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AUGUST 31, 2022 |
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2022 Annual Report
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iShares Trust
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iShares Currency Hedged MSCI United Kingdom ETF | HEWU | NYSE Arca |
| · |
iShares MSCI United Kingdom ETF | EWU | NYSE Arca |
| · |
iShares MSCI United Kingdom Small-Cap ETF | EWUS | Cboe BZX |
Dear Shareholder,
The 12-month reporting period as of August 31, 2022 saw the emergence of significant challenges that disrupted the economic recovery and strong financial markets of 2021. The U.S. economy shrank in the first half of 2022, ending the run of robust growth that followed the reopening of global economies and the development of COVID-19 vaccines. Changes in consumer spending patterns and a tight labor market led to elevated inflation, which reached a 40-year high. Moreover, while the foremost effect of Russia’s invasion of Ukraine has been a severe humanitarian crisis, the ongoing war continued to present challenges for both investors and policymakers.
Equity prices fell as interest rates rose, particularly weighing on relatively high-valuation growth stocks and economically sensitive small-capitalization stocks. While both large- and small-capitalization U.S. stocks fell, declines for small-capitalization U.S. stocks were steeper. Both emerging market stocks and international equities from developed markets fell significantly, pressured by rising interest rates and a strengthening U.S. dollar.
The 10-year U.S. Treasury yield (which is inversely related to bond prices) rose notably during the reporting period as investors reacted to higher inflation and attempted to anticipate its impact on future interest rate changes. The corporate bond market also faced inflationary headwinds, and increasing uncertainty led to higher corporate bond spreads (the difference in yield between U.S. Treasuries and similarly-dated corporate bonds).
The U.S. Federal Reserve (the “Fed”), acknowledging that inflation is growing faster than expected, raised interest rates four times while indicating that additional rate hikes were likely. Furthermore, the Fed wound down its bond-buying programs and began to reduce its balance sheet. As investors attempted to assess the Fed’s future trajectory, the Fed’s statements late in the reporting period led markets to believe that additional tightening is likely in the near term.
The horrific war in Ukraine has significantly clouded the outlook for the global economy, leading to major volatility in energy and metals markets. Sanctions on Russia, Europe’s top energy supplier, and general wartime disruption have magnified supply problems for key commodities. We believe elevated energy prices will continue to exacerbate inflationary pressure while also constraining economic growth. Combating inflation without stifling a recovery, while buffering against ongoing supply and price shocks, will be an especially challenging environment for setting effective monetary policy. Despite the likelihood of more rate increases on the horizon, we believe the Fed will ultimately err on the side of protecting employment, even at the expense of higher inflation. In the meantime, however, we are likely to see a period of slowing growth paired with relatively high inflation.
In this environment, while we favor an overweight to equities in the long-term, the market’s concerns over excessive rate hikes from central banks moderate our outlook. Furthermore, the energy shock and a deteriorating economic backdrop in China and Europe are likely to challenge corporate earnings, so we are underweight equities overall in the near term. We take the opposite view on credit, where higher spreads provide near-term opportunities, while the likelihood of higher inflation leads us to take an underweight stance on credit in the long term. We believe that investment-grade corporates, U.K. gilts, local-currency emerging market debt, and inflation-protected bonds (particularly in Europe) offer strong opportunities for a six- to twelve-month horizon.
Overall, our view is that investors need to think globally, extend their scope across a broad array of asset classes, 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.
Rob Kapito
President, BlackRock, Inc.
Rob Kapito
President, BlackRock, Inc.
| Total Returns as of August 31, 2022 | ||||
| 6-Month | 12-Month | |||
|
U.S. large cap equities (S&P 500® Index) |
(8.84)% | (11.23)% | ||
|
U.S. small cap equities (Russell 2000® Index) |
(9.31) | (17.88) | ||
|
International equities (MSCI Europe, Australasia, Far East Index) |
(13.97) | (19.80) | ||
|
Emerging market equities (MSCI Emerging Markets Index) |
(13.30) | (21.80) | ||
|
3-month Treasury bills (ICE BofA 3-Month U.S. Treasury Bill Index) |
0.36 | 0.39 | ||
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U.S. Treasury securities (ICE BofA 10-Year U.S. Treasury Index) |
(9.71) | (13.27) | ||
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U.S. investment grade bonds (Bloomberg U.S. Aggregate Bond Index) |
(7.76) | (11.52) | ||
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Tax-exempt municipal bonds (Bloomberg Municipal Bond Index) |
(5.72) | (8.63) | ||
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U.S. high yield bonds (Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index) |
(7.78) | (10.61) | ||
| Past performance is not an indication of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. | ||||
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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 |
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iShares Trust
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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2 0 2 2 I 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 August 31, 2022 | iShares® Currency Hedged MSCI United Kingdom ETF |
Investment Objective
The iShares Currency Hedged MSCI United Kingdom ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization United Kingdom equities while mitigating exposure to fluctuations between the value of the British pound and the U.S. dollar, as represented by the MSCI United Kingdom 100% Hedged to 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. The Fund currently seeks to achieve its investment objective by investing a substantial portion of its assets in one underlying fund, the iShares MSCI United Kingdom ETF.
Performance
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||||
| 1 Year | 5 Years | |
Since Inception |
|
1 Year | 5 Years | |
Since Inception |
| |||||||||||||||||||
|
Fund NAV |
9.18 | % | 4.11 | % | 5.76 | % | 9.18 | % | 22.30 | % | 49.42 | % | ||||||||||||||||
|
Fund Market |
9.19 | 4.11 | 5.76 | 9.19 | 22.32 | 49.49 | ||||||||||||||||||||||
|
Index |
9.83 | 4.82 | 6.33 | 9.83 | 26.53 | 55.24 | ||||||||||||||||||||||
GROWTH OF $10,000 INVESTMENT
(SINCE INCEPTION AT NET ASSET VALUE)
The inception date of the Fund was June 29, 2015. The first day of secondary market trading was July 1, 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
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||||||
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Beginning Account Value (03/01/22) |
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Ending Account Value (08/31/22) |
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Expenses Paid During the Period |
(a) |
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Beginning Account Value (03/01/22) |
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Ending Account Value (08/31/22) |
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|
Expenses Paid During the Period |
(a) |
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Annualized Expense Ratio |
| ||||||||||
| $ | 1,000.00 | $ | 1,019.90 | $ | 0.00 | $ | 1,000.00 | $ | 1,025.20 | $ | 0.00 | 0.00 | % | |||||||||||||||||
| (a) |
Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (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. The fees and expenses of the underlying funds in which the Fund invests are not included in the Fund’s annualized expense ratio. |
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F U N D S U M M A R Y |
5 |
| Fund Summary as of August 31, 2022 (continued) | iShares® Currency Hedged MSCI United Kingdom ETF |
Portfolio Management Commentary
Stocks in the U.K. declined for the reporting period in U.S. dollar terms, as the country’s economy contracted in the second quarter of 2022 and inflation reached 40-year highs. The Bank of England raised interest rates multiple times and warned of a prolonged recession.
The industrials sector was the largest detractor from the Index’s return, as industrial production grew at a relatively slow pace. A multinational construction rental company with operations in the U.S. declined sharply despite benefiting from the relatively strong U.S. housing market. In addition, a multinational consumer credit rating agency declined despite strong earnings, as lower mortgage refinancing activity and declining consumer spending clouded the earnings outlook.
The financials sector also detracted from the Index’s performance. The insurance industry generally benefited from higher interest rates, but rising inflation led to uncertainty about cost increases and demand for insurance products. A large multinational insurer declined sharply as slower growth abroad and outflows from mutual funds weighed on earnings growth.
The consumer discretionary and consumer staples sectors also detracted from the Index’s return, as high inflation drove up input costs and tempered demand. Household durables stocks declined, as the cooling housing market and rising cost of living weighed on sales of big-ticket items. The personal products industry also weakened, largely driven by a multinational consumer products company, as inflation increased production expenses and sapped consumer demand. On the upside, the energy sector was a relatively large contributor in U.S. dollar terms due to rising oil and gas prices.
In terms of currency performance during the reporting period, the British pound depreciated by approximately 15% relative to the U.S. dollar. Rising interest rates in the U.S. along with high inflation and energy costs in Britain pressured the British pound.
The British pound’s negative performance meant hedging activity contributed to the Index’s return. A fully hedged investor seeks to bypass the currency fluctuations — both on the upside and on the downside — related to holding foreign-currency-denominated securities. The Index’s hedging activity offset the negative impact of the British pound’s performance relative to the U.S. dollar, resulting in an Index return that was relatively close to the return of British equities measured in British pounds.
Portfolio Information
PORTFOLIO COMPOSITION
|
Investment Type |
|
Percent of Net Assets |
| |
|
Investment Companies |
99.7 | % | ||
|
Short-term Investments |
4.4 | |||
| Forward foreign currency exchange contracts, net cumulative appreciation | 6.4 | |||
|
Other assets less liabilities |
(10.5 | ) | ||
SECTOR ALLOCATION (of the UNDERLYING FUND)
| Sector |
Percent of Total Investment(a) |
|||
|
Consumer Staples |
20.8 | % | ||
|
Financials |
17.4 | |||
|
Energy |
14.2 | |||
|
Health Care |
13.0 | |||
|
Industrials |
10.5 | |||
|
Materials |
8.9 | |||
|
Consumer Discretionary |
5.2 | |||
|
Utilities |
4.0 | |||
|
Communication Services |
3.9 | |||
|
Real Estate |
1.1 | |||
|
Information Technology |
1.0 | |||
| (a) |
Excludes money market funds. |
| 6 |
2 0 2 2 I 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 August 31, 2022 | iShares® MSCI United Kingdom ETF |
Investment Objective
The iShares MSCI United Kingdom ETF (the “Fund”) seeks to track the investment results of an index composed of U.K. equities, as represented by the MSCI United Kingdom 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 |
(8.50 | )% | 0.80 | % | 2.48 | % | (8.50 | )% | 4.08 | % | 27.79 | % | ||||||||||||||||
|
Fund Market |
(8.36 | ) | 0.76 | 2.43 | (8.36 | ) | 3.84 | 27.08 | ||||||||||||||||||||
|
Index |
(7.66 | ) | 1.45 | 3.07 | (7.66 | ) | 7.45 | 35.25 | ||||||||||||||||||||
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
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||||||
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Beginning Account Value (03/01/22) |
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Ending Account Value (08/31/22) |
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Expenses Paid During the Period |
(a) |
|
Beginning Account Value (03/01/22) |
|
|
Ending Account Value (08/31/22) |
|
|
Expenses Paid During the Period |
(a) |
|
Annualized Expense Ratio |
| ||||||||||
| $ | 1,000.00 | $ | 873.70 | $ | 2.36 | $ | 1,000.00 | $ | 1,022.70 | $ | 2.55 | 0.50 | % | |||||||||||||||||
| (a) |
Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (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 August 31, 2022 (continued) | iShares® MSCI United Kingdom ETF |
Portfolio Management Commentary
Stocks in the U.K. declined for the reporting period in U.S. dollar terms, as the country’s economy contracted in the second quarter of 2022 and inflation reached 40-year highs. The Bank of England raised interest rates multiple times and warned of a prolonged recession. In addition, comparatively high interest rates in the U.S. and the U.K.’s dependence on foreign imports led to a sharp depreciation in the British pound relative to the U.S. dollar, which detracted from the Index’s return in U.S. dollar terms.
The industrials sector was the largest detractor from the Index’s return, as industrial production grew at a relatively slow pace. A multinational construction rental company with operations in the U.S. declined sharply despite benefiting from the relatively strong U.S. housing market. In addition, a multinational consumer credit rating agency declined despite strong earnings, as lower mortgage refinancing activity and declining consumer spending clouded the earnings outlook.
The financials sector also detracted from the Index’s performance. The insurance industry generally benefited from higher interest rates, but rising inflation led to uncertainty about cost increases and demand for insurance products. A large multinational insurer declined sharply as slower growth abroad and outflows from mutual funds weighed on earnings growth.
The consumer discretionary and consumer staples sectors also detracted from the Index’s return, as high inflation drove up input costs and tempered demand. Household durables stocks declined, as the cooling housing market and rising cost of living weighed on sales of big-ticket items. The personal products industry also weakened, largely driven by a multinational consumer products company, as inflation increased production expenses and sapped consumer demand. On the upside, the energy sector was a relatively large contributor due to rising oil and gas prices.
Portfolio Information
SECTOR ALLOCATION
|
Sector |
|
Percent of Total Investments |
(a) | |
|
Consumer Staples |
20.8 | % | ||
|
Financials |
17.4 | |||
|
Energy |
14.2 | |||
|
Health Care |
13.0 | |||
|
Industrials |
10.5 | |||
|
Materials |
8.9 | |||
|
Consumer Discretionary |
5.2 | |||
|
Utilities |
4.0 | |||
|
Communication Services |
3.9 | |||
|
Real Estate |
1.1 | |||
|
Information Technology |
1.0 | |||
| (a) |
Excludes money market funds. |
TEN LARGEST HOLDINGS
|
Security |
|
Percent of Total Investments |
(a) | |
|
Shell PLC |
9.5 | % | ||
|
AstraZeneca PLC |
9.2 | |||
|
HSBC Holdings PLC |
5.9 | |||
|
Unilever PLC |
5.6 | |||
|
Diageo PLC |
4.8 | |||
|
BP PLC |
4.8 | |||
|
British American Tobacco PLC |
4.2 | |||
|
GSK PLC |
3.1 | |||
|
Rio Tinto PLC |
3.0 | |||
|
Reckitt Benckiser Group PLC |
2.7 | |||
| 8 |
2 0 2 2 I 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 August 31, 2022 | iShares® MSCI United Kingdom Small-Cap ETF |
Investment Objective
The iShares MSCI United Kingdom Small-Cap ETF (the “Fund”) seeks to track the investment results of an index composed of small-capitalization U.K. equities, as represented by the MSCI United Kingdom Small Cap 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 |
(36.56 | )% | (2.44 | )% | 3.81 | % | (36.56 | )% | (11.60 | )% | 45.40 | % | ||||||||||||||||
|
Fund Market |
(36.66 | ) | (2.45 | ) | 3.70 | (36.66 | ) | (11.65 | ) | 43.82 | ||||||||||||||||||
|
Index |
(36.05 | ) | (1.79 | ) | 4.48 | (36.05 | ) | (8.62 | ) | 54.96 | ||||||||||||||||||
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
| Actual | Hypothetical 5% Return | |||||||||||||||||||||||||||||
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| |
Beginning Account Value (03/01/22) |
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Ending Account Value (08/31/22) |
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Expenses Paid During the Period |
(a) |
|
Beginning Account Value (03/01/22) |
|
|
Ending Account Value (08/31/22) |
|
|
Expenses Paid During the Period |
(a) |
|
Annualized Expense Ratio |
| ||||||||||
| $ | 1,000.00 | $ | 766.60 | $ | 2.63 | $ | 1,000.00 | $ | 1,022.20 | $ | 3.01 | 0.59 | % | |||||||||||||||||
| (a) |
Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (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 |
9 |
| Fund Summary as of August 31, 2022 (continued) | iShares® MSCI United Kingdom Small-Cap ETF |
Portfolio Management Commentary
Small-capitalization stocks in the U.K. declined for the reporting period, as the country’s economy slipped into contraction in the second quarter of 2022 and inflation reached 40-year highs. The Bank of England raised interest rates to the highest levels in 13 years and warned of a prolonged recession. The declining value of the British pound relative to the U.S. dollar also diminished the value of U.K. stocks in U.S. dollar terms.
