023

  

iShares® MSCI China A ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Capital Markets (continued)            

China Great Wall Securities Co. Ltd., Class A

    211,400     $ 263,368  

China International Capital Corp. Ltd., Class A

    106,700       597,222  

China Merchants Securities Co. Ltd., Class A

    422,007       884,782  

CITIC Securities Co. Ltd., Class A

    696,370       2,353,380  

CSC Financial Co. Ltd., Class A

    253,639       945,731  

Dongxing Securities Co. Ltd., Class A

    189,939       242,320  

East Money Information Co. Ltd., Class A

    894,139       2,017,426  

Everbright Securities Co. Ltd., Class A

    211,400       543,520  

First Capital Securities Co. Ltd., Class A

    253,200       223,405  

Founder Securities Co. Ltd., Class A

    439,000       445,519  

GF Securities Co. Ltd., Class A

    338,000       776,063  

Guangzhou Yuexiu Financial Holdings Group Co. Ltd., Class A

    237,891       248,320  

Guolian Securities Co. Ltd., Class A(a)

    147,700       210,836  

Guosen Securities Co. Ltd., Class A

    394,100       534,933  

Guotai Junan Securities Co. Ltd., Class A

    422,445       922,267  

Guoyuan Securities Co. Ltd., Class A

    253,644       262,284  

Haitong Securities Co. Ltd., Class A

    550,200       798,041  

Hithink RoyalFlush Information Network Co. Ltd., Class A

    32,200       853,054  

Huatai Securities Co. Ltd., Class A

    423,200       1,006,105  

Huaxi Securities Co. Ltd., Class A

    148,100       191,372  

Industrial Securities Co. Ltd., Class A

    488,808       477,736  

Nanjing Securities Co. Ltd., Class A

    188,200       230,316  

Orient Securities Co. Ltd., Class A

    414,321       627,863  

SDIC Capital Co. Ltd., Class A

    344,600       380,467  

Shanxi Securities Co. Ltd., Class A

    211,457       192,762  

Shenwan Hongyuan Group Co. Ltd., Class A

    1,289,500       910,027  

Sinolink Securities Co. Ltd., Class A

    188,200       257,202  

SooChow Securities Co. Ltd., Class A

    275,138       349,431  

Southwest Securities Co. Ltd., Class A

    372,300       247,289  

Western Securities Co. Ltd., Class A

    254,420       256,182  

Zheshang Securities Co. Ltd., Class A

    211,427       321,763  

Zhongtai Securities Co. Ltd.

    381,000       412,088  
   

 

 

 
       20,312,698  
Chemicals — 6.2%            

Asia - Potash International Investment Guangzhou Co. Ltd.(a)

    42,200       161,794  

Chengxin Lithium Group Co. Ltd., Class A

    43,100       166,219  

CNGR Advanced Material Co. Ltd.

    37,900       328,395  

CNNC Hua Yuan Titanium Dioxide Co. Ltd., Class A

    215,040       183,940  

Do-Fluoride New Materials Co. Ltd., Class A

    59,400       162,941  

Ganfeng Lithium Group Co. Ltd., Class A

    89,270       748,738  

Guangzhou Tinci Materials Technology Co. Ltd., Class A

    105,520       544,520  

Hangzhou Oxygen Plant Group Co. Ltd., Class A

    63,300       302,083  

Haohua Chemical Science & Technology Co. Ltd., NVS

    41,900       211,575  

Hengli Petrochemical Co. Ltd., Class A(a)

    401,315       874,840  

Hengyi Petrochemical Co. Ltd., Class A(a)

    211,876       216,633  

Hoshine Silicon Industry Co. Ltd., Class A

    42,200       425,964  

Huafon Chemical Co. Ltd., Class A

    253,200       263,720  

Hubei Feilihua Quartz Glass Co. Ltd.

    21,100       117,218  

Hubei Xingfa Chemicals Group Co. Ltd., Class A

    56,700       191,829  

Hunan Changyuan Lico Co. Ltd.

    99,905       156,546  

Inner Mongolia Junzheng Energy & Chemical Industry Group Co. Ltd., Class A

    465,000       291,055  

Inner Mongolia Yuan Xing Energy Co. Ltd., Class A

    194,400       204,212  

Jiangsu Eastern Shenghong Co. Ltd., Class A

    358,700       630,946  

Jiangsu Yangnong Chemical Co. Ltd., Class A

    27,430       272,660  

Jiangsu Yoke Technology Co. Ltd., Class A

    36,100       344,088  

LB Group Co. Ltd., Class A

    126,609       337,071  
Security   Shares     Value  
Chemicals (continued)            

Luxi Chemical Group Co. Ltd., Class A

    105,500     $ 156,184  

Ningbo Shanshan Co. Ltd.

    126,600       274,486  

Ningxia Baofeng Energy Group Co. Ltd., Class A

    400,900       795,700  

Qinghai Salt Lake Industry Co. Ltd., Class A(a)

    316,600       886,828  

Rongsheng Petrochemical Co. Ltd., Class A

    571,301       1,017,066  

Satellite Chemical Co. Ltd., Class A

    178,177       401,960  

Shandong Hualu Hengsheng Chemical Co. Ltd., Class A

    127,460       603,605  

Shanghai Putailai New Energy Technology Co. Ltd., Class A

    114,614       632,284  

Shenzhen Capchem Technology Co. Ltd., Class A

    52,820       360,694  

Shenzhen Dynanonic Co. Ltd.

    16,320       252,356  

Shenzhen Senior Technology Co. Ltd., Class A

    63,317       150,698  

Sichuan Hebang Biotechnology Co. Ltd., Class A

    485,300       177,399  

Sichuan Yahua Industrial Group Co. Ltd., Class A

    61,600       153,773  

Sinoma Science & Technology Co. Ltd., Class A

    84,400       273,438  

Sinopec Shanghai Petrochemical Co. Ltd., Class A(a)

    443,531       201,081  

Skshu Paint Co. Ltd., Class A(a)

    34,404       394,895  

Sunresin New Materials Co. Ltd., NVS

    31,100       251,753  

SuZhou TA&A Ultra Clean Technology Co. Ltd., Class A

    49,880       224,821  

Tianqi Lithium Corp., Class A

    91,700       856,084  

Tongkun Group Co. Ltd., Class A(a)

    127,497       266,561  

Wanhua Chemical Group Co. Ltd., Class A

    183,700       2,518,046  

Weihai Guangwei Composites Co. Ltd., Class A

    49,952       212,282  

Xinjiang Zhongtai Chemical Co. Ltd., Class A

    147,700       153,024  

Yunnan Energy New Material Co. Ltd., Class A(a)

    53,015       717,192  

Yunnan Yuntianhua Co. Ltd.

    93,800       242,670  

Zangge Mining Co. Ltd.

    87,800       295,985  

Zhejiang Juhua Co. Ltd., Class A

    148,100       309,413  

Zhejiang Longsheng Group Co. Ltd., Class A

    188,200       254,721  

Zibo Qixiang Tengda Chemical Co. Ltd., Class A

    165,700       153,080  
   

 

 

 
       20,325,066  
Commercial Services & Supplies — 0.2%            

Shanghai M&G Stationery Inc., Class A

    63,300       396,598  

Zhejiang Weiming Environment Protection Co. Ltd., Class A

    84,753       215,762  
   

 

 

 
      612,360  
Communications Equipment — 0.9%            

Guangzhou Haige Communications Group Inc. Co., Class A

    126,600       176,660  

Hengtong Optic-Electric Co. Ltd., Class A

    132,500       285,390  

Tianjin 712 Communication & Broadcasting Co. Ltd., Class A

    42,600       167,672  

Yealink Network Technology Corp. Ltd., Class A

    76,077       400,735  

Zhongji Innolight Co. Ltd., Class A

    42,688       765,674  

ZTE Corp., Class A

    219,300       1,202,928  
   

 

 

 
      2,999,059  
Construction & Engineering — 2.1%            

China Energy Engineering Corp. Ltd.

    1,942,100       666,294  

China National Chemical Engineering Co. Ltd., Class A

    337,610       410,178  

China Railway Group Ltd., Class A

    1,181,600       1,330,872  

China State Construction Engineering Corp. Ltd., Class A

    2,426,500       2,078,260  

Metallurgical Corp. of China Ltd., Class A

    1,014,800       595,564  

Power Construction Corp. of China Ltd., Class A

    991,700       833,399  

Shanghai Construction Group Co. Ltd., Class A

    570,900       237,397  

Sichuan Road & Bridge Co. Ltd., Class A

    413,800       572,503  

Sinoma International Engineering Co.

    146,400       276,554  
   

 

 

 
      7,001,021  

 

 

14  

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


Schedule of Investments (continued)

July 31, 2023

  

iShares® MSCI China A ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Construction Materials — 0.6%            

Anhui Conch Cement Co. Ltd., Class A

    232,500     $ 884,741  

BBMG Corp., Class A

    569,700       192,239  

China Jushi Co. Ltd., Class A

    232,450       483,400  

Huaxin Cement Co. Ltd., Class A

    84,419       164,708  

Tangshan Jidong Cement Co. Ltd., Class A

    168,800       193,121  
   

 

 

 
      1,918,209  
Containers & Packaging — 0.0%            

Shenzhen YUTO Packaging Technology Co. Ltd.

