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iShares, Inc.

·  iShares ESG Aware MSCI EM ETF | ESGE | NASDAQ

·  iShares MSCI Emerging Markets ex China ETF | EMXC | NASDAQ

·  iShares MSCI Emerging Markets Min Vol Factor ETF | EEMV | Cboe BZX

·  iShares MSCI Emerging Markets Multifactor ETF | EMGF | Cboe BZX

·  iShares MSCI Global Min Vol Factor ETF | ACWV | Cboe BZX

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Market Overview

iShares, Inc.

Global Market Overview

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

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

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

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

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

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

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Investment Objective

The iShares ESG Aware MSCI EM ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities that have positive environmental, social and governance characteristics as identified by the index provider while exhibiting risk and return characteristics similar to those of the parent index, as represented by the MSCI Emerging Markets Extended ESG Focus Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was June 28, 2016. The first day of secondary market trading was June 30, 2016.

Index performance through May 31, 2018 reflects the performance of the MSCI Emerging Markets ESG Focus Index. Index performance beginning on June 1, 2018 reflects the performance of the MSCI Emerging Markets Extended ESG Focus Index.

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

Expense Example

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Portfolio Management Commentary

Investor interest in the environmental, social, and governance (“ESG”) attributes of companies was positive during the reporting period, even as equity markets declined. Many emerging market countries continued to advance ESG-related regulation and legislation. In China, a new set of voluntary guidelines for ESG reporting took effect in June 2022. The Taiwan Stock Exchange imposed a reporting requirement for listed companies that mandated disclosure of greenhouse gas emissions, energy management, and other ESG-related metrics. Regulatory authorities in India released a proposal for regulating ESG impact ratings that would require the accreditation of ratings providers.

With a negative global macro backdrop, the Index, which consists of emerging market stocks, declined significantly for the reporting period. Within China, the consumer discretionary and information technology sectors detracted substantially from the Index’s return amid the government’s campaign to rein in large online companies, which included billions of dollars in antitrust fines and restrictions on listings on foreign stock exchanges. The life sciences tools and services industry in the healthcare sector declined after the U.S. included a company on the list of firms prohibited from receiving certain technology exports.

South Korean stocks also weighed on the Index’s return, particularly in the technology hardware, storage, and peripherals industry. Budgetary reductions from major chip customers amid global economic uncertainty slowed sales growth and lowered profits.

In terms of relative performance, the Index underperformed the broader market, as represented by the MSCI Emerging Markets Index, while tracking it relatively closely. Relative to the broader market, the ESG security selection process leads to overweight stocks with higher ESG ratings and underweight stocks with lower ESG characteristics. Due to the ESG selection process, the Index is structurally underweight to the Energy sector and overweight to Financials, which were net detractors to relative performance. A modest underweight to Consumer Discretionary was a small source of relative outperformance.

Portfolio Information

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Investment Objective

The iShares MSCI Emerging Markets ex China ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities, excluding China, as represented by the MSCI Emerging Markets ex China Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was July 18, 2017. The first day of secondary market trading was July 20, 2017.

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

Expense Example

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Portfolio Management Commentary

Emerging markets stocks outside of China declined sharply during the reporting period, as higher interest rates and a strengthening U.S. dollar raised the cost of borrowing in many emerging economies. The strong U.S. dollar made investments denominated in some foreign currencies worth less in U.S. dollar terms, which further detracted from the Index’s performance.

South Korean stocks detracted the most from the Index’s return, particularly in the technology hardware, storage, and peripherals industry in the information technology sector. Budgetary reductions from major chip customers slowed sales growth, lowered profits, and affected capacity expansion plans for producers of semiconductors. Indications of weakening consumer demand for electronics further pressured the near-term outlook for semiconductors stocks.

South Korean media and entertainment stocks in the communication services sector also weighed on the Index’s return. Revenues slowed for operators of major search, messaging, and content platforms in the face of diminished e-commerce business, rising labor costs, and stagnating growth in online advertising sales.

BlackRock suspended the purchase of Russian securities in its active and index funds on Monday, February 28, 2022, in response to the Russian attack on Ukraine. All major index providers began the removal of Russian securities from their indexes beginning the week of March 7, 2022. In the weeks leading up to the invasion, Russian equities and the Russian ruble lost substantial value as investors fled due to expectations that Western nations might impose punishing sanctions on Russian companies. In the days following the attack, the country’s stock market endured even steeper price declines. Russian energy and financials stocks weighed on the Index’s performance, as integrated oil and gas companies and banks were impacted strongly by the investor exodus.