The consumer discretionary sector detracted the most from the Index’s return. Internet and direct marketing retail companies experienced declining sales due to a reduction in online spending by consumers. Additionally, persistent supply chain problems affected international deliveries from online retailers. In the restaurants industry, disruptions to supply precipitated by the war in Ukraine increased prices for energy and wheat, weighing on the profitability of makers of baked goods.
Industrials stocks also detracted from the Index’s performance, particularly in the trading companies and distributors industry. The costs of raw materials rose, pressuring sellers of building materials. Additionally, the U.K. housing market cooled as interest rates rose, weakening the prospects for new home construction. Retailers of home improvement materials were further impacted as worsening inflation led to a reduction in consumer spending on discretionary home renovation projects.
Financials stocks were another source of weakness for the Index’s return, driven by capital markets companies. Challenges for asset managers during the reporting period included increased market volatility, outflows from higher-growth stocks, and negative publicity surrounding the suspension of investments in Russia. In the real estate sector, office real estate investment trusts declined significantly as the increase in remote working during the coronavirus pandemic led to higher office vacancies and prompted investors to question the future viability of office investments.
Portfolio Information
SECTOR ALLOCATION
|
Sector |
|
Percent of Total Investments |
(a) | |
|
Industrials |
21.8 | % | ||
|
Financials |
16.0 | |||
|
Real Estate |
13.0 | |||
|
Consumer Discretionary |
12.9 | |||
|
Information Technology |
8.2 | |||
|
Health Care |
6.9 | |||
|
Communication Services |
5.9 | |||
|
Materials |
4.5 | |||
|
Consumer Staples |
4.0 | |||
|
Utilities |
3.4 | |||
|
Energy |
3.4 | |||
| (a) |
Excludes money market funds. |
TEN LARGEST HOLDINGS
|
Security |
|
Percent of Total Investments |
(a) | |
|
Meggitt PLC |
1.9 | % | ||
|
RS GROUP PLC |
1.6 | |||
|
Rightmove PLC |
1.6 | |||
|
Avast PLC |
1.5 | |||
|
Centrica PLC |
1.4 | |||
|
Intermediate Capital Group PLC |
1.2 | |||
|
Dechra Pharmaceuticals PLC |
1.2 | |||
|
Weir Group PLC (The) |
1.2 | |||
|
DS Smith PLC |
1.1 | |||
|
HomeServe PLC |
1.1 | |||
| 10 |
2 0 2 2 I 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 |
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.
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 / S H A R E H O L D E R E X P E N S E S |
11 |
|
August 31, 2022 |
iShares® Currency Hedged MSCI United Kingdom ETF (Percentages shown are based on Net Assets) |
| Security | Shares | Value | ||||||
|
Investment Companies |
||||||||
| Exchange-Traded Funds — 99.7% | ||||||||
|
iShares MSCI United Kingdom ETF(a) |
546,282 | $ | 15,793,013 | |||||
|
|
|
|||||||
|
Total
Investment Companies |
15,793,013 | |||||||
|
|
|
|||||||
|
Short-Term Securities |
||||||||
| Money Market Funds — 4.4% | ||||||||
|
BlackRock Cash Funds: Treasury, SL Agency Shares, 2.07%(a)(b) |
700,000 | 700,000 | ||||||
|
|
|
|||||||
|
Total
Short-Term Securities — 4.4% |
700,000 | |||||||
|
|
|
|||||||
|
Total
Investments in Securities — 104.1% |
16,493,013 | |||||||
| Liabilities in Excess of Other Assets — (4.1)% | (654,899) | |||||||
|
|
|
|||||||
| Net Assets — 100.0% | $ 15,838,114 | |||||||
|
|
|
|||||||
| (a) |
Affiliate of the Fund. |
| (b) |
Annualized 7-day yield as of period end. |
Affiliates
Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2022 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:
| Affiliated Issuer | Value at 08/31/21 |
Purchases at Cost |
Proceeds from Sale |
Net Realized Gain (Loss) |
Change
in Unrealized Appreciation (Depreciation) |
Value at 08/31/22 |
Shares Held at 08/31/22 |
Income |
Capital Gain |
|||||||||||||||||||||||||||
|
BlackRock Cash Funds: Treasury, SL Agency Shares |
$ | — | $ | 700,000 | (a) | $ | — | $ | — | $ | — | $ | 700,000 | 700,000 | $ | 1,573 | $ | — | ||||||||||||||||||
|
iShares MSCI United Kingdom ETF |
8,253,193 | 22,033,423 | (12,506,349 | ) | 8,262 | (1,995,516 | ) | 15,793,013 | 546,282 | 686,595 | — | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| $ | 8,262 | $ | (1,995,516 | ) | $ | 16,493,013 | $ | 688,168 | $ | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| (a) |
Represents net amount purchased (sold). |
Derivative Financial Instruments Outstanding as of Period End
Forward Foreign Currency Exchange Contracts
| Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||||||
|
USD |
23,266,281 | GBP | 19,105,000 | Morgan Stanley & Co. International PLC | 09/06/22 | $ | 1,070,376 | |||||||||||||||||||||||
|
USD |
16,086,029 | GBP | 13,816,000 | Morgan Stanley & Co. International PLC | 10/04/22 | 26,243 | ||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||
| 1,096,619 | ||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||
|
GBP |
19,105,000 | USD | 22,285,614 | Morgan Stanley & Co. International PLC | 09/06/22 | (89,709 | ) | |||||||||||||||||||||||
|
GBP |
67,000 | USD | 77,944 | JPMorgan Chase Bank N.A. | 10/04/22 | (63 | ) | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||
| (89,772 | ) | |||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||
| $1,006,847 | ||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||
| 12 |
2 0 2 2 I 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) August 31, 2022 |
iShares® Currency Hedged MSCI United Kingdom 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 |
||||||||||||||||||||||||||||
|
Forward foreign currency exchange contracts |
||||||||||||||||||||||||||||
|
Unrealized appreciation on forward foreign currency exchange contracts |
$ | — | $ | — | $ | — | $ | 1,096,619 | $ | — | $ | — | $ | 1,096,619 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Liabilities — Derivative Financial Instruments |
||||||||||||||||||||||||||||
|
Forward foreign currency exchange contracts |
||||||||||||||||||||||||||||
|
Unrealized depreciation on forward foreign currency exchange contracts |
$ | — | $ | — | $ | — | $ | 89,772 | $ | — | $ | — | $ | 89,772 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
For the period ended August 31, 2022, 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 |
||||||||||||||||||||||||||||
|
Forward foreign currency exchange contracts |
$ | — | $ | — | $ | — | $ | 1,833,302 | $ | — | $ | — | $ | 1,833,302 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net Change in Unrealized Appreciation (Depreciation) on |
||||||||||||||||||||||||||||
|
Forward foreign currency exchange contracts |
$ | — | $ | — | $ | — | $ | 915,285 | $ | — | $ | — | $ | 915,285 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Average Quarterly Balances of Outstanding Derivative Financial Instruments
|
|
||||
|
Forward foreign currency exchange contracts |
||||
|
Average amounts purchased — in USD |
$ | 14,379,791 | ||
|
Average amounts sold — in USD |
$ | 27,861,354 | ||
|
|
||||
For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.
Derivative Financial Instruments - Offsetting as of Period End
The Fund’s derivative assets and liabilities (by type) were as follows:
|
|
||||||||
| Assets | Liabilities | |||||||
|
|
||||||||
|
Derivative Financial Instruments: |
||||||||
|
Forward foreign currency exchange contracts |
$ | 1,096,619 | $ | 89,772 | ||||
|
|
|
|
|
|||||
|
Total derivative assets and liabilities in the Statement of Assets and Liabilities |
1,096,619 | 89,772 | ||||||
|
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”) |
— | — | ||||||
|
|
|
|
|
|||||
|
Total derivative assets and liabilities subject to an MNA |
1,096,619 | 89,772 | ||||||
|
|
|
|
|
|||||
The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:
|
|
||||||||||||||||||||||||||||||||||||||||
|
Counterparty |
|
Derivative Assets Subject to an MNA by |
|
|
Derivatives Available for Offset |
(a) |
|
Non-Cash |
|
|
Cash |
|
|
Net
Amount of Derivative Assets |
(b) | |||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Morgan Stanley & Co. International PLC |
$ | 1,096,619 | $ | (89,709 | ) | $ | — | $ | — | $ | 1,006,910 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Counterparty |
|
Derivative Liabilities Subject to an MNA by |
|
|
Derivatives Available for Offset |
(a) |
|
Non-Cash Collateral Pledged |
|
|
Cash Collateral Pledged |
|
|
Net
Amount of Derivative Liabilities |
(c) | |||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
JPMorgan Chase Bank N.A. |
$ | 63 | $ | — | $ | — | $ | — | $ | 63 | ||||||||||||||||||||||||||||||
|
Morgan Stanley & Co. International PLC |
89,709 | (89,709 | ) | — | — | — | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| $ | 89,772 | $ | (89,709 | ) | $ | — | $ | — | $ | 63 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
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) August 31, 2022 |
iShares® Currency Hedged MSCI United Kingdom ETF |
Derivative Financial Instruments - Offsetting as of Period End (continued)
| (a) |
The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA. |
| (b) |
Net amount represents the net amount receivable from the counterparty in the event of default. |
| (c) |
Net amount represents the net amount payable due to the counterparty in the event of default. |
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 | |||||||||||||
|
|
||||||||||||||||
|
Investments |
||||||||||||||||
|
Assets |
||||||||||||||||
|
Investment Companies |
$ | 15,793,013 | $ | — | $ | — | $ | 15,793,013 | ||||||||
|
Money Market Funds |
700,000 | — | — | 700,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 16,493,013 | $ | — | $ | — | $ | 16,493,013 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Derivative financial instruments(a) |
||||||||||||||||
|
Assets |
||||||||||||||||
|
Forward Foreign Currency Exchange Contracts |
$ | — | $ | 1,096,619 | $ | — | $ | 1,096,619 | ||||||||
|
Liabilities |
||||||||||||||||
|
Forward Foreign Currency Exchange Contracts |
— | (89,772 | ) | — | (89,772 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | — | $ | 1,006,847 | $ | — | $ | 1,006,847 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) |
Derivative financial instruments are forward foreign currency exchange contracts. Forward foreign currency exchange contracts are valued at the unrealized appreciation (depreciation) on the instrument. |
See notes to financial statements.