    42,200       152,062  
   

 

 

 
Distributors — 0.1%            

Wuchan Zhongda Group Co. Ltd., Class A

    295,814       212,515  
   

 

 

 
Diversified Consumer Services — 0.1%            

Offcn Education Technology Co. Ltd., Class A(a)

    345,100       221,460  
   

 

 

 
Financial Services — 0.1%            

AVIC Industry-Finance Holdings Co. Ltd., Class A

    506,401       291,705  
   

 

 

 
Electrical Equipment — 6.1%            

Beijing Easpring Material Technology Co. Ltd., Class A

    42,200       291,899  

Contemporary Amperex Technology Co. Ltd., Class A

    249,491       8,317,279  

Dajin Heavy Industry Co. Ltd.

    42,200       179,086  

Dongfang Electric Corp. Ltd., Class A

    148,190       399,420  

Eve Energy Co. Ltd., Class A

    106,682       885,834  

Fangda Carbon New Material Co. Ltd., Class A(a)

    211,428       183,573  

Ginlong Technologies Co. Ltd., Class A

    25,200       333,869  

Goldwind Science & Technology Co. Ltd., Class A

    187,651       294,294  

Gotion High-tech Co. Ltd., Class A(a)

    107,000       412,855  

Guangzhou Great Power Energy & Technology Co. Ltd.(a)

    42,200       277,483  

Hongfa Technology Co. Ltd., Class A

    28,900       140,495  

Hoymiles Power Electronics Inc., NVS

    4,609       210,934  

Jiangsu GoodWe Power Supply Technology Co. Ltd., NVS

    9,472       219,873  

Jiangsu Zhongtian Technology Co. Ltd., Class A

    190,300       419,461  

Jiangxi Special Electric Motor Co. Ltd., NVS(a)

    105,500       173,330  

Ming Yang Smart Energy Group Ltd., Class A

    120,100       303,497  

NARI Technology Co. Ltd., Class A

    463,888       1,579,749  

Ningbo Orient Wires & Cables Co. Ltd.

    42,200       274,719  

Ningbo Ronbay New Energy Technology Co. Ltd.

    24,541       172,655  

Pylon Technologies Co. Ltd., NVS

    9,825       244,031  

Shanghai Electric Group Co. Ltd., Class A(a)

    761,250       508,422  

Shenzhen Kstar Science & Technology Co. Ltd.

    45,500       213,899  

Sieyuan Electric Co. Ltd.

    43,000       294,991  

Sungrow Power Supply Co. Ltd., Class A

    88,700       1,386,022  

Sunwoda Electronic Co. Ltd., Class A

    105,599       243,337  

Suzhou Maxwell Technologies Co. Ltd., Class A

    16,256       419,038  

TBEA Co. Ltd., Class A

    274,820       631,008  

Titan Wind Energy Suzhou Co. Ltd., Class A(a)

    106,300       212,207  

Zhefu Holding Group Co. Ltd., Class A

    300,600       180,928  

Zhejiang Chint Electrics Co. Ltd., Class A

    126,600       502,399  
   

 

 

 
       19,906,587  
Electronic Equipment, Instruments & Components — 4.4%  

Avary Holding Shenzhen Co. Ltd., Class A

    114,500       392,811  

BOE Technology Group Co. Ltd., Class A

    2,092,128       1,239,514  

Chaozhou Three-Circle Group Co. Ltd., Class A

    105,900       481,950  

China Railway Signal & Communication Corp. Ltd., Class A

    428,781       360,382  

China Zhenhua Group Science & Technology Co. Ltd., Class A

    35,200       440,392  

Foxconn Industrial Internet Co. Ltd., Class A

    569,706       1,784,033  
Security   Shares     Value  
Electronic Equipment, Instruments & Components (continued)  

GoerTek Inc., Class A

    190,704     $ 478,115  

Guangzhou Shiyuan Electronic Technology Co. Ltd., Class A

    42,867       370,602  

Hengdian Group DMEGC Magnetics Co. Ltd.

    84,400       205,889  

Huagong Tech Co. Ltd., Class A

    62,800       316,296  

Lens Technology Co. Ltd., Class A

    274,700       475,623  

Lingyi iTech Guangdong Co., Class A

    381,800       328,668  

Luxshare Precision Industry Co. Ltd., Class A

    402,168       1,821,941  

Maxscend Microelectronics Co. Ltd., Class A

    34,556       582,903  

Raytron Technology Co. Ltd., Class A

    25,496       165,534  

Shanghai Friendess Electronic Technology Corp. Ltd., Class A

    7,914       246,761  

Shengyi Technology Co. Ltd., Class A

    127,082       283,519  

Shennan Circuits Co. Ltd., Class A

    30,767       329,738  

Shenzhen Kaifa Technology Co. Ltd., Class A

    83,700       228,097  

Shenzhen SED Industry Co. Ltd., NVS

    41,900       176,016  

Shenzhen Sunlord Electronics Co. Ltd., Class A

    39,200       149,460  

Suzhou Dongshan Precision Manufacturing Co. Ltd., Class A

    91,300       287,081  

Tianma Microelectronics Co. Ltd., Class A(a)

    148,500       194,805  

Unisplendour Corp. Ltd., Class A

    150,791       576,369  

Universal Scientific Industrial Shanghai Co. Ltd., Class A

    104,600       211,747  

Westone Information Industry Inc., Class A

    45,300       168,923  

Wingtech Technology Co. Ltd., Class A

    69,211       450,830  

Wuhan Guide Infrared Co. Ltd., Class A

    210,004       241,626  

WUS Printed Circuit Kunshan Co. Ltd., Class A

    105,590       324,326  

Xiamen Faratronic Co. Ltd.

    15,800       298,233  

Zhejiang Dahua Technology Co. Ltd., Class A

    192,400       591,599  

Zhejiang Supcon Technology Co. Ltd.

    40,998       310,717  
   

 

 

 
       14,514,500  
Energy Equipment & Services — 0.1%            

Offshore Oil Engineering Co. Ltd., Class A

    254,868       223,601  

Yantai Jereh Oilfield Services Group Co. Ltd., Class A

    63,385       248,645  
   

 

 

 
      472,246  
Entertainment — 0.9%            

37 Interactive Entertainment Network Technology Group Co. Ltd., Class A

    126,693       477,217  

Beijing Enlight Media Co. Ltd., Class A

    168,800       198,125  

G-Bits Network Technology Xiamen Co. Ltd., Class A

    5,500       331,804  

Giant Network Group Co. Ltd., Class A

    104,600       207,953  

Kunlun Tech Co. Ltd., Class A(a)

    62,800       325,945  

Mango Excellent Media Co. Ltd., Class A

    107,680       518,350  

Perfect World Co. Ltd., Class A

    105,552       221,915  

Wanda Film Holding Co. Ltd., Class A(a)

    128,600       260,745  

Zhejiang Century Huatong Group Co. Ltd., Class A(a)

    422,882       312,978  
   

 

 

 
      2,855,032  
Consumer Staples Distribution & Retail — 0.2%  

DaShenLin Pharmaceutical Group Co. Ltd., Class A

    65,131       253,737  

Yifeng Pharmacy Chain Co. Ltd., Class A

    59,183       314,981  

Yonghui Superstores Co. Ltd., Class A(a)

    522,600       256,221  
   

 

 

 
      824,939  
Food Products — 3.4%            

Angel Yeast Co. Ltd., Class A

    46,096       239,263  

Anjoy Foods Group Co. Ltd., Class A

    19,300       417,396  

Beijing Dabeinong Technology Group Co. Ltd., Class A

    232,500       230,464  

Chongqing Fuling Zhacai Group Co. Ltd., Class A

    55,100       145,629  

Foshan Haitian Flavouring & Food Co. Ltd., Class A

    274,379       1,781,815  

Fujian Sunner Development Co. Ltd., Class A

    63,300       189,483  

 

 

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

    15  


Schedule of Investments (continued)

July 31, 2023

  

iShares® MSCI China A ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Food Products (continued)            

Guangdong Haid Group Co. Ltd., Class A

    105,599     $ 744,389  

Hebei Yangyuan Zhihui Beverage Co. Ltd., Class A

    62,800       232,963  

Heilongjiang Agriculture Co. Ltd., Class A

    105,900       217,703  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    190,300       672,715  

Inner Mongolia Yili Industrial Group Co. Ltd., Class A

    359,500       1,443,896  

Jonjee Hi-Tech Industrial And Commercial Holding Co. Ltd., Class A(a)

    37,462       183,987  

Juewei Food Co. Ltd., Class A

    42,200       226,821  

Meihua Holdings Group Co. Ltd.

    170,900       222,217  

Muyuan Foods Co. Ltd., Class A

    316,919       1,971,075  

New Hope Liuhe Co. Ltd., Class A(a)

    267,400       468,062  

Toly Bread Co. Ltd., Class A

    89,938       132,966  

Wens Foodstuffs Group Co. Ltd., Class A

    381,446       1,015,169  

Yihai Kerry Arawana Holdings Co. Ltd., Class A

    85,200       502,341  

Yuan Longping High-Tech Agriculture Co. Ltd., Class A(a)

    84,400       192,963  
   

 

 

 
       11,231,317  
Gas Utilities — 0.1%  

ENN Natural Gas Co. Ltd., Class A

    148,900       383,312  
   

 

 

 
Health Care Equipment & Supplies — 1.4%            

Autobio Diagnostics Co. Ltd., Class A

    43,200       338,815  

iRay Technology Co. Ltd.

