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 MSCI Hong Kong ETF (the “Fund”) seeks to track the investment results of an index composed of Hong Kong equities, as represented by the MSCI Hong Kong 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

Index performance through August 31, 2020 reflects the performance of the MSCI Hong Kong Index. Index performance beginning on September 1, 2020 reflects the performance of the MSCI Hong Kong 25/50 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

Stocks in Hong Kong declined for the reporting period, mirroring ongoing economic and geopolitical challenges in mainland China, Hong Kong’s lead trading partner. As Hong Kong’s economy contracted in late 2022 and exports dropped by the largest amount in 70 years, U.S. President Joe Biden’s trip to China created optimism for improved relations between the U.S. and China. Economic growth resumed in early 2023 after China’s removal of tight coronavirus-related restrictions. However, China’s rebound wavered from property distress and weak demand. Manufacturing and services growth in Hong Kong contracted again late in the reporting period as exports weakened. Meanwhile, U.S.-China relations remained strained, and foreign investors increasingly withdrew from China.

The real estate sector detracted the most from the Index’s return, led by the real estate management and development industry. Property transaction volumes in 2022 reached the lowest level in decades. Rising interest rates and China’s coronavirus-related restrictions decreased investment values and led to financial losses for some property managers and developers. Property values declined, and tourism remained below pre-pandemic levels. Office rents decreased and office vacancy rates, which rose dramatically during the pandemic, reached an all-time high amid an uneven recovery in an oversupplied market.

The industrials sector also detracted from the Index’s performance. A leading machinery stock declined amid allegations of improperly inflated earnings, and a leading industrial conglomerate fell as high interest rates and weak growth reduced earnings.

The financials sector likewise detracted as banks’ loan volumes and earnings fell amid credit downgrades, reflecting exposure to local Chinese government debt. In addition, the insurance industry declined as new business volume decreased. On the upside, the consumer discretionary sector contributed to the Index’s return, led by significantly higher revenue supporting the hotels, restaurants, and leisure industry in Macau.

Portfolio Information

Investment Objective

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

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

Japanese small-capitalization stocks advanced for the reporting period, as the economy grew at its fastest pace in three years. The Japanese economy, after struggling with weak growth and deflation, or falling prices, in recent decades, returned to growth while logging its highest inflation rate in more than 30 years. Foreign demand for automotive products and tourism drove stronger economic growth. Domestic consumption lagged as household spending contracted, and the country’s notoriously high savings rates remained elevated for the reporting period, leading to concerns about the sustainability of recent economic growth. Nevertheless, investor optimism that Japan would sustain accommodative monetary policy to stimulate growth and inflation, as well as other policy shifts, such as limiting government intervention in bond markets and corporate governance reforms, ultimately drove strong flows into the Japanese equity market.

The consumer discretionary sector contributed the most to the Index’s return amid strong sales by global Japanese brands, including running sneakers, video games, lumber products, and sushi. Strong demand for running shoes as in-person sporting events resumed and growth in popular videogame franchises drove growth in the consumer durables industry. Retail sales grew as the return of tourists drove gains in the broadline retail industry. A small Japanese maker of lumber products used in the U.S. homebuilding industry also posted strong gains, as a recovery in building activity and a large undersupply of homes drove demand for its products. Strong global demand for sushi restaurants and acquisitions of sushi chains in North America and the U.K. also drove growth in the consumer services industry.

The industrials and financials sectors also contributed to the Index’s performance amid strong economic growth. Solid demand for industrial pumps, metal working products, and infrastructure services drove strong advances in the capital goods industry. Japanese regional banks sidestepped contagion from the U.S.’s regional banking crisis despite a heavy concentration in lending activity in the U.S., reflecting their relatively large capital reserves and risk management.

Portfolio Information

Investment Objective

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

Stocks in Malaysia declined modestly for the reporting period, as economic growth slowed. Malaysia’s central bank increased its overnight policy rate three times to the highest level since before the coronavirus pandemic. Higher interest rates helped reduce inflation by more than half to 2%. However, as interest rates rose, manufacturing production contracted and factories decreased their workforces. Stocks increased in late 2022 in anticipation of China’s reopening from coronavirus restrictions, but demand for Malaysia’s goods did not materialize as expected. Instead, exports and domestic consumption both declined. The low orders in part reflected a global slump in demand for semiconductors and other electronic equipment, which account for more than a third of the nation’s exports.