| 14 |
2 0 2 2 I 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 August 31, 2022 |
iShares® MSCI United Kingdom ETF (Percentages shown are based on Net Assets) |
| Security | Shares | Value | ||||||
|
|
||||||||
|
Common Stocks |
||||||||
| Aerospace & Defense — 1.7% | ||||||||
|
BAE Systems PLC |
4,946,331 | $ | 44,547,152 | |||||
|
Rolls-Royce Holdings PLC(a) |
13,048,795 | 11,629,326 | ||||||
|
|
|
|||||||
| 56,176,478 | ||||||||
| Banks — 10.6% | ||||||||
|
Barclays PLC |
26,241,327 | 50,034,103 | ||||||
|
HSBC Holdings PLC |
31,501,158 | 193,002,637 | ||||||
|
Lloyds Banking Group PLC |
109,142,757 | 55,308,733 | ||||||
|
NatWest Group PLC, NVS |
8,385,527 | 23,929,487 | ||||||
|
Standard Chartered PLC |
3,953,639 | 27,383,499 | ||||||
|
|
|
|||||||
| 349,658,459 | ||||||||
| Beverages — 4.9% | ||||||||
|
Coca-Cola HBC AG, Class DI |
315,897 | 7,208,561 | ||||||
|
Diageo PLC |
3,584,566 | 155,736,437 | ||||||
|
|
|
|||||||
| 162,944,998 | ||||||||
| Capital Markets — 3.0% | ||||||||
|
3i Group PLC |
1,523,839 | 21,449,996 | ||||||
|
abrdn PLC |
3,304,161 | 5,615,263 | ||||||
|
Hargreaves Lansdown PLC |
560,731 | 5,308,539 | ||||||
|
London Stock Exchange Group PLC |
516,513 | 48,449,712 | ||||||
|
Schroders PLC |
195,039 | 6,066,909 | ||||||
|
St. James’s Place PLC |
848,239 | 10,857,410 | ||||||
|
|
|
|||||||
| 97,747,829 | ||||||||
| Chemicals — 0.7% | ||||||||
|
Croda International PLC |
218,708 | 17,047,182 | ||||||
|
Johnson Matthey PLC |
290,966 | 6,788,472 | ||||||
|
|
|
|||||||
| 23,835,654 | ||||||||
| Commercial Services & Supplies — 0.5% | ||||||||
|
Rentokil Initial PLC |
2,921,104 | 17,641,923 | ||||||
|
|
|
|||||||
| Diversified Financial Services — 0.3% | ||||||||
|
M&G PLC |
4,036,785 | 9,161,219 | ||||||
|
|
|
|||||||
| Diversified Telecommunication Services — 0.6% | ||||||||
|
BT Group PLC |
10,896,460 | 19,061,181 | ||||||
|
|
|
|||||||
| Electric Utilities — 1.0% | ||||||||
|
SSE PLC |
1,673,315 | 32,065,266 | ||||||
|
|
|
|||||||
| Electronic Equipment, Instruments & Components — 0.4% | ||||||||
|
Halma PLC |
595,002 | 14,312,747 | ||||||
|
|
|
|||||||
| Equity Real Estate Investment Trusts (REITs) — 1.1% | ||||||||
|
British Land Co. PLC (The) |
1,375,500 | 6,861,283 | ||||||
|
Land Securities Group PLC |
1,097,768 | 8,279,815 | ||||||
|
Segro PLC |
1,893,587 | 20,664,671 | ||||||
|
|
|
|||||||
| 35,805,769 | ||||||||
| Food & Staples Retailing — 1.5% | ||||||||
|
J Sainsbury PLC |
2,735,546 | 6,456,869 | ||||||
|
Ocado Group PLC(a) |
906,232 | 7,616,085 | ||||||
|
Tesco PLC |
11,831,200 | 34,171,700 | ||||||
|
|
|
|||||||
| 48,244,654 | ||||||||
| Food Products — 0.3% | ||||||||
|
Associated British Foods PLC |
558,599 | 9,865,415 | ||||||
|
|
|
|||||||
| Health Care Equipment & Supplies — 0.5% | ||||||||
|
Smith & Nephew PLC |
1,365,687 | 16,064,220 | ||||||
|
|
|
|||||||
| Health Care Providers & Services — 0.0% | ||||||||
|
NMC Health PLC, NVS(b) |
122,262 | 1 | ||||||
|
|
|
|||||||
| Security | Shares | Value | ||||||
|
|
||||||||
| Hotels, Restaurants & Leisure — 3.0% | ||||||||
|
Compass Group PLC |
2,795,854 | $ | 60,141,767 | |||||
|
Entain PLC |
922,012 | 13,565,219 | ||||||
|
InterContinental Hotels Group PLC |
287,373 | 15,600,378 | ||||||
|
Whitbread PLC |
314,446 | 9,113,702 | ||||||
|
|
|
|||||||
| 98,421,066 | ||||||||
| Household Durables — 0.9% | ||||||||
|
Barratt Developments PLC |
1,607,092 | 7,956,370 | ||||||
|
Berkeley Group Holdings PLC |
173,809 | 7,357,869 | ||||||
|
Persimmon PLC |
499,669 | 8,549,888 | ||||||
|
Taylor Wimpey PLC |
5,585,255 | 7,006,895 | ||||||
|
|
|
|||||||
| 30,871,022 | ||||||||
| Household Products — 2.6% | ||||||||
|
Reckitt Benckiser Group PLC |
1,120,688 | 86,474,060 | ||||||
|
|
|
|||||||
| Industrial Conglomerates — 0.9% | ||||||||
|
DCC PLC |
154,785 | 8,908,552 | ||||||
|
Melrose Industries PLC |
6,862,242 | 10,828,973 | ||||||
|
Smiths Group PLC |
587,724 | 10,153,422 | ||||||
|
|
|
|||||||
| 29,890,947 | ||||||||
| Insurance — 3.3% | ||||||||
|
Admiral Group PLC |
281,299 | 6,919,619 | ||||||
|
Aviva PLC |
4,434,076 | 21,510,780 | ||||||
|
Legal & General Group PLC |
9,357,342 | 27,408,310 | ||||||
|
Phoenix Group Holdings PLC |
1,173,237 | 8,194,573 | ||||||
|
Prudential PLC |
4,308,868 | 45,222,273 | ||||||
|
|
|
|||||||
| 109,255,555 | ||||||||
| Interactive Media & Services — 0.3% | ||||||||
|
Auto Trader Group PLC(c) |
1,477,329 | 11,154,836 | ||||||
|
|
|
|||||||
| Machinery — 0.4% | ||||||||
|
Spirax-Sarco Engineering PLC |
115,626 | 14,115,203 | ||||||
|
|
|
|||||||
| Media — 1.2% | ||||||||
|
Informa PLC |
2,296,678 | 14,530,260 | ||||||
|
Pearson PLC |
1,050,199 | 10,510,368 | ||||||
|
WPP PLC |
1,711,557 | 14,741,721 | ||||||
|
|
|
|||||||
| 39,782,349 | ||||||||
| Metals & Mining — 7.7% | ||||||||
|
Anglo American PLC |
1,991,511 | 63,996,140 | ||||||
|
Antofagasta PLC |
619,660 | 7,884,486 | ||||||
|
Glencore PLC |
15,452,008 | 84,484,782 | ||||||
|
Rio Tinto PLC |
1,762,151 | 97,288,880 | ||||||
|
|
|
|||||||
| 253,654,288 | ||||||||
| Multi-Utilities — 2.2% | ||||||||
|
National Grid PLC |
5,715,157 | 71,164,280 | ||||||
|
|
|
|||||||
| Multiline Retail — 0.4% | ||||||||
|
Next PLC |
205,418 | 13,833,221 | ||||||
|
|
|
|||||||
| Oil, Gas & Consumable Fuels — 14.0% | ||||||||
|
BP PLC |
30,281,347 | 154,735,440 | ||||||
|
Shell PLC |
11,657,895 | 308,561,630 | ||||||
|
|
|
|||||||
| 463,297,070 | ||||||||
| Paper & Forest Products — 0.4% | ||||||||
|
Mondi PLC |
757,317 | 12,855,774 | ||||||
|
|
|
|||||||
| Personal Products — 6.2% | ||||||||
|
Haleon PLC(a) |
7,960,119 | 23,936,571 | ||||||
|
Unilever PLC |
3,999,448 | 181,424,247 | ||||||
|
|
|
|||||||
| 205,360,818 | ||||||||
|
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) August 31, 2022 |
iShares® MSCI United Kingdom ETF (Percentages shown are based on Net Assets) |
| Security | Shares | Value | ||||||
|
|
||||||||
| Pharmaceuticals — 12.3% | ||||||||
|
AstraZeneca PLC |
2,428,407 | $ | 300,375,341 | |||||
|
GSK PLC |
6,374,313 | 101,893,475 | ||||||
|
Hikma Pharmaceuticals PLC |
260,006 | 3,962,669 | ||||||
|
|
|
|||||||
| 406,231,485 | ||||||||
| Professional Services — 4.1% | ||||||||
|
Experian PLC |
1,443,131 | 43,792,485 | ||||||
|
Intertek Group PLC |
252,944 | 11,609,774 | ||||||
|
RELX PLC |
3,017,002 | 79,121,215 | ||||||
|
|
|
|||||||
| 134,523,474 | ||||||||
| Software — 0.6% | ||||||||
|
AVEVA Group PLC |
187,391 | 6,076,804 | ||||||
|
Sage Group PLC (The) |
1,591,810 | 13,194,021 | ||||||
|
|
|
|||||||
| 19,270,825 | ||||||||
| Specialty Retail — 0.4% | ||||||||
|
JD Sports Fashion PLC |
4,066,003 | 5,318,457 | ||||||
|
Kingfisher PLC |
3,182,406 | 8,548,794 | ||||||
|
|
|
|||||||
| 13,867,251 | ||||||||
| Textiles, Apparel & Luxury Goods — 0.4% | ||||||||
|
Burberry Group PLC |
625,291 | 12,648,818 | ||||||
|
|
|
|||||||
| Tobacco — 5.0% | ||||||||
|
British American Tobacco PLC |
3,375,778 | 135,209,198 | ||||||
|
Imperial Brands PLC |
1,415,056 | 31,119,685 | ||||||
|
|
|
|||||||
| 166,328,883 | ||||||||
| Trading Companies & Distributors — 2.8% | ||||||||
|
Ashtead Group PLC |
693,062 | 34,048,634 | ||||||
|
Bunzl PLC |
529,235 | 17,551,636 | ||||||
|
Ferguson PLC |
336,062 | 38,918,708 | ||||||
|
|
|
|||||||
| 90,518,978 | ||||||||
| Security | Shares | Value | ||||||
|
|
||||||||
| Water Utilities — 0.8% | ||||||||
|
Severn Trent PLC |
391,424 | $ | 12,643,613 | |||||
|
United Utilities Group PLC |
1,063,698 | 13,036,996 | ||||||
|
|
|
|||||||
| 25,680,609 | ||||||||
| Wireless Telecommunication Services — 1.7% | ||||||||
|
Vodafone Group PLC |
41,870,921 | 56,058,958 | ||||||
|
|
|
|||||||
|
Total
Long-Term Investments — 98.7% |
3,257,845,583 | |||||||
|
|
|
|||||||
|
Short-Term Securities |
||||||||
| Money Market Funds — 0.0% | ||||||||
|
BlackRock
Cash Funds: Treasury, |
120,000 | 120,000 | ||||||
|
|
|
|||||||
|
Total
Short-Term Securities — 0.0% |
120,000 | |||||||
|
|
|
|||||||
|
Total
Investments in Securities — 98.7% |
|
3,257,965,583 | ||||||
|
Other Assets Less Liabilities — 1.3% |
41,876,432 | |||||||
|
|
|
|||||||
|
Net Assets — 100.0% |
$ | 3,299,842,015 | ||||||
|
|
|
|||||||
| (a) |
Non-income producing security. |
| (b) |
Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
| (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. |
| (d) |
Affiliate of the Fund. |
| (e) |
Annualized 7-day yield as of period end. |
Affiliates
Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2022 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:
|
|
||||||||||||||||||||||||||||||||||||
| Affiliated Issuer | Value
at 08/31/21 |
Purchases at Cost |
Proceeds from Sale |
Net Realized Gain (Loss) |
Change
in Unrealized Appreciation (Depreciation) |
Value
at 08/31/22 |
Shares Held at 08/31/22 |
Income |
Capital Gain |
|||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
BlackRock Cash Funds: Treasury, SL Agency Shares |
$ | 1,420,000 | $ | — | $ | (1,300,000 | )(a) | $ | — | $ | — | $ | 120,000 | 120,000 | $ | 8,491 | $ | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| (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 100 Index |
493 | 09/16/22 | $ | 41,805 | $ | (104,944 | ) | |||||||||
|
|
|
|||||||||||||||
| 16 |
2 0 2 2 I 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) August 31, 2022 |
iShares® MSCI United Kingdom 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 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Liabilities — Derivative Financial Instruments |
||||||||||||||||||||||||||||
|
Futures contracts |
||||||||||||||||||||||||||||
|
Unrealized depreciation on futures contracts(a) |
$ | — | $ | — | $ | 104,944 | $ | — | $ | — | $ | — | $ | 104,944 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (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 August 31, 2022, 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 |
$ | — | $ | — | $ | 1,153,160 | $ | — | $ | — | $ | — | $ | 1,153,160 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net Change in Unrealized Appreciation (Depreciation) on |
||||||||||||||||||||||||||||
|
Futures contracts |
$ | — | $ | — | $ | (196,244 | ) | $ | — | $ | — | $ | — | $ | (196,244 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Average Quarterly Balances of Outstanding Derivative Financial Instruments
|
|
||||
|
Futures contracts |
||||
|
Average notional value of contracts — long |
$ | 28,737,361 | ||
|
|
||||
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 | |||||||||||||
|
|
||||||||||||||||
|
Investments |
||||||||||||||||
|
Assets |
||||||||||||||||
|
Common Stocks |
$ | 23,936,571 | $ | 3,233,909,011 | $ | 1 | $ | 3,257,845,583 | ||||||||
|
Money Market Funds |
120,000 | — | — | 120,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 24,056,571 | $ | 3,233,909,011 | $ | 1 | $ | 3,257,965,583 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Derivative financial instruments(a) |
||||||||||||||||
|
Liabilities |
||||||||||||||||
|
Futures Contracts |
$ | — | $ | (104,944 | ) | $ | — | $ (104,944) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) |
Derivative financial instruments are futures contracts. Futures contracts are valued at the unrealized appreciation (depreciation) on the instrument. |
See notes to financial statements.