    5,716       200,957  

Jafron Biomedical Co. Ltd., Class A

    38,450       127,541  

Jiangsu Yuyue Medical Equipment & Supply Co. Ltd., Class A

    63,700       301,235  

Lepu Medical Technology Beijing Co. Ltd., Class A

    105,900       308,645  

Ovctek China Inc., Class A

    43,480       207,264  

Shenzhen Mindray Bio-Medical Electronics Co. Ltd., Class A

    68,434       2,839,757  

Shenzhen New Industries Biomedical Engineering Co. Ltd., Class A

    42,200       334,171  
   

 

 

 
      4,658,385  
Health Care Providers & Services — 1.3%  

Aier Eye Hospital Group Co. Ltd., Class A

    529,281       1,493,388  

China Meheco Co. Ltd., Class A

    90,520       166,754  

China National Medicines Corp. Ltd., Class A

    41,900       195,266  

Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., Class A

    84,800       378,389  

Guangzhou Kingmed Diagnostics Group Co. Ltd., Class A

    32,097       323,868  

Huadong Medicine Co. Ltd., Class A

    105,925       644,342  

Jointown Pharmaceutical Group Co. Ltd., Class A

    170,651       236,604  

Meinian Onehealth Healthcare Holdings Co. Ltd., Class A(a)

    211,360       213,994  

Shanghai Pharmaceuticals Holding Co. Ltd., Class A

    148,109       416,974  

Topchoice Medical Corp., Class A(a)

    21,100       341,159  
   

 

 

 
      4,410,738  
Hotels, Restaurants & Leisure — 0.2%            

BTG Hotels Group Co. Ltd., Class A(a)

    63,300       186,461  

Shanghai Jinjiang International Hotels Co. Ltd., Class A

    48,200       336,269  

Songcheng Performance Development Co. Ltd., Class A

    147,772       277,593  
   

 

 

 
      800,323  
Household Durables — 1.5%            

Beijing Roborock Technology Co. Ltd., Class A

    7,165       276,940  

Ecovacs Robotics Co. Ltd., Class A

    39,300       435,416  

Gree Electric Appliances Inc. of Zhuhai, Class A

    172,700       937,754  

Haier Smart Home Co. Ltd., Class A

    359,500       1,244,990  
Security   Shares     Value  
Household Durables (continued)            

Hangzhou Robam Appliances Co. Ltd., Class A

    42,264     $ 172,759  

Jason Furniture Hangzhou Co. Ltd., Class A(a)

    61,220       388,588  

Oppein Home Group Inc., Class A

    29,983       451,687  

TCL Technology Group Corp., Class A(a)

    1,031,081       619,633  

Zhejiang Supor Co. Ltd., Class A

    46,098       322,833  
   

 

 

 
      4,850,600  
Independent Power and Renewable Electricity Producers — 3.5%  

CECEP Solar Energy Co. Ltd., Class A

    214,900       198,595  

CECEP Wind Power Corp, Class A

    387,240       198,405  

China National Nuclear Power Co. Ltd., Class A

    1,097,247       1,123,056  

China Three Gorges Renewables Group Co. Ltd., Class A

    1,624,700       1,226,223  

China Yangtze Power Co. Ltd., Class A

    1,350,488       4,059,166  

Datang International Power Generation Co. Ltd.(a)

    485,300       212,517  

GD Power Development Co. Ltd., Class A

    1,012,800       523,070  

Huadian Power International Corp. Ltd., Class A

    464,200       368,689  

Huaneng Power International Inc., Class A(a)

    528,700       636,132  

SDIC Power Holdings Co. Ltd., Class A

    439,200       782,156  

Shanghai Electric Power Co. Ltd., Class A

    168,800       243,206  

Shenergy Co. Ltd., Class A

    292,900       277,981  

Shenzhen Energy Group Co. Ltd., Class A

    295,806       284,409  

Sichuan Chuantou Energy Co. Ltd., Class A

    253,200       512,443  

Wintime Energy Group Co. Ltd., NVS

    1,297,100       276,065  

Zhejiang Zheneng Electric Power Co. Ltd., Class A(a)

    648,200       437,149  
   

 

 

 
       11,359,262  
Industrial Conglomerates — 0.1%            

China Baoan Group Co. Ltd., Class A

    148,100       238,967  
   

 

 

 
Insurance — 2.5%            

China Life Insurance Co. Ltd., Class A

    148,500       763,694  

China Pacific Insurance Group Co. Ltd., Class A

    400,916       1,682,628  

New China Life Insurance Co. Ltd., Class A

    127,400       812,035  

People’s Insurance Co. Group of China Ltd. (The), Class A

    549,900       486,527  

Ping An Insurance Group Co. of China Ltd., Class A

    618,923       4,572,666  
   

 

 

 
      8,317,550  
IT Services — 0.1%            

DHC Software Co. Ltd., Class A

    168,800       160,656  

Isoftstone Information Technology Group Co. Ltd., NVS

    62,650       209,584  
   

 

 

 
      370,240  
Life Sciences Tools & Services — 0.7%            

Hangzhou Tigermed Consulting Co. Ltd., Class A

    26,104       251,562  

Joinn Laboratories China Co. Ltd., Class A

    47,073       185,164  

Pharmaron Beijing Co. Ltd., Class A

    94,950       376,357  

WuXi AppTec Co. Ltd., Class A

    148,648       1,495,772  
   

 

 

 
      2,308,855  
Machinery — 2.9%            

China CSSC Holdings Ltd., Class A

    253,200       1,183,860  

CRRC Corp. Ltd., Class A

    1,394,190       1,310,108  

FAW Jiefang Group Co. Ltd., Class A(a)

    168,800       219,144  

Hoyuan Green Energy Co. Ltd., Class A

    35,465       252,023  

Jiangsu Hengli Hydraulic Co. Ltd., Class A

    84,424       847,934  

Keda Industrial Group Co. Ltd.

    105,500       168,127  

Ningbo Deye Technology Co. Ltd., NVS

    21,160       371,262  

North Industries Group Red Arrow Co. Ltd., Class A

    71,800       177,584  

Riyue Heavy Industry Co. Ltd., Class A

    65,982       167,941  

Sany Heavy Industry Co. Ltd., Class A

    486,150       1,209,341  

Shenzhen Inovance Technology Co. Ltd., Class A

    84,411       839,660  

Shuangliang Eco-Energy Systems Co. Ltd.

    104,600       171,699  

 

 

16  

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


Schedule of Investments (continued)

July 31, 2023

  

iShares® MSCI China A ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Machinery (continued)  

Weichai Power Co. Ltd., Class A

    379,800     $ 702,020  

XCMG Construction Machinery Co. Ltd., Class A

    676,000       669,207  

Zhejiang Dingli Machinery Co. Ltd., Class A

    21,598       178,633  

Zhejiang Sanhua Intelligent Controls Co. Ltd., Class A

    104,600       408,246  

Zhuzhou CRRC Times Electric Co. Ltd., NVS

    40,369       254,592  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class A

    402,450       388,214  
   

 

 

 
       9,519,595  
Marine Transportation — 0.3%  

COSCO SHIPPING Holdings Co. Ltd., Class A

    720,850       1,022,104  
   

 

 

 
Media — 0.3%  

Focus Media Information Technology Co. Ltd., Class A

    825,760       861,939  
   

 

 

 
Metals & Mining — 4.6%  

Aluminum Corp. of China Ltd., Class A

    760,716       679,484  

Anhui Honglu Steel Construction Group Co. Ltd., Class A

    48,530       224,244  

Baoshan Iron & Steel Co. Ltd., Class A

    1,268,870       1,140,946  

Chifeng Jilong Gold Mining Co. Ltd., Class A(a)

    83,700       173,427  

China Minmetals Rare Earth Co. Ltd., Class A

    63,300       271,577  

China Northern Rare Earth Group High-Tech Co. Ltd., Class A

    199,200       689,222  

CMOC Group Ltd., Class A

    993,700       860,295  

GEM Co. Ltd., Class A

    275,996       272,235  

Guangdong HEC Technology Holding Co. Ltd., Class A

    168,800       168,868  

Henan Shenhuo Coal & Power Co. Ltd.

    126,600       278,996  

Hesteel Co. Ltd., Class A

    652,600       220,205  

Huaibei Mining Holdings Co. Ltd.

    147,700       255,674  

Hunan Valin Steel Co. Ltd., Class A

    403,840       339,344  

Inner Mongolia BaoTou Steel Union Co. Ltd., Class A(a)

    2,600,100       688,334  

Jiangxi Copper Co. Ltd., Class A

    105,900       296,867  

Jinduicheng Molybdenum Co. Ltd., Class A

    188,400       303,857  

Pangang Group Vanadium Titanium & Resources Co. Ltd., Class A(a)

    527,500       303,581  

Shandong Gold Mining Co. Ltd., Class A

    211,428       722,519  

Shandong Nanshan Aluminum Co. Ltd., Class A

    697,500       316,672  

Shanxi Meijin Energy Co. Ltd., Class A(a)

    232,500       252,973  

Shanxi Taigang Stainless Steel Co. Ltd., Class A

    359,100       216,248  

Shenghe Resources Holding Co. Ltd., Class A

    96,700       171,115  

Sinomine Resource Group Co. Ltd., Class A

    41,792       264,881  

Tianshan Aluminum Group Co. Ltd., Class A

    256,100       251,903  

Tibet Summit Resources Co. Ltd., Class-A(a)

    42,200       107,658  

Tongling Nonferrous Metals Group Co. Ltd., Class A

    602,500       274,446  

Western Mining Co. Ltd., Class A

    147,700       254,536  

Western Superconducting Technologies Co. Ltd., Class A

    35,991       266,680  

Xiamen Tungsten Co. Ltd., Class A

    84,898       226,835  

Yintai Gold Co. Ltd., Class A

    160,220       293,360  

YongXing Special Materials Technology Co. Ltd., Class A

    30,640       232,453  

Youngy Co. Ltd.

