Table of Contents

 

LOGO

  AUGUST 31, 2022

 

 

   

  

2022 Annual Report

 

 

iShares Trust

·  iShares MSCI India ETF | INDA | Cboe BZX

·  iShares MSCI India Small-Cap ETF | SMIN | Cboe BZX


Table of Contents

The Markets in Review

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.

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

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
 

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

  (9.71)   (13.27)   
 

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

  (7.76)   (11.52)   
 

Tax-exempt municipal bonds
(Bloomberg Municipal Bond Index)

  (5.72)     (8.63)   
 

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.

 

 

 

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


Table of Contents

Table of Contents

 

 

      Page  

The Markets in Review

     2  

Annual Report:

  

Market Overview

     4  

Fund Summary

     5  

About Fund Performance

     9  

Disclosure of Expenses

     9  

Schedules of Investments

     10  

Financial Statements

  

Statements of Assets and Liabilities

     20  

Consolidated Statements of Operations

     21  

Consolidated Statements of Changes in Net Assets

     22  

Consolidated Financial Highlights

     23  

Notes to Financial Statements

     25  

Report of Independent Registered Public Accounting Firm

     32  

Important Tax Information

     33  

Board Review and Approval of Investment Advisory Contract

     34  

Supplemental Information

     38  

Trustee and Officer Information

     40  

General Information

     43  

Glossary of Terms Used in this Report

     44  

 

 

 


Table of Contents

Market Overview

 

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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Table of Contents
Fund Summary as of August 31, 2022    iShares® MSCI India ETF

 

Investment Objective

The iShares MSCI India ETF (the “Fund”) seeks to track the investment results of an index composed of Indian equities, as represented by the MSCI India 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

    (5.79 )%(a)      6.78      8.19       (5.79 )%(a)      38.83      119.81

Fund Market

    (5.73     6.77        8.15         (5.73     38.73        118.93  

Index

    (3.17     8.61        9.47               (3.17     51.10        147.17  

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

 

  (a) 

The NAV total return presented in the table for the one-year period differs from the same period return disclosed in the financial highlights. The total return in the financial highlights is calculated in the same manner but differs due to certain adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

 

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

Expense Example

 

Actual           Hypothetical 5% Return           

 

 

     

 

 

      
 

Beginning     
Account Value     
(03/01/22)     
 
 
 
      

Ending
Account Value
(08/31/22)
 
 
 
      

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               $          987.20          $        3.61               $      1,000.00             $      1,021.60          $        3.67          0.72 %  

 

  (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

  5


Table of Contents
Fund Summary as of August 31, 2022  (continued)    iShares® MSCI India ETF

 

Portfolio Management Commentary

Indian equities declined during the reporting period as inflation weakened the country’s recovery from the coronavirus pandemic, which slowed economic growth well into 2021. Early in the reporting period, Indian stocks advanced as accommodative monetary policy increased liquidity and, despite a resurgence of COVID-19 cases, India’s economic growth was among the world’s strongest as domestic demand improved and foreign inflows rose. Later in the reporting period, rising commodities prices and India’s heavy reliance on imported oil helped drive inflation, raising concerns about an economic slowdown despite strong growth data. Foreign outflows surged. Unemployment remained high and the central bank started to tighten monetary policy.

The information technology sector was the largest detractor from the Index’s return. The IT services industry, which benefited from the increasing role of digital technology in business as companies pursued digitization and increased demand for outsourced services, declined sharply late in the reporting period as higher costs weighed on profits, leading to uncertainty about the sustainability of demand after the pandemic-related surge in technology spending.

The financials sector also detracted from the Index’s return. Thrifts and mortgage financing companies declined despite strong loan, profit, and earnings growth, improving asset quality, and lower provisioning costs. However, relatively low overall asset quality and persistent inflation weighed on investor sentiment, especially after the Russian invasion of Ukraine and resulting sanctions dimmed the economic outlook for Russia’s major trading partners, including India.

In contrast, the utilities sector contributed substantially to the Index’s return. Electricity demand rose sharply and the supply of coal failed to keep pace, raising power prices. A series of companies under a multi-sector conglomerate with roots in commodities trading drove gains, rallying sharply as the conglomerate continued to expand.

Automobiles stocks in the consumer discretionary sector also drove contribution. Demand for vehicles increased and supply chain issues showed signs of easing, driving strong sales growth.

Portfolio Information

 

SECTOR ALLOCATION

 

   
Sector   Percent of    
Total Investments(a)

Financials

  24.4%

Information Technology

  14.8   

Energy

  12.8   

Materials

  9.3   

Consumer Staples

  9.2   

Consumer Discretionary

  8.9   

Utilities

  7.1   

Industrials

  5.6   

Health Care

  4.6   

Communication Services

  2.7   

Real Estate

  0.6   

TEN LARGEST HOLDINGS

 

   
Security   Percent of    
Total Investments(a)

Reliance Industries Ltd.

  10.8%

Infosys Ltd.

  6.7   

ICICI Bank Ltd.

  6.1   

Housing Development Finance Corp. Ltd.

  5.6   

Tata Consultancy Services Ltd.

  3.9   

Hindustan Unilever Ltd.

  2.9   

Bajaj Finance Ltd.

  2.6   

Axis Bank Ltd.

  2.3   

Bharti Airtel Ltd.

  2.2   

Larsen & Toubro Ltd.

  1.8   
  (a)

Excludes money market funds.

 

 

 

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Table of Contents
Fund Summary as of August 31, 2022    iShares® MSCI India Small-Cap ETF

 

Investment Objective

The iShares MSCI India Small-Cap ETF (the “Fund”) seeks to track the investment results of an index composed of small-capitalization Indian equities, as represented by the MSCI India 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

    (4.78 )%(a)      4.73   11.26%       (4.78 )%(a)      25.99   190.69% 

Fund Market

    (5.48     4.62     11.13          (5.48     25.36     187.35    

Index

    (3.03     6.57     12.66            (3.03     37.46     229.41    

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

 

LOGO

 

  (a) 

The NAV total return presented in the table for the one-year period differs from the same period return disclosed in the financial highlights. The total return in the financial highlights is calculated in the same manner but differs due to certain adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

 

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

Expense Example

 

    Actual         Hypothetical 5% Return         
                                                            
     

Beginning     
Account Value     
(03/01/22)     
 
 
 
      

Ending
Account Value
(08/31/22)
 
 
 
      

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               $          989.80          $        3.71           $      1,000.00             $      1,021.50          $        3.77        0.74% 

 

  (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


Table of Contents
Fund Summary as of August 31, 2022    (continued)    iShares® MSCI India Small-Cap ETF

 

Portfolio Management Commentary

Indian small-capitalization equities declined during the reporting period as inflation weakened the country’s recovery from the coronavirus pandemic. Early in the reporting period, Indian stocks advanced as accommodative monetary policy increased liquidity and, despite a resurgence of COVID-19 cases, India’s economic growth was among the world’s strongest as domestic demand improved. Later in the reporting period, rising commodities prices and India’s heavy reliance on imported oil helped drive inflation, raising concerns about an economic slowdown. Small-capitalization stocks are generally more sensitive to economic and market shifts, and inflation tends to pressure their margins more than larger peers.

The healthcare sector was the largest detractor from the Index’s return, led by the pharmaceuticals industry. Rising costs pressured margins, leading to analyst downgrades and lowered guidance. COVID-19 test demand waned along with case numbers, weighing on sector earnings.

In the materials sector, which also detracted substantially from the Index’s return, construction materials and chemicals stocks declined amid rising costs. Concerns surrounding global growth also weighed on the sector.

In contrast, the industrials sector was a leading contributor to the Index’s return as manufacturing activity continued to rebound from the pandemic. Capital goods stocks benefited from rising business spending and strong order volumes, while fewer public health restrictions led to a resurgence of demand in the commercial and professional services industry.

The utilities sector also contributed to the Index’s return as regulatory issues receded. Electricity demand rose sharply and the supply of coal failed to keep pace, raising the price of power and coal. The real estate sector also bolstered the Index’s return, with stocks advancing as residential sales volumes rose and price increases outweighed increasing costs, while commercial developers benefited from reopening demand.

Portfolio Information

 

SECTOR ALLOCATION

 

   
Sector   Percent of    
Total Investments(a)

Materials

  19.2%

Industrials

  18.3   

Consumer Discretionary

  16.2   

Financials

  15.4   

Health Care

  9.2   

Information Technology

  6.7   

Communication Services

  4.9   

Real Estate

  4.3   

Consumer Staples

  2.7   

Utilities

  2.2   

Energy

  0.9   

TEN LARGEST HOLDINGS

 

   
Security   Percent of    
Total Investments(a)

Crompton Greaves Consumer Electricals Ltd.

  1.3%

Tube Investments of India Ltd.

  1.3   

Ashok Leyland Ltd.

  1.2   

Indian Hotels Co. Ltd. (The)

  1.2   

Zee Entertainment Enterprises Ltd.

  1.2   

Voltas Ltd.

  1.2   

Laurus Labs Ltd.

  1.1   

Astral Ltd.

  1.0   

Max Healthcare Institute Ltd.

  1.0   

TVS Motor Co. Ltd.

  1.0   
  (a)

Excludes money market funds.