|
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 August 31, 2022 |
iShares® MSCI United Kingdom Small-Cap ETF (Percentages shown are based on Net Assets) |
| Security | Shares | Value | ||||||
|
|
||||||||
|
Common Stocks |
||||||||
| Aerospace & Defense — 3.3% | ||||||||
|
Avon Protection PLC |
3,738 | $ | 34,979 | |||||
|
Babcock International Group PLC(a) |
31,572 | 120,414 | ||||||
|
Chemring Group PLC |
35,404 | 128,733 | ||||||
|
Meggitt PLC(a) |
97,209 | 900,937 | ||||||
|
QinetiQ Group PLC |
71,937 | 290,670 | ||||||
|
Senior PLC(a) |
51,317 | 77,738 | ||||||
|
|
|
|||||||
| 1,553,471 | ||||||||
| Air Freight & Logistics — 0.8% | ||||||||
|
Royal Mail PLC |
94,858 | 302,658 | ||||||
|
Wincanton PLC |
15,667 | 61,478 | ||||||
|
|
|
|||||||
| 364,136 | ||||||||
| Airlines — 0.8% | ||||||||
|
easyJet PLC(a) |
37,781 | 156,976 | ||||||
|
JET2 PLC(a) |
19,949 | 197,556 | ||||||
|
|
|
|||||||
| 354,532 | ||||||||
| Auto Components — 0.1% | ||||||||
|
TI Fluid Systems PLC(b) |
41,275 | 69,955 | ||||||
|
|
|
|||||||
| Automobiles — 0.1% | ||||||||
|
Aston Martin Lagonda Global Holdings PLC(a)(b) |
8,594 | 44,368 | ||||||
|
|
|
|||||||
| Banks — 1.5% | ||||||||
|
Bank of Georgia Group PLC |
4,625 | 107,410 | ||||||
|
Close Brothers Group PLC |
18,592 | 219,952 | ||||||
|
TBC Bank Group PLC |
5,183 | 106,814 | ||||||
|
Virgin Money UK PLC |
160,863 | 278,147 | ||||||
|
|
|
|||||||
| 712,323 | ||||||||
| Beverages — 1.3% | ||||||||
|
AG Barr PLC |
11,775 | 68,944 | ||||||
|
Britvic PLC |
33,247 | 302,032 | ||||||
|
C&C Group PLC(a) |
48,142 | 96,133 | ||||||
|
Fevertree Drinks PLC |
13,045 | 138,010 | ||||||
|
|
|
|||||||
| 605,119 | ||||||||
| Biotechnology — 1.5% | ||||||||
|
Abcam PLC(a) |
26,954 | 397,728 | ||||||
|
Avacta Group PLC(a)(c) |
30,907 | 45,096 | ||||||
|
Genus PLC |
8,133 | 237,715 | ||||||
|
Oxford Biomedica PLC(a) |
8,807 | 46,756 | ||||||
|
|
|
|||||||
| 727,295 | ||||||||
| Building Products — 0.6% | ||||||||
|
Genuit Group PLC |
30,932 | 128,919 | ||||||
|
Tyman PLC |
24,018 | 64,174 | ||||||
|
Volution Group PLC |
24,787 | 100,301 | ||||||
|
|
|
|||||||
| 293,394 | ||||||||
| Capital Markets — 8.6% | ||||||||
|
AJ Bell PLC |
38,365 | 130,851 | ||||||
|
Alpha FX Group PLC |
3,924 | 82,965 | ||||||
|
Ashmore Group PLC |
57,667 | 135,878 | ||||||
|
Brewin Dolphin Holdings PLC |
33,829 | 201,212 | ||||||
|
Bridgepoint Group PLC(b) |
81,748 | 237,797 | ||||||
|
CMC Markets PLC(b) |
15,897 | 42,383 | ||||||
|
IG Group Holdings PLC |
50,915 | 483,182 | ||||||
|
Impax Asset Management Group PLC |
10,546 | 76,548 | ||||||
|
IntegraFin Holdings PLC |
37,026 | 115,533 | ||||||
|
Intermediate Capital Group PLC |
36,016 | 569,332 | ||||||
|
Investec PLC |
86,511 | 417,276 | ||||||
|
IP Group PLC |
127,769 | 103,901 | ||||||
|
JTC PLC(b) |
16,417 | 145,716 | ||||||
| Security | Shares | Value | ||||||
|
|
||||||||
| Capital Markets (continued) | ||||||||
|
Jupiter Fund Management PLC |
54,135 | $ | 61,128 | |||||
|
Liontrust Asset Management PLC |
8,060 | 85,603 | ||||||
|
Man Group PLC/Jersey |
164,300 | 464,290 | ||||||
|
Ninety One PLC |
50,665 | 116,244 | ||||||
|
Numis Corp. PLC(c) |
7,656 | 21,727 | ||||||
|
Polar Capital Holdings PLC(c) |
8,611 | 45,768 | ||||||
|
Quilter PLC(b) |
165,842 | 202,773 | ||||||
|
Rathbones Group PLC |
7,266 | 152,105 | ||||||
|
TP ICAP Group PLC |
98,302 | 175,308 | ||||||
|
|
|
|||||||
| 4,067,520 | ||||||||
| Chemicals — 1.1% | ||||||||
|
Elementis PLC(a) |
71,192 | 91,401 | ||||||
|
Essentra PLC |
37,027 | 85,230 | ||||||
|
Synthomer PLC |
46,312 | 105,738 | ||||||
|
Victrex PLC |
10,753 | 218,118 | ||||||
|
|
|
|||||||
| 500,487 | ||||||||
| Commercial Services & Supplies — 3.4% | ||||||||
|
Biffa PLC(b) |
37,943 | 177,371 | ||||||
|
Finablr PLC(a)(b)(d) |
61,710 | 1 | ||||||
|
HomeServe PLC |
37,583 | 517,810 | ||||||
|
Johnson Service Group PLC(a) |
55,214 | 61,695 | ||||||
|
Marlowe PLC(a) |
10,263 | 76,781 | ||||||
|
Mitie Group PLC |
177,171 | 148,795 | ||||||
|
Renewi PLC(a) |
9,797 | 88,210 | ||||||
|
Restore PLC |
15,093 | 76,642 | ||||||
|
Serco Group PLC |
149,252 | 302,728 | ||||||
|
Smart Metering Systems PLC |
15,673 | 165,505 | ||||||
|
|
|
|||||||
| 1,615,538 | ||||||||
| Communications Equipment — 0.5% | ||||||||
|
Spirent Communications PLC |
75,990 | 227,305 | ||||||
|
|
|
|||||||
| Construction & Engineering — 1.1% | ||||||||
|
Balfour Beatty PLC |
77,732 | 284,630 | ||||||
|
Keller Group PLC |
9,134 | 74,595 | ||||||
|
Kier Group PLC(a) |
54,527 | 45,354 | ||||||
|
Morgan Sindall Group PLC |
5,228 | 104,376 | ||||||
|
|
|
|||||||
| 508,955 | ||||||||
| Construction Materials — 1.1% | ||||||||
|
Breedon Group PLC |
189,375 | 131,119 | ||||||
|
Forterra PLC(b) |
27,776 | 85,228 | ||||||
|
Ibstock PLC(b) |
51,171 | 112,471 | ||||||
|
Marshalls PLC |
28,261 | 109,601 | ||||||
|
RHI Magnesita NV |
3,205 | 67,162 | ||||||
|
|
|
|||||||
| 505,581 | ||||||||
| Consumer Finance — 0.1% | ||||||||
|
Provident Financial PLC |
29,188 | 58,491 | ||||||
|
|
|
|||||||
| Containers & Packaging — 1.1% | ||||||||
|
DS Smith PLC |
170,374 | 527,986 | ||||||
|
|
|
|||||||
| Distributors — 0.9% | ||||||||
|
Inchcape PLC |
46,745 | 410,475 | ||||||
|
|
|
|||||||
| Diversified Financial Services — 1.0% | ||||||||
|
Burford Capital Ltd. |
22,992 | 215,081 | ||||||
|
Plus500 Ltd. |
12,192 | 240,256 | ||||||
|
|
|
|||||||
| 455,337 | ||||||||
| Diversified Telecommunication Services — 0.5% | ||||||||
|
Gamma Communications PLC |
10,208 | 127,683 | ||||||
| 18 |
2 0 2 2 I 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) August 31, 2022 |
iShares® MSCI United Kingdom Small-Cap ETF (Percentages shown are based on Net Assets) |
| Security | Shares | Value | ||||||
|
|
||||||||
| Diversified Telecommunication Services (continued) | ||||||||
|
Helios Towers PLC(a) |
91,010 | $ | 130,424 | |||||
|
|
|
|||||||
| 258,107 | ||||||||
| Electrical Equipment — 0.6% | ||||||||
|
Ceres Power Holdings PLC(a) |
15,421 | 115,828 | ||||||
|
ITM Power PLC(a)(c) |
52,953 | 120,678 | ||||||
|
Luceco PLC(b) |
10,424 | 9,485 | ||||||
|
Volex PLC |
14,323 | 44,509 | ||||||
|
|
|
|||||||
| 290,500 | ||||||||
| Electronic Equipment, Instruments & Components — 1.4% | ||||||||
|
Renishaw PLC |
4,526 | 193,591 | ||||||
|
Spectris PLC |
13,424 | 434,042 | ||||||
|
Strix Group PLC(c) |
25,539 | 43,909 | ||||||
|
|
|
|||||||
| 671,542 | ||||||||
| Energy Equipment & Services — 0.6% | ||||||||
|
Hunting PLC |
17,155 | 57,495 | ||||||
|
John Wood Group PLC(a) |
86,431 | 129,400 | ||||||
|
Petrofac Ltd.(a) |
54,085 | 74,957 | ||||||
|
|
|
|||||||
| 261,852 | ||||||||
| Entertainment — 0.2% | ||||||||
|
Cineworld Group PLC(a)(c) |
116,670 | 4,578 | ||||||
|
Frontier Developments PLC(a)(c) |
2,943 | 49,876 | ||||||
|
Team17 Group PLC(a) |
13,551 | 62,812 | ||||||
|
|
|
|||||||
| 117,266 | ||||||||
| Equity Real Estate Investment Trusts (REITs) — 10.8% | ||||||||
|
Assura PLC |
367,150 | 277,877 | ||||||
|
Balanced Commercial Property Trust Ltd. |
89,936 | 111,083 | ||||||
|
Big Yellow Group PLC |
21,674 | 333,867 | ||||||
|
Capital & Counties Properties PLC |
90,387 | 125,611 | ||||||
|
Civitas Social Housing PLC |
76,681 | 63,336 | ||||||
|
Custodian Reit PLC |
51,934 | 61,780 | ||||||
|
Derwent London PLC |
12,491 | 352,392 | ||||||
|
Empiric Student Property PLC |
76,002 | 85,113 | ||||||
|
Great Portland Estates PLC |
26,921 | 155,369 | ||||||
|
Hammerson PLC |
451,526 | 114,068 | ||||||
|
Home Reit PLC |
98,649 | 134,999 | ||||||
|
Impact Healthcare Reit PLC |
39,222 | 52,217 | ||||||
|
LondonMetric Property PLC |
115,541 | 291,535 | ||||||
|
LXI REIT PLC |
234,007 | 400,157 | ||||||
|
Picton Property Income Ltd. (The) |
69,150 | 72,700 | ||||||
|
Primary Health Properties PLC |
157,181 | 249,094 | ||||||
|
PRS REIT PLC (The) |
65,278 | 77,805 | ||||||
|
Regional REIT Ltd.(b) |
50,482 | 40,562 | ||||||
|
Safestore Holdings PLC |
26,164 | 334,943 | ||||||
|
Shaftesbury PLC |
23,925 | 114,410 | ||||||
|
Supermarket Income Reit PLC |
153,750 | 216,120 | ||||||
|
Target Healthcare REIT PLC |
77,785 | 99,941 | ||||||
|
Tritax Big Box REIT PLC |
231,851 | 447,298 | ||||||
|
UK Commercial Property REIT Ltd. |
95,289 | 78,288 | ||||||
|
UNITE Group PLC (The) |
42,271 | 515,371 | ||||||
|
Urban Logistics REIT PLC |
58,681 | 115,889 | ||||||
|
Warehouse REIT PLC |
49,383 | 88,806 | ||||||
|
Workspace Group PLC |
17,961 | 108,735 | ||||||
|
|
|
|||||||
| 5,119,366 | ||||||||
| Food & Staples Retailing — 0.7% | ||||||||
|
Marks & Spencer Group PLC(a) |
242,918 | 343,268 | ||||||
|
|
|
|||||||
| Food Products — 1.9% | ||||||||
|
Bakkavor Group PLC(b) |
21,268 | 19,741 | ||||||
|
Cranswick PLC |
6,617 | 236,913 | ||||||
| Security | Shares | Value | ||||||
|
|
||||||||
| Food Products (continued) | ||||||||
|
Greencore Group PLC(a) |
65,297 | $ | 64,515 | |||||
|
Hotel Chocolat Group PLC(a) |
7,561 | 11,946 | ||||||
|
Premier Foods PLC |
80,751 | 100,938 | ||||||
|
Tate & Lyle PLC |
49,903 | 441,902 | ||||||
|
|
|
|||||||
| 875,955 | ||||||||
| Health Care Equipment & Supplies — 1.3% | ||||||||
|
Advanced Medical Solutions Group PLC |
26,439 | 92,450 | ||||||
|
ConvaTec Group PLC(b) |
202,551 | 511,024 | ||||||
|
|
|
|||||||
| 603,474 | ||||||||
| Health Care Providers & Services — 1.2% | ||||||||
|
CVS Group PLC |
8,813 | 185,684 | ||||||
|
Mediclinic International PLC |
50,396 | 292,847 | ||||||
|
Spire Healthcare Group PLC(a)(b) |
34,354 | 92,555 | ||||||
|
|
|
|||||||
| 571,086 | ||||||||
| Health Care Technology — 0.5% | ||||||||
|
Craneware PLC |
3,261 | 59,855 | ||||||
|
EMIS Group PLC |
7,092 | 155,133 | ||||||
|
|
|
|||||||
| 214,988 | ||||||||
| Hotels, Restaurants & Leisure — 3.8% | ||||||||
|
888 Holdings PLC |
47,488 | 68,076 | ||||||
|
Carnival PLC(a) |
18,108 | 151,761 | ||||||
|
Domino’s Pizza Group PLC |
48,903 | 134,073 | ||||||
|
Greggs PLC |
12,629 | 269,952 | ||||||
|
Gym Group PLC (The)(a)(b) |
19,857 | 33,310 | ||||||
|
J D Wetherspoon PLC(a) |
11,782 | 65,984 | ||||||
|
Marston’s PLC(a) |
77,591 | 32,774 | ||||||
|
Mitchells & Butlers PLC(a) |
32,951 | 58,931 | ||||||
|
On the Beach Group PLC(a)(b) |
20,229 | 30,029 | ||||||
|
Patisserie Holdings PLC, NVS(d) |
6,053 | — | ||||||
|
Playtech PLC(a) |
28,319 | 147,000 | ||||||
|
Rank Group PLC(a) |
25,590 | 22,385 | ||||||
|
Restaurant Group PLC (The)(a) |
94,520 | 44,866 | ||||||
|
SSP Group PLC(a) |
98,179 | 240,580 | ||||||
|
Trainline PLC(a)(b) |
59,367 | 238,418 | ||||||
|
TUI AG(a)(c) |
143,893 | 220,640 | ||||||
|
Young & Co’s Brewery PLC, Series A |
2,699 | 36,873 | ||||||
|
|
|
|||||||
| 1,795,652 | ||||||||
| Household Durables — 2.4% | ||||||||
|
Bellway PLC |
15,356 | 363,083 | ||||||
|
Countryside Partnerships PLC(a)(b) |
58,840 | 164,777 | ||||||
|
Crest Nicholson Holdings PLC |
32,238 | 87,614 | ||||||
|
Redrow PLC |
36,959 | 217,114 | ||||||
|
Victoria PLC(a)(c) |
7,965 | 31,794 | ||||||
|
Vistry Group PLC |
27,571 | 247,266 | ||||||
|
|
|
|||||||
| 1,111,648 | ||||||||
| Independent Power and Renewable Electricity Producers — 0.9% | ||||||||
|
ContourGlobal PLC(b) |
24,951 | 74,584 | ||||||
|
Drax Group PLC |
49,682 | 366,482 | ||||||
|
|
|
|||||||
| 441,066 | ||||||||
| Insurance — 3.6% | ||||||||
|
Beazley PLC |
75,639 | 510,387 | ||||||
|
Direct Line Insurance Group PLC |
163,380 | 389,131 | ||||||
|
Hiscox Ltd. |
43,055 | 449,053 | ||||||
|
Just Group PLC |
129,883 | 108,457 | ||||||
|
Lancashire Holdings Ltd. |
30,335 | 174,059 | ||||||
|
Sabre Insurance Group PLC(b) |
30,590 | 40,796 | ||||||
|
Saga PLC(a) |
13,709 | 23,873 | ||||||
|
|
|
|||||||
| 1,695,756 | ||||||||
|
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) August 31, 2022 |
iShares® MSCI United Kingdom Small-Cap ETF (Percentages shown are based on Net Assets) |
| Security | Shares | Value | ||||||
|
|
||||||||
| Interactive Media & Services — 1.9% | ||||||||
|
Moneysupermarket.com Group PLC |
66,814 | $ | 152,732 | |||||
|
Rightmove PLC |
104,082 | 731,592 | ||||||
|
Trustpilot Group PLC(a)(b) |