    21,100       181,534  

Yunnan Aluminium Co. Ltd., Class A

    189,900       395,194  

Yunnan Tin Co. Ltd., Class A

    84,400       196,788  

Zhejiang Huayou Cobalt Co. Ltd., Class A

    89,112       629,330  

Zhongjin Gold Corp. Ltd., Class A

    271,800       405,274  

Zijin Mining Group Co. Ltd., Class A

    1,183,200       2,160,841  
   

 

 

 
      14,988,396  
Oil, Gas & Consumable Fuels — 2.7%  

China Merchants Energy Shipping Co. Ltd., Class A

    468,800       419,274  
Security   Shares     Value  
Oil, Gas & Consumable Fuels (continued)  

China Petroleum & Chemical Corp., Class A

    1,814,843     $ 1,576,748  

China Shenhua Energy Co. Ltd., Class A

    380,299       1,512,644  

COSCO SHIPPING Energy Transportation Co. Ltd., Class A

    189,949       390,124  

Guanghui Energy Co. Ltd., Class A

    380,983       379,932  

Inner Mongolia Dian Tou Energy Corp. Ltd.

    126,600       243,802  

Jizhong Energy Resources Co. Ltd.

    211,000       194,065  

PetroChina Co. Ltd., Class A

    1,216,000       1,350,415  

Pingdingshan Tianan Coal Mining Co. Ltd.

    126,600       141,793  

Shaanxi Coal Industry Co. Ltd., Class A

    550,201       1,251,958  

Shan Xi Hua Yang Group New Energy Co. Ltd.

    211,000       240,328  

Shanxi Coking Coal Energy Group Co. Ltd., Class A

    316,560       402,392  

Shanxi Lu’an Environmental Energy Development Co. Ltd., Class A

    169,200       387,360  

Yankuang Energy Group Co. Ltd., Class A

    222,450       552,518  
   

 

 

 
       9,043,353  
Paper & Forest Products — 0.1%  

Shandong Sun Paper Industry JSC Ltd., Class A

    169,200       284,728  
   

 

 

 
Personal Care Products — 0.2%  

By-health Co. Ltd., Class A

    84,800       251,141  

Yunnan Botanee Bio-Technology Group Co. Ltd.

    18,000       262,083  
   

 

 

 
      513,224  
Pharmaceuticals — 3.2%  

Apeloa Pharmaceutical Co. Ltd., Class A

    63,700       157,250  

Asymchem Laboratories Tianjin Co. Ltd., Class A

    21,380       373,235  

Beijing Tongrentang Co. Ltd., Class A

    73,800       527,227  

Betta Pharmaceuticals Co. Ltd., Class A

    21,112       160,959  

Changchun High & New Technology Industry Group Inc., Class A

    25,840       543,938  

China Resources Sanjiu Medical & Pharmaceutical Co. Ltd., Class A

    63,300       443,780  

Dong-E-E-Jiao Co. Ltd., Class A

    42,200       289,109  

Hubei Jumpcan Pharmaceutical Co. Ltd., Class A

    42,200       155,572  

Humanwell Healthcare Group Co. Ltd., Class A

    84,400       267,257  

Jiangsu Hengrui Medicine Co. Ltd., Class A

    359,942       2,248,639  

Joincare Pharmaceutical Group Industry Co. Ltd., Class A

    105,900       186,459  

Livzon Pharmaceutical Group Inc., Class A

    42,200       217,413  

Nanjing King-Friend Biochemical Pharmaceutical Co. Ltd., Class A

    90,800       172,630  

Porton Pharma Solutions Ltd.

    21,100       89,303  

Shandong Buchang Pharmaceuticals Co. Ltd., Class A

    66,327       189,364  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class A(a)

    126,663       562,460  

Shenzhen Salubris Pharmaceuticals Co. Ltd., Class A

    58,800       264,288  

Shijiazhuang Yiling Pharmaceutical Co. Ltd., Class A

    84,860       296,535  

Sichuan Kelun Pharmaceutical Co. Ltd., Class A

    84,800       327,932  

Yunnan Baiyao Group Co. Ltd., Class A

    105,560       795,603  

Zhangzhou Pientzehuang Pharmaceutical Co. Ltd., Class A

    36,199       1,470,942  

Zhejiang Huahai Pharmaceutical Co. Ltd., Class A

    85,204       219,608  

Zhejiang Jiuzhou Pharmaceutical Co. Ltd., Class A

    42,900       161,924  

Zhejiang NHU Co. Ltd., Class A

    169,968       392,858  

Zhejiang Wolwo Bio-Pharmaceutical Co. Ltd., Class A

    25,600       135,722  
   

 

 

 
      10,650,007  
Real Estate Management & Development — 1.9%  

China Merchants Shekou Industrial Zone Holdings Co. Ltd., Class A

    443,100       884,901  

 

 

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

    17  


Schedule of Investments (continued)

July 31, 2023

  

iShares® MSCI China A ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Real Estate Management & Development (continued)  

China Vanke Co. Ltd., Class A

    555,400     $ 1,187,022  

Gemdale Corp., Class A

    253,618       307,092  

Greenland Holdings Corp. Ltd., Class A(a)

    648,000       294,056  

Hainan Airport Infrastructure Co. Ltd., NVS

    627,100       374,776  

Hangzhou Binjiang Real Estate Group Co. Ltd.

    168,800       255,498  

Poly Developments and Holdings Group Co. Ltd., Class A

    676,731       1,350,211  

Seazen Holdings Co. Ltd., Class A(a)

    126,666       292,452  

Shanghai Lingang Holdings Corp. Ltd., Class A

    127,023       230,416  

Shenzhen Overseas Chinese Town Co. Ltd., Class A(a)

    465,856       320,518  

Youngor Group Co. Ltd., Class A

    295,794       295,638  

Zhejiang China Commodities City Group Co. Ltd., Class A

    316,500       377,058  
   

 

 

 
       6,169,638  
Ground Transportation — 0.7%  

Beijing-Shanghai High Speed Railway Co. Ltd., Class A

    1,881,500       1,441,567  

Daqin Railway Co. Ltd., Class A

    865,100       866,739  
   

 

 

 
      2,308,306  
Semiconductors & Semiconductor Equipment — 6.5%  

3peak Inc.

    5,986       197,047  

Advanced Micro-Fabrication Equipment Inc., Class A(a)

    38,738       776,240  

Amlogic Shanghai Co. Ltd.(a)

    22,347       275,920  

ASR Microelectronics Co. Ltd.(a)

    22,064       237,825  

Cambricon Technologies Corp. Ltd.(a)

    22,992       528,964  

China Resources Microelectronics Ltd.

    70,619       567,609  

Flat Glass Group Co. Ltd., Class A

    84,800       416,606  

GalaxyCore Inc., NVS

    82,089       184,666  

GigaDevice Semiconductor Inc., Class A

    42,757       687,577  

Hangzhou Chang Chuan Technology Co. Ltd.

    42,200       248,712  

Hangzhou First Applied Material Co. Ltd., Class A

    97,210       476,413  

Hangzhou Lion Electronics Co. Ltd.

    42,200       227,136  

Hangzhou Silan Microelectronics Co. Ltd., Class A

    84,400       362,343  

Ingenic Semiconductor Co. Ltd., Class A

    34,300       402,939  

JA Solar Technology Co. Ltd., Class A

    182,780       851,308  

JCET Group Co. Ltd., Class A

    106,700       493,325  

Jiangsu Pacific Quartz Co. Ltd., NVS

    21,600       310,667  

Jinko Solar Co. Ltd.

    378,584       660,420  

LONGi Green Energy Technology Co. Ltd., Class A

    436,846       1,830,363  

Montage Technology Co. Ltd., Class A

    66,745       541,147  

National Silicon Industry Group Co. Ltd., Class A(a)

    125,600       371,239  

NAURA Technology Group Co. Ltd., Class A

    32,200       1,280,752  

Risen Energy Co. Ltd.

    64,800       209,453  

Rockchip Electronics Co. Ltd.

    21,000       219,742  

Sanan Optoelectronics Co. Ltd., Class A

    271,800       645,973  

SG Micro Corp., Class A

    30,995       366,301  

Shanghai Aiko Solar Energy Co. Ltd.

    111,900       404,374  

Shanghai Fudan Microelectronics Group Co. Ltd.

    31,017       241,335  

Shenzhen SC New Energy Technology Corp., Class A

    21,100       277,030  

StarPower Semiconductor Ltd., Class A

    10,000       306,842  

TCL Zhonghuan Renewable Energy Technology Co. Ltd., Class A

    221,123       900,919  

Tianshui Huatian Technology Co. Ltd., Class A

    189,700       254,823  

TongFu Microelectronics Co. Ltd., Class A

    86,400       263,027  

Tongwei Co. Ltd., Class A

    256,293       1,250,124  

Trina Solar Co. Ltd.

    121,789       642,737  

Unigroup Guoxin Microelectronics Co. Ltd., Class A

    49,679       649,079  

Verisilicon Microelectronics Shanghai Co. Ltd.(a)

    26,754       258,480  

Will Semiconductor Co. Ltd. Shanghai, Class A

    63,355       911,273  

Wuxi Autowell Technology Co. Ltd.

    8,456       203,788  
Security   Shares     Value  
Semiconductors & Semiconductor Equipment (continued)  

Xinjiang Daqo New Energy Co. Ltd.

    98,862     $ 570,998  

Yangzhou Yangjie Electronic Technology Co. Ltd.