 

 

 

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Table of Contents

About Fund Performance

 

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

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

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

Disclosure of Expenses

Shareholders of each Fund may incur the following charges: (1) transactional expenses, including brokerage commissions on purchases and sales of fund shares and (2) ongoing expenses, including management fees and other fund expenses. The expense examples shown (which are based on a hypothetical investment of $1,000 invested at the beginning of the period and held through the end of the period) are intended to assist shareholders both in calculating expenses based on an investment in each Fund and in comparing these expenses with similar costs of investing in other funds.

The expense examples provide information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

The expense examples also provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Funds and other funds, compare the 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing expenses only and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

 

 

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

  9


Table of Contents

Schedule of Investments

August 31, 2022

  

iShares® MSCI India ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 0.5%            

Bharat Electronics Ltd.

    5,498,134     $ 21,008,272  
   

 

 

 
Airlines — 0.3%            

InterGlobe Aviation Ltd.(a)(b)

    434,584       10,852,640  
   

 

 

 
Auto Components — 0.9%            

Balkrishna Industries Ltd.

    348,972       8,864,963  

Bharat Forge Ltd.

    1,155,646       10,638,498  

MRF Ltd.

    8,607       9,174,382  

Samvardhana Motherson International Ltd.

    6,112,204       9,322,761  
   

 

 

 
      38,000,604  
Automobiles — 5.4%            

Bajaj Auto Ltd.

    313,407       15,963,027  

Eicher Motors Ltd.

    616,969       25,749,347  

Hero MotoCorp Ltd.

    495,960       17,470,286  

Mahindra & Mahindra Ltd.

    3,924,677       63,699,979  

Maruti Suzuki India Ltd.

    544,941       61,467,930  

Tata Motors Ltd.(b)

    7,488,372       43,609,224  
   

 

 

 
          227,959,793  
Banks — 11.7%            

AU Small Finance Bank Ltd.(a)

    748,146       5,883,597  

Axis Bank Ltd.

    10,249,570       95,520,749  

Bandhan Bank Ltd.(a)

    2,888,209       9,967,722  

ICICI Bank Ltd.

    23,198,848       254,383,367  

Kotak Mahindra Bank Ltd.

    2,507,269       59,482,875  

State Bank of India

    8,055,299       53,035,843  

Yes Bank Ltd.(b)

    50,882,548       10,429,153  
   

 

 

 
      488,703,306  
Beverages — 0.3%            

United Spirits Ltd.(b)

    1,311,718       13,258,688  
   

 

 

 
Biotechnology — 0.2%            

Biocon Ltd.

    1,883,237       7,286,670  
   

 

 

 
Chemicals — 3.9%            

Asian Paints Ltd.

    1,729,954       72,829,023  

Berger Paints India Ltd.

    1,096,354       9,169,202  

PI Industries Ltd.

    342,168       14,630,844  

Pidilite Industries Ltd.

    687,999       23,485,190  

SRF Ltd.

    668,866       21,107,947  

UPL Ltd.

    2,200,360       21,075,166  
   

 

 

 
      162,297,372  
Commercial Services & Supplies — 0.2%            

Indian Railway Catering & Tourism Corp. Ltd.

    1,083,112       9,500,391  
   

 

 

 
Construction & Engineering — 1.8%            

Larsen & Toubro Ltd.

    3,105,165       74,111,700  
   

 

 

 
Construction Materials — 2.4%            

ACC Ltd.

    339,054       9,715,386  

Ambuja Cements Ltd.

    2,688,338       13,785,358  

Grasim Industries Ltd.

    1,184,773       24,692,368  

Shree Cement Ltd.

    48,847       13,409,496  

UltraTech Cement Ltd.

    455,653       37,880,651  
   

 

 

 
      99,483,259  
Consumer Finance — 3.9%            

Bajaj Finance Ltd.

    1,224,588       110,520,658  

Cholamandalam Investment and Finance Co. Ltd.

    1,852,507       18,149,209  

Muthoot Finance Ltd.

    542,289       7,104,675  
Security   Shares     Value  
Consumer Finance (continued)            

SBI Cards & Payment Services Ltd.

    1,064,092     $ 12,201,164  

Shriram Transport Finance Co. Ltd.

    854,591       14,343,720  
   

 

 

 
      162,319,426  
Diversified Financial Services — 6.5%  

Bajaj Finserv Ltd.

    172,351       36,132,558  

Housing Development Finance Corp. Ltd.

    7,768,139       235,183,615  

Piramal Enterprises Ltd.

    3,588       47,343  
   

 

 

 
      271,363,516  
Diversified Telecommunication Services — 0.2%  

Indus Towers Ltd.

    3,043,533       7,568,515  
   

 

 

 
Electric Utilities — 2.9%            

Adani Transmission Ltd.(b)

    1,257,691       61,675,287  

Power Grid Corp. of India Ltd.

    14,156,385       40,530,738  

Tata Power Co. Ltd. (The)

    6,489,216       19,028,748  
   

 

 

 
          121,234,773  
Electrical Equipment — 0.5%            

Havells India Ltd.

    1,130,512       19,571,033  
   

 

 

 
Food & Staples Retailing — 1.0%            

Avenue Supermarts Ltd.(a)(b)

    730,351       41,054,660  
   

 

 

 
Food Products — 2.4%            

Britannia Industries Ltd.

    489,158       22,888,371  

Marico Ltd.

    2,329,578       15,293,356  

Nestle India Ltd.

    152,284       37,915,498  

Tata Consumer Products Ltd.

    2,495,360       25,220,763  
   

 

 

 
      101,317,988  
Gas Utilities — 1.8%            

Adani Total Gas Ltd.

    1,240,010       57,830,903  

GAIL India Ltd.

    7,013,758       11,913,765  

Indraprastha Gas Ltd.

    1,418,256       7,415,100  
   

 

 

 
      77,159,768  
Health Care Providers & Services — 0.6%            

Apollo Hospitals Enterprise Ltd.

    454,221       24,404,559  
   

 

 

 
Hotels, Restaurants & Leisure — 0.3%            

Jubilant Foodworks Ltd.

    1,786,713       13,609,817  
   

 

 

 
Independent Power and Renewable Electricity Producers — 2.3%  

Adani Green Energy Ltd.(b)

    1,428,767       43,171,392  

Adani Power Ltd.(b)

    3,481,249       17,777,520  

NTPC Ltd.

    17,491,741       35,855,583  
   

 

 

 
      96,804,495  
Industrial Conglomerates — 0.3%            

Siemens Ltd.

    321,420       11,540,420  
   

 

 

 
Insurance — 2.2%            

HDFC Life Insurance Co. Ltd.(a)

    4,290,181       30,744,321  

ICICI Lombard General Insurance Co. Ltd.(a)

    1,085,527       17,437,374  

ICICI Prudential Life Insurance Co. Ltd.(a)

    1,621,625       11,971,486  

SBI Life Insurance Co. Ltd.(a)

    2,031,404       33,570,443  
   

 

 

 
      93,723,624  
Interactive Media & Services — 0.4%            

Info Edge India Ltd.

    319,659       17,195,396  
   

 

 

 
Internet & Direct Marketing Retail — 0.2%            

Zomato Ltd.(b)

    10,660,074       7,620,092  
   

 

 

 
IT Services — 14.4%            

HCL Technologies Ltd.

    4,895,349       56,941,897  

 

 

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


Table of Contents

Schedule of Investments    (continued)

August 31, 2022

  

iShares® MSCI India ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
IT Services (continued)            

Infosys Ltd.

    15,180,141     $     279,786,551  

Larsen & Toubro Infotech Ltd.(a)

    237,271       13,577,439  

Mindtree Ltd.

    260,193       10,587,242  

Mphasis Ltd.

    381,287       10,030,695  

Tata Consultancy Services Ltd.

    4,125,494       164,531,239  

Tech Mahindra Ltd.

    2,629,870       35,039,146  

Wipro Ltd.

    6,164,834       31,565,069  
   

 

 

 
      602,059,278  
Life Sciences Tools & Services — 0.6%            

Divi’s Laboratories Ltd.

    599,023       27,045,146  
   

 

 

 
Metals & Mining — 3.0%            

Hindalco Industries Ltd.

    6,061,605       32,875,718  

Jindal Steel & Power Ltd.

    1,842,277       9,912,781  

JSW Steel Ltd.

    3,260,477       27,039,578  

Tata Steel Ltd.

    33,069,035       44,398,564  

Vedanta Ltd.

    3,346,643       11,215,970  
   

 

 

 
      125,442,611  
Oil, Gas & Consumable Fuels — 12.8%            

Bharat Petroleum Corp. Ltd.

    3,903,567       15,990,523  

Coal India Ltd.

    6,953,050       20,316,718  

Hindustan Petroleum Corp. Ltd.

    2,882,374       8,748,709  

Indian Oil Corp. Ltd.

    12,745,754       11,373,145  

Oil & Natural Gas Corp. Ltd.

    11,354,893       19,656,608  

Petronet LNG Ltd.

    3,384,725       9,337,639  

Reliance Industries Ltd.

    13,729,555       449,780,838  
   

 

 

 
      535,204,180  
Personal Products — 4.2%            

Colgate-Palmolive India Ltd.

    552,357       11,597,803  

Dabur India Ltd.

    2,792,394       20,360,221  

Godrej Consumer Products Ltd.(b)

    1,845,940       21,263,165  

Hindustan Unilever Ltd.

    3,708,752       122,781,801  
   

 

 

 
      176,002,990  
Pharmaceuticals — 3.2%            

Aurobindo Pharma Ltd.