27,857 | 20,623 | ||||||
|
|
|
|||||||
| 904,947 | ||||||||
| Internet & Direct Marketing Retail — 1.0% | ||||||||
|
AO World PLC(a)(c) |
52,471 | 27,528 | ||||||
|
ASOS PLC(a)(c) |
8,543 | 68,730 | ||||||
|
Auction Technology Group PLC(a) |
11,288 | 108,185 | ||||||
|
boohoo Group PLC(a) |
123,250 | 59,649 | ||||||
|
Deliveroo PLC(a)(b) |
109,786 | 103,153 | ||||||
|
Moonpig Group PLC(a) |
27,210 | 61,570 | ||||||
|
THG PLC(a) |
89,639 | 57,167 | ||||||
|
|
|
|||||||
| 485,982 | ||||||||
| IT Services — 2.7% | ||||||||
|
Capita PLC(a) |
207,617 | 62,383 | ||||||
|
Computacenter PLC |
9,943 | 285,305 | ||||||
|
Kainos Group PLC |
9,945 | 157,353 | ||||||
|
Keywords Studios PLC |
9,036 | 260,424 | ||||||
|
NCC Group PLC |
38,006 | 86,890 | ||||||
|
Network International Holdings PLC(a)(b) |
62,372 | 174,478 | ||||||
|
Softcat PLC |
16,066 | 240,919 | ||||||
|
|
|
|||||||
| 1,267,752 | ||||||||
| Leisure Products — 0.7% | ||||||||
|
Games Workshop Group PLC |
4,064 | 334,646 | ||||||
|
|
|
|||||||
| Life Sciences Tools & Services — 0.4% | ||||||||
|
Ergomed PLC(a) |
4,877 | 63,185 | ||||||
|
Oxford Nanopore Technologies PLC(a) |
40,971 | 130,039 | ||||||
|
|
|
|||||||
| 193,224 | ||||||||
| Machinery — 3.6% | ||||||||
|
Bodycote PLC |
23,779 | 151,624 | ||||||
|
IMI PLC |
32,380 | 430,663 | ||||||
|
Judges Scientific PLC |
651 | 57,476 | ||||||
|
Morgan Advanced Materials PLC |
35,649 | 109,953 | ||||||
|
Rotork PLC |
106,648 | 305,953 | ||||||
|
Vesuvius PLC |
27,150 | 109,571 | ||||||
|
Weir Group PLC (The) |
32,181 | 541,979 | ||||||
|
|
|
|||||||
| 1,707,219 | ||||||||
| Marine — 0.3% | ||||||||
|
Clarkson PLC |
3,420 | 119,533 | ||||||
|
|
|
|||||||
| Media — 2.8% | ||||||||
|
Ascential PLC(a) |
54,634 | 128,692 | ||||||
|
Euromoney Institutional Investor PLC |
13,521 | 227,910 | ||||||
|
Future PLC |
14,224 | 256,713 | ||||||
|
ITV PLC |
449,080 | 334,196 | ||||||
|
Next Fifteen Communications Group PLC |
10,259 | 102,101 | ||||||
|
Reach PLC |
36,797 | 31,590 | ||||||
|
S4 Capital PLC(a) |
35,313 | 54,275 | ||||||
|
Tremor International Ltd.(a)(c) |
11,266 | 43,027 | ||||||
|
YouGov PLC |
13,190 | 153,228 | ||||||
|
|
|
|||||||
| 1,331,732 | ||||||||
| Metals & Mining — 1.2% | ||||||||
|
Atalaya Mining PLC |
14,148 | 36,570 | ||||||
|
Centamin PLC |
143,860 | 150,868 | ||||||
|
Central Asia Metals PLC |
21,540 | 57,553 | ||||||
|
Ferrexpo PLC |
36,011 | 61,943 | ||||||
|
Greatland Gold PLC(a) |
501,704 | 46,102 | ||||||
|
Hill & Smith Holdings PLC |
9,963 | 120,362 | ||||||
| Security | Shares | Value | ||||||
|
|
||||||||
| Metals & Mining (continued) | ||||||||
|
Hochschild Mining PLC |
37,429 | $ | 28,180 | |||||
|
Pan African Resources PLC |
213,890 | 45,432 | ||||||
|
SolGold PLC(a)(c) |
140,327 | 32,441 | ||||||
|
|
|
|||||||
| 579,451 | ||||||||
| Multi-Utilities — 1.7% | ||||||||
|
Centrica PLC(a) |
733,284 | 643,139 | ||||||
|
Telecom Plus PLC |
7,835 | 177,001 | ||||||
|
|
|
|||||||
| 820,140 | ||||||||
| Multiline Retail — 1.1% | ||||||||
|
B&M European Value Retail SA |
117,928 | 505,698 | ||||||
|
|
|
|||||||
| Oil, Gas & Consumable Fuels — 2.8% | ||||||||
|
Capricorn Energy PLC(a) |
39,982 | 107,850 | ||||||
|
Diversified Energy Co. PLC |
105,704 | 162,582 | ||||||
|
Energean PLC(a) |
15,422 | 231,830 | ||||||
|
EnQuest PLC(a) |
186,031 | 64,550 | ||||||
|
Genel Energy PLC |
18,716 | 30,852 | ||||||
|
Gulf Keystone Petroleum Ltd |
26,930 | 75,398 | ||||||
|
Harbour Energy PLC |
57,449 | 316,974 | ||||||
|
Pantheon Resources PLC(a)(c) |
89,681 | 138,819 | ||||||
|
Serica Energy PLC |
25,047 | 108,428 | ||||||
|
Tullow Oil PLC(a) |
140,617 | 78,970 | ||||||
|
|
|
|||||||
| 1,316,253 | ||||||||
| Personal Products — 0.1% | ||||||||
|
PZ Cussons PLC |
29,240 | 65,934 | ||||||
|
|
|
|||||||
| Pharmaceuticals — 1.9% | ||||||||
|
Alliance Pharma PLC |
63,551 | 69,988 | ||||||
|
Dechra Pharmaceuticals PLC |
13,442 | 543,634 | ||||||
|
Indivior PLC(a) |
87,300 | 292,516 | ||||||
|
|
|
|||||||
| 906,138 | ||||||||
| Professional Services — 1.5% | ||||||||
|
Hays PLC |
205,842 | 279,097 | ||||||
|
Pagegroup PLC |
40,660 | 204,226 | ||||||
|
RWS Holdings PLC |
38,703 | 155,026 | ||||||
|
SThree PLC |
15,618 | 63,755 | ||||||
|
|
|
|||||||
| 702,104 | ||||||||
| Real Estate Management & Development — 2.1% | ||||||||
|
CLS Holdings PLC(c) |
22,404 | 48,697 | ||||||
|
Grainger PLC |
92,178 | 287,197 | ||||||
|
Helical PLC |
13,508 | 61,200 | ||||||
|
IWG PLC(a) |
94,127 | 175,446 | ||||||
|
Savills PLC |
17,844 | 195,971 | ||||||
|
Sirius Real Estate Ltd |
146,468 | 138,333 | ||||||
|
Watkin Jones PLC |
28,211 | 62,072 | ||||||
|
|
|
|||||||
| 968,916 | ||||||||
| Road & Rail — 1.0% | ||||||||
|
Firstgroup PLC |
93,355 | 124,336 | ||||||
|
Go-Ahead Group PLC (The)(a) |
5,123 | 91,901 | ||||||
|
National Express Group PLC(a) |
64,208 | 130,313 | ||||||
|
Redde Northgate PLC |
28,568 | 113,667 | ||||||
|
|
|
|||||||
| 460,217 | ||||||||
| Semiconductors & Semiconductor Equipment — 0.1% | ||||||||
|
Alphawave IP Group PLC(a) |
33,799 | 52,693 | ||||||
|
|
|
|||||||
| Software — 3.4% | ||||||||
|
Argo Blockchain PLC(a) |
56,042 | 27,162 | ||||||
|
Avast PLC(b) |
83,779 | 688,096 | ||||||
|
Bytes Technology Group PLC |
26,856 | 130,098 | ||||||
| 20 |
2 0 2 2 I 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) August 31, 2022 |
iShares® MSCI United Kingdom Small-Cap ETF (Percentages shown are based on Net Assets) |
| Security | Shares | Value | ||||||
|
|
||||||||
| Software (continued) | ||||||||
|
Darktrace PLC(a) |
26,226 | $ | 155,438 | |||||
|
FD Technologies PLC(a) |
2,917 | 53,948 | ||||||
|
GB Group PLC |
29,777 | 154,137 | ||||||
|
Kape Technologies PLC(a) |
20,117 | 66,604 | ||||||
|
Learning Technologies Group PLC |
73,856 | 97,810 | ||||||
|
Micro Focus International PLC |
41,505 | 249,895 | ||||||
|
|
|
|||||||
| 1,623,188 | ||||||||
| Specialty Retail — 2.1% | ||||||||
|
Currys PLC |
133,531 | 98,351 | ||||||
|
Dunelm Group PLC |
13,917 | 111,312 | ||||||
|
Frasers Group PLC(a) |
20,890 | 194,509 | ||||||
|
Halfords Group PLC |
26,786 | 40,493 | ||||||
|
Pets at Home Group PLC |
61,852 | 227,776 | ||||||
|
WH Smith PLC(a) |
16,235 | 269,124 | ||||||
|
Wickes Group PLC |
32,564 | 45,169 | ||||||
|
|
|
|||||||
| 986,734 | ||||||||
| Textiles, Apparel & Luxury Goods — 0.7% | ||||||||
|
Coats Group PLC |
180,840 | 126,040 | ||||||
|
Dr. Martens PLC |
74,592 | 203,353 | ||||||
|
|
|
|||||||
| 329,393 | ||||||||
| Thrifts & Mortgage Finance — 1.1% | ||||||||
|
OSB Group PLC |
55,153 | 351,640 | ||||||
|
Paragon Banking Group PLC |
30,122 | 187,232 | ||||||
|
|
|
|||||||
| 538,872 | ||||||||
| Trading Companies & Distributors — 4.8% | ||||||||
|
Diploma PLC |
15,477 | 450,289 | ||||||
|
Grafton Group PLC |
27,894 | 234,142 | ||||||
|
Howden Joinery Group PLC |
71,382 | 471,968 | ||||||
|
RS GROUP PLC |
58,383 | 734,436 | ||||||
|
SIG PLC(a) |
90,271 | 35,077 | ||||||
|
Travis Perkins PLC |
26,055 | 256,245 | ||||||
|
Yellow Cake PLC(a)(b) |
21,707 | 105,833 | ||||||
|
|
|
|||||||
| 2,287,990 | ||||||||
| Security | Shares | Value | ||||||
|
|
||||||||
| Water Utilities — 0.8% | ||||||||
|
Penno Group PLC |
32,968 | $ | 356,957 | |||||
|
|
|
|||||||
| Wireless Telecommunication Services — 0.4% | ||||||||
|
Airtel Africa PLC(b) |
116,052 | 178,165 | ||||||
|
|
|
|||||||
|
Total
Long-Term Investments — 99.5% |
46,997,672 | |||||||
|
|
|
|||||||
|
Short-Term Securities |
||||||||
| Money Market Funds — 1.5% | ||||||||
|
BlackRock Cash Funds: Institutional, SL Agency Shares, 2.42%(e)(f)(g) |
684,987 | 685,192 | ||||||
|
BlackRock Cash Funds: Treasury, SL Agency Shares, 2.07%(e)(f) |
20,000 | 20,000 | ||||||
|
|
|
|||||||
|
Total
Short-Term Securities — 1.5% |
705,192 | |||||||
|
|
|
|||||||
|
Total
Investments in Securities — 101.0% |
47,702,864 | |||||||
| Liabilities in Excess of Other Assets — (1.0)% | (462,944) | |||||||
|
|
|
|||||||
| Net Assets — 100.0% | $ 47,239,920 | |||||||
|
|
|
|||||||
| (a) |
Non-income producing security. |
| (b) |
Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
| (c) |
All or a portion of this security is on loan. |
| (d) |
Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
| (e) |
Affiliate of the Fund. |
| (f) |
Annualized 7-day yield as of period end. |
| (g) |
All or a portion of this security was purchased with the cash collateral from loaned securities. |
Affiliates
Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2022 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:
| Affiliated Issuer | Value at 08/31/21 |
Purchases at Cost |
Proceeds from Sale |
Net Realized Gain (Loss) |
Change
in Unrealized Appreciation (Depreciation) |
Value at 08/31/22 |
Shares Held at 08/31/22 |
Income |
Capital Gain |
|||||||||||||||||||||||||||
|
BlackRock Cash Funds: Institutional, SL Agency Shares |
$ | 2,279,475 | $ | — | $ | (1,593,514 | )(a) | $ | (813 | ) | $ | 44 | $ | 685,192 | 684,987 | $ | 56,564 | (b) | $ | — | ||||||||||||||||
|
BlackRock Cash Funds: Treasury, SL Agency Shares |
50,000 | — | (30,000 | )(a) | — | — | 20,000 | 20,000 | 144 | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| $ | (813 | ) | $ | 44 | $ | 705,192 | $ | 56,708 | $ | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| (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. |
|
S C H E D U L E O F I N V E S T M E N T S |
21 |
|
Schedule of Investments (continued) August 31, 2022 |
iShares® MSCI United Kingdom Small-Cap ETF |
Derivative Financial Instruments Outstanding as of Period End
Futures Contracts
|
|
||||||||||||||||
| Description | Number of Contracts |
Expiration Date |
Notional Amount (000) |
Value/ Unrealized Appreciation (Depreciation) |
||||||||||||
|
|
||||||||||||||||
|
Long Contracts |
||||||||||||||||
|
FTSE 250 Index |
5 | 09/16/22 | $ | 222 | $ | (12,294 | ) | |||||||||
|
|
|
|||||||||||||||
Derivative Financial Instruments Categorized by Risk Exposure
As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:
|
|
||||||||||||||||||||||||||||
| Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency Exchange Contracts |
Interest Rate Contracts |
Other Contracts |
Total | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Liabilities — Derivative Financial Instruments |
||||||||||||||||||||||||||||
|
Futures contracts |
||||||||||||||||||||||||||||
|
Unrealized depreciation on futures contracts(a) |
$ | — | $ | — | $ | 12,294 | $ | — | $ | — | $ | — | $ | 12,294 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (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 August 31, 2022, 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 |
$ | — | $ | — | $ | (74,252 | ) | $ | — | $ | — | $ | — | $ | (74,252 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net Change in Unrealized Appreciation (Depreciation) on |
||||||||||||||||||||||||||||
|
Futures contracts |
$ | — | $ | — | $ | (46,794 | ) | $ | — | $ | — | $ | — | $ | (46,794 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Average Quarterly Balances of Outstanding Derivative Financial Instruments
|
|
||||
|
Futures contracts |
||||
|
Average notional value of contracts — long |
$539,413 | |||
|
|
||||
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 | |||||||||||||
|
|
||||||||||||||||
|
Investments |
||||||||||||||||
|
Assets |
||||||||||||||||
|
Common Stocks |
$ | 12,766,840 | $ | 34,230,831 | $ | 1 | $ | 46,997,672 | ||||||||
|
Money Market Funds |
705,192 | — | — | 705,192 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 13,472,032 | $ | 34,230,831 | $ | 1 | $ | 47,702,864 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Derivative financial instruments(a) |
||||||||||||||||
|
Liabilities |
||||||||||||||||
|
Futures Contracts |
$ | — | $ | (12,294 | ) | $ | — | $ | (12,294 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) |
Derivative financial instruments are futures contracts. Futures contracts are valued at the unrealized appreciation (depreciation) on the instrument. |
See notes to financial statements.