    21,300       128,097  

Zhejiang Jingsheng Mechanical & Electrical Co. Ltd., Class A

    84,401       730,353  
   

 

 

 
       21,363,966  
Software — 2.2%  

360 Security Technology Inc., Class A(a)

    402,500       668,986  

Beijing E-Hualu Information Technology Co. Ltd., Class A(a)

    41,900       180,647  

Beijing Kingsoft Office Software Inc., Class A

    27,344       1,555,971  

Beijing Shiji Information Technology Co. Ltd., Class A(a)

    133,595       260,293  

China National Software & Service Co. Ltd., Class A

    54,920       400,104  

Hundsun Technologies Inc., Class A

    113,282       652,960  

Iflytek Co. Ltd., Class A

    126,650       1,114,883  

NavInfo Co. Ltd., Class A(a)

    126,600       198,800  

Qi An Xin Technology Group Inc.(a)

    37,413       265,387  

Sangfor Technologies Inc., Class A(a)

    25,400       401,953  

Shanghai Baosight Software Co. Ltd., Class A

    108,888       732,620  

Thunder Software Technology Co. Ltd., Class A

    31,900       403,564  

Yonyou Network Technology Co. Ltd., Class A

    190,749       504,302  
   

 

 

 
      7,340,470  
Specialty Retail — 0.7%  

China Tourism Group Duty Free Corp. Ltd., Class A

    110,341       1,950,202  

Shanghai Yuyuan Tourist Mart Group Co. Ltd., Class A

    232,406       247,294  
   

 

 

 
      2,197,496  
Technology Hardware, Storage & Peripherals — 0.7%  

China Greatwall Technology Group Co. Ltd., Class A

    190,400       326,594  

GRG Banking Equipment Co. Ltd., Class A

    126,600       204,140  

Inspur Electronic Information Industry Co. Ltd., Class A

    84,560       540,774  

Ninestar Corp., Class A

    84,410       395,912  

Shenzhen Transsion Holding Co. Ltd., Class A

    45,463       781,084  
   

 

 

 
      2,248,504  
Trading Companies & Distributors — 0.3%  

Beijing United Information Technology Co. Ltd., Class A

    53,694       287,944  

COSCO SHIPPING Development Co. Ltd., Class A

    591,600       208,766  

Shanxi Coal International Energy Group Co. Ltd.

    104,600       213,734  

Sichuan New Energy Power Co. Ltd., Class A(a)

    73,000       149,058  

Xiamen C & D Inc., Class A

    168,800       265,265  
   

 

 

 
      1,124,767  
Transportation Infrastructure — 0.4%  

Guangzhou Baiyun International Airport Co. Ltd., Class A(a)

    125,500       253,039  

Liaoning Port Co Ltd., Class A

    1,223,800       282,659  

Shanghai International Airport Co. Ltd., Class A(a)

    63,322       420,873  

Shanghai International Port Group Co. Ltd., Class A

    402,500       305,456  
   

 

 

 
      1,262,027  
Wireless Telecommunication Services — 0.4%  

China United Network Communications Ltd., Class A

    1,812,700       1,311,540  
   

 

 

 

Total Common Stocks — 99.6%
(Cost: $264,297,364)

 

    327,679,337  
   

 

 

 

 

 

18  

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


Schedule of Investments (continued)

July 31, 2023

  

iShares® MSCI China A ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Rights

 

Pharmaceuticals — 0.0%

 

Kangmei Pharmaceutical Co. Ltd. (Expires 12/31/49)(a)

    30,064     $  
   

 

 

 

Total Rights — 0.0%
(Cost: $0)

 

     
   

 

 

 

Total Long-Term Investments — 99.6%
(Cost: $264,297,364)

 

    327,679,337  
   

 

 

 

Short-Term Securities

 

Money Market Funds — 0.3%  

BlackRock Cash Funds: Treasury, SL Agency Shares, 5.22%(b)(c)

    870,000       870,000  
   

 

 

 

Total Short-Term Securities — 0.3%
(Cost: $870,000)

 

    870,000  
   

 

 

 

Total Investments — 99.9%
(Cost: $265,167,364)

 

    328,549,337  

Other Assets Less Liabilities — 0.1%

 

    438,671  
   

 

 

 

Net Assets — 100.0%

 

  $ 328,988,008  
   

 

 

 
(a) 

Non-income producing security.

(b) 

Affiliate of the Fund.

(c) 

Annualized 7-day yield as of period end.

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended July 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

07/31/22

    

Purchases

at Cost

   

Proceeds

from Sale

    

Net Realized

Gain (Loss)

    

Change in

Unrealized

Appreciation

(Depreciation)

    

Value at

07/31/23

    

Shares

Held at

07/31/23

     Income     

Capital

Gain
Distributions
from
Underlying
Funds

 

 

 

BlackRock Cash Funds: Treasury, SL Agency Shares

  $      $ 870,000 (a)    $      $      $      $ 870,000        870,000      $ 11,161      $  
         

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 

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

       

FTSE China A50

    76       08/30/23     $ 1,015     $ 33,081  
       

 

 

 

 

 

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

    19  


Schedule of Investments (continued)

July 31, 2023

  

iShares® MSCI China A ETF

 

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  

 

 

Assets — Derivative Financial Instruments

                   

Futures contracts

                   

Unrealized appreciation on futures contracts(a)

  $      $      $ 33,081      $      $      $      $ 33,081  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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 July 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

  $      $      $ (77,633   $      $      $      $ (77,633
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

 

Futures contracts

  $      $      $ 41,204     $      $      $      $ 41,204  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Futures contracts:

 

Average notional value of contracts — long

  $ 880,187  

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

  $ 4,185,721      $ 323,493,616      $      $ 327,679,337  

Rights

                          

Short-Term Securities

          

Money Market Funds

    870,000                      870,000  
 

 

 

    

 

 

    

 

 

    

 

 

 
  $  5,055,721      $ 323,493,616      $      $ 328,549,337  
 

 

 

    

 

 

    

 

 

    

 

 

 

Derivative Financial Instruments(a)

          

Assets

          

Equity Contracts

  $      $ 33,081      $     —      $ 33,081  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

See notes to financial statements.

 

 

20  

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


Statements of Assets and Liabilities

July 31, 2023

 

   

iShares

China Large-Cap

ETF

    

iShares

MSCI China

AETF

 

 

 

ASSETS

    

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

  $ 5,565,180,992      $ 327,679,337  

Investments, at value — affiliated(c)

    21,165,636        870,000  

Cash

    17,943         

Cash pledged for futures contracts

    11,332,000        68,000  

Foreign currency, at value(d)

    23,002,969        488,990  

Receivables:

    

Securities lending income — affiliated

    3,996         

Dividends — unaffiliated

    84,319,770        5,553  

Dividends — affiliated

    15,291        3,005  

Variation margin on futures contracts

    3,181,171        952  
 

 

 

    

 

 

 

Total assets

    5,708,219,768        329,115,837  
 

 

 

    

 

 

 

LIABILITIES

    

Bank overdraft

           64,543  

Collateral on securities loaned, at value

    12,130,635         

Payables:

    

Investment advisory fees

    3,297,786        63,286  
 

 

 

    

 

 

 

Total liabilities

    15,428,421        127,829  
 

 

 

    

 

 

 

Commitments and contingent liabilities

    

NET ASSETS

  $ 5,692,791,347      $ 328,988,008  
 

 

 

    

 

 

 

NET ASSETS CONSIST OF

    

Paid-in capital

  $ 9,940,811,561      $ 393,282,602  

Accumulated loss

    (4,248,020,214      (64,294,594
 

 

 

    

 

 

 

NET ASSETS

  $ 5,692,791,347      $ 328,988,008  
 

 

 

    

 

 

 

NET ASSET VALUE

    

Shares outstanding

    187,350,000        10,550,000  
 

 

 

    

 

 

 

Net asset value

  $ 30.39      $ 31.18  
 

 

 

    

 

 

 

Shares authorized

    Unlimited        Unlimited  
 

 

 

    

 

 

 

Par value

    None        None  
 

 

 

    

 

 

 

(a) Investments, at cost — unaffiliated

  $ 5,922,528,041      $ 264,297,364  

(b) Securities loaned, at value

  $ 11,492,040      $  

(c)  Investments, at cost — affiliated

  $ 21,162,585      $ 870,000  

(d) Foreign currency, at cost

  $ 22,990,035      $ 487,081  

See notes to financial statements.

 

 

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

    21  


Statements of Operations

Year Ended July 31, 2023

 

   

iShares

China

Large-Cap

ETF

   

iShares

MSCI China
AETF

 

 

 

INVESTMENT INCOME

   

Dividends — unaffiliated

  $ 167,469,979     $ 8,281,918  

Dividends — affiliated

    192,234       11,161  

Interest — unaffiliated

    85,532       51,919  

Securities lending income — affiliated — net

    350,872        

Foreign taxes withheld

    (14,462,666     (831,373
 

 

 

   

 

 

 

Total investment income

    153,635,951       7,513,625  
 

 

 

   

 

 

 

EXPENSES

   

Investment advisory

    38,791,801       2,326,392  

Commitment costs

          4,473  
 

 

 

   

 

 

 

Total expenses

    38,791,801       2,330,865  

Less:

   

Investment advisory fees waived

          (1,400,308
 

 

 

   

 

 

 

Total expenses after fees waived

    38,791,801       930,557  
 

 

 

   

 

 

 

Net investment income

    114,844,150       6,583,068  
 

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

   

Net realized gain (loss) from:

   

Investments — unaffiliated

    (732,517,399     (5,478,178

Investments — affiliated

    5,682        

Capital gain distributions from underlying funds — affiliated

    2        

Foreign currency transactions

    142,130       34,506  

Futures contracts

    (9,275,558     (77,633
 

 

 

   

 

 

 
    (741,645,143     (5,521,305
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

   

Investments — unaffiliated

    737,540,692       (53,055,303

Investments — affiliated

    1,716        

Foreign currency translations

    290,263       (69

Futures contracts

    18,431,138       41,204  
 

 

 

   

 

 

 
    756,263,809       (53,014,168
 

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    14,618,666       (58,535,473
 

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ 129,462,816     $ (51,952,405
 

 

 

   

 

 

 

See notes to financial statements.