    1,190,720       8,106,693  

Cipla Ltd.

    2,184,667       28,309,637  

Dr. Reddy’s Laboratories Ltd.

    525,242       27,757,085  

Lupin Ltd.

    923,497       7,717,149  

Piramal Pharma Ltd., NVS

    2,143,944       5,759,859  

Sun Pharmaceutical Industries Ltd.

    4,328,203       48,303,678  

Torrent Pharmaceuticals Ltd.

    458,209       8,853,867  
   

 

 

 
      134,807,968  
Real Estate Management & Development — 0.6%        

DLF Ltd.

    2,792,744       13,490,426  

Godrej Properties Ltd.(b)

    564,541       9,846,582  
   

 

 

 
      23,337,008  
Security   Shares     Value  
Road & Rail — 0.2%            

Container Corp. of India Ltd.

    1,237,368     $ 10,733,530  
   

 

 

 
Software — 0.4%            

Tata Elxsi Ltd.

    154,567       17,241,007  
   

 

 

 
Specialty Retail — 0.3%            

Trent Ltd.

    818,191       14,310,230  
   

 

 

 
Textiles, Apparel & Luxury Goods — 1.7%        

Page Industries Ltd.

    27,682       17,636,672  

Titan Co. Ltd.

    1,601,533       51,896,543  
   

 

 

 
      69,533,215  
Tobacco — 1.3%            

ITC Ltd.

    13,338,413       53,304,027  
   

 

 

 
Trading Companies & Distributors — 1.2%        

Adani Enterprises Ltd.

    1,285,324       51,006,474  
   

 

 

 
Transportation Infrastructure — 0.6%        

Adani Ports & Special Economic Zone Ltd.

    2,381,650       24,918,013  
   

 

 

 
Wireless Telecommunication Services — 2.1%        

Bharti Airtel Ltd.

    9,907,410       89,745,700  
   

 

 

 

Total Long-Term Investments — 99.7%
(Cost: $3,997,305,344)

      4,173,642,154  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 1.0%            

BlackRock Cash Funds: Treasury, SL Agency Shares, 2.07%(c)(d)

    39,580,000       39,580,000  
   

 

 

 

Total Short-Term Securities — 1.0%
(Cost: $39,580,000)

      39,580,000  
   

 

 

 

Total Investments in Securities — 100.7%
(Cost: $4,036,885,344)

 

    4,213,222,154  

Liabilities in Excess of Other Assets — (0.7)%

 

    (27,603,849
   

 

 

 

Net Assets — 100.0%

    $     4,185,618,305  
   

 

 

 

 

(a) 

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.

(b) 

Non-income producing security.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period end.

 

 

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

  11


Table of Contents

Schedule of Investments    (continued)

August 31, 2022

  

iShares® MSCI India ETF

 

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
Distributions
from
Underlying
Funds
 

 

 

BlackRock Cash Funds: Treasury, SL Agency Shares

   $ 138,250,000      $        $(98,670,000) (a)    $      $      $ 39,580,000        39,580,000      $ 437,827      $  
          

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (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

       

SGX Nifty 50 Index

    543       09/29/22     $ 18,713     $ (452,971
       

 

 

 

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)

   $      $      $ 452,971      $      $      $      $ 452,971  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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 Consolidated 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

   $      $      $ (2,519,502    $      $      $      $ (2,519,502
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                    

Futures contracts

   $      $      $ (520,405    $      $      $      $ (520,405
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts

  

Average notional value of contracts — long

   $ 16,075,950      

 

 

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.

 

 

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


Table of Contents

Schedule of Investments    (continued)

August 31, 2022

  

iShares® MSCI India ETF

 

Fair Value Hierarchy as of Period End (continued)

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

   $      $ 4,173,642,154      $      $ 4,173,642,154  

Money Market Funds

     39,580,000                      39,580,000  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $   39,580,000      $ 4,173,642,154      $           —      $ 4,213,222,154  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Liabilities

           

Futures Contracts

   $      $ (452,971    $      $ (452,971
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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

  13


Table of Contents

Consolidated Schedule of Investments

August 31, 2022

  

iShares® MSCI India Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 0.2%            

Bharat Dynamics Ltd.

    48,827     $ 496,848  
   

 

 

 
Air Freight & Logistics — 0.6%            

Allcargo Logistics Ltd.

    81,147       360,513  

Blue Dart Express Ltd.

    6,374       680,174  

Mahindra Logistics Ltd.(a)

    43,922       263,944  

TCI Express Ltd.

    15,251       335,738  

Transport Corp. of India Ltd.

    30,427       270,673  
   

 

 

 
      1,911,042  
Airlines — 0.1%            

SpiceJet Ltd.(b)

    327,337       188,554  
   

 

 

 
Auto Components — 5.0%            

Apollo Tyres Ltd.

    422,983       1,319,656  

Asahi India Glass Ltd.

    80,597       639,743  

Ceat Ltd.

    29,563       512,134  

Endurance Technologies Ltd.(a)

    37,413       698,402  

Exide Industries Ltd.

    509,178       1,016,777  

Mahindra CIE Automotive Ltd.

    151,499       517,580  

Minda Corp. Ltd.

    77,679       217,193  

Motherson Sumi Wiring India Ltd.

    1,682,572       1,709,456  

Sundaram Clayton Ltd.

    6,749       397,917  

Sundram Fasteners Ltd.

    125,953       1,313,456  

Suprajit Engineering Ltd.

    91,379       386,557  

Tube Investments of India Ltd.

    141,357       3,985,659  

UNO Minda Ltd.

    228,271       1,638,676  

Varroc Engineering Ltd.(a)(b)

    51,934       221,980  

ZF Commercial Vehicle Control Systems India Ltd.

    6,309       758,228  
   

 

 

 
        15,333,414  
Automobiles — 1.0%            

TVS Motor Co. Ltd.

    253,131       3,098,621  
   

 

 

 
Banks — 3.7%            

Canara Bank

    483,291       1,441,251  

City Union Bank Ltd.

    482,329       1,079,390  

Equitas Small Finance Bank Ltd.(a)(b)

    510,394       290,378  

Federal Bank Ltd.

    2,073,326       3,006,769  

IDFC First Bank Ltd.(b)

    4,058,614       2,470,502  

Indian Bank

    331,790       798,419  

Karur Vysya Bank Ltd. (The)

    521,196       442,796  

RBL Bank Ltd.(a)(b)

    590,937       892,008  

Yes Bank Ltd., (Acquired 03/16/20, Cost: $3,554,476)(b)(c)

    4,044,378       791,013  
   

 

 

 
      11,212,526  
Beverages — 0.5%            

Radico Khaitan Ltd.

    106,834       1,391,043  
   

 

 

 
Building Products — 2.1%            

Astral Ltd.

    120,433       3,131,512  

Blue Star Ltd.

    76,854       1,054,327  

Cera Sanitaryware Ltd.

    6,026       375,517  

Kajaria Ceramics Ltd.

    106,031       1,537,540  

Prince Pipes and Fittings Ltd.

    51,238       373,474  
   

 

 

 
      6,472,370  
Capital Markets — 3.6%            

Angel One Ltd.

    33,411       537,831  

BSE Ltd.

    88,416       715,489  

Central Depository Services India Ltd.

    68,206       1,053,141  

CRISIL Ltd.

    19,453       795,350  

Dhani Services Ltd.(b)

    342,442       276,559  
Security   Shares     Value  
Capital Markets (continued)        

Edelweiss Financial Services Ltd.

    689,166     $ 521,987  

ICICI Securities Ltd.(a)

    107,423       669,603  

IDFC Ltd.

    1,488,538       1,268,038  

IIFL Wealth Management Ltd.

    47,292       987,457  

Indian Energy Exchange Ltd.(a)

    584,826       1,165,529  

JM Financial Ltd.

    578,437       459,325  

Motilal Oswal Financial Services Ltd.

    49,513       474,574  

Multi Commodity Exchange of India Ltd.

    33,184       531,651  

Nippon Life India Asset Management Ltd.(a)

    165,074       620,746  

Tata Investment Corp. Ltd.

    20,095       401,845  

UTI Asset Management Co. Ltd.

    59,054       605,366  
   

 

 

 
        11,084,491  
Chemicals — 13.7%            

Aarti Industries Ltd.

    265,574       2,740,576  

Advanced Enzyme Technologies Ltd.

    60,780       203,562  

Akzo Nobel India Ltd.

    12,042       292,120  

Alkyl Amines Chemicals

    16,966       626,297  

Atul Ltd.

    19,705       2,253,706  

Balaji Amines Ltd.

    13,030       559,198  

BASF India Ltd.

    14,500       599,137  

Bayer CropScience Ltd.

    17,959       1,224,507  

Carborundum Universal Ltd.

    139,104       1,464,016  

Castrol India Ltd.

    527,012       750,441  

Chambal Fertilisers and Chemicals Ltd.

    221,036       962,652  

Chemplast Sanmar Ltd.(b)

    95,098       498,568  

Clean Science and Technology

    28,299       609,602  

Coromandel International Ltd.

    156,377       2,053,113  

Deepak Fertilisers & Petrochemicals Corp. Ltd.

    72,082       814,736  

Deepak Nitrite Ltd.

    90,839       2,229,130  

EID Parry India Ltd.

    106,302       703,222  

Fine Organic Industries Ltd.

    10,187       784,839  

Finolex Industries Ltd.