| 22 |
2 0 2 2 I 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
August 31, 2022
|
iShares Currency Hedged MSCI United ETF |
iShares MSCI United Kingdom ETF |
iShares MSCI United ETF |
||||||||||
|
|
||||||||||||
|
ASSETS |
||||||||||||
|
Investments, at value — unaffiliated(a)(b) |
$ | — | $ | 3,257,845,583 | $ | 46,997,672 | ||||||
|
Investments, at value — affiliated(c) |
16,493,013 | 120,000 | 705,192 | |||||||||
|
Cash |
966 | 2,279 | 8,130 | |||||||||
|
Foreign currency, at value(d) |
— | 7,224,847 | 71,601 | |||||||||
|
Foreign currency collateral pledged for futures contracts(e) |
— | 2,565,360 | 15,102 | |||||||||
|
Receivables: |
||||||||||||
|
Investments sold |
262,199 | 11,344,671 | 171,353 | |||||||||
|
Securities lending income — affiliated |
— | — | 2,015 | |||||||||
|
Dividends — unaffiliated |
— | 33,246,933 | 133,382 | |||||||||
|
Dividends — affiliated |
437 | 836 | 51 | |||||||||
|
Tax reclaims |
— | 101,425 | 22,664 | |||||||||
|
Unrealized appreciation on forward foreign currency exchange contracts |
1,096,619 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total assets |
17,853,234 | 3,312,451,934 | 48,127,162 | |||||||||
|
|
|
|
|
|
|
|||||||
|
LIABILITIES |
||||||||||||
|
Cash received as collateral for OTC derivatives |
690,000 | — | — | |||||||||
|
Collateral on securities loaned, at value |
— | — | 686,282 | |||||||||
|
Payables: |
||||||||||||
|
Investments purchased |
969,852 | 10,567,464 | 174,120 | |||||||||
|
Variation margin on futures contracts |
— | 532,253 | 1,173 | |||||||||
|
Capital shares redeemed |
265,496 | — | — | |||||||||
|
Investment advisory fees |
— | 1,510,202 | 25,667 | |||||||||
|
Unrealized depreciation on forward foreign currency exchange contracts |
89,772 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total liabilities |
2,015,120 | 12,609,919 | 887,242 | |||||||||
|
|
|
|
|
|
|
|||||||
|
NET ASSETS |
$ | 15,838,114 | $ | 3,299,842,015 | $ | 47,239,920 | ||||||
|
|
|
|
|
|
|
|||||||
|
NET ASSETS CONSIST OF |
||||||||||||
|
Paid-in capital |
$ | 22,161,181 | $ | 4,680,864,658 | $ | 84,980,480 | ||||||
|
Accumulated loss |
(6,323,067 | ) | (1,381,022,643 | ) | (37,740,560 | ) | ||||||
|
|
|
|
|
|
|
|||||||
|
NET ASSETS |
$ | 15,838,114 | $ | 3,299,842,015 | $ | 47,239,920 | ||||||
|
|
|
|
|
|
|
|||||||
|
NET ASSET VALUE |
||||||||||||
|
Shares outstanding |
660,000 | 114,200,000 | 1,550,000 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Net asset value |
$ | 24.00 | $ | 28.90 | $ | 30.48 | ||||||
|
|
|
|
|
|
|
|||||||
|
Shares authorized |
Unlimited | Unlimited | Unlimited | |||||||||
|
|
|
|
|
|
|
|||||||
|
Par value |
None | None | None | |||||||||
|
|
|
|
|
|
|
|||||||
|
(a) Investments, at cost — unaffiliated |
$ | — | $ | 4,112,544,533 | $ | 71,154,951 | ||||||
|
(b) Securities loaned, at value |
$ | — | $ | — | $ | 579,076 | ||||||
|
(c) Investments, at cost — affiliated |
$ | 18,551,040 | $ | 120,000 | $ | 704,597 | ||||||
|
(d) Foreign currency, at cost |
$ | — | $ | 7,432,548 | $ | 72,742 | ||||||
|
(e) Foreign currency collateral pledged, at cost |
$ | — | $ | 2,735,340 | $ | 16,261 | ||||||
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 |
Year Ended August 31, 2022
|
iShares Currency Hedged MSCI United Kingdom ETF |
iShares MSCI United Kingdom ETF |
iShares MSCI United Kingdom ETF |
||||||||||
|
|
||||||||||||
|
INVESTMENT INCOME |
||||||||||||
|
Dividends — unaffiliated |
$ | — | $ | 148,980,863 | $ | 2,430,926 | ||||||
|
Dividends — affiliated |
688,168 | 8,491 | 267 | |||||||||
|
Securities lending income — affiliated — net |
— | — | 56,441 | |||||||||
|
Foreign taxes withheld |
— | (362,104 | ) | (53,063 | ) | |||||||
|
|
|
|
|
|
|
|||||||
|
Total investment income |
688,168 | 148,627,250 | 2,434,571 | |||||||||
|
|
|
|
|
|
|
|||||||
|
EXPENSES |
||||||||||||
|
Investment advisory fees |
94,905 | 16,873,143 | 508,497 | |||||||||
|
Professional fees |
217 | 217 | 217 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total expenses |
95,122 | 16,873,360 | 508,714 | |||||||||
|
Less: |
||||||||||||
|
Investment advisory fees waived |
(95,122 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
|
Total expenses after fees waived |
— | 16,873,360 | 508,714 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Net investment income |
688,168 | 131,753,890 | 1,925,857 | |||||||||
|
|
|
|
|
|
|
|||||||
|
REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
|
Net realized gain (loss) from: |
||||||||||||
|
Investments — unaffiliated |
— | (49,778,617 | ) | (4,129,877 | ) | |||||||
|
Investments — affiliated |
(164,882 | ) | — | (813 | ) | |||||||
|
In-kind redemptions — unaffiliated(a) |
— | 251,619,889 | 1,853,126 | |||||||||
|
In-kind redemptions — affiliated(a) |
173,144 | — | — | |||||||||
|
Futures contracts |
— | 1,153,160 | (74,252 | ) | ||||||||
|
Forward foreign currency exchange contracts |
1,833,302 | — | — | |||||||||
|
Foreign currency transactions |
— | (2,960,266 | ) | (31,615 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| 1,841,564 | 200,034,166 | (2,383,431 | ) | |||||||||
|
|
|
|
|
|
|
|||||||
|
Net change in unrealized appreciation (depreciation) on: |
||||||||||||
|
Investments — unaffiliated |
— | (676,150,540 | ) | (37,482,994 | ) | |||||||
|
Investments — affiliated |
(1,995,516 | ) | — | 44 | ||||||||
|
Futures contracts |
— | (196,244 | ) | (46,794 | ) | |||||||
|
Forward foreign currency exchange contracts |
915,285 | — | — | |||||||||
|
Foreign currency translations |
— | (1,105,637 | ) | (10,705 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| (1,080,231 | ) | (677,452,421 | ) | (37,540,449 | ) | |||||||
|
|
|
|
|
|
|
|||||||
|
Net realized and unrealized gain (loss) |
761,333 | (477,418,255 | ) | (39,923,880 | ) | |||||||
|
|
|
|
|
|
|
|||||||
|
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 1,449,501 | $ | (345,664,365 | ) | $ | (37,998,023 | ) | ||||
|
|
|
|
|
|
|
|||||||
|
(a) See Note 2 of the Notes to Financial Statements. |
||||||||||||
See notes to financial statements.
| 24 |
2 0 2 2 I 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 Currency Hedged MSCI United Kingdom ETF |
iShares MSCI United Kingdom ETF |
|||||||||||||||||||
|
|
|
|
|
|||||||||||||||||
| Year Ended 08/31/22 |
Year Ended 08/31/21 |
Year Ended 08/31/22 |
Year Ended 08/31/21 |
|||||||||||||||||
|
|
||||||||||||||||||||
|
INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||||||
|
OPERATIONS |
||||||||||||||||||||
|
Net investment income |
$ | 688,168 | $ | 243,737 | $ | 131,753,890 | $ | 121,383,125 | ||||||||||||
|
Net realized gain (loss) |
1,841,564 | (1,213,157 | ) | 200,034,166 | 37,132,219 | |||||||||||||||
|
Net change in unrealized appreciation (depreciation) |
(1,080,231 | ) | 3,026,264 | (677,452,421 | ) | 562,344,983 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Net increase (decrease) in net assets resulting from operations |
1,449,501 | 2,056,844 | (345,664,365 | ) | 720,860,327 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
DISTRIBUTIONS TO SHAREHOLDERS(a) |
||||||||||||||||||||
|
Decrease in net assets resulting from distributions to shareholders |
(688,249 | ) | (243,738 | ) | (144,252,025 | ) | (95,207,591 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
CAPITAL SHARE TRANSACTIONS |
||||||||||||||||||||
|
Net increase (decrease) in net assets derived from capital share transactions |
6,810,679 | (3,967,299 | ) | 210,576,943 | 762,464,858 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
NET ASSETS |
||||||||||||||||||||
|
Total increase (decrease) in net assets |
7,571,931 | (2,154,193 | ) | (279,339,447 | ) | 1,388,117,594 | ||||||||||||||
|
Beginning of year |
8,266,183 | 10,420,376 | 3,579,181,462 | 2,191,063,868 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
End of year |
$ | 15,838,114 | $ | 8,266,183 | $ | 3,299,842,015 | $ | 3,579,181,462 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| (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 |
25 |
Statements of Changes in Net Assets (continued)
|
iShares MSCI United Kingdom Small-Cap ETF |
||||||||||||
|
|
|
|||||||||||
| Year Ended 08/31/22 |
Year Ended 08/31/21 |
|||||||||||
|
|
||||||||||||
|
INCREASE (DECREASE) IN NET ASSETS |
||||||||||||
|
OPERATIONS |
||||||||||||
|
Net investment income |
$ | 1,925,857 | $ | 1,778,892 | ||||||||
|
Net realized gain (loss) |
(2,383,431 | ) | 340,262 | |||||||||
|
Net change in unrealized appreciation (depreciation) |
(37,540,449 | ) | 26,611,588 | |||||||||
|
|
|
|
|
|||||||||
|
Net increase (decrease) in net assets resulting from operations |
(37,998,023 | ) | 28,730,742 | |||||||||
|
|
|
|
|
|||||||||
|
DISTRIBUTIONS TO SHAREHOLDERS(a) |
||||||||||||
|
Decrease in net assets resulting from distributions to shareholders |
(3,896,752 | ) | (1,264,047 | ) | ||||||||
|
|
|
|
|
|||||||||
|
CAPITAL SHARE TRANSACTIONS |
||||||||||||
|
Net increase (decrease) in net assets derived from capital share transactions |
(41,424,975 | ) | 42,435,550 | |||||||||
|
|
|
|
|
|||||||||
|
NET ASSETS |
||||||||||||
|
Total increase (decrease) in net assets |
(83,319,750 | ) | 69,902,245 | |||||||||
|
Beginning of year |
130,559,670 | 60,657,425 | ||||||||||
|
|
|
|
|
|||||||||
|
End of year |
$ | 47,239,920 | $ | 130,559,670 | ||||||||
|
|
|
|
|
|||||||||
| (a) |
Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
See notes to financial statements.