The financials sector detracted the most from the Index’s return. Throughout Malaysia’s banking industry, business and household credit growth slowed, as did growth in outstanding business loans. Increased competition for deposits and the higher cost of funds pressured banks’ net interest income margins – the difference between the interest banks receive on loans and what they pay on deposits.

The materials sector also detracted from the Index’s performance. The commodity chemicals industry declined as profits fell. Rising input and production costs, along with intense competition, reduced the profit margins on petrochemical products. Demand also decreased as consumption slowed.

In addition, the consumer discretionary sector weighed on performance, led by the casinos and gaming and home improvement retail industries. Increased living expenses, rising borrowing costs, and the declining impact of special pandemic-related early pension withdrawals, which ended in 2022, all reduced consumer spending growth.

On the upside, the utilities sector contributed the most to the Index’s return. The electrical utilities industry benefited from lower input prices for power generation and anticipated demand growth from large data centers.

Portfolio Information

Investment Objective

The iShares MSCI Pacific ex Japan ETF (the “Fund”) seeks to track the investment results of an index composed of Pacific region developed market equities, excluding Japan, as represented by the MSCI Pacific ex Japan 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

Stocks in Pacific region developed markets excluding Japan advanced modestly for the reporting period. Slower economic growth in China dampened regional economic growth, but most Asian economies avoided recession.

The Australian materials sector contributed the most to the Index’s return, led by the metals and mining industry. Australian producers of iron ore, aluminum, copper, and precious metals advanced, as prices for many metals increased during the reporting period. China, the world’s largest refiner, ended coronavirus-related lockdowns and businesses restarted production, sparking a surge in commodities demand. Amid rising interest rates and inflation, more investors turned to gold, pushing prices higher. Iron ore prices also rose toward the end of 2022, reflecting rising demand from China. With prices and demand rising, production increased, helping boost cash flow in some segments of the industry. However, higher costs weighed on earnings, and commodities prices retreated as economic growth slowed. Australian financials stocks also contributed. Bank stocks rose as profits grew, benefiting from loan growth and increased deposits. In the insurance industry, rising premiums drove profits significantly higher.

The financials sector in Singapore, which is a trade and financing hub for the Asia Pacific region, also contributed to the Index’s performance, as many Asian economies continued to post modest growth despite economic weakness in China. Singapore’s banks, which have some of the strongest capital positions in the world, reported record-high earnings amid rebounding business momentum as the coronavirus pandemic faded and rising net interest income — the difference between interest banks receive on loans and interest they pay on deposits.

The Hong Kong real estate sector detracted the most from the Index’s return, led by the real estate management and development industry. Property transaction volumes in 2022 reached the lowest level in decades. Rising interest rates and China’s coronavirus-related restrictions decreased investment values and led to financial losses for some property managers and developers. Property values declined, and tourism remained below pre-pandemic levels. Office rents decreased and office vacancy rates, which rose dramatically during the pandemic, reached an all-time high amid an uneven recovery in an oversupplied market.

Portfolio Information

Investment Objective

The iShares MSCI Singapore ETF (the “Fund”) seeks to track the investment results of an index composed of Singaporean equities, as represented by the MSCI Singapore 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

Index performance through November 30, 2016 reflects the performance of the MSCI Singapore Index. Index performance beginning on December 1, 2016 reflects the performance of the MSCI Singapore 25/50 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

Stocks in Singapore advanced for the reporting period as the country’s exports, which account for virtually all its economic output, increased in 2022 and optimism grew as China ended strict coronavirus limitations on its economy. Singapore’s largest trade partners, China and Hong Kong, account for almost a quarter of its exports. As China reopened in early 2023, Singapore’s manufacturing sector resumed expansion at an increasingly rapid growth rate. Exports declined, however, late in the reporting period, as China’s economy encountered numerous challenges, and Singapore’s industrial production weakened. Nevertheless, broader economic growth resumed as inflation moderated and interest rates stabilized. Stocks rallied late in the period amid stronger-than-expected corporate earnings.