    332,755       628,669  

Galaxy Surfactants Ltd.

    14,168       579,125  

GHCL Ltd.

    82,959       616,995  

Gujarat Alkalies & Chemicals Ltd.

    24,075       265,539  

Gujarat Fluorochemicals Ltd.

    36,581       1,516,694  

Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

    103,510       963,277  

Gujarat State Fertilizers & Chemicals Ltd.

    265,390       520,373  

Indigo Paints Ltd.

    12,528       261,637  

Jubilant Ingrevia Ltd.

    95,708       555,722  

Kansai Nerolac Paints Ltd.

    179,463       1,132,664  

Laxmi Organic Industries Ltd.

    87,191       357,134  

Linde India Ltd.

    28,400       1,212,194  

Navin Fluorine International Ltd.

    42,904       2,286,066  

NOCIL Ltd.

    131,831       432,472  

PCBL Ltd.

    224,595       383,873  

Polyplex Corporation Ltd.

    21,013       562,092  

Privi Specility Chemical Ltd.

    10,626       183,760  

Rain Industries Ltd.

    246,410       606,681  

Rallis India Ltd.

    103,900       292,205  

Rashtriya Chemicals & Fertilizers Ltd.

    187,512       230,653  

Rossari Biotech Ltd.

    17,948       219,763  

Sharda Cropchem Ltd.

    36,801       237,608  

Solar Industries India Ltd.

    36,160       1,503,913  

Sumitomo Chemical India Ltd.

    132,974       811,909  

Supreme Industries Ltd.

    84,601       2,076,470  

Supreme Petrochem Ltd.

    43,752       425,900  

Tata Chemicals Ltd.

    186,684       2,623,386  

 

 

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


Table of Contents

Consolidated Schedule of Investments    (continued)

August 31, 2022

  

iShares® MSCI India Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Chemicals (continued)            

Vinati Organics Ltd.(b)

    34,106     $ 935,971  
   

 

 

 
      41,792,167  
Commercial Services & Supplies — 0.1%        

SIS Ltd.(b)

    48,258       272,625  
   

 

 

 
Communications Equipment — 0.4%        

Sterlite Technologies Ltd.

    238,462       508,464  

Tejas Networks Ltd.(a)(b)

    80,691       613,091  
   

 

 

 
          1,121,555  
Construction & Engineering — 2.9%        

Dilip Buildcon Ltd.(a)

    59,572       178,304  

Engineers India Ltd.

    333,618       282,628  

IRB Infrastructure Developers Ltd.

    160,881       472,443  

Kalpataru Power Transmission Ltd.

    90,457       460,977  

KEC International Ltd.

    171,122       868,701  

KNR Constructions Ltd.

    187,305       607,608  

NBCC India Ltd.

    832,881       356,344  

NCC Ltd./India

    526,921       457,491  

PNC Infratech Ltd.

    153,772       542,465  

Praj Industries Ltd.

    146,794       763,492  

Sterling and Wilson Renewable Energy Ltd.(b)

    51,752       190,994  

Voltas Ltd.

    286,484       3,567,187  
   

 

 

 
      8,748,634  
Construction Materials — 2.5%        

Birla Corp. Ltd.

    36,148       437,236  

Dalmia Bharat Ltd.

    99,831       1,910,338  

HeidelbergCement India Ltd.

    77,026       183,677  

India Cements Ltd. (The)

    164,328       465,301  

JK Cement Ltd.

    46,315       1,563,510  

JK Lakshmi Cement Ltd.

    79,149       465,108  

Nuvoco Vistas Corp. Ltd.(b)

    142,722       638,711  

Prism Johnson Ltd.(b)

    164,873       258,923  

Ramco Cements Ltd. (The)

    141,636       1,336,430  

Rhi Magnesita India Ltd.

    53,292       391,845  
   

 

 

 
      7,651,079  
Consumer Finance — 2.3%            

Cholamandalam Financial Holdings Ltd.

    125,039       1,044,067  

CreditAccess Grameen Ltd.(b)

    62,304       771,217  

Mahindra & Mahindra Financial Services Ltd.

    739,044       1,882,263  

Manappuram Finance Ltd.

    676,448       888,694  

MAS Financial Services Ltd.(a)

    21,122       197,660  

Paisalo Digital Ltd.

    316,248       295,917  

Poonawalla Fincorp Ltd.

    305,684       1,155,763  

Shriram City Union Finance Ltd.

    31,172       740,975  
   

 

 

 
      6,976,556  
Containers & Packaging — 0.1%        

EPL Ltd.

    188,221       400,040  
   

 

 

 
Diversified Financial Services — 2.0%            

Aditya Birla Capital Ltd.(b)

    611,556       863,774  

L&T Finance Holdings Ltd.

    988,986       971,338  

Piramal Enterprises Ltd.

    158,128       2,086,479  

REC Ltd.

    1,578,377       2,143,139  
   

 

 

 
      6,064,730  
Diversified Telecommunication Services — 1.3%        

HFCL Ltd.

    916,818       841,842  

Tata Communications Ltd.

    151,850       2,270,928  

Tata Teleservices Maharashtra Ltd.(b)

    650,862       888,342  
   

 

 

 
      4,001,112  
Security   Shares     Value  
Electric Utilities — 0.7%            

CESC Ltd.

    794,558     $ 806,491  

Torrent Power Ltd.

    192,057       1,393,942  
   

 

 

 
      2,200,433  
Electrical Equipment — 3.6%            

Amara Raja Batteries Ltd.

    125,139       793,860  

Bharat Heavy Electricals Ltd.(b)

    1,159,544       847,102  

CG Power and Industrial Solutions Ltd.(b)

    768,225       2,139,106  

Finolex Cables Ltd.

    81,385       467,299  

Graphite India Ltd.

    90,999       465,932  

HEG Ltd.

    17,726       277,280  

Hitachi Energy India Ltd.

    14,178       660,298  

KEI Industries Ltd.

    78,014       1,421,653  

Olectra Greentech Ltd.(b)

    54,491       418,857  

Polycab India Ltd.

    59,783       1,833,693  

Suzlon Energy Ltd.(b)

    6,077,889       616,980  

Triveni Turbine Ltd.

    109,887       279,831  

V-Guard Industries Ltd.

    231,573       654,825  
   

 

 

 
          10,876,716  
Electronic Equipment, Instruments & Components — 0.4%  

Redington India Ltd.

    728,635       1,359,539  
   

 

 

 
Entertainment — 0.8%            

Chennai Super Kings Cricket Ltd.(d)

    206,787       26  

Inox Leisure Ltd.(b)

    88,933       557,003  

Nazara Technologies Ltd.(b)

    22,294       181,508  

PVR Ltd.(b)

    60,957       1,384,785  

Saregama India Ltd.

    90,568       452,981  
   

 

 

 
      2,576,303  
Equity Real Estate Investment Trusts (REITs) — 1.4%        

Brookfield India Real Estate Trust(a)

    155,640       655,261  

Embassy Office Parks REIT

    568,179       2,587,372  

Mindspace Business Parks REIT(a)

    197,478       914,678  
   

 

 

 
      4,157,311  
Food & Staples Retailing — 0.1%        

Medplus Health Services Ltd.(b)

    47,593       435,787  
   

 

 

 
Food Products — 1.2%            

Avanti Feeds Ltd.

    53,857       311,252  

Balrampur Chini Mills Ltd.

    163,071       711,171  

Bombay Burmah Trading Co.

    22,953       259,852  

CCL Products India Ltd.

    98,450       588,958  

Gujarat Ambuja Exports Ltd.

    90,833       309,448  

Kaveri Seed Co. Ltd.

    27,333       155,656  

Shree Renuka Sugars Ltd.(b)

    850,557       493,793  

Triveni Engineering & Industries Ltd.

    95,312       278,763  

Zydus Wellness Ltd.

    21,130       422,738  
   

 

 

 
      3,531,631  
Gas Utilities — 1.1%            

Gujarat Gas Ltd.

    229,237       1,348,946  

Gujarat State Petronet Ltd.

    375,770       1,132,482  

Mahanagar Gas Ltd.

    72,366       786,307  
   

 

 

 
      3,267,735  
Health Care Equipment & Supplies — 0.1%        

Poly Medicure Ltd.

    38,020       403,841  
   

 

 

 
Health Care Providers & Services — 3.2%        

Aster DM Healthcare Ltd.(a)(b)

    164,793       454,429  

Dr Lal PathLabs Ltd.(a)

    49,962       1,591,720  

Fortis Healthcare Ltd.(b)

    603,371       2,212,882  

 

 

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

  15


Table of Contents

Consolidated Schedule of Investments    (continued)

August 31, 2022

  

iShares® MSCI India Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Health Care Providers & Services (continued)        

Krishna Institute Of Medical Sciences Ltd.(a)(b)

    37,309     $ 560,456  

Max Healthcare Institute Ltd.(b)

    645,786           3,121,008  

Metropolis Healthcare Ltd.(a)

    33,997       605,915  

Narayana Hrudayalaya Ltd.

    95,285       833,080  

Thyrocare Technologies Ltd.(a)

    21,581       166,672  

Vijaya Diagnostic Centre Pvt Ltd.(b)

    55,451       245,229  
   

 

 

 
      9,791,391  
Hotels, Restaurants & Leisure — 2.7%            

Chalet Hotel Ltd.(b)

    81,011       325,036  

Delta Corp. Ltd.

    84,044       219,584  

Devyani International Ltd.(b)

    320,946       730,864  

Easy Trip Planners Ltd.

    57,021       275,653  

EIH Ltd.(b)

    210,165       418,548  

Indian Hotels Co. Ltd. (The)

    1,040,600       3,682,277  

Lemon Tree Hotels Ltd.(a)(b)

    579,365       501,776  

Mahindra Holidays & Resorts India Ltd.(b)

    81,811       267,677  

Restaurant Brands Asia Ltd.(b)

    361,858       593,021  

Sapphire Foods India Ltd.(b)

    29,607       493,475  

Westlife Development Ltd.(b)

    94,070       757,517  
   

 

 

 
      8,265,428  
Household Durables — 3.6%            

Amber Enterprises India Ltd.(b)

    22,372       629,631  

Bajaj Electricals Ltd.

    61,206       943,779  

Crompton Greaves Consumer Electricals Ltd.

    801,773       4,079,712  

Dixon Technologies India Ltd.

    39,522       2,009,709  

Johnson Controls-Hitachi Air Conditioning India Ltd.(b)

    9,072       180,471  

Orient Electric Ltd.

    168,831       547,234  

Sheela Foam Ltd.(b)

    19,494       726,831  

Symphony Ltd.

    23,001       267,993  

TTK Prestige Ltd.

    55,348       662,363  

Whirlpool of India Ltd.

    42,249       960,500  
   

 

 

 
      11,008,223  
Household Products — 0.2%            

Jyothy Labs Ltd.

    195,728       461,413  
   

 

 

 
Independent Power and Renewable Electricity Producers — 0.4%  

Jaiprakash Power Ventures Ltd.(b)

    4,088,488       382,359  

RattanIndia Enterprises Ltd.(b)

    454,559       289,921  

Reliance Power Ltd.(b)

    3,183,161       661,272  
   

 

 

 
      1,333,552  
Industrial Conglomerates — 0.5%            

3M India Ltd.(b)

    3,751       1,091,094  

Godrej Industries Ltd.(b)

    66,835       400,621  
   

 

 

 
      1,491,715  
Insurance — 1.4%            

Max Financial Services Ltd.(b)

    298,805       3,070,666  

PB Fintech Ltd.(b)

    179,623       1,118,602  
   

 

 

 
      4,189,268  
Interactive Media & Services — 0.3%            

Brightcom Group Ltd.

    1,343,955       681,225  

Just Dial Ltd.(b)

    22,836       167,430  
   

 

 

 
      848,655  
Internet & Direct Marketing Retail — 0.1%            

CarTrade Tech Ltd.(b)

    25,095       200,518  
   

 

 

 
IT Services — 3.3%            

Coforge Ltd.

    36,517       1,609,547  

Computer Age Management Services Ltd.

    39,107       1,118,240  

eClerx Services Ltd.

    20,350       534,251  
Security   Shares     Value  
IT Services (continued)            

Firstsource Solutions Ltd.

    417,782     $ 555,539  

Happiest Minds Technologies Ltd.

    78,250       994,547  

Infibeam Avenues Ltd.

    1,267,677       249,641  

Mastek Ltd.

    18,041       422,747  

NIIT Ltd.

    98,064       421,938  

Persistent Systems Ltd.

    66,170           2,877,735  

Sonata Software Ltd.

    83,054       735,380  

Vakrangee Ltd.

    720,156       248,429  

Zensar Technologies Ltd.

    134,919       383,324  
   

 

 

 
      10,151,318  
Life Sciences Tools & Services — 0.4%            

Syngene International Ltd.(a)

    159,072       1,188,484  
   

 

 

 
Machinery — 6.8%            

AIA Engineering Ltd.

    56,536       1,838,426  

Ashok Leyland Ltd.

    1,955,089       3,739,561  

BEML Ltd.

    25,071       575,425  

Cochin Shipyard Ltd.(a)

    53,592       252,033  

Cummins India Ltd.

    166,156       2,467,616  

ESAB India Ltd.

    6,279       254,411  

GMM Pfaudler Ltd.

    26,286       543,882  

Greaves Cotton Ltd.

    121,310       255,628  

Grindwell Norton Ltd.

    58,992       1,617,975  

ISGEC Heavy Engineering Ltd.

    39,944       238,169  

Jamna Auto Industries Ltd.

    236,968       343,734  

KSB Ltd.

    16,149       384,529  

Lakshmi Machine Works Ltd.

    4,287       642,578  

MTAR Technologies Ltd.

    14,429       294,228  

Schaeffler India Ltd.

    62,460       2,363,933  

SKF India Ltd.

    32,926       1,998,035  

Thermax Ltd.

    55,551       1,672,238  

Timken India Ltd.

    30,058       1,132,054  
   

 

 

 
      20,614,455  
Marine — 0.1%            

Shipping Corp. of India Ltd.

    189,770       278,716  
   

 

 

 
Media — 2.0%            

Affle India Ltd.(b)

    70,997       1,142,514  

Network18 Media & Investments Ltd.(b)

    213,507       186,459  

Sun TV Network Ltd.

    104,491       652,653  

TV18 Broadcast Ltd.(b)

    598,834       302,707  

Zee Entertainment Enterprises Ltd.

    1,151,487       3,668,581  
   

 

 

 
      5,952,914  
Metals & Mining — 2.1%            

APL Apollo Tubes Ltd.(b)

    183,358       2,156,256  

Godawari Power and Ispat Ltd.

    57,488       210,530  

Hindustan Copper Ltd.

    256,170       375,785  

Jindal Stainless Hisar Ltd.(b)

    124,889       379,223  

Jindal Stainless Ltd.(b)

    199,482       317,355  

Lloyds Metals & Energy Ltd.

    100,258       173,468  

National Aluminium Co. Ltd.

    1,100,238       1,095,627  

Ratnamani Metals & Tubes Ltd.

    37,346       869,246  

Usha Martin Ltd.

    159,987       282,015  

Welspun Corp. Ltd.

    156,158       437,852  
   

 

 

 
      6,297,357  
Multiline Retail — 0.3%            

Shoppers Stop Ltd.(b)

    50,806       393,803  

V-Mart Retail Ltd.

    12,999       474,096  
   

 

 

 
      867,899  

 

 

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


Table of Contents

Consolidated Schedule of Investments    (continued)

August 31, 2022

  

iShares® MSCI India Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Oil, Gas & Consumable Fuels — 0.9%            

Aegis Logistics Ltd.

    188,001     $ 687,464  

Great Eastern Shipping Co. Ltd. (The)

    123,612       879,311  

Gujarat Mineral Development Corp. Ltd.

    108,083       222,732  

Oil India Ltd.

    361,112       869,517  
   

 

 

 
      2,659,024  
Paper & Forest Products — 0.7%            

Century Plyboards India Ltd.

    74,547       622,455  

Century Textiles & Industries Ltd.

    67,397       721,535  

Greenpanel Industries Ltd.

    64,877       362,027  

JK Paper Ltd.

    101,541       527,614  
   

 

 

 
      2,233,631  
Personal Products — 0.7%            

Emami Ltd.

    264,429       1,600,720  

Gillette India Ltd.

    8,732       601,340  
   

 

 

 
      2,202,060  
Pharmaceuticals — 5.4%            

Aarti Drugs Ltd.

    50,301       271,369  

Ajanta Pharma Ltd.

    51,200       878,075  

Alembic Pharmaceuticals Ltd.

    78,418       634,585  

AstraZeneca Pharma India Ltd.

    6,542       252,383  

Caplin Point Laboratories Ltd.

    29,867       290,784  

Eris Lifesciences Ltd.(a)

    54,286       468,954  

FDC Ltd./India(b)

    68,660       225,987  

GlaxoSmithKline Pharmaceuticals Ltd.

    45,130       823,350  

Glenmark Pharmaceuticals Ltd.

    187,524       868,526  

Granules India Ltd.

    198,207       754,624  

Hikal Ltd.

    58,607       249,392  

Ipca Laboratories Ltd.

    185,832       2,102,806  

JB Chemicals & Pharmaceuticals Ltd.

    46,257       1,029,400  

Jubilant Pharmova Ltd.

    84,898       371,564  

Laurus Labs Ltd.(a)

    465,244       3,349,020  

Natco Pharma Ltd.

    109,243       840,120  

Procter & Gamble Health Ltd.

    10,025       528,843  

Sanofi India Ltd.

    10,711       830,412  

Shilpa Medicare Ltd.

    41,308       202,516  

Strides Pharma Science Ltd.

    76,910       316,394  

Sun Pharma Advanced Research Co. Ltd.(b)

    71,632       204,522  

Suven Pharmaceuticals Ltd.

    135,634       830,730  

Wockhardt Ltd.(b)

    68,470       204,729  
   

 

 

 
          16,529,085  
Professional Services — 0.4%            

Quess Corp. Ltd.(a)

    98,482       700,842  

TeamLease Services Ltd.(b)

    14,716       623,437  
   

 

 

 
      1,324,279  
Real Estate Management & Development — 2.9%  

Brigade Enterprises Ltd.

    153,382       974,076  

Indiabulls Real Estate Ltd.(b)

    575,139       618,266  

Mahindra Lifespace Developers Ltd.

    102,436       661,895  

NESCO Ltd.

    28,888       207,417  

Oberoi Realty Ltd.

    169,514       2,118,827  

Phoenix Mills Ltd. (The)

    130,804       2,287,607  

Prestige Estates Projects Ltd.

    186,884       1,061,294  

Sobha Ltd.

    50,944       441,146  

Sunteck Realty Ltd.

    69,159       409,467  
   

 

 

 
      8,779,995  
Semiconductors & Semiconductor Equipment — 0.1%  

Borosil Renewables Ltd.(b)

    60,551       423,455  
   

 

 

 
Security   Shares     Value  
Software — 2.3%            

Birlasoft Ltd.

    223,269     $ 883,297  

CE Info Systems Ltd.

    14,479       243,461  

Cyient Ltd.

    110,209       1,154,033  

Intellect Design Arena Ltd.

    107,247       787,198  

KPIT Technologies Ltd.

    219,099       1,513,750  

Oracle Financial Services Software Ltd.

    28,753       1,135,939  

Route Mobile Ltd.

    33,643       631,784  

Tanla Platforms Ltd.

    88,214       780,858  
   

 

 

 
          7,130,320  
Specialty Retail — 0.1%            

Go Fashion India Ltd.(b)

    25,000       360,579  
   

 

 

 
Textiles, Apparel & Luxury Goods — 3.3%            

Aditya Birla Fashion and Retail Ltd.(b)

    437,414       1,661,243  

Alok Industries Ltd.(b)

    1,646,526       395,329  

Bata India Ltd.

    68,480       1,655,538  

Garware Technical Fibres Ltd.

    12,359       538,138  

Indo Count Industries Ltd.

    93,934       191,104  

KPR Mill Ltd.

    113,826       856,053  

LUX Industries Ltd.

    9,888       223,832  

Rajesh Exports Ltd.

    78,494       578,377  

Raymond Ltd.

    44,433       529,370  

Relaxo Footwears Ltd.

    66,315       827,342  

Trident Ltd.

    1,663,766       753,763  

Vaibhav Global Ltd.

    65,843       284,348  

Vardhman Textiles Ltd.

    153,951       635,556  

VIP Industries Ltd.

    84,601       624,401  

Welspun India Ltd.

    330,871       317,227  
   

 

 

 
      10,071,621  
Thrifts & Mortgage Finance — 2.4%            

Aavas Financiers Ltd.(b)

    63,095       1,785,888  

Aptus Value Housing Finance India Ltd.(b)

    132,025       591,894  

Can Fin Homes Ltd.

    70,946       558,114  

Home First Finance Company India Ltd.(a)(b)

    35,314       425,527  

IIFL Finance Ltd.

    177,037       758,314  

Indiabulls Housing Finance Ltd.(b)

    438,819       740,109  

LIC Housing Finance Ltd.

    402,982       2,047,608  

PNB Housing Finance Ltd.(a)(b)

    77,940       338,054  
   

 

 

 
      7,245,508  
Tobacco — 0.1%            

Godfrey Phillips India Ltd.

    16,939       235,133  
   

 

 

 
Trading Companies & Distributors — 0.4%            

Apollo Tricoat Tubes Ltd.(b)

    28,099       326,045  

IndiaMART Intermesh Ltd.(a)

    18,189       993,783  
   

 

 

 
      1,319,828  
Transportation Infrastructure — 0.5%            

GMR Infrastructure Ltd.(b)

    2,813,998       1,256,651  

Gujarat Pipavav Port Ltd.

    351,278       381,451  
   

 

 

 
      1,638,102  
Wireless Telecommunication Services — 0.5%  

Vodafone Idea Ltd.(b)

    12,834,877       1,439,168  
   

 

 

 

Total Long-Term Investments — 99.6%
(Cost: $214,066,225)

      303,559,797  
   

 

 

 

 

 

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

  17


Table of Contents

Consolidated Schedule of Investments  (continued)

August 31, 2022

  

iShares® MSCI India Small-Cap ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Short-Term Securities            
Money Market Funds — 0.6%            

BlackRock Cash Funds: Treasury,
SL Agency Shares, 2.07%(e)(f)

    1,770,000     $ 1,770,000  
   

 

 

 

Total Short-Term Securities — 0.6%
(Cost: $1,770,000)

      1,770,000  
   

 

 

 

Total Investments in Securities — 100.2%
(Cost: $215,836,225)

      305,329,797  

Liabilities in Excess of Other Assets — (0.2)%

 

    (529,896
   

 

 

 

Net Assets — 100.0%

    $   304,799,901  
   

 

 

 

 

(a) 

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.

(b) 

Non-income producing security.

(c) 

Restricted security as to resale, excluding 144A securities. The Fund held restricted securities with a current value of $791,013, representing 0.3% of its net assets as of period end, and an original cost of $3,554,476.

(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.

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

Distributions

from

Underlying

Funds

 

BlackRock Cash Funds: Treasury, SL Agency Shares

  $ 7,290,000     $     $ (5,520,000 )(a)    $     $     $ 1,770,000       1,770,000     $ 17,569     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (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

           

SGX Nifty 50 Index

     37        09/29/22      $ 1,275      $ (38,002
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Consolidated 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)

   $      $      $ 38,002      $      $      $      $ 38,002  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts are reported in the Consolidated Schedule of Investments. In the Consolidated 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).

 

 

 

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Table of Contents

Consolidated Schedule of Investments    (continued)

August 31, 2022

  

iShares® MSCI India Small-Cap ETF

 

Derivative Financial Instruments Categorized by Risk Exposure (continued)

For the period ended August 31, 2022, the effect of derivative financial instruments in the Consolidated 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

   $      $      $ (248,608    $      $      $      $ (248,608
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                    

Futures contracts

   $      $      $ (49,006    $      $      $      $ (49,006
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts

        

Average notional value of contracts — long

   $ 1,137,132  

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

   $ 1,184,259        $ 302,375,512        $ 26        $ 303,559,797  

Money Market Funds

     1,770,000                            1,770,000  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $   2,954,259        $ 302,375,512        $     26        $ 305,329,797  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative financial instruments(a)

                 

Liabilities

                 

Futures Contracts

   $        $ (38,002      $        $ (38,002
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (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

  19


Table of Contents

 

Statements of Assets and Liabilities

August 31, 2022

 

    

iShares

MSCI India ETF

    

iShares

MSCI India

Small-Cap

ETF

(Consolidated)

 

ASSETS

    

Investments, at value — unaffiliated(a)

  $ 4,173,642,154      $ 303,559,797  

Investments, at value — affiliated(b)

    39,580,000        1,770,000  

Cash

           4,011  

Foreign currency, at value(c)

    14,177,544        286,898  

Cash pledged for futures contracts

    26,000        46,000  

Receivables:

    

Investments sold

    12,301,010        3,691,781  

Capital shares sold

    12,427,599         

Dividends — unaffiliated

    4,425,446        255,025  

Dividends — affiliated

    50,327        7,080  

Other assets

           147,468  
 

 

 

    

 

 

 

Total assets

    4,256,630,080        309,768,060  
 

 

 

    

 

 

 

LIABILITIES

    

Bank overdraft

    21,954         

Deferred foreign capital gain tax

    29,998,706        4,739,617  

Payables:

    

Investments purchased

    30,251,505         

Variation margin on futures contracts

    456,483        38,422  

Investment advisory fees

    2,258,199        190,120  

Other liabilities

    8,024,928         
 

 

 

    

 

 

 

Total liabilities

    71,011,775        4,968,159  
 

 

 

    

 

 

 

NET ASSETS

  $ 4,185,618,305      $ 304,799,901  
 

 

 

    

 

 

 

NET ASSETS CONSIST OF

    

Paid-in capital

  $ 3,185,268,379      $ 275,520,833  

Accumulated earnings

    1,000,349,926        29,279,068  
 

 

 

    

 

 

 

NET ASSETS

  $ 4,185,618,305      $ 304,799,901  
 

 

 

    

 

 

 

NET ASSET VALUE

    

Shares outstanding

    96,850,000        5,600,000  
 

 

 

    

 

 

 

Net asset value

  $ 43.22      $ 54.43  
 

 

 

    

 

 

 

Shares authorized

    Unlimited        Unlimited  
 

 

 

    

 

 

 

Par value

    None        None  
 

 

 

    

 

 

 

(a) Investments, at cost — unaffiliated

  $ 3,997,305,344      $ 214,066,225  

(b) Investments, at cost — affiliated

  $ 39,580,000      $ 1,770,000  

(c)  Foreign currency, at cost

  $ 14,173,530      $ 285,778  

See notes to financial statements.

 

 

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Table of Contents

 

Consolidated Statements of Operations

Year Ended August 31, 2022

 

   

iShares

MSCI India ETF

   

iShares

MSCI India
Small-Cap

ETF

 

 

 

INVESTMENT INCOME

 

 

Dividends — unaffiliated

  $ 78,893,106     $ 3,591,556  

Dividends — affiliated

    437,827       17,569  

Foreign taxes withheld

    (17,155,608     (703,137
 

 

 

   

 

 

 

Total investment income

    62,175,325       2,905,988  
 

 

 

   

 

 

 

EXPENSES

   

Investment advisory fees

    34,710,970       2,625,875  

Commitment fees

    43,057       3,824  

Professional fees

    217       217  

Mauritius income taxes

    295       295  

Interest expense

    1,820,328        
 

 

 

   

 

 

 

Total expenses

    36,574,867       2,630,211  
 

 

 

   

 

 

 

Net investment income

    25,600,458       275,777  
 

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

   

Net realized gain (loss) from:

   

Investments — unaffiliated(a)

    2,105,981,898       30,172,750  

Futures contracts

    (2,519,502     (248,608

Foreign currency transactions

    (21,959,227     (666,991
 

 

 

   

 

 

 
    2,081,503,169       29,257,151  
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

   

Investments — unaffiliated(b)

    (2,522,935,749     (53,499,633

Futures contracts

    (520,405     (49,006

Foreign currency translations

    (143,934     (6,671
 

 

 

   

 

 

 
    (2,523,600,088     (53,555,310
 

 

 

   

 

 

 

Net realized and unrealized loss

    (442,096,919     (24,298,159
 

 

 

   

 

 

 

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ (416,496,461   $ (24,022,382
 

 

 

   

 

 

 

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

  $ (148,141,012   $ (4,198,016

(b) Net of reduction in deferred foreign capital gain tax of

  $ 147,715,180     $ 4,015,952  

See notes to financial statements.

 

 

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

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Table of Contents

 

Consolidated Statements of Changes in Net Assets

 

          

iShares

MSCI India ETF

         

iShares

MSCI India Small-Cap 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 (loss)

     $ 25,600,458     $ 16,931,383             $ 275,777     $ (33,382

Net realized gain

       2,081,503,169       6,980,789         29,257,151       20,967,516  

Net change in unrealized appreciation (depreciation)

       (2,523,600,088     1,743,084,666         (53,555,310     110,021,003  
    

 

 

   

 

 

     

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

       (416,496,461     1,766,996,838         (24,022,382     130,955,137  
    

 

 

   

 

 

     

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

            

From net investment income

       (374,889,807     (8,540,172       (5,222,073     (268,669

Return of capital

                           (1,270
    

 

 

   

 

 

     

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

       (374,889,807     (8,540,172       (5,222,073     (269,939
    

 

 

   

 

 

     

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

            

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

       (1,373,587,175     1,498,302,314         4,578,598       5,010,592  
    

 

 

   

 

 

     

 

 

   

 

 

 

NET ASSETS

            

Total increase (decrease) in net assets

       (2,164,973,443     3,256,758,980         (24,665,857     135,695,790  

Beginning of year

       6,350,591,748       3,093,832,768         329,465,758       193,769,968  
    

 

 

   

 

 

     

 

 

   

 

 

 

End of year

     $ 4,185,618,305     $ 6,350,591,748       $ 304,799,901     $ 329,465,758  
    

 

 

   

 

 

     

 

 

   

 

 

 

 

(a) 

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

See notes to financial statements.

 

 

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Table of Contents

Consolidated Financial Highlights

(For a share outstanding throughout each period)

 

    iShares MSCI India 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

  $ 48.79     $ 33.37     $ 32.38     $ 35.68     $ 34.20  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.21       0.14       0.14       0.29       0.25  

Net realized and unrealized gain (loss)(b)

    (2.87     15.35       0.96       (3.00     1.54  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (2.66     15.49       1.10       (2.71     1.79  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (2.91     (0.07     (0.11     (0.49     (0.31

Return of capital

                      (0.10      
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (2.91     (0.07     (0.11     (0.59     (0.31
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 43.22     $ 48.79     $ 33.37     $ 32.38     $ 35.68  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return(d)

         

Based on net asset value

    (5.66 )%      46.54     3.40     (7.61 )%      5.26
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets(e)

         

Total expenses

    0.68     0.65     0.69     0.69     0.68
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    0.47     0.35     0.43     0.86     0.72
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $ 4,185,618     $ 6,350,592     $ 3,093,833     $ 4,899,749     $ 5,082,120  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(f)

    95 %(g)       25 %(g)       25 %(g)       9 %(g)       10 %(g)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(a)   Based on average shares outstanding.

    

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

   

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

    

(d)   Where applicable, assumes the reinvestment of distributions.

    

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

    

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

    

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

    91     17     19     6     5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

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

  23


Table of Contents

Consolidated Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

          iShares MSCI India Small-Cap 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

    $ 57.80        $ 34.60        $ 33.39        $ 44.10        $ 46.27  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)(a)

      0.04          (0.01        0.15          0.10          (0.00 )(b)  

Net realized and unrealized gain (loss)(c)

      (2.64        23.26          1.88          (10.60        (1.06
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) from investment operations

      (2.60        23.25          2.03          (10.50        (1.06
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Distributions(d)

                       

From net investment income

      (0.77        (0.05        (0.82        (0.21        (0.63

Return of capital

               (0.00 )(b)                            (0.48
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total distributions

      (0.77        (0.05        (0.82        (0.21        (1.11
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net asset value, end of year

    $ 54.43        $ 57.80        $ 34.60        $ 33.39        $ 44.10  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total Return(e)

                       

Based on net asset value

      (4.61 )%         67.25        6.35        (23.88 )%         (2.36 )% 
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Ratios to Average Net Assets(f)

                       

Total expenses

      0.74        0.74        0.81        0.76        0.77
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

      0.08        (0.01 )%         0.45        0.28        (0.00 )%(g) 
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Supplemental Data

                       

Net assets, end of year (000)

    $ 304,800        $ 329,466        $ 193,770        $ 270,433        $ 282,264  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Portfolio turnover rate(h)

      56 %(i)          55 %(i)          32 %(i)          24 %(i)          49 %(i)  
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

(a)  Based on average shares outstanding.

   

(b)  Rounds to less than $0.01.

   

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

   

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

   

(e)  Where applicable, assumes the reinvestment of distributions.

   

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

    

(g)  Rounds to less than 0.01%.

   

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

   

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

      37        37        28        19        31
   

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

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Table of Contents

Notes to Financial Statements

 

 

1.

ORGANIZATION

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

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

 

   
iShares ETF   Diversification    
Classification    

MSCI India

  Non-diversified    

MSCI India Small-Cap

  Diversified    

Basis of Consolidation: The accompanying consolidated financial statements for each Fund includes the accounts of its subsidiary in the Republic of Mauritius, which is a wholly-owned subsidiary (each, a “Subsidiary”) of the Fund that invests in Indian securities. Through this investment structure, each Fund expects to obtain certain benefits under a current tax treaty between Mauritius and India. The net assets of the Subsidiary of the iShares MSCI India ETF and iShares MSCI India Small-Cap ETF as of period end were $0 and $302,909,156, which is 0.0% and 99.4% of each Fund’s consolidated net assets. Intercompany accounts and transactions, if any, have been eliminated.

Effective August 8, 2022, iShares MSCI India ETF transferred all of the assets of MSCI India’s wholly owned Mauritius Subsidiary to MSCI India through on-exchange transactions in India. MSCI India recognized a net realized gain of $1,964,159,904 as a result of this transaction. After the transfer, MSCI India began making new investments in India directly. On August 29, 2022, MSCI India’s Subsidiary was dissolved.

 

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 Consolidated Statements of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. Each Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its Consolidated 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 Consolidated Statements of Operations includes tax reclaims recorded as well as professional and other fees, if any, associated with recovery of foreign withholding taxes.

Each Fund has conducted investment activities in India through its Subsidiary and expects to obtain benefits under the Double Tax Avoidance Agreement (“DTAA”) between India and Mauritius. In order to be eligible to claim benefits under the DTAA, each Subsidiary must have commercial substance, on an annual basis, to satisfy certain tests

 

 

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Table of Contents

Notes to Financial Statements    (continued)

 

and conditions, including the establishment and maintenance of valid tax residence in Mauritius, have the place of effective management outside of India, and related requirements. Each Fund has obtained a current tax residence certificate issued by the Mauritian Revenue Authorities.

Based upon current interpretation and practice of the current tax laws in India and Mauritius and the DTAA, each Subsidiary is subject to tax in Mauritius on its net income at the rate of 15%. However, each Subsidiary is entitled to a tax credit equivalent to the higher of the actual foreign tax incurred or 80% of the Mauritius tax on its foreign source income, thus reducing its maximum effective tax rate to 3% up to June 30, 2021. After June 30, 2021, under the new tax regime and subject to meeting the necessary substance requirements as required under the Financial Services Act 2007 (as amended by the Finance Act 2018) and such guidelines issued by the Financial Services Commission (the “FSC”), each Subsidiary is entitled to either (a) a foreign tax credit equivalent to the actual foreign tax suffered on its foreign income against each Subsidiary’s tax liability computed at 15% on such income, or (b) a partial exemption of 80% of some of the income derived, including interest income or foreign source dividends. Taxes on income, if any, are paid by each Subsidiary and are disclosed in its Consolidated Statements of Operations. Any dividends paid by a Subsidiary to its Fund are not subject to tax in Mauritius. Each Subsidiary is currently exempt from tax in Mauritius on any gains from the sale of securities.

The DTAA provides that capital gains will be taxable in India with respect to the sale of shares acquired on or after April 1, 2017. Capital gains arising from shares acquired before April 1, 2017, regardless of when they are sold, will continue to be exempt from taxation under the amended DTAA, assuming requirements for eligibility under the DTAA are satisfied. There can be no assurance, however, that the DTAA will remain in effect during the Subsidiary’s existence or that it will continue to enjoy its benefits on the shares acquired prior to April 1, 2017.

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.

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.

 

   

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

 

   

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

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

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

 

 

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Notes to Financial Statements    (continued)

 

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

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

 

   

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

 

   

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

 

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds that may not have a secondary market and/or may have a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

DERIVATIVE FINANCIAL INSTRUMENTS

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

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

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, are shown as cash pledged for futures contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Consolidated 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.

 

5.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

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

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

 

   
Aggregate Average Daily Net Assets   Investment Advisory Fees  

First $4 billion

    0.6500

Over $4 billion, up to and including $6 billion

    0.6175  

Over $6 billion, up to and including $8 billion

    0.5867  

Over $8 billion

    0.5573  

For its investment advisory services to the iShares MSCI India Small-Cap ETF, BFA is entitled to an annual investment advisory fee of 0.74%, accrued daily and paid monthly by the Fund, based on the average daily net assets of the Fund.

 

 

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Notes to Financial Statements    (continued)

 

Each Subsidiary has entered into a separate contract with BFA under which BFA provides investment advisory services to the Subsidiary but does not receive separate compensation from the Subsidiary for providing it with such services. Each Subsidiary has also entered into separate arrangements that provide for the provision of other services to the Subsidiary (including administrative, custody, transfer agency and other services), and BFA pays the costs and expenses related to the provision of those services.

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.

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

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.

 

6.

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  

MSCI India

  $   5,117,529,831       $   6,904,024,169    

MSCI India Small-Cap

    195,615,191       199,263,016  

There were no in-kind transactions for the year ended August 31, 2022.

 

7.

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.

The tax character of distributions paid was as follows:

 

     
iShares ETF   Year Ended
08/31/22
     Year Ended
08/31/21
 

MSCI India

    

Ordinary income

  $   374,889,807      $ 8,540,172  
 

 

 

    

 

 

 

MSCI India Small-Cap

    

Ordinary income

  $ 5,222,073      $ 268,669  

Return of capital

           1,270  
 

 

 

    

 

 

 
  $ 5,222,073      $ 269,939  
 

 

 

    

 

 

 

As of August 31, 2022, the tax components of accumulated net earnings (losses) were as follows:

 

iShares ETF

   

Non-expiring
Capital Loss
Carryforwards
 
 
(a) 
   
Net Unrealized
Gains (Losses)
 
(b) 
   
Qualified
Late-Year Losses
 
(c) 
    Total    

MSCI India

  $   (337,313,909   $   1,611,007,634       $    (273,343,799   $   1,000,349,926    

MSCI India Small-Cap

    (28,005,798     63,042,070       (5,757,204     29,279,068    

 

  (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 characterization of corporate actions, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the timing and recognition of realized gains/losses for tax purposes.

 
  (c) 

The Funds have elected to defer certain qualified late-year losses and recognize such losses in the next taxable year.

 

 

 

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Notes to Financial Statements    (continued)

 

For the year ended August 31, 2022, the Funds listed below utilized the following amounts of their respective capital loss carryforwards:

 

   
iShares ETF   Utilized  

MSCI India

  $   318,675,919    

MSCI India Small-Cap

    34,199,603  

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)
 

MSCI India

  $   2,571,696,372      $   1,735,756,051      $     (94,683,240   $   1,641,072,811    

MSCI India Small-Cap

    237,511,605        99,993,576        (32,213,386     67,780,190  

 

8.

LINE OF CREDIT

The Funds, along with certain other iShares funds (“Participating Funds”), are parties to a $800 million credit agreement (“Syndicated Credit Agreement”) with a group of lenders, which expires on August 11, 2023. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Syndicated Credit Agreement. The Syndicated Credit Agreement has the following terms: a commitment fee of 0.15% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 0.10% and 1.00% per annum or (b) the U.S. Federal Funds rate plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Syndicated Credit Agreement.

During the year ended August 31, 2022, the Funds did not borrow under the Syndicated Credit Agreement.

Effective April 21, 2022, the Funds, along with certain other iShares funds (“Mauritius Participating Funds”), are parties to a $1.50 billion unsecured and uncommitted line of credit (“Uncommitted Liquidity Facility”) with State Street Bank and Trust Company, which may be used solely to facilitate trading associated with the closure of each Fund’s Mauritius subsidiary. The Uncommitted Liquidity Facility has interest at a rate equal to the higher of (a) the U.S. Federal Funds rate (not less than zero) plus 1.25% per annum or (b) the Overnight Bank Funding rate (not less than zero) plus 1.25% per annum on amounts borrowed. Each Mauritius Participating Fund will be removed from the Uncommitted Liquidity Facility once trading out of its holdings in the Mauritius subsidiary is complete. For the year ended August 31, 2022, the maximum amount borrowed, the average daily borrowing and the weighted average interest rate, if any, under the Uncommitted Liquidity Facility were as follows:

 

       
iShares ETF   Maximum
Amount
Borrowed
     Average
Borrowing
     Weighted
Average
Interest Rates
 

MSCI India

  $ 1,094,400,000      $ 54,824,110        2.22

 

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.

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.

 

 

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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.

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

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

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

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 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.

 

 

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Notes to Financial Statements    (continued)

 

Transactions in capital shares were as follows:

 

 

 
    Year Ended
08/31/22
     Year Ended
08/31/21
 
 

 

 

    

 

 

 
iShares ETF   Shares      Amount      Shares      Amount  

 

 

MSCI India

          

Shares sold

    7,750,000      $ 344,412,931        44,850,000      $ 1,805,890,047  

Shares redeemed

    (41,050,000      (1,718,000,106      (7,400,000      (307,587,733
 

 

 

    

 

 

    

 

 

    

 

 

 
    (33,300,000    $ (1,373,587,175      37,450,000      $ 1,498,302,314  
 

 

 

    

 

 

    

 

 

    

 

 

 

MSCI India Small-Cap

          

Shares sold

    1,100,000      $ 67,453,633        1,000,000      $ 49,353,215  

Shares redeemed

    (1,200,000      (62,875,035      (900,000      (44,342,623
 

 

 

    

 

 

    

 

 

    

 

 

 
    (100,000    $ 4,578,598        100,000      $ 5,010,592  
 

 

 

    

 

 

    

 

 

    

 

 

 

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.

 

11.

SUBSEQUENT EVENTS

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

Subsequent to year-end, iShares MSCI India Small Cap Index Fund began transferring the assets of iShares MSCI India Small Cap Index Fund’s wholly owned Mauritius Subsidiary to iShares MSCI India Small Cap Index Fund through on-exchange transactions in India.

 

 

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

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Table of Contents

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of

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

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of each of the funds listed in the table below (two of the funds constituting iShares Trust, hereafter collectively referred to as the “Funds”) as of August 31, 2022, the related consolidated statements of operations and of changes in net assets for each of the periods indicated in the table below, including the related notes, and the consolidated 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 and the changes in each of their net assets for the periods indicated in the table below, 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 MSCI India ETF(1)

iShares MSCI India Small-Cap ETF(2)

(1) Statement of assets and liabilities, including the schedule of investments as of August 31, 2022 and the related consolidated statement of operations for the year ended August 31, 2022 and consolidated statements of changes in net assets for each of the two years in the period ended August 31, 2022.

(2) Consolidated statement of assets and liabilities, including the consolidated schedule of investments as of August 31, 2022 and the related consolidated statement of operations for the year ended August 31, 2022 and consolidated statements of changes in net assets for each of the two years in the period ended August 31, 2022.

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.

 

 

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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
 

MSCI India

  $ 73,526,541  

MSCI India Small-Cap

    2,974,775  

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
 

MSCI India

  $ 78,908,337      $   165,139,162  

MSCI India Small-Cap

    3,593,401        4,889,403  

 

 

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

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Table of Contents

Board Review and Approval of Investment Advisory Contract

 

iShares MSCI India 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 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 lower 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 already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

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

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

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

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

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, including, but not limited to, payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities (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 India Small-Cap ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees (the “Board”), including a majority of Board Members who are not “interested persons” of the Trust (as that term is defined in the 1940 Act) (the “Independent Board Members”), is required annually to consider and approve the

 

 

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

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Table of Contents

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 lower 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 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.

 

 

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Table of Contents

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

 

     
   

Total Cumulative Distributions

for the Fiscal Year

    

% Breakdown of the Total Cumulative

Distributions for the Fiscal Year

 
 

 

 

    

 

 

 
iShares ETF   Net
Investment
Income
     Net Realized
Capital Gains
     Return of
Capital
     Total Per
Share
     Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
 

MSCI India

  $   2.909494      $      $      $   2.909494        100             100

MSCI India Small-Cap

    0.767952                      0.767952        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 India ETF (the “Fund”) be marketed to United Kingdom and EU investors in the Netherlands and Ireland.

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.

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.

 

 

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Supplemental Information  (unaudited) (continued)

 

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    
 

MSCI India

    $526,909        $246,364        $280,545        661        $64,495        $6,666      

Disclosures Under the EU Sustainable Finance Disclosure Regulation

The iShares MSCI India 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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Table of Contents

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).

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

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

Independent Trustees
       
  Name (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).

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).

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).

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).
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.

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).

Marisa

Rolland (42)

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

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).

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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Table of Contents

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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General Information

 

Electronic Delivery

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

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

 

   

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

Householding

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

Availability of Quarterly Schedule of Investments

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

Availability of Proxy Voting Policies and Proxy Voting Records

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

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

 

 

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Table of Contents

Glossary of Terms Used in this Report

 

Portfolio Abbreviations
NVS    Non-Voting Shares
REIT    Real Estate Investment Trust

 

 

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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-809-0822

 

 

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