| 26 |
2 0 2 2 I 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 |
(For a share outstanding throughout each period)
|
iShares Currency Hedged MSCI United Kingdom ETF |
||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||
| Year Ended 08/31/22 |
Year Ended 08/31/21 |
Year Ended 08/31/20 |
Year Ended 08/31/19 |
Year Ended 08/31/18 |
||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||
|
Net asset value, beginning of year |
$ | 22.96 | $ | 18.95 | $ | 23.43 | $ | 23.83 | $ | 23.84 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Net investment income(a) |
1.08 | 0.59 | 0.74 | 0.92 | 1.11 | |||||||||||||||||||||||||||||||||
|
Net realized and unrealized gain (loss)(b) |
1.00 | 4.04 | (4.46 | ) | (0.26 | ) | (0.05 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Net increase (decrease) from investment operations |
2.08 | 4.63 | (3.72 | ) | 0.66 | 1.06 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Distributions from net investment income(c) |
(1.04 | ) | (0.62 | ) | (0.76 | ) | (1.06 | ) | (1.07 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Net asset value, end of year |
$ | 24.00 | $ | 22.96 | $ | 18.95 | $ | 23.43 | $ | 23.83 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Total Return(d) |
||||||||||||||||||||||||||||||||||||||
|
Based on net asset value |
9.18 | % | 24.59 | % | (16.34 | )% | 2.92 | % | 4.42 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Ratios to Average Net Assets(e) |
||||||||||||||||||||||||||||||||||||||
|
Total expenses |
0.62 | % | 0.62 | % | 0.62 | % | 0.62 | % | 0.62 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Total expenses after fees waived |
0.00 | %(f) | 0.00 | %(f) | 0.00 | %(f) | 0.00 | % | 0.00 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Net investment income |
4.50 | % | 2.82 | % | 3.31 | % | 3.96 | % | 4.62 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Supplemental Data |
||||||||||||||||||||||||||||||||||||||
|
Net assets, end of year (000) |
$ | 15,838 | $ | 8,266 | $ | 10,420 | $ | 35,146 | $ | 22,643 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Portfolio turnover rate(g) |
12 | % | 15 | % | 15 | % | 11 | % | 17 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| (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) |
Rounds to less than 0.01%. |
| (g) |
Portfolio turnover rate excludes in-kind transactions. |
See notes to financial statements.
|
F I N A N C I A L H I G H L I G H T S |
27 |
Financial Highlights (continued)
(For a share outstanding throughout each period)
| iShares MSCI United Kingdom ETF | ||||||||||||||||||||
|
|
|
|||||||||||||||||||
| Year Ended 08/31/22 |
Year Ended 08/31/21 |
Year Ended 08/31/20 |
Year Ended 08/31/19 |
Year Ended 08/31/18 |
||||||||||||||||
|
|
||||||||||||||||||||
|
Net asset value, beginning of year |
$ | 33.05 | $ | 26.88 | $ | 30.27 | $ | 33.62 | $ | 33.76 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Net investment income(a) |
1.26 | 1.20 | 0.90 | 1.49 | 1.29 | |||||||||||||||
|
Net realized and unrealized gain (loss)(b) |
(3.95 | ) | 5.87 | (3.30 | ) | (3.39 | ) | 0.06 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Net increase (decrease) from investment operations |
(2.69 | ) | 7.07 | (2.40 | ) | (1.90 | ) | 1.35 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Distributions from net investment income(c) |
(1.46 | ) | (0.90 | ) | (0.99 | ) | (1.45 | ) | (1.49 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Net asset value, end of year |
$ | 28.90 | $ | 33.05 | $ | 26.88 | $ | 30.27 | $ | 33.62 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total Return(d) |
||||||||||||||||||||
|
Based on net asset value |
(8.50 | )% | 26.46 | % | (8.25 | )% | (5.64 | )% | 3.90 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Ratios to Average Net Assets(e) |
||||||||||||||||||||
|
Total expenses |
0.50 | % | 0.50 | % | 0.51 | % | 0.50 | % | 0.47 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Net investment income |
3.90 | % | 3.91 | % | 3.12 | % | 4.64 | % | 3.66 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Supplemental Data |
||||||||||||||||||||
|
Net assets, end of year (000) |
$ | 3,299,842 | $ | 3,579,181 | $ | 2,191,064 | $ | 2,000,722 | $ | 1,986,971 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Portfolio turnover rate(f) |
7 | % | 9 | % | 4 | % | 11 | % | 5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (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.
| 28 |
2 0 2 2 I 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 United Kingdom Small-Cap ETF | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Year Ended |
Year Ended |
Year Ended |
Year Ended |
Year Ended |
||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Net asset value, beginning of year |
$ | 50.22 | $ | 35.68 | $ | 35.95 | $ | 42.65 | $ | 39.92 | ||||||||||||||||||||||||||||||
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|
Net investment income(a) |
0.92 | 0.86 | 0.72 | 1.05 | 1.15 | |||||||||||||||||||||||||||||||||||
|
Net realized and unrealized gain (loss)(b) |
(18.83 | ) | 14.32 | 0.03 | (6.69 | ) | 2.93 | |||||||||||||||||||||||||||||||||
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|
Net increase (decrease) from investment operations |
(17.91 | ) | 15.18 | 0.75 | (5.64 | ) | 4.08 | |||||||||||||||||||||||||||||||||
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Distributions from net investment income(c) |
(1.83 | ) | (0.64 | ) | (1.02 | ) | (1.06 | ) | (1.35 | ) | ||||||||||||||||||||||||||||||
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Net asset value, end of year |
$ | 30.48 | $ | 50.22 | $ | 35.68 | $ | 35.95 | $ | 42.65 | ||||||||||||||||||||||||||||||
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|
Total Return(d) |
||||||||||||||||||||||||||||||||||||||||
|
Based on net asset value |
(36.56 | )% | 42.88 | % | 1.90 | % | (13.17 | )% | 10.22 | % | ||||||||||||||||||||||||||||||
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Ratios to Average Net Assets(e) |
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|
Total expenses |
0.59 | % | 0.59 | % | 0.59 | % | 0.59 | % | 0.59 | % | ||||||||||||||||||||||||||||||
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|
Net investment income |
2.23 | % | 1.94 | % | 1.99 | % | 2.76 | % | 2.68 | % | ||||||||||||||||||||||||||||||
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|
Supplemental Data |
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|
Net assets, end of year (000) |
$ | 47,240 | $ | 130,560 | $ | 60,657 | $ | 61,109 | $ | 57,571 | ||||||||||||||||||||||||||||||
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|
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|
Portfolio turnover rate(f) |
17 | % | 15 | % | 25 | % | 20 | % | 20 | % | ||||||||||||||||||||||||||||||
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| (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.
|
F I N A N C I A L H I G H L I G H T S |
29 |
| 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 |
|||
|
Currency Hedged MSCI United Kingdom |
Diversified | |||
|
MSCI United Kingdom |
Non-diversified | |||
|
MSCI United Kingdom Small-Cap |
Diversified | |||
Currently the iShares Currency Hedged MSCI United Kingdom ETF seeks to achieve its investment objective by investing a substantial portion of its assets in the iShares MSCI United Kingdom ETF (the “underlying fund”). The financial statements, including the accounting policies, and Schedule of Investments for the underlying fund are included in this report and should be read in conjunction with the financial statements of the iShares Currency Hedged MSCI United Kingdom ETF.
| 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. Upon notification from issuers or as estimated by management, a portion of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain.
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. However, the currency hedged fund has elected to treat realized gains (losses) from certain foreign currency contracts as capital gain (loss) 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 August 31, 2022, if any, are disclosed in the Statements of Assets and Liabilities.
The Funds file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. The Funds may record a reclaim receivable based on collectability, which includes factors such as the jurisdiction’s applicable laws, payment history and market convention. The Statements of Operations includes tax reclaims recorded as well as professional and other fees, if any, associated with recovery of foreign withholding taxes.
Collateralization: If required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments.
In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.
| 30 |
2 0 2 2 I 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. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.
Indemnifications: In the normal course of business, 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. |
| • |
Exchange-traded funds and closed-end funds traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the fund is primarily traded. Funds traded on a recognized exchange for which there were no sales on that day may be 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. |
| • |
Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of trading on the NYSE based on that day’s prevailing forward exchange rate for the underlying currencies. |
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). |
|
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)
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.
| 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 | ||||||
|
|
||||||||||||||||
|
MSCI United Kingdom Small-Cap |
||||||||||||||||
|
Barclays Capital, Inc. |
$ | 75,080 | $ | (75,080 | ) | $ | — | $ | — | |||||||
|
BofA Securities, Inc. |
153,226 | (153,226 | ) | — | — | |||||||||||
|
J.P. Morgan Securities LLC |
255,228 | (255,228 | ) | — | — | |||||||||||
|
Jefferies LLC |
39,763 | (39,763 | ) | — | — | |||||||||||
|
Morgan Stanley |
51,430 | (51,430 | ) | — | — | |||||||||||
|
Scotia Capital (USA), Inc. |
4,349 | (3,326 | ) | — | 1,023 | (b) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 579,076 | $ | (578,053 | ) | $ | — | $ | 1,023 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (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 each Fund is disclosed in the Fund’s statement of assets and liabilities. |
| (b) |
The market value of the loaned securities is determined as of August 31, 2022. 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).
| 32 |
2 0 2 2 I 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)
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.
Forward Foreign Currency Exchange Contracts: Forward foreign currency exchange contracts are entered into to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk).
A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a specified date. These contracts help to manage the overall exposure to the currencies in which some of the investments held by the Funds are denominated and in some cases, may be used to obtain exposure to a particular market. The contracts are traded over-the-counter (“OTC”) and not on an organized exchange.
The contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation or depreciation 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 value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a contract changes unfavorably due to movements in the value of the referenced foreign currencies, and such value may exceed the amount(s) reflected in the Statements of Assets and Liabilities. Cash amounts pledged for forward foreign currency exchange contracts are considered restricted and are included in cash pledged as collateral for OTC derivatives in the Statements of Assets and Liabilities. A fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund.
Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help mitigate its counterparty risk, a fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, a fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency, or other events.
For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement, and comparing that amount to the value of any collateral currently pledged by a fund and the counterparty.
Cash collateral that has been pledged to cover obligations of the Funds and cash collateral received from the counterparty, if any, is reported separately in the Statements of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Funds, if any, is noted in the Schedules of Investments. Generally, the amount of collateral due from or to a counterparty is subject to a certain minimum transfer amount threshold before a transfer is required, which is determined at the close of business of the Funds. Any additional required collateral is delivered to/pledged by the Funds on the next business day. Typically, the counterparty is not permitted to sell, re-pledge or use cash and non-cash collateral it receives. A fund generally agrees not to use non-cash collateral that it receives but may, absent default or certain other circumstances defined in the underlying ISDA Master Agreement, be permitted to use cash collateral received. In such cases, interest may be paid pursuant to the collateral arrangement with the counterparty. To the extent amounts due to the Funds from the counterparty are not fully collateralized, each Fund bears the risk of loss from counterparty non-performance. Likewise, to the extent the Funds have delivered collateral to a counterparty and stand ready to perform under the terms of their agreement with such counterparty, each Fund bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral. Based on the terms of agreements, collateral may not be required for all derivative contracts.
For financial reporting purposes, each Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statements of Assets and Liabilities.
| 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).
|
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 |
Notes to Financial Statements (continued)
For its investment advisory services to each of the following Funds, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Funds, based on the average daily net assets of each Fund as follows:
| iShares ETF | Investment Advisory Fees | |||
|
Currency Hedged MSCI United Kingdom |
0.62 | % | ||
|
MSCI United Kingdom Small-Cap |
0.59 | |||
For its investment advisory services to the iShares MSCI United Kingdom ETF, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Aggregate Average Daily Net Assets | Investment Advisory Fees | |||
|
First $7 billion |
0.59 | % | ||
|
Over $7 billion, up to and including $11 billion |
0.54 | |||
|
Over $11 billion, up to and including $24 billion |
0.49 | |||
|
Over $24 billion, up to and including $48 billion |
0.44 | |||
|
Over $48 billion, up to and including $72 billion |
0.40 | |||
|
Over $72 billion, up to and including $96 billion |
0.36 | |||
|
Over $96 billion |
0.32 | |||
Expense Waivers: A fund may incur its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses”). The total of the investment advisory fee and acquired fund fees and expenses, if any, is a fund’s total annual operating expenses. Total expenses as shown in the Statement of Operations does not include acquired fund fees and expenses.
For the iShares Currency Hedged MSCI United Kingdom ETF, BFA has contractually agreed to waive a portion of its investment advisory fee for the Fund through December 31, 2025 so that the Fund’s total annual operating expenses after fee waiver is equal to the acquired fund fees and expenses attributable to the Fund’s investment in the iShares MSCI United Kingdom ETF (“EWU”), after taking into account any fee waivers by EWU, plus 0.03%. BFA has also contractually agreed to an additional reduction in its investment advisory fee of 0.03% through December 31, 2025.
This amount is included in investment advisory fees waived in the Statements of Operations. For the year ended August 31, 2022, the amounts waived in investment advisory fees pursuant to this arrangement were as follows:
| iShares ETF | Amounts Waived | |||
|
Currency Hedged MSCI United Kingdom |
$ | 95,122 | ||
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.
| 34 |
2 0 2 2 I 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)
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 August 31, 2022, the Funds paid BTC the following amounts for securities lending agent services:
| iShares ETF | Fees Paid to BTC |
|||
|
MSCI United Kingdom Small-Cap |
$ | 12,669 | ||
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 August 31, 2022, 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) |
|||||||||
|
MSCI United Kingdom |
$ | 18,179,481 | $ | 5,720,041 | $ | (1,482,701 | ) | |||||
|
MSCI United Kingdom Small-Cap |
931,120 | 1,298,445 | (199,162 | ) | ||||||||
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 August 31, 2022, purchases and sales of investments, excluding short-term securities and in-kind transactions, were as follows:
| iShares ETF | Purchases | Sales | ||||||
|
Currency Hedged MSCI United Kingdom |
$ | 4,404,612 | $ | 1,708,321 | ||||
|
MSCI United Kingdom |
271,307,039 | 221,281,722 | ||||||
|
MSCI United Kingdom Small-Cap |
15,592,005 | 14,347,668 | ||||||
For the year ended August 31, 2022, in-kind transactions were as follows:
| iShares ETF | In-kind Purchases |
In-kind Sales |
||||||
|
Currency Hedged MSCI United Kingdom |
$ | 17,628,812 | $ | 10,798,028 | ||||
|
MSCI United Kingdom |
1,370,435,571 | 1,210,812,496 | ||||||
|
MSCI United Kingdom Small-Cap |
1,845,634 | 42,806,176 | ||||||
| 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 August 31, 2022, 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.