The Taiwanese information technology sector was another source of weakness, as stocks of companies in the semiconductors industry declined against a backdrop of lower global consumer demand. Other factors that affected the overall Taiwanese market during the reporting period specifically pressured chipmakers, including tensions between the U.S. and China over Taiwan’s status.

Portfolio Information

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Investment Objective

The iShares MSCI Emerging Markets Min Vol Factor ETF (the “Fund”) seeks to track the investment results of an index composed of emerging market equities that, in the aggregate, have lower volatility characteristics relative to the broader emerging equity markets, as represented by the MSCI Emerging Markets Minimum Volatility (USD) Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Expense Example

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Portfolio Management Commentary

Lower volatility emerging markets stocks declined during the reporting period, as higher interest rates and a strengthening U.S. dollar raised the cost of borrowing in many emerging economies. The strong U.S. dollar made investments denominated in some foreign currencies worth less in U.S. dollar terms, which further detracted from the Index’s performance. Relate to broad emerging market stocks, as represented by the MSCI Emerging Markets Index, the Index outperformed significantly over the reporting period.

Chinese equities were the largest detractors from the Index’s return amid coronavirus-related restrictions, a far-reaching regulatory crackdown, and supply chain disruptions. Consumer discretionary companies weighed on the Index’s performance as the government’s campaign to rein in large internet firms, which included billions of dollars in anti-trust fines and restrictions on listings on foreign stock exchanges, weighed on investor sentiment. The Chinese internet and direct marketing retail industry declined as competitive advantages weakened, while concerns surrounding customer growth and slowing consumption pressured margins and earnings.

Chinese healthcare stocks detracted from the Index’s performance after the U.S. Commerce Department added several pharmaceuticals, biotechnology, and life sciences companies to a list of firms with restricted access to U.S. technology. Chinese information technology companies also declined, notably in the technology hardware and equipment industry, as domestic demand for consumer electronics shrank.

South Korean communication services stocks also detracted from the Index’s return, led by the media and entertainment industry. Revenues slowed for operators of major search, messaging, and content platforms in the face of diminished e-commerce business, rising labor costs, and stagnating growth in online advertising sales. In the information technology sector, South Korean technology hardware, storage, and peripherals equities declined during the reporting period. Budgetary reductions from major chip customers amid global economic uncertainty slowed sales growth, lowered profits, and affected capacity expansion plans for producers of semiconductors. Demand for personal computers and cell phones slackened as inflation diminished consumers’ buying power, further weakening the near-term outlook for semiconductors stocks.

In terms of relative performance, the Index outperformed the broader market, as measured by the MSCI Emerging Markets Index. Stocks with low-volatility characteristics benefited from the sharp downturn in global markets precipitated by recession concerns, rising interest rates, and geopolitical instability. From a country perspective, positioning within Taiwan helped relative performance, specifically overweight positions in communication services, financials, and information technology. An underweight position to China and positioning within the country also contributed. Underweights to Brazil and Indonesia and sector allocation within India hindered relative performance.

Portfolio Information

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Investment Objective

The iShares MSCI Emerging Markets Multifactor ETF (the “Fund”) seeks to track the investment results of an index composed of stocks of large- and mid-capitalization companies in emerging markets that have favorable exposure to target style factors subject to constraints, as represented by the MSCI Emerging Markets Diversified Multiple-Factor Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was December 8, 2015. The first day of secondary market trading was December 10, 2015.

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

Expense Example

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Portfolio Management Commentary

Emerging markets stocks with favorable exposure to four targeted factors — value, quality, momentum, and small size — declined during the reporting period. The strong U.S. dollar made investments denominated in some foreign currencies worth less in U.S. dollar terms, which further detracted from the Index’s performance. Relative to the broad market, as represented by the MSCI Emerging Markets Index, the Index outperformed.

Chinese equities were the largest detractors from the Index’s return, notably in the consumer discretionary sector. Internet and direct marketing retail companies declined as competitive advantages weakened and concerns surrounding slowing consumption pressured margins and earnings. In the apparel, accessories, and luxury goods industry, a sportswear retailer faced allegations of violating U.S. sanctions against North Korea in its labor practices, leading the U.S. to ban its products. Within the materials sector, a slowdown in economic growth widely attributed to government-imposed COVID-related lockdowns led to investment cuts by property developers and a drop in new construction starts. And an ongoing government investigation into the chief executive officer and majority shareholder of a maker of flavors and fragrances weighed on the specialty chemicals industry.

The Taiwanese information technology sector was another source of weakness, led by the semiconductors industry. In the wake of rising inflation and higher interest rates, a reduction in consumer demand for electronics products weighed on chip makers. Political tensions between the U.S. and China over Taiwan’s status further pressured semiconductor companies.

South Korean equities in the consumer discretionary sector detracted from the Index’s performance, particularly in the automobiles and components industry. The war in Ukraine and subsequent sanctions against Russia resulted in factory shutdowns where Korean automakers produced cars for several markets, and a global chip shortage decreased vehicle shipments for some automakers.

For the reporting period, the Index outperformed the broader market, as represented by the MSCI Emerging Markets Index. The Index’s research-based selection process focuses on four investment factors: value, quality, momentum, and size. Of the four target style factors, exposure to value, momentum, and quality contributed to the Index’s performance, while size detracted.

From a country perspective, stock selection in China was a driver of outperformance, though an overweight position in the country detracted. An overweight in India added to relative performance, as did an underweight position and stock selection in South Korea. Regional characteristics that detracted from relative performance included an underweight to Brazil, a slight overweight to Russia, sector allocation within Taiwan, and an underweight to Mexico. BlackRock suspended the purchase of Russian securities in its active and index funds on Monday, February 28, 2022, in response to the Russian attack on Ukraine. All major index providers began the removal of Russian securities from their indexes beginning the week of March 7.

Portfolio Information

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Investment Objective

The iShares MSCI Global Min Vol Factor ETF (the “Fund”) seeks to track the investment results of an index composed of developed and emerging market equities that, in the aggregate, have lower volatility characteristics relative to the broader developed and emerging equity markets, as represented by the MSCI ACWI Minimum Volatility (USD) Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Expense Example

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Portfolio Management Commentary

Lower volatility global stocks declined as global growth cooled in an environment of high inflation, rising interest rates, and volatility in commodities markets. Stocks in the U.S., which represented approximately 56% of the Index on average, detracted from the Index’s return, led by the communication services sector. Stocks of streaming content providers in the entertainment industry declined amid stiff competition, as more entrants into the streaming market weighed on revenue growth. Consumers switched frequently among streaming providers, creating significant customer turnover. Stocks of broadband providers in the media industry also declined, as slowing revenue and customer growth challenged broadband providers and rising interest rates pressured highly indebted companies in the industry. The information technology sector was another detractor from the Index’s return, as the return of some remote workers to physical offices negatively impacted the sales growth of software platforms designed to facilitate online collaboration.

Stocks in Japan, which endured two quarters of economic contraction during the reporting period, also detracted notably from the Index’s performance. The Japanese yen declined significantly relative to the U.S. dollar, reducing the value of Japanese assets denominated in U.S. dollars. Despite strong earnings amid increasing factory automation, the Japanese information technology sector was pressured by both the widening gap between U.S. and Japanese interest rates and the global revaluation of information technology stocks in response to sharply declining demand.

Swiss stocks also declined, as the war in Ukraine disrupted supply chains and contributed to rising inflation. Prices for food and energy climbed, and in June 2022 the Swiss National Bank raised interest rates for the first time since 2007. The healthcare sector was the largest detractor, as the pharmaceuticals industry was negatively impacted by the failure of a cancer drug trial.

In terms of relative performance, the Index notably outperformed the broader market, as measured by the MSCI ACWI Index. Low volatility stocks generally benefited from an environment of slowing global economic growth, rising interest rates, and geopolitical instability. Positioning among U.S. stocks contributed substantially to the Index’s performance relative to the broader market, particularly within the consumer staples and utilities sectors. Positioning in Taiwanese stocks was also additive, driven primarily by financials and information technology stocks. On the downside, an underweight allocation to the U.S. energy sector detracted from the Index’s relative performance.

Portfolio Information

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About Fund Performance

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

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

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