 

 

22  

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


Statements of Changes in Net Assets

 

   

iShares

China Large-Cap ETF

        

iShares

MSCI China A ETF

 
 

 

 

      

 

 

 
          Year Ended
07/31/23
    Year Ended
07/31/22
         Year Ended
07/31/23
    Year Ended
07/31/22
 

 

 

INCREASE (DECREASE) IN NET ASSETS

            

OPERATIONS

            

Net investment income

        $ 114,844,150     $ 111,144,219        $ 6,583,068     $ 8,412,505  

Net realized loss

      (741,645,143     (696,107,215        (5,521,305     (100,193,129

Net change in unrealized appreciation (depreciation)

      756,263,809       (875,861,384        (53,014,168     (67,300,859
   

 

 

   

 

 

      

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

      129,462,816       (1,460,824,380        (51,952,405     (159,081,483
   

 

 

   

 

 

      

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

            

Decrease in net assets resulting from distributions to shareholders

      (137,823,574     (82,196,257        (8,340,710     (8,184,031
   

 

 

   

 

 

      

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

            

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

      407,457,486       2,024,227,917          (161,024,123     90,044,292  
   

 

 

   

 

 

      

 

 

   

 

 

 

NET ASSETS

            

Total increase (decrease) in net assets

      399,096,728       481,207,280          (221,317,238     (77,221,222

Beginning of year

      5,293,694,619       4,812,487,339          550,305,246       627,526,468  
   

 

 

   

 

 

      

 

 

   

 

 

 

End of year

    $ 5,692,791,347     $ 5,293,694,619        $ 328,988,008     $ 550,305,246  
   

 

 

   

 

 

      

 

 

   

 

 

 

 

(a) 

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

See notes to financial statements.

 

 

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

    23  


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares China Large-Cap ETF  
 

 

 

 
   

Year Ended

07/31/23

    Year Ended
07/31/22
    Year Ended
07/31/21
    Year Ended
07/31/20
    Year Ended
07/31/19
 

 

 

Net asset value, beginning of year

  $ 30.37     $ 40.36     $ 41.57     $ 41.63     $ 43.14  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.62       0.75       0.88       0.89       1.07  

Net realized and unrealized gain (loss)(b)

    0.15       (10.16     (1.26     0.17       (1.73
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    0.77       (9.41     (0.38     1.06       (0.66
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions from net investment income(c)

    (0.75     (0.58     (0.83     (1.12     (0.85
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 30.39     $ 30.37     $ 40.36     $ 41.57     $ 41.63  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return(d)

         

Based on net asset value

    2.71     (23.54 )%      (1.13 )%      2.59     (1.44 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets(e)

         

Total expenses

    0.74     0.74     0.74     0.74     0.74
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    2.19     2.12     1.90     2.18     2.55
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 5,692,791     $ 5,293,695     $ 4,812,487     $ 3,429,710     $ 5,039,411  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(f)

    23     29     62     18     14
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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) 

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

(f) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

24  

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


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares MSCI China A ETF  
 

 

 

 
    Year Ended
07/31/23
    Year Ended
07/31/22
    Year Ended
07/31/21
    Year Ended
07/31/20
    Year Ended
07/31/19
 

 

 

Net asset value, beginning of year

    $ 35.39       $ 41.70       $ 36.39       $ 28.68       $ 27.06  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

      0.54         0.46         0.52         0.59         0.84  

Net realized and unrealized gain (loss)(b)

      (3.92       (6.29       5.22         7.47         1.67  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

      (3.38       (5.83       5.74         8.06         2.51  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(c)

                   

From net investment income

      (0.83       (0.48       (0.43       (0.35       (0.19

From net realized gain

                                      (0.70
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

      (0.83       (0.48       (0.43       (0.35       (0.89
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

    $ 31.18       $ 35.39       $ 41.70       $ 36.39       $ 28.68  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return(d)

                   

Based on net asset value

      (9.55 )%        (14.18 )%        15.79       28.40       9.97
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets(e)

                   

Total expenses

      0.60       0.60       0.60       0.63       0.65
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total expenses after fees waived

      0.24       0.24       0.24       0.24       0.24
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      1.70       1.15       1.24       1.98       3.10
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                   

Net assets, end of year (000)

    $ 328,988       $ 550,305       $ 627,526       $ 484,005       $ 141,989  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(f)

      26 %(g)         64       38 %(g)         31 %(g)         44 %(g)  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

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

(f)  Portfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash in U.S. dollars (“cash creations”).

 

  

  

   

  

  

   

(g)   Portfolio turnover rate excluding cash creations was as follows:

      13               24       28       22
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

See notes to financial statements.

 

 

F I N A N C I A L  H I G H L I G H T S

    25  


Notes to Financial Statements

 

1.

ORGANIZATION

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

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

 

   
iShares ETF  

Diversification

Classification

 

China Large-Cap

    Non-diversified  

MSCI China A

    Diversified  

 

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. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized daily on an accrual basis.

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 July 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.

Bank Overdraft: The iShares MSCI China A ETF had outstanding cash disbursements exceeding deposited cash amounts at the custodian and utilized its ability to temporarily borrow from that custodian for operational purposes. The Funds are obligated to repay the custodian for any overdraft, including any related costs or expenses, where applicable.

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.

 

 

26  

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


Notes to Financial Statements (continued)

 

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

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

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date. 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 Trustees of the Trust (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.

 

 

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

    27  


Notes to Financial Statements (continued)

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by an approved bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Fund is required to have a value of at least 102% of the current market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of 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  

 

 

China Large-Cap

        

Credit Suisse Securities (USA) LLC

  $ 112,201      $ (112,023   $     $ 178 (b) 

Morgan Stanley

    11,379,839        (11,379,839            
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 11,492,040      $ (11,491,862   $     $ 178  
 

 

 

    

 

 

   

 

 

   

 

 

 

 

  (a) 

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

 
  (b) 

The market value of the loaned securities is determined as of July 31, 2023. Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

Futures Contracts: 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).

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.

 

 

28  

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


Notes to Financial Statements (continued)

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

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

For its investment advisory services to the iShares China Large-Cap ETF, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the average daily net assets of the Fund as follows:

 

   
Average Daily Net Assets   Investment Advisory Fees  

First $6 billion

    0.74

Over $6 billion, up to and including $9 billion

    0.67  

Over $9 billion, up to and including $12 billion

    0.60  

Over $12 billion

    0.54  

For its investment advisory services to the iShares MSCI China A ETF, BFA is entitled to an annual investment advisory fee of 0.60%, accrued daily and paid monthly by the Fund, based on the average daily net assets of the Fund.

Expense Waivers: BFA may from time to time voluntarily waive and/or reimburse fees or expenses in order to limit total annual fund operating expenses (excluding acquired fund fees and expenses, if any). BFA has elected to implement a voluntary fee waiver in order to limit the iShares MSCI China A ETF’s total annual operating expenses after fee waiver to 0.24%, and currently intends to keep such voluntary fee waiver for the Fund in place through December 31, 2023. Any such voluntary waiver or reimbursement may be eliminated by BFA at any time.

This amount is included in investment advisory fees waived in the Statement of Operations. For the year ended July 31, 2023, the amounts waived in investment advisory fees pursuant to this arrangement were as follows:

 

   
iShares ETF   Amounts Waived  

MSCI China A

  $ 1,400,308  

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.

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.

 

 

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

    29  


Notes to Financial Statements (continued)

 

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 year ended July 31, 2023, the Funds paid BTC the following amounts for securities lending agent services:

 

   
iShares ETF   Amounts  

China Large-Cap

  $ 88,820  

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

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

For the year ended July 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)

 

China Large-Cap

  $ 10,592,013        $ 22,764,517        $ (24,654,678

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 year ended July 31, 2023, purchases and sales of investments, excluding short-term securities and in-kind transactions, were as follows:

 

     
iShares ETF   Purchases        Sales  

China Large-Cap

  $ 1,599,045,074        $ 1,207,403,913  

MSCI China A

    98,762,518          261,952,184  

There were no in-kind transactions for the year ended July 31, 2023.

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Trust’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 July 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.

The tax character of distributions paid was as follows:

 

 

 
iShares ETF   Year Ended
07/31/23
       Year Ended
07/31/22
 

 

 

China Large-Cap

      

Ordinary income

  $ 137,823,574        $ 82,196,257  
 

 

 

      

 

 

 

MSCI China A

      

Ordinary income

  $ 8,340,710        $ 8,184,031  
 

 

 

      

 

 

 

As of July 31, 2023, the tax components of accumulated net earnings (losses) were as follows:

 

iShares ETF

   

Undistributed

Ordinary Income

 

 

    

Non-expiring

Capital Loss

Carryforwards

 

 

(a) 

   

Net Unrealized

Gains (Losses)

 

(b) 

    Total  

China Large-Cap

  $ 105,366,586      $ (3,429,917,973   $ (923,468,827   $ (4,248,020,214

MSCI China A

    7,209,269        (113,808,609     42,304,746       (64,294,594

 

  (a) 

Amounts available to offset future realized capital gains.

 

 

 

30  

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


Notes to Financial Statements (continued)

 

  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales, characterization of corporate actions and the realization for tax purposes of unrealized gains on investments in passive foreign investment companies.

 

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 July 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)

 

China Large-Cap

   $  6,517,224,208      $ 423,762,750      $ (1,347,506,128    $  (923,743,378

MSCI China A

     286,279,241        83,125,069        (40,821,892      42,303,177  

 

9.