U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of August 31, 2022, permanent differences attributable to distributions paid in excess of taxable income and realized gains (losses) from in-kind redemptions were reclassified to the following accounts:
| iShares ETF | Paid-in Capital | Accumulated Earnings (Loss) |
||||||
|
Currency Hedged MSCI United Kingdom |
$ | 87,399 | $ | (87,399 | ) | |||
|
MSCI United Kingdom |
245,762,032 | (245,762,032 | ) | |||||
|
MSCI United Kingdom Small-Cap |
258,954 | (258,954 | ) | |||||
|
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 |
35 |
Notes to Financial Statements (continued)
The tax character of distributions paid was as follows:
|
|
||||||||
|
iShares ETF |
|
Year Ended 08/31/22 |
|
|
Year Ended 08/31/21 |
| ||
|
|
||||||||
|
Currency Hedged MSCI United Kingdom |
||||||||
|
Ordinary income |
$ | 688,249 | $ | 243,738 | ||||
|
|
|
|
|
|||||
|
MSCI United Kingdom |
||||||||
|
Ordinary income |
$ | 144,252,025 | $ | 95,207,591 | ||||
|
|
|
|
|
|||||
|
MSCI United Kingdom Small-Cap |
||||||||
|
Ordinary income |
$ | 3,896,752 | $ | 1,264,047 | ||||
|
|
|
|
|
|||||
As of August 31, 2022, 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) |
|
Qualified Late-Year Losses |
|
Total | |||||||
|
Currency Hedged MSCI United Kingdom |
$ | — | $ | (4,113,809 | ) | $ | (2,209,258 | ) | $ | — | $ | (6,323,067 | ) | |||||||
|
MSCI United Kingdom |
31,261,239 | (533,266,947 | ) | (879,016,935 | ) | — | (1,381,022,643 | ) | ||||||||||||
|
MSCI United Kingdom Small-Cap |
— | (12,550,279 | ) | (24,945,070 | ) | (245,211 | ) | (37,740,560 | ) | |||||||||||
| (a) |
Amounts available to offset future realized capital gains. |
| (b) |
The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain foreign currency contracts and futures contracts, the characterization of corporate actions and the realization for tax purposes of unrealized gains on investments in passive foreign investment companies. |
For the year ended August 31, 2022, the iShares Currency Hedged MSCI United Kingdom ETF utilized $2,748,587 of its capital loss carryforwards.
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 August 31, 2022, 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) |
||||||||||||
|
Currency Hedged MSCI United Kingdom |
$ | 18,702,271 | $ | 1,096,619 | $ | (3,305,877 | ) | $ | (2,209,258 | ) | ||||||
|
MSCI United Kingdom |
4,135,728,113 | 35,056,662 | (912,819,192 | ) | (877,762,530 | ) | ||||||||||
|
MSCI United Kingdom Small-Cap |
72,637,433 | 1,470,770 | (26,405,339 | ) | (24,934,569 | ) | ||||||||||
| 9. |
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: An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. Although vaccines have been developed and approved for use by various governments, the duration of this pandemic and its effects cannot be determined with certainty.
| 36 |
2 0 2 2 I 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)
Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.
The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.
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 the Manager 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.
Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its Schedule of Investments.
Certain Funds invest a significant portion of their assets in issuers located in a single country or a limited number of countries. When a fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in that country or those countries may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the Fund’s portfolio. Unanticipated or sudden political or social developments may cause uncertainty in the markets and as a result adversely affect the Fund’s investments. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the Schedule of Investments.
Certain Funds invest a significant portion of their assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries as well as acts of war in the region. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Funds’ investments.
Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. The United Kingdom has withdrawn from the European Union, and one or more other countries may withdraw from the European Union and/or abandon the Euro, the common currency of the European Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching. In addition, Russia launched a large-scale invasion of Ukraine on February 24, 2022. The extent and duration of the military action, resulting sanctions and resulting future market disruptions in the region are impossible to predict, but could be significant and have a severe adverse effect on the region, including significant negative impacts on the economy and the markets for certain securities and commodities, such as oil and natural gas, as well as other sectors.
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.
LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”). Although many LIBOR rates ceased to be published or no longer are representative of the underlying market they seek to measure after December 31, 2021, a selection of widely used USD LIBOR rates will continue to be published through June 2023 in order to assist with the transition. The Funds may be exposed to financial instruments tied to LIBOR to determine
|
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 |
37 |
Notes to Financial Statements (continued)
payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.
| 10. |
CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.
Transactions in capital shares were as follows:
|
|
||||||||||||||||
| Year Ended 08/31/22 |
Year Ended 08/31/21 |
|||||||||||||||
| iShares ETF | Shares | Amount | Shares | Amount | ||||||||||||
|
|
||||||||||||||||
|
Currency Hedged MSCI United Kingdom |
||||||||||||||||
|
Shares sold |
760,000 | $ | 17,906,170 | 60,000 | $ | 1,246,734 | ||||||||||
|
Shares redeemed |
(460,000 | ) | (11,095,491 | ) | (250,000 | ) | (5,214,033 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 300,000 | $ | 6,810,679 | (190,000 | ) | $ | (3,967,299 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
MSCI United Kingdom |
||||||||||||||||
|
Shares sold |
43,500,000 | $ | 1,432,434,045 | 40,300,000 | $ | 1,197,285,969 | ||||||||||
|
Shares redeemed |
(37,600,000 | ) | (1,221,857,102 | ) | (13,500,000 | ) | (434,821,111 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 5,900,000 | $ | 210,576,943 | 26,800,000 | $ | 762,464,858 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
MSCI United Kingdom Small-Cap |
||||||||||||||||
|
Shares sold |
50,000 | $ | 1,854,361 | 1,300,000 | $ | 58,198,236 | ||||||||||
|
Shares redeemed |
(1,100,000 | ) | (43,279,336 | ) | (400,000 | ) | (15,762,686 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1,050,000 | ) | $ | (41,424,975 | ) | 900,000 | $ | 42,435,550 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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.
| 11. |
SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.
| 38 |
2 0 2 2 I 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 |
| Report of Independent Registered Public Accounting Firm |
To the Board of Trustees of
iShares Trust and Shareholders of each of the three 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 (three of the funds constituting iShares Trust, hereafter collectively referred to as the “Funds”) as of August 31, 2022, the related statements of operations for the year ended August 31, 2022, the statements of changes in net assets for each of the two years in the period ended August 31, 2022, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2022 (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 August 31, 2022, 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 August 31, 2022 and each of the financial highlights for each of the five years in the period ended August 31, 2022 in conformity with accounting principles generally accepted in the United States of America.
|
iShares Currency Hedged MSCI United Kingdom ETF iShares MSCI United Kingdom ETF iShares MSCI United Kingdom Small-Cap 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 August 31, 2022 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
October 21, 2022
We have served as the auditor of one or more BlackRock investment companies since 2000.
|
R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M |
39 |
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 August 31, 2022:
| iShares ETF | Qualified Dividend Income |
|||
|
Currency Hedged MSCI United Kingdom |
$ | 675,047 | ||
|
MSCI United Kingdom |
144,968,044 | |||
|
MSCI United Kingdom Small-Cap |
1,972,316 | |||
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 August 31, 2022:
| iShares ETF | Foreign Source Income Earned |
Foreign Taxes Paid |
||||||
|
Currency Hedged MSCI United Kingdom |
$ | 690,541 | $ | 2,707 | ||||
|
MSCI United Kingdom |
148,983,703 | 569,743 | ||||||
|
MSCI United Kingdom Small-Cap |
2,406,085 | 53,543 | ||||||
The following percentage, or maximum percentage allowable by law, of ordinary income distributions paid during the fiscal year ended August 31, 2022 qualified for the dividends-received deduction for corporate shareholders:
| iShares ETF | Dividends-Received Deduction |
|||
|
MSCI United Kingdom Small-Cap |
1.56 | % | ||
| 40 |
2 0 2 2 I 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
iShares Currency Hedged MSCI United Kingdom ETF, iShares MSCI United Kingdom Small-Cap ETF (each 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 and approve 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 3, 2022 and May 18, 2022, 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 13-15, 2022, 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 another fund 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 waivers and reimbursements) for the Fund were higher than the median of the investment advisory fee rates and overall expenses (net of 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, 2021, 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 recent 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. 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 3, 2022 meeting and throughout the year, and matters related to BFA’s portfolio compliance program.
Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Agreement supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.
Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Agreement), and other sources of revenue and expense to BFA
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Board Review and Approval of Investment Advisory Contract (continued)
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, 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 (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 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.
iShares MSCI United Kingdom 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 and approve the
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Board Review and Approval of Investment Advisory Contract (continued)
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 3, 2022 and May 18, 2022, 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 13-15, 2022, 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 another fund 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 waivers and reimbursements) for the Fund were higher than the median of the investment advisory fee rates and overall expenses (net of 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, 2021, 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 recent 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. 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 3, 2022 meeting and throughout the year, and matters related to BFA’s portfolio compliance program.
Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Agreement supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.
Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Agreement), and other sources of revenue and expense to BFA 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,
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Board Review and Approval of Investment Advisory Contract (continued)
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, 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 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 (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 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.
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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.
August 31, 2022
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Total Cumulative Distributions for the Fiscal Year |
% Breakdown of the Total Cumulative Distributions for the Fiscal Year |
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| 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 |
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Currency Hedged MSCI United Kingdom |
$ | 1.037382 | $ | — | $ | — | $ | 1.037382 | 100 | % | — | % | — | % | 100 | % | ||||||||||||||||||
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MSCI United Kingdom |
1.456044 | — | — | 1.456044 | 100 | — | — | 100 | ||||||||||||||||||||||||||
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MSCI United Kingdom Small-Cap |
1.829031 | — | — | 1.829031 | 100 | — | — | 100 | ||||||||||||||||||||||||||
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 the Alternative Investment Fund Managers Regulations 2013 (as amended) and the “Guidelines on sound remuneration policies under the AIFMD” issued by the European Securities and Markets Authority (together the “Regulations”) 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, non-EU and non-UK managers are only required to comply with certain disclosure, reporting and transparency obligations of the Regulations if such managers market a fund to EU investors.
The Company has registered the iShares MSCI United Kingdom ETF (the “Fund”) to be marketed to United Kingdom and EU investors in the Netherlands, Finland and Sweden.
Report on Remuneration
The Company is required under the Regulations 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 programmes 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, a significant percentage of variable remuneration is deferred over time. All employees are subject to a claw-back policy.
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.
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Supplemental Information (unaudited) (continued)
Each of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) each have their own organisational structures which are independent of the business units. 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. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the Fund according to an objective apportionment methodology which acknowledges the multiple-service nature of the Company. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.
The amount of total & aggregate remuneration awarded by the Company to its staff which has been attributed to the Fund in respect of the Company’s financial year ending December 31, 2021 were as follows:
| iShares ETF | Total Remuneration |
Fixed Remuneration |
Variable Remuneration |
No.
of Beneficiaries |
Senior Management Remuneration |
Risk
Taker Remuneration |
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MSCI United Kingdom |
$263,688 | $123,292 | $140,397 | 661 | $32,276 | $3,336 | ||||||||||||||||||
Disclosures Under the EU Sustainable Finance Disclosure Regulation
The iShares MSCI United Kingdom 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 investments do not take into account the criteria for environmentally sustainable economic activities under the EU sustainable investment taxonomy regulation.
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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 378 funds as of August 31, 2022. With the exception of Robert S. Kapito, Salim Ramji and Charles Park, 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. Park is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055. 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 (Age) | Position(s) |
Principal Occupation(s) During Past 5 Years |
Other Directorships Held by Trustee | |||
| Robert S. Kapito(a) (65) | 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) (52) | 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). | |||
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(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. | ||||||
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(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. | ||||||
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Independent Trustees | ||||||
| Name (Age) | Position(s) |
Principal Occupation(s) During Past 5 Years |
Other Directorships Held by Trustee | |||
| John E. Kerrigan (67) | 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 (66) | 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 (67) | Trustee (since 2017); Audit Committee Chair (since 2019). | Partner, KPMG LLP (2002-2016). | Director of iShares, Inc. (since 2017); Trustee of iShares U.S. ETF Trust (since 2017). | |||
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Trustee and Officer Information (unaudited) (continued)
| Independent Trustees (continued) | ||||||
| Name (Age) | Position(s) |
Principal Occupation(s) During Past 5 Years |
Other Directorships Held by Trustee | |||
|
Cecilia H. Herbert (73) |
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) and Investment Committee (since 2011); Chair (1994-2005) and Member (since 1992) of the Investment Committee, Archdiocese of San Francisco; Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018); Director (1998-2013) and President (2007-2011) of the Board of Directors, Catholic Charities CYO; Trustee (2002-2011) and Chair of the Finance and Investment Committee (2006-2010) of the Thacher School; Director of the Senior Center of Jackson Hole (since 2020). | Director of iShares, Inc. (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Trustee of Thrivent Church Loan and Income Fund (since 2019). | |||
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Drew E. Lawton (63) |
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). | |||
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John E. Martinez (61) |
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). | |||
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Madhav V. Rajan (58) |
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). | |||
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Officers | ||||||
| Name (Age) | Position(s) |
Principal Occupation(s) During Past 5 Years | ||||
|
Armando Senra (51) |
President (since 2019). | Managing Director, BlackRock, Inc. (since 2007); Head of U.S., Canada and Latam iShares, BlackRock, Inc. (since 2019); Head of Latin America Region, BlackRock, Inc. (2006-2019); Managing Director, Bank of America Merrill Lynch (1994-2006). | ||||
|
Trent Walker (48) |
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. | ||||
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Charles Park (55) |
Chief Compliance Officer (since 2006). | Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex (since 2014); Chief Compliance Officer of BFA (since 2006). | ||||
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Marisa Rolland (42) |
Secretary (since 2022). | Director, BlackRock, Inc. (since 2018); Vice President, BlackRock, Inc. (2010-2017). | ||||
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Rachel Aguirre (40) |
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). | ||||
|
Jennifer Hsui (46) |
Executive Vice President (since 2022). | Managing Director, BlackRock, Inc. (since 2009); Co-Head of Index Equity (since 2022). | ||||
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James Mauro (51) |
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). | ||||
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Trustee and Officer Information (unaudited) (continued)
Effective March 18, 2022, Rachel Aguirre, Jennifer Hsui, and James Mauro have replaced Scott Radell, Alan Mason, and Marybeth Leithead as Executive Vice Presidents.
Effective June 15, 2022, Marisa Rolland replaced Deepa Damre Smith as Secretary.
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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.
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Glossary of Terms Used in this Report
| Portfolio Abbreviations | ||
| NVS | Non-Voting Shares | |
| REIT | Real Estate Investment Trust | |
| Currency Abbreviations | ||
| GBP | British Pound | |
| USD | United States Dollar | |
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G L O S S A R Y O F T E R M S U S E D I N T H I S R E P O R T |
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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 MSCI Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the company listed above.
©2022 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-813-0822
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