Singapore’s industrials sector contributed the most to the Index’s return. A leading industrial conglomerate reported strong profit growth, as it sold parts of its business to further its focus on investment management. The passenger airlines industry benefited amid a recovery in post-pandemic travel demand that boosted earnings. In addition, ride-hailing and food delivery services in the ground transportation industry benefited from strong demand and cost rationalization.

The financials sector also contributed to the Index’s performance. Singapore’s banks, with some of the strongest capital positions in the world, reported record-high earnings amid rebounding business momentum, as the pandemic faded, and rising net interest income — the difference between interest banks receive on loans and interest they pay on deposits.

On the downside, the communication services sector detracted from the Index’s return, led by the entertainment industry. Stock in a leading online e-commerce and digital entertainment firm declined, as it prioritized growth instead of profits amid efforts to maintain market share.

Portfolio Information

Investment Objective

The iShares MSCI Taiwan ETF (the “Fund”) seeks to track the investment results of an index composed of Taiwanese equities, as represented by the MSCI Taiwan 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

Index performance through November 30, 2016 reflects the performance of the MSCI Taiwan Index. Index performance beginning on December 1, 2016 reflects the performance of the MSCI Taiwan 25/50 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

Taiwanese stocks advanced for the reporting period, as the Taiwanese economy returned to growth in the second quarter of 2023 and unemployment fell to the lowest level in 23 years. While a trade dispute that led to a Chinese investigation of thousands of Taiwanese goods pressured exports, the Taiwanese government moved to diversify its export markets, and its exports of microchips to the U.S. continued to increase. The 2022 CHIPS and Science Act in the U.S. encouraged Taiwanese investment in U.S. semiconductor manufacturing facilities, and continued tension between China and the U.S. and its allies led companies to invest in alternate Asian suppliers, including Taiwan.

The Taiwanese information technology sector contributed the most to the Index’s performance, 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 strong 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.

On the downside, the materials sector detracted from the Index’s performance, particularly the chemicals industry. The U.S. subsidiary of a Taiwanese chemicals company agreed to settle a price-fixing lawsuit, and parent company profits declined substantially amid lower product prices and sales volumes. Stocks in the industrials sector also declined, as lower prices for ocean freight shipping pressured revenues in the marine transportation industry.

Portfolio Information

Investment Objective

The iShares MSCI Thailand ETF (the “Fund”) seeks to track the investment results of a broad-based index composed of Thai equities, as represented by the MSCI Thailand IMI 25/50 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

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

Stocks in Thailand advanced marginally for the reporting period amid inconsistent economic growth and falling inflation. Thailand’s stocks rose in anticipation of a rebound in tourism and the reopening of China, the country’s second-largest export market, from tight coronavirus restrictions in late 2022. Aided by demand from the U.S., exports rose after the reopening but remained down on a year-to-year basis amid political uncertainty, as Thai business leaders awaited the formation of a new government after May 2023 elections. Inflation moderated considerably, as the central bank of Thailand raised its benchmark interest rate more than fourfold. Manufacturing output decreased significantly, contracting in August 2023 for the first time in 19 months. The nation’s parliament selected a new prime minister near the conclusion of the reporting period.

The information technology sector contributed the most to the Index’s return. The electronic components industry advanced, driven by demand for server applications, cloud-storage operations, and electric vehicle components, including charging stations. Strong sales and earnings drove the stock of a leading electronics firm sharply higher, propelling the company past two state-owned enterprises to become Thailand’s largest firm in terms of market value. The real estate sector also contributed to performance, led by the real estate and development industry, which advanced along with residential property prices.

On the downside, the materials sector detracted from the Index’s return, led by the chemicals industry, which reported dramatically lower profits amid volatile energy costs and customers reducing excess inventories. Independent power and renewable electricity producers in the utilities sector declined amid contentious tariff increases by the government. In addition, the financials sector detracted. Consumer finance firms faced headwinds from rising interest rates and the weak economy as expenses and credit losses increased.

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. 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.

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2023 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

OTC Total Return Swaps

The following are the specified benchmarks (plus or minus a range) used in determining the variable rate of interest: