iShares, Inc.

Table of Contents

Market Overview

iShares, Inc.

Global Market Overview

Global equity markets advanced during the 12 months ended August 31, 2023 (“reporting period”), supported by continued economic growth and moderating inflation. The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 13.95% in U.S. dollar terms for the reporting period. Despite concerns about the impact of higher interest rates and rising prices, the global economy continued to grow, albeit at a slower pace than during the initial post-coronavirus pandemic recovery. Inflation began to subside in most regions of the world, and lower energy prices reduced pressure on consumers, leading consumer and business sentiment to improve. While the Russian invasion of Ukraine continued to disrupt trade in Europe and elsewhere, market adaptation lessened the economic impact of the ongoing war. The prices of several key commodities, including oil, natural gas, and wheat, either stabilized or declined during the reporting period, easing pressure on the world’s economies.

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

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

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

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

Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

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

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

Expense Example

Portfolio Management Commentary

Emerging markets stocks with favorable exposure to five targeted factors — value, quality, momentum, low volatility, and small size — were nearly flat during the reporting period. Taiwanese stocks contributed the most to the Index’s return, as the Taiwanese economy returned to growth in the second quarter of 2023 and unemployment fell to the lowest level in 23 years. Exports of microchips to the U.S. continued to increase, and the 2022 CHIPS and Science Act in the U.S. encouraged Taiwanese investment in U.S. semiconductor manufacturing facilities.

The Taiwanese information technology sector was a source of strength, led by companies in its technology hardware, storage, and peripherals industry. Continued growth of cloud computing fueled robust sales of high-end power units used in data centers, bolstering profits in the industry. The semiconductors and semiconductor equipment industry also posted gains, helped by growing investor interest in technologies related to artificial intelligence (“AI”). Semiconductor manufacturers made capital investments in anticipation of rising customer demand for AI microchips. A slowdown in the U.S. inflation rate also provided a tailwind to Taiwanese information technology stocks, as investors grew optimistic that the monetary tightening cycle was nearing an end.

South Korean stocks advanced, particularly the steel industry in the materials sector. A leading steelmaker exceeded earnings expectations, with operating profit rising substantially, as it recovered from a lengthy, typhoon-related mill closure early in the reporting period. Battery material sales also increased significantly, bolstering earnings.

Stocks in Turkey further contributed to the Index’s performance, led by the industrials sector. Strong automotive demand domestically combined with rising exports benefited auto manufacturing operations in the industrial conglomerates industry.

On the downside, Chinese stocks detracted notably from the Index’s return, negatively impacted by slowing economic growth. While investors were initially optimistic following China’s lifting of several coronavirus pandemic-related lockdowns in December 2022, subsequent economic performance disappointed. The financials sector faced headwinds, as the insurance industry’s profits were negatively impacted by volatile financial markets and the lingering economic disruption from the lockdowns. The declining value of the Chinese yuan relative to the U.S. dollar also decreased the value of Chinese stocks in U.S. dollar terms.

Equities in SaudiArabia also declined, most notably in the financials sector. Tighter liquidity amid rapid credit growth and a slowing economy drove investors’ concerns about the Saudi banking industry.

Portfolio Information

Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

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

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

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

Expense Example

Portfolio Management Commentary

Investor interest in the environmental, social, and governance (“ESG”) attributes of companies was mixed during the reporting period. Globally, fund flows to ESG-focused investments slowed in the first half of 2023 while remaining net positive.

During the reporting period, the Index of emerging market stocks with a tilt towards favorable ESG characteristics posted a modest advance. Taiwanese stocks contributed the most to the Index’s return, led by the information technology sector. Personal computer sales rebounded from a post-coronavirus pandemic slump, driving a notable recovery in industry profits late in the reporting period.

Mexican stocks also advanced, as the beverages industry in the consumer staples sector posted gains amid high consumer demand and effective digital initiatives to improve operations. Stocks from South Korea also contributed due to optimism surrounding the effect of new artificial intelligence advances on the information technology sector.

On the downside, Chinese stocks detracted from the Index’s return. Concerns about a slowdown in China’s consumer spending weighed on the industry.

In terms of relative performance, the Index was nearly in line with the broader market, as represented by the MSCI Emerging Markets Index. The Index balances seeking similar risk and return to the broad market while tilting towards companies with favorable ESG characteristics. Compared to the broader market, the Index held an underweight position in the utilities sector which helped support relative performance. Stock selection in the information technology sector also contributed to the Index’s relative performance, while stock selection in the industrials sector and financials sector detracted.

Portfolio Information

Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

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

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

Expense Example

Portfolio Management Commentary

Emerging market stocks outside of China advanced during the reporting period, as the resilient global economic environment reassured investors. The declining value of the U.S. dollar relative to many other currencies and the slowing pace of the Fed’s interest rate increases also supported emerging market stocks.

South Korean stocks contributed the most to the Index’s return, led by the information technology sector. A U.S. law enacted in August 2022 encouraged South Korean companies in the technology hardware and equipment industry to expand manufacturing in the U.S. Investors also responded favorably to early-2023 production cuts by microchip producers. The South Korean materials sector also contributed, led by the steel industry. As a South Korean steel company diversified into electric vehicle battery production, it benefited from investor optimism that a U.S. automaker will soon pivot from Chinese battery producers to South Korean producers.

Taiwanese information technology stocks contributed meaningfully to the Index’s performance. A slowdown in the U.S. inflation rate supported Taiwanese information technology stocks, as investors grew optimistic that the monetary tightening cycle was nearing an end. Companies in the technology hardware, storage, and peripherals industry and the semiconductors industry were buoyed by growing investor interest in technologies related to artificial intelligence (“AI”). In this environment, Taiwanese companies that manufacture AI servers and produce microchips for AI applications posted strong gains.