LINE OF CREDIT

The iShares MSCI China A 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 August 11, 2023. 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 year ended July 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: The iShares MSCI China A ETF invests in A-shares (i.e., equity securities of companies based in the People’s Republic of China (“China” or “PRC”) that trade on the Shanghai Stock Exchange and Shenzhen Stock Exchange) primarily through the Shanghai-Hong Kong Stock Connect program or the Shenzhen-Hong Kong Stock Connect program (together, “Stock Connect”). Investing in A-shares through Stock Connect is subject to trading, clearance and settlement procedures, which could pose risks to the Fund. Trading through Stock Connect is subject to a daily quota, which limits the maximum net purchases under Stock Connect each day. The daily quota may restrict the Fund’s ability to invest in A-shares on a timely basis and could affect the Fund’s ability to effectively pursue its investment strategy. Additionally, the Fund may be subject to the risk of price fluctuations on days when the Chinese markets are open, but Stock Connect is not trading. The A-shares market has a higher propensity for trading suspensions than many other global equity markets.

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

 

 

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

    31  


Notes to Financial Statements (continued)

 

company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise 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.

The 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.

The Funds invest a significant portion of their assets in securities of issuers located in China or with significant exposure to Chinese issuers. Investments in Chinese securities, including certain Hong Kong-listed securities, involve risks specific to China. China may be subject to considerable degrees of economic, political and social instability and demonstrates significantly higher volatility from time to time in comparison to developed markets. Chinese markets generally continue to experience inefficiency, volatility and pricing anomalies resulting from governmental influence, a lack of publicly available information and/or political and social instability. Internal social unrest or confrontations with other neighboring countries may disrupt economic development in China and result in a greater risk of currency fluctuations, currency non-convertibility, interest rate fluctuations and higher rates of inflation. Incidents involving China’s or the region’s security may cause uncertainty in Chinese markets and may adversely affect the Chinese economy and a fund’s investments. Reduction in spending on Chinese products and services, institution of tariffs or other trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy. In addition, measures may be taken to limit the flow of capital and/or sanctions may be imposed, which could prohibit or restrict the ability to own or transfer fund assets and may also include retaliatory actions, such as seizure of fund assets.

The 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.

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

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.

 

 

32  

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


Notes to Financial Statements (continued)

 

Transactions in capital shares were as follows:

 

 

 
    

Year Ended

07/31/23

    

Year Ended

07/31/22

 
  

 

 

    

 

 

 
iShares ETF    Shares      Amount      Shares      Amount  

 

 

China Large-Cap

           

Shares sold

     21,300,000      $ 633,923,422        55,800,000      $ 2,047,521,737  

Shares redeemed

     (8,250,000      (226,465,936      (750,000      (23,293,820
  

 

 

    

 

 

    

 

 

    

 

 

 
     13,050,000      $ 407,457,486        55,050,000      $ 2,024,227,917  
  

 

 

    

 

 

    

 

 

    

 

 

 

MSCI China A

           

Shares sold

     1,650,000      $ 54,145,546        10,350,000      $ 432,813,220  

Shares redeemed

     (6,650,000      (215,169,669      (9,850,000      (342,768,928
  

 

 

    

 

 

    

 

 

    

 

 

 
     (5,000,000    $ (161,024,123      500,000      $ 90,044,292  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

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

 

12.

SUBSEQUENT EVENTS

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were available to be issued and the following items were noted:

Effective August 11, 2023, the Syndicated Credit Agreement to which the Participating Funds are party was extended until August 2024 under the same terms.

 

 

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

    33  


Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of

iShares Trust and Shareholders of each of the two funds listed in the table below

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of each of the funds listed in the table below (two of the funds constituting iShares Trust , hereafter collectively referred to as the “Funds”) as of July 31, 2023, the related statements of operations for the year ended July 31, 2023, the statements of changes in net assets for each of the two years in the period ended July 31, 2023, including the related notes, and the financial highlights for each of the five years in the period ended July 31, 2023 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of July 31, 2023, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended July 31, 2023 and each of the financial highlights for each of the five years in the period ended July 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

 

 

iShares China Large-Cap ETF

iShares MSCI China A ETF

 

Basis for Opinions

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

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

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of July 31, 2023 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

September 22, 2023

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

 

 

34  

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


Important Tax Information (unaudited)

 

The following amounts, or maximum amounts allowable by law, are hereby designated as qualified dividend income for individuals for the fiscal year ended July 31, 2023:

 

   
iShares ETF   

Qualified Dividend

Income

 

China Large-Cap

   $ 134,506,250  

MSCI China A

     7,856,959  

The Funds intend to pass through to their shareholders the following amounts, or maximum amounts allowable by law, of foreign source income earned and foreign taxes paid for the fiscal year ended July 31, 2023:

 

     
iShares ETF   

Foreign Source

Income Earned

    

Foreign

Taxes Paid

 

China Large-Cap

   $ 194,691,110      $  10,299,986  

MSCI China A

     8,281,917        831,104  

 

 

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

    35  


Board Review and Approval of Investment Advisory Contract

 

iShares China Large-Cap ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees (the “Board”), including a majority of Board Members who are not “interested persons” of the Trust (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 Trust 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 higher than the median of the investment advisory fee rates and overall expenses (net of any waivers and reimbursements) of the funds in its Peer Group, excluding iShares funds. The Board also noted the tradability, liquidity and developed capital markets ecosystem associated with the Fund that differentiates it from other ETFs in the marketplace.

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.

 

 

36  

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


Board Review and Approval of Investment Advisory Contract  (continued)

 

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

Based on this review, the Board concluded that the information considered with respect to the profits realized by BFA and its affiliates under the Advisory Agreement and from other relationships between the Fund and BFA and/or its affiliates, if any, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

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

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

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts.

The Board received detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate.

The Board considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement and noted that the investment advisory fee rate under the Advisory Agreement for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, including, but not limited to, payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities, as applicable (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services, and BlackRock’s profile in the investment community. The Board further considered other direct benefits that might accrue to BFA, including the potential for reduction in the Fund’s expenses that are borne by BFA under the “all-inclusive” management fee arrangement, due in part to the size and scope of BFA’s investment operations servicing the Fund (and other funds in the iShares complex) as well as in response to a changing market environment. The Board also reviewed and considered information provided by BFA concerning authorized participant primary market order processing services that are provided by BlackRock Investments, LLC (“BRIL”), an affiliate of BFA, and paid for by authorized participants under the ETF Servicing Platform. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Agreement for the coming year.

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

 

 

B O A R D  R E V I E W  A N D  A P P R O V A L  O F  I N V E S T M E N T  A D V I S O R Y  C O N T R A C T

    37  


Board Review and Approval of Investment Advisory Contract  (continued)

 

iShares MSCI China A ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees (the “Board”), including a majority of Board Members who are not “interested persons” of the Trust (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 Trust 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 lower than the median of the investment advisory fee rates and overall expenses (net of any waivers and reimbursements) of the funds in its Peer Group, excluding iShares funds.

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.

 

 

38  

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


Board Review and Approval of Investment Advisory Contract  (continued)

 

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

Based on this review, the Board concluded that the information considered with respect to the profits realized by BFA and its affiliates under the Advisory Agreement and from other relationships between the Fund and BFA and/or its affiliates, if any, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability (as discussed above), including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Agreement for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board noted that it would continue to assess the appropriateness of adding breakpoints in the future.

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

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts.

The Board received detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index as the Fund. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate.

The Board considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement and noted that the investment advisory fee rate under the Advisory Agreement for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, including, but not limited to, payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities, as applicable (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services, and BlackRock’s profile in the investment community. The Board further considered other direct benefits that might accrue to BFA, including the potential for reduction in the Fund’s expenses that are borne by BFA under the “all-inclusive” management fee arrangement, due in part to the size and scope of BFA’s investment operations servicing the Fund (and other funds in the iShares complex) as well as in response to a changing market environment. The Board also reviewed and considered information provided by BFA concerning authorized participant primary market order processing services that are provided by BlackRock Investments, LLC (“BRIL”), an affiliate of BFA, and paid for by authorized participants under the ETF Servicing Platform. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Agreement for the coming year.

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

 

 

B O A R D  R E V I E W  A N D  A P P R O V A L  O F  I N V E S T M E N T  A D V I S O R Y  C O N T R A C T

    39  


Supplemental Information (unaudited)

 

Section 19(a) Notices

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

July 31, 2023

 

     
    

Total Cumulative Distributions

for the Fiscal Year

    

% Breakdown of the Total Cumulative

Distributions for the Fiscal Year

 
  

 

 

    

 

 

 
iShares ETF   

Net

Investment

Income

    

Net Realized

Capital Gains

    

Return of

Capital

    

Total Per

Share

    

Net

Investment

Income

    

Net Realized

Capital Gains

    

Return of

Capital

   

Total Per

Share

 

China Large-Cap(a)

   $ 0.746077      $      $ 0.001443      $ 0.747520        100           0 %(b)      100

 

  (a) 

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

 
  (b) 

Rounds to less than 1%.

 

Tailored Shareholder Reports for Open-End Mutual Funds and ETFs

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Funds.

Premium/Discount Information

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

Regulation under the Alternative Investment Fund Managers Directive

The Alternative Investment Fund Managers Directive, and its United Kingdom (“UK”) equivalent, ( “AIFMD”) impose detailed and prescriptive obligations on fund managers established in the European Union (the “EU”) and the UK. These do not currently apply to managers established outside of the EU or UK, such as BFA (the “Company”). Rather, the Company is only required to comply with certain disclosure, reporting and transparency obligations of AIFMD because it has registered the iShares China Large-Cap ETF (the “Fund”) to be marketed to investors in the EU and/or UK.