Mexican stocks also contributed, led by the consumer staples sector. The beverages industry advanced, as strong sales growth across business segments benefited a leading operator of convenience stores and bottling operations. The company’s strategic investments in digital enterprises further buoyed investor sentiment. Brazilian stocks also contributed, led by the energy sector. Investors reacted positively to the new government’s policies on pricing and capital allocation for a state-owned oil company.

On the downside, stocks in Saudi Arabia and Qatar weighed on the Index’s performance, driven by the financials sector. Banks in both countries were negatively impacted by large investments in a Swiss financial services company that was forced by the Swiss government into a takeover arrangement with a competing firm.

Portfolio Information

Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Expense Example

Portfolio Management Commentary

Lower-volatility stocks in emerging markets posted a small gain for the reporting period. Taiwanese stocks contributed the most to the Index’s return, as the Taiwanese economy returned to growth in the second quarter of 2023 and unemployment fell to the lowest level in 23 years. Exports of microchips to the U.S. continued to increase, and the 2022 CHIPS and Science Act in the U.S. encouraged Taiwanese investment in U.S. semiconductor manufacturing facilities.

The Taiwanese information technology sector led the advance, as companies in its technology hardware, storage, and peripherals industry were buoyed by growing investor interest in technologies related to artificial intelligence (“AI”). In this environment, companies involved in AI-related activities, such as manufacturing AI servers and producing chips for AI applications, posted strong gains. Continued data center growth fueled robust sales of high-end power units used in their construction, bolstering profits in the industry. A slowdown in the U.S. inflation rate also provided a tailwind to Taiwanese information technology stocks, as investors grew optimistic that the monetary tightening cycle was nearing an end.

Indian stocks also advanced, led by the healthcare sector. Strong sales of generic drugs in the U.S. and the acquisition of a U.S. biotechnology firm benefited Indian pharmaceuticals companies. Collaboration with a U.S. online pharmacy dedicated to low-cost generic drug sales bolstered the industry’s presence in the critical U.S. market.

On the downside, Qatari stocks detracted from the Index’s performance, particularly stocks in the financials sector. Prices for liquefied natural gas, Qatar’s largest export product, dropped by more than two-thirds, as global markets adjusted to supply disruptions following Russia’s invasion of Ukraine in early 2022. This decline negatively impacted stocks in the banking industry, reflecting banks’ significant loan exposure to oil and gas businesses faced with lower values for their products.

In terms of relative performance, the Index was nearly in line with the broader market, as measured by the MSCI Emerging Markets Index. Stocks with low-volatility characteristics generally perform better in an environment of market declines or muted market returns. Looking at sectors, the Index had an overweight position in the healthcare sector and an underweight position in the information technology sector. Both positions detracted from the Index’s relative performance. Stock selection in the financials, industrials, and materials sectors also detracted.

Portfolio Information

Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Expense Example

Portfolio Management Commentary

Lower-volatility global stocks advanced for the reporting period, as the world economy showed resilience despite the challenges of inflation and higher interest rates. Stocks in the U.S., which represented approximately 56% of the Index on average, contributed the most to the Index’s return. Solid economic growth and low unemployment helped support strong consumer spending, benefiting U.S. stocks.

The U.S. healthcare sector advanced notably, as innovation in development of new treatments for common medical conditions drove gains in the sector. The biotechnology industry was a leading source of strength, helped by approval of a treatment for several eye diseases. Food and Drug Administration approval of a drug targeting a type of breast cancer bolstered the biotechnology industry’s gains, and development of a promising diabetes drug for treatment of obesity buoyed the pharmaceuticals industry. The U.S. information technology sector also contributed to the Index’s return, particularly the software industry. The rapidly growing use of artificial intelligence (“AI”) applications drove higher revenue and earnings in the industry, as spending on cloud services to power AI increased sharply.

Japanese stocks also gained, helped by Japan’s improving economy and corporate reforms designed to reorient focus on profits. In October 2022, Japan lifted strict coronavirus pandemic-related border controls, driving a significant increase in tourism and stimulating consumer spending. Stocks in the industrials sector advanced, as strong performance in food and retail operations boosted earnings for a large company in the trading companies and distributors industry.

Equities from Taiwan advanced amid strength in the information technology sector. Companies in the technology hardware, storage, and peripherals industry were buoyed by growing investor interest in technologies related to AI, benefiting companies that manufacture AI servers and produce chips for AI applications.

In terms of relative performance, the Index significantly underperformed the broader market, as measured by the MSCI All Country World Index. Stocks with low-volatility characteristics generally perform better in an environment of market declines or muted market returns. Consequently, as global stocks rebounded, led by large information technology companies, lower-volatility stocks posted generally lower returns. Looking at sectors, stock selection in the communication services sector was the largest detractor from the Index’s relative performance. An underweight position in the information technology sector, which rallied sharply during the reporting period, also detracted, as did an overweight position in the utilities sector.

Portfolio Information

About Fund Performance

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

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. Beginning August 10, 2020, the price used to calculate market return (“Market Price”) is the closing price. Prior to August 10, 2020, Market Price was determined using the midpoint between the highest bid and the lowest ask on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of a fund may not trade in the secondary market until after the fund’s inception, for the period from inception to the first day of secondary market trading in shares of the fund, the NAV of the fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV, respectively.

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

Disclosure of Expenses

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

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

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

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