Report on Remuneration

The Company is required under AIFMD to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to (a) the staff of the Company; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Fund.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the Fund is included in the aggregate figures disclosed.

BlackRock has a clear and well-defined pay-for-performance philosophy, and compensation programs which support that philosophy.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme. Although all employees are eligible to receive a discretionary bonus, there is no contractual obligation to make a discretionary bonus award to any employees. For senior management and staff who have the ability to materially affect the risk profile of the Fund, a significant percentage of variable remuneration is deferred over time. All employees are subject to a clawback policy.

 

 

40  

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


Supplemental Information (unaudited) (continued)

 

Remuneration decisions for employees are made once annually in January following the end of the performance year, based on BlackRock’s full-year financial results and other non-financial goals and objectives. Alongside financial performance, individual total compensation is also based on strategic and operating results and other considerations such as management and leadership capabilities. No set formulas are established and no fixed benchmarks are used in determining annual incentive awards.

Annual incentive awards are paid from a bonus pool which is reviewed throughout the year by BlackRock’s independent compensation committee, taking into account both actual and projected financial information together with information provided by the Enterprise Risk and Regulatory Compliance departments in relation to any activities, incidents or events that warrant consideration in making compensation decisions. Individuals are not involved in setting their own remuneration.

Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organizational structures which are independent of the business units and therefore staff members in control functions are remunerated independently of the businesses they oversee. Functional bonus pools for those control functions are determined with reference to the performance of each individual function and the remuneration of the senior members of control functions is directly overseen by BlackRock’s independent remuneration committee.

Members of staff and senior management of the Company typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Company and across the broader BlackRock group. Conversely, members of staff and senior management of the broader BlackRock group may provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the broader BlackRock group and of the Company. Therefore, the figures disclosed are a sum of individuals’ portion of remuneration attributable to the Company according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company and the broader BlackRock group. Accordingly, the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded to the Company’s staff in respect of the Company’s financial year ending December 31, 2022 was USD 4.12 million. This figure is comprised of fixed remuneration of USD 685 thousand and variable remuneration of USD 3.43 million. There was a total of 8 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Company in respect of the Company’s financial year ending December 31, 2022, to its senior management was USD 2.96 million, and to other members of its staff whose actions potentially have a material impact on the risk profile of the Company or its funds was USD 970 thousand. These figures relate to the entire Company and not to the Fund.

Disclosures Under the EU Sustainable Finance Disclosure Regulation

The iShares China Large-Cap ETF (the “Fund”) is registered under the Alternative Investment Fund Managers Directive to be marketed to European Union (“EU”) investors, as noted above. As a result, certain disclosures are required under the EU Sustainable Finance Disclosure Regulation (“SFDR”).

The Fund has not been categorized under the SFDR as an “Article 8” or “Article 9” product. In addition, the Fund’s investment strategy does not take into account the criteria for environmentally sustainable economic activities under the EU sustainable investment taxonomy regulation or principal adverse impacts (“PAIs”) on sustainability factors under the SFDR. PAIs are identified under the SFDR as the material impacts of investment decisions on sustainability factors relating to environmental, social and employee matters, respect for human rights, and anti-corruption and anti-bribery matters.

 

 

S U P P L E M E N T A L  I N F O R M A T I O N

    41  


Trustee and Officer Information (unaudited)

 

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

The registered investment companies advised by BFA or its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds and ETFs (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (including ETFs) (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fund is included in the Exchange-Traded Fund Complex. Each Trustee also serves as a Director of iShares, Inc. and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 387 funds as of July 31, 2023. With the exception of Robert S. Kapito, Salim Ramji and Aaron Wasserman, the address of each Trustee and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Wasserman is c/o BlackRock, Inc., 50 Hudson Yards, New York, NY 10001. The Board has designated John E. Kerrigan as its Independent Board Chair. Additional information about the Funds’ Trustees and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Trustees
       

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

   Other Directorships Held by Trustee

Robert S. Kapito(a)

(1957)

  

Trustee (since

2009).

   President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Director of iShares, Inc. (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(1970)

  

Trustee (since

2019).

   Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Director of iShares, Inc. (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

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

 

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

Independent Trustees
       

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

   Other Directorships Held by Trustee

John E. Kerrigan

(1955)

  

Trustee (since

2005);

Independent

Board Chair

(since 2022).

   Chief Investment Officer, Santa Clara University (since 2002).    Director of iShares, Inc. (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares, Inc. and iShares U.S. ETF Trust (since 2022).

Jane D. Carlin

(1956)

  

Trustee (since

2015); Risk

Committee Chair

(since 2016).

   Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Director of iShares, Inc. (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016), Chair of the Audit Committee (since 2020) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L. Fagnani

(1954)

  

Trustee (since

2017); Audit

Committee Chair

(since 2019).

   Partner, KPMG LLP (2002-2016); Director of One Generation Away (since 2021).    Director of iShares, Inc. (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

42  

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


Trustee and Officer Information (unaudited) (continued)

 

Independent Trustees (continued)
       

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

   Other Directorships Held by Trustee

Cecilia H. Herbert

(1949)

  

Trustee (since

2005); Nominating

and Governance

and Equity Plus

Committee Chairs

(since 2022).

   Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018), Investment Committee (since 2011) and Personnel Committee (since 2022); Member of the Wyoming State Investment Funds Committee (since 2022); Director of the Jackson Hole Center for the Arts (since 2021); Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018).    Director of iShares, Inc. (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E. Lawton

(1959)

  

Trustee (since

2017); 15(c)

Committee Chair

(since 2017).

   Senior Managing Director of New York Life Insurance Company (2010-2015).    Director of iShares, Inc. (since 2017); Trustee of iShares U.S. ETF Trust (since 2017); Director of Jackson Financial Inc. (since 2021).

John E. Martinez

(1961)

  

Trustee (since

2003); Securities

Lending

Committee Chair

(since 2019).

   Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (2017-2020); and Director of Reading Partners (2012-2016).    Director of iShares, Inc. (since 2003); Trustee of iShares U.S. ETF Trust (since 2011).

Madhav V. Rajan

(1964)

  

Trustee (since

2011);

Fixed-Income

Plus Committee

Chair (since

2019).

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

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

Dominik Rohé

(1973)

  

President (since

2023).

   Managing Director, BlackRock, Inc. (since 2005); Head of Americas ETF and Index Investments (since 2023); Head of Latin America (2019-2023).

Trent Walker

(1974)

  

Treasurer and

Chief Financial

Officer (since

2020).

   Managing Director, BlackRock, Inc. (since September 2019); Chief Financial Officer of iShares Delaware Trust Sponsor LLC, BlackRock Funds, BlackRock Funds II, BlackRock Funds IV, BlackRock Funds V and BlackRock Funds VI (since 2021); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Aaron Wasserman

(1974)

  

Chief Compliance

Officer (iShares,

Inc. and iShares

Trust, since 2023;

iShares U.S. ETF

Trust, since

2023).

   Managing Director of BlackRock, Inc. (since 2018); Chief Compliance Officer of the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex and the Exchange-Traded Fund Complex (since 2023); Deputy Chief Compliance Officer for the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex and the Exchange-Traded Fund Complex (2014-2023).

Marisa Rolland

(1980)

  

Secretary (since

2022).

   Managing Director, BlackRock, Inc. (since 2023); Director, BlackRock, Inc. (2018-2022); Vice President, BlackRock, Inc. (2010-2017).

Rachel Aguirre

(1982)

  

Executive Vice

President (since

2022).

   Managing Director, BlackRock, Inc. (since 2018); Director, BlackRock, Inc. (2009-2018); Head of U.S. iShares Product (since 2022); Head of EII U.S. Product Engineering (since 2021); Co-Head of EII’s Americas Portfolio Engineering (2020-2021); Head of Developed Markets Portfolio Engineering (2016-2019).

 

 

T R U S T E E  A N D  O F F I C E R  I N F O R M A T I O N

    43  


Trustee and Officer Information (unaudited) (continued)

 

Officers (continued)
     

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

Jennifer Hsui

(1976)

  

Executive Vice

President (since

2022).

   Managing Director, BlackRock, Inc. (since 2009); Co-Head of Index Equity (since 2022).

James Mauro

(1970)

  

Executive Vice

President (since

2022).

   Managing Director, BlackRock, Inc. (since 2010); Head of Fixed Income Index Investments in the Americas and Head of San Francisco Core Portfolio Management (since 2020).

 

 Effective March 30, 2023, Dominik Rohé replaced Armando Senra as President.

 Effective July 1, 2023, Aaron Wasserman replaced Charles Park as Chief Compliance Officer.

 

 

44  

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


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 Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT. The Funds’ Forms N-PORT are available on the SEC’s website at sec.gov. Additionally, each 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 Trust’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.

 

 

G E N E R A L  I N F O R M A T I O N

    45  


Glossary of Terms Used in this Report

 

Portfolio Abbreviation
JSC    Joint Stock Company
NVS    Non-Voting Shares

 

 

46  

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


 

THIS PAGE INTENTIONALLY LEFT BLANK.

 


 

THIS PAGE INTENTIONALLY LEFT BLANK.

 

 


 

THIS PAGE INTENTIONALLY LEFT BLANK.

 

 


 

THIS PAGE INTENTIONALLY LEFT BLANK.

 

 

 


 

 

 

 

Want to know more?

iShares.com | 1-800-474-2737

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

Investing involves risk, including possible loss of principal.

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

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by FTSE International Limited or MSCI Inc., nor do these companies make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the companies 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-AR-708-0723

 

 

LOGO

   